Earlier this month, Andrew Yang officially qualified for the upcoming Democratic presidential debate, making him the only candidate so far on stage without a background in politics. Yang is a former tech executive and founder of Venture for America, a sort of Teach for America that sends recent graduates to work for start-ups in “struggling cities,” as The New York Times puts it, such as Detroit, Cleveland, and New Orleans. That probably best sums up Yang’s very Silicon Valley approach to governing: Structural problems can be innovated away with entrepreneurial gumption. The central plank of his campaign is his proposed “Freedom Dividend,” a guaranteed $1,000 every month for every person in the U.S. over 18 years old.
Speaking at an event for the Los Angeles Times, Yang described the appeal of Freedom Dividend, saying, “[People] look up and say, ‘Wait a minute. My jobs are disappearing. My main street’s closing. My hometown’s a mess. My kids are addicted to opiates. My school’s shrinking. My property taxes are going up because the population’s shrinking. And Andrew Yang wants to give me a thousand bucks a month, and that at least makes sense to me.’ “
What Yang is proposing is a universal basic income, or UBI, and it’s not exactly a newfangled start-up concept, but it’s become relevant again in an economy where many are in a precarious financial situation. The term “universal basic income” actually covers a broad range of programs, and it’s a strange creature in that it’s been both supported and criticized by people on the left and the right. As a result, there’s a lot of confusion about what, exactly, a universal basic income is and how it would work.
So, what is “universal basic income”?
It’s a catch-all term for a variety of social programs, but the basic version is a periodic payment to individuals regardless of their employment status or pretty much any other qualifications. It could be comparable to something like unemployment benefits, except recipients don’t need to prove that they’re looking for work, don’t need to pass drug tests, and don’t have to be unemployed. There’s no minimum requirement for receiving the money, except for maybe age, like in Yang’s Freedom Dividend. The most ambitious forms of it would involve replacing a person’s entire income with UBI, or, again as with the Freedom Dividend, would just be a comparatively modest supplement.
Where’d the idea come from?
The concept’s a pretty old one, going all the way back to Thomas More’s sixteenth-century book Utopia, which depicted an idealized society where people received a guaranteed income. In his pamphlet “Agrarian Justice,” American founding father and revolutionary Thomas Paine also advocated for a “citizen’s dividend” that would be paid by a tax on landowners and distributed to every person, whether they’re rich or poor. He wrote, “It is also right it should be so, because it is in lieu of the natural inheritance, which, as a right, belongs to every man, over and above the property he may have created, or inherited from those who did.” In other words, everyone is entitled to benefit from the wealth of a society.
So it would be paid for by taxes?
Basically, yes, although every different plan relies on slightly different models. Yang proposes to pay for his Freedom Dividend in part with a 10 percent value-added tax, which functions similarly to a sales tax. He also wants to give people currently on welfare programs the option to keep those benefits, or switch over to the Freedom Dividend. He predicts that enough people will make the switch that the savings will also help pay for his UBI.
Who thinks it would be a good idea?
One of the odd things about UBI is how popular it is among a really wide range of political ideologies. Seemingly contradictory figures Martin Luther King Jr. and former president Richard Nixon both supported the idea. Silicon Valley billionaires Elon Musk and Mark Zuckerberg are also proponents. Former Greek finance minister and Marxist economist Yanis Varoufakis has argued for the “universal right to basic income.” And libertarians like economist Milton Friedman and infamous racist social scientist Charles Murray are also particularly fond of UBI, provided it goes hand-in-hand with the abolition of all other social-welfare programs.
What are the arguments for a UBI?
There are a few different philosophical arguments for UBI. Some supporters, including Elon Musk and Andrew Yang, see UBI as a solution to the problem of automation. As both technology and artificial intelligence improve, there will be fewer and fewer jobs that machines can’t do better than workers. In theory, goods will get cheaper, but people will have less money to spend. In that scenario, a UBI would help keep the economy running and, hopefully, prevent the total collapse of society.
But not all UBI proponents have such apocalyptic motivations, nor do they all buy the argument that it would be a cure-all for automation—a $12,000 annual stipend isn’t a replacement for a job lost to a robot, after all. In an interview with Ezra Klein, Dutch historian Rutger Bregman argues that UBI is a way to restructure society for the better, not just plug holes as some workers get left behind. A person doesn’t have to base all of their decisions on the fear of losing their job or not having enough money for food or rent. In his words, a guaranteed income is about “the freedom to say ‘yes’ to the things that you want to do, and it’s about the freedom to say ‘no’ to things you don’t like—a boss that harasses you or a wife or husband that you don’t really like anymore.”
Unlike many welfare programs in the U.S., UBI is not means tested, which means there’s nothing people have to do to qualify for it. Some programs, like Medicaid, only apply to people whose income is low enough to qualify, while others, like unemployment benefits, require that beneficiaries can prove they’ve been trying to find work or meet some other requirements. A UBI would work more like the National Health Service in the United Kingdom—it applies to everyone, unconditionally.
What are the cons?
Conservative critics claim that UBI would “attack the dignity of work,” as Matthew Continetti wrote in the National Review, and incentivize people to be lazy and unproductive. That’s essentially the conservative criticism of almost every social-welfare program going back before Ronald Reagan’s overblown stories of “welfare queens,” and it’s been largely debunked: Among many other studies with similar results, a meta-study by Harvard and MIT economists found “no systematic evidence that cash transfer programs discourage work.”
A larger concern would be that landlords or employers would just adapt to the existence of a UBI, raising rents or lowering wages to essentially eat up the extra money that people receive.
What are the countries with universal basic income?
Some countries and states have experimented with UBI, most recently Finland and the Canadian province of Ontario. Finland offered 2,000 randomly chosen unemployed people the equivalent of $635 a month for two years, but chose not to expand its program when it failed to improve employment. Ontario’s program was geared toward poverty rather than unemployment, giving 4,000 low-income people $13,000 a year and $19,000 for couples. Conservative premier Doug Ford canceled the pilot program soon after he was elected. There’s also an American version of UBI: The Alaska Permanent Fund has been in existence since 1982, and it pays an annual dividend to every man, woman, and child. It’s a state-run investment fund that’s pegged to oil revenues, and in the past decade it’s ranged from $878 to $2,072 per person per year. That’s obviously not enough to live on—it’s more universal than it is basic—but the model is the same.
Okay, but does it work?
Well, it really depends on the objective. Finland’s experiment with UBI didn’t improve employment numbers, which was the goal, but according to the head researcher, “The basic income recipients of the test group reported better well-being in every way,” with many of them pointing to the psychological benefits of not having to worry as much about money. A 2017 study from the liberal think tank the Roosevelt Institute also found that giving every American $1,000 would potentially grow the whole economy by $2.5 trillion by 2025, based on the premise that economic growth is constrained by household income. Even a modest UBI could help soften the blow to working-class people when a recession hits, which may very well explain a renewed curiosity in the previously obscure policy. Convincing enough politicians that’s a good enough justification, though, is an entirely separate endeavor.