Andrew Yang is a businessman and a presidential candidate in the Democratic Party. It is hard to believe that he may actually have the biggest spending plans – or in his case, plan (singular) – of all the Democratic candidates.
They all have their ideas for making government bigger, but some are definitely bigger than others. Bernie Sanders has identified himself as a socialist in the past, yet he is one of the top tier candidates.
While Yang may have the single biggest proposal, there is something unique about him. It is even a little refreshing in a sense.
He is a strong advocate for a Universal Basic Income (UBI). Under his plan, every adult American citizen would get $1,000 per month from the government. I don’t know if this would be bigger than Medicare-for-all (nationalized healthcare), but it’s got to be close.
Yang says that robots are going to take our jobs. Therefore, we need a guaranteed income from the government. He has tried to appeal to people from all different political angles. He has even mentioned libertarians.
He is wrong that robots/ technology will cause us to lose our jobs. The only exception would be if we could get to a point where robots and machines could produce everything that we want. But then we wouldn’t need jobs, since we would have everything we want.
It is illogical to think that only a select few will get all of the wealth from owning the robots. People get wealthier by trading with others. How will someone get wealthy if everyone else around him is poor? Bill Gates could not have become rich if it hadn’t been for many millions of people and businesses buying his products.
Maybe it is possible that someone owns a bunch of robots that produces great wealth just for himself. But this doesn’t automatically make everyone else poorer. Everyone else can still have their own society where they trade with each other. Nobody has to do business with the robot owner, assuming there is no threat of violence involved.
To be sure, robots, and technology in general, will make some jobs obsolete. Some people will lose their jobs to technology. This is nothing new. But there is virtually endless work to be done because there are virtually endless wants and needs. Until robots can provide everything we want, there is work to be done.
Therefore, there should always be jobs for people. The nature of the work may change with the times. If there is high unemployment, then it is either because some people want to be unemployed or because there is government interference. Taxes and regulations (such as licensing laws and the minimum wage) can make unemployment rates higher, but this is not the fault of robots. If a fast food restaurant sets up robots to take the place of some workers because it is cheaper to set up the robots than to pay the workers, this isn’t the fault of technology. If it is due to the minimum wage exceeding the costs of the robots, then that is the fault of the government law.
Welfare for All to See
Yang comes across as being more genuine than most of the other candidates. The reason is that he is putting his welfare plan right in front of you. You see what you get. It isn’t some abstract concept.
The Democrats like to make fun of trickle-down economics. In other words, if something (say, a tax cut) benefits a rich person, the Democrats will generally make fun of the concept that this could somehow benefit the lower and middle classes.
Yet, the Democrats believe in trickle-down economics in the worst kind of way. They believe that you should be forced to hand over a bunch of money to the government and all of its alphabet agencies, and this money will trickle-down to the poor and middle class. When you collect trillions of dollars per year, it isn’t hard to throw some goodies back to the people. But what percentage is eaten up through the bureaucracies? This doesn’t even account for the massive distortions that are caused.
With Yang’s proposal, the money would just go directly to people, if it works as he claims. You aren’t getting a subsidized loan to go to college. You aren’t getting subsidized healthcare. You aren’t getting a special government housing loan with a low down payment. You aren’t getting a job training program. You are getting direct money into your bank account.
The only thing is, I haven’t heard Yang say that he will be doing away with everything else. If you got rid of all welfare programs in the United States and substituted the UBI, I could see this being attractive even to some libertarians. I, personally, wouldn’t trust it (and it would still be immoral), but I can at least see where some people might find it appealing.
Yang isn’t talking about eliminating Social Security and Medicare and Medicaid and housing subsidies and food subsidies. As far as I know, he just wants to mostly add to the existing structure. Even worse, while he has a laser focus on the UBI, he does propose Medicare for all.
Yang says that “people already receiving benefits would have a choice between keeping their current benefits and the $1,000, and would not receive both.” But these “benefits” are for limited things such as food stamps and disability. It doesn’t include Medicare, Social Security, and education for the kids. And we can be certain that his plan won’t go through Congress just the way it is. Would someone with a major disability end up getting the same exact amount as everyone without a disability? Oh, and what about the non-citizen residents who pay taxes?
If his proposal did become a reality, what about fraud? How many dead people would there be trying to claim their $1,000 per month?
According to Yang’s website, he proposes to pay for this by enacting a value-added tax (VAT) of 10%. In other words, the businesses would pay (ha, ha). He also has some other proposals, such as removing the Social Security cap, which would be a significant tax on high-income earners.
Let’s Do the Math
There will soon be 250 million adult Americans. Multiply this by $12,000 per year ($1,000 per month times 12 months). This comes out to $3 trillion per year.
The federal budget is already nearly $4.5 trillion. The annual deficit is currently running close to $1 trillion, and there is no sign of this slowing down. This is during a supposedly booming economic period.
I don’t believe it is even possible for Yang’s proposal to raise this much money from taxes. If it is possible, the other consequences would be disastrous.
Businesses would have to raise prices significantly or else face bankruptcy. And if there are a lot of bankruptcies, then there will be fewer businesses paying taxes and fewer products being offered.
There is also the option to print more digital money by having the Federal Reserve buy up even more U.S. government debt. But this will ultimately raise prices as well.
It sure does sound nice to get $1,000 in “free” money every month. If you have a spouse, you could be “making” $2,000 per month. The problem is, you will be paying something like $50,000 for a basic car. You will be paying $10 for a loaf of bread. You will be paying $12 for a gallon of gasoline.
Yang’s proposal is ridiculous. All of the other candidate’s proposals are ridiculous too, but they are more concealed and vague. That is what I like about Yang. He is putting the ridiculousness out there on the table. Maybe that is why he is not an establishment favorite at this point.
In the last debate, Yang told people to sign up on his website and that 10 families would win $1,000 per month for a year. I’m pretty sure that is illegal, but again, there is something refreshing about him coming right out and saying that. His bribery is out in the open. You can promise free college and free healthcare for all, and this is supposedly perfectly legal. It is bribery, but the candidates and most of those who ask them questions dare not call it that.
Yang is wrong in his prediction of mass unemployment due to technology. Even if he were not wrong on this, his solution of a UBI is wrong. However, he is clear on what he is proposing. For this, I am glad he is in the presidential race.
Imagine what you are your family could do with an extra $1,000 per month without any hike in the general price level. This could be reality if government were significantly scaled back. Unfortunately, that is not on the table from any of the current candidates.