Detailing Andrew Yang’s Freedom Dividend
Andrew Yang took the stage at St. Anslem’s College February 7th with six other nominees for Democratic Party’s nomination. For Yang, this was the sixth out of a possible seven debates he qualified for, he failed to qualify for the January debate. Little known before the 2020 election cycle, the entrepreneur runs on a platform centered by a form of universal basic income (UBI) he calls the “freedom dividend”. The only candidate to push such a plan, Yang continues to make waves in political circles despite his lack of political experience.
Yang’s fervent supporters, dubbed the “Yang Gang”, have rallied behind him as the only one to discuss the fourth industrial revolution and the automation of jobs [1]. While other candidates on Friday took jabs at each other and president Trump, Yang spoke about providing every American over the age of 18 with $1000 per month, including those such as homemakers who do not earn a wage. While such an ambitious plan carries a hefty price tag(the Tax Foundation estimates the cost at $2.8 trillion per year [5]), Yang provides possible solutions to foot the bill.
The largest source of income to fund the Freedom Dividend comes from a 10% value added tax (VAT). This type of tax is common in European countries and would greatly reduce corporate tax deductions for companies like Amazon. A carbon tax, as well as taxing financial transactions, would also contribute to covering the cost [5].
The idea of putting money directly into their pockets has attracted supporters on both sides of the isle. Conservatives see it as a way to lessen the load on welfare programs, while liberals note the benefit it would provide low income families. Yang is also incredibly popular with young voters. He won Iowa’s youth straw poll at 22.5% of participants. The immense appeal of UBI has been the driving force behind Yang’s campaign thus far.
UBI is not a new idea. According to the Usman Chohan, the origins of UBI can be traced back to 1516, and been contemplated by several well known historical figures including Thomas Paine and Abraham Lincoln [4]. Alaska implemented a UBI system in 1982, and according to Ioana Marinescu, a professor at the Penn School of Social Policy & Practice, Alaskans work at the same rate as Utahs and Wyomings, dispatching concerns that people will not work if given basic income [7]. India has been looking for ways to implement UBI to replace the Indian public distribution system (PDS). PDS subsidizes wheat and other necessities for low income families in India, akin to the US Food Stamps program. PDS has become inefficient and some families earn more than others in subsidies. Replacing PDS with UBI would result in public expenditure savings, and in turn, provide families with a more generous stipend in the form of UBI [1].
Andrew Yang had the least speaking time of any candidate, according to FiveThirtyEight on Friday night [3]. In every debate he has been in he has been in the bottom two of speaking time. He has no prior political experience, and he averages 3.6% in national polls [2]. He has struggled to gain support nationally, due to a race populated by well-known candidates with years of experience in elected office. While Yang is no longer in the race, his presence has no doubt been felt. He has involved a multitude of young people in the political process, who historically have been politically apathetic. Yang has united a broad coalition of Democrats, Independents, and even some Republicans. The idea of a universal basic income is appealing to people of all walks of life, and it will be interesting to see if future candidates will pick up the idea (or if Yang himself will run again).
Footnotes
[1] Fink, Jenni. “This Is What Andrew Yang's Referring to When He Says ‘4th Industrial Revolution.’” Newsweek, Newsweek, 16 Oct. 2019, www.newsweek.com/andrew-yang-trump-fourth-industrial-revolution-what-it-1465649.
[1] Chohan, Usman. (2017). Universal Basic Income: A Review. SSRN Electronic Journal. 10.2139/ssrn.3013634.
[2] “Election 2020 - 2020 Democratic Presidential Nomination.” RealClearPolitics, www.realclearpolitics.com/epolls/2020/president/us/2020_democratic_presidential_nomination-6730.html.
[3] Fivethirtyeight. “What Went Down In The New Hampshire Democratic Debate.” FiveThirtyEight, 8 Feb. 2020, fivethirtyeight.com/live-blog/democratic-debate-february-2020/.
[4] Hoynes, Hilary, and Jesse Rothstein. "Universal basic income in the United States and advanced countries." Annual Review of Economics 11 (2019): 929-958.
[5] Pomerleau, Kyle. “Does Andrew Yang's ‘Freedom Dividend’ Proposal Add Up?” Tax Foundation, 2 Jan. 2020, taxfoundation.org/andrew-yang-value-added-tax-universal-basic-income/.
[6] “What Is Universal Basic Income? - Yang2020 - Andrew Yang for President.” Yang2020, www.yang2020.com/what-is-freedom-dividend-faq/.
[7] Business Radio. “Why Alaska's Experience Shows Promise for Universal Basic Income.” Knowledge@Wharton, 10 May 2018, knowledge.wharton.upenn.edu/article/alaskas-experience-shows-promise-universal-basic-income/.
