The idea being promoted by Andrew Yang, Democratic Candidate for President, of a Universal Basic Income, may seem absurd — until you find it is not a left-wing scheme, but something aligned with some very respected libertarians and a pretty famous Jewish rabbi. It may not be “the answer,” but it may be time for us to give it an honest debate.

TL;DR

· There is a real, present and escalating challenge facing this country with the arrival of the Fourth Industrial Revolution.

· We need to begin discussing how we prepare our nation for these changes.

· The libertarian-leaning part of me instinctively rejects the idea of UBI.

· The Christian part of me appreciates the idea of providing a modest sum for all to be able to maintain basic needs.

· The economically-focused part of me sees in UBI an idea not too far removed from the FairTax idea of a prebate.

· UBI is a valid concept, respecting the immediate impacts of our changing economy, the compassion and intentions of Christ, and providing a reasonable baseline to encourage greater prosperity and security for our nation.

· Implementing UBI requires considerably more study and consideration and it may be a good idea that is simply not economically reasonable.

What is UBI?

When I first heard of the idea of Andrew Yang’s campaign being based on the idea of providing a massive handout to every American adult — a “Universal Basic Income” (UBI) — I scoffed at what seemed like a miserable attempt to pander that was neither needed nor realistic.

Andrew Yang photo from the Yang2020 website, flag via pixabay, graphic by B.O.

Since then, I’ve spent a bit of time trying to better understand his rationale and to fairly, not instinctively, assess the idea of UBI. Twitter, including Andrew Yang’s profile and legions of loyal fans — the YangGang, have helped with that, as did this very good interview with Joe Rogan. Its long, but if you want to fairly understand Yang’s perspective and proposal, it is worth a listen.

After hearing Andrew explain his idea and with further reflection, I genuinely appreciate his advocacy for what I agree is a very real issue that is already making impacts. While most campaigns will focus on the divisive issues that can gain public attention today — abortion, the environment, the chaotic tweets from the living caricature we have elected as President, etc. — Yang is trying to get us to understand and consider a present, and increasingly urgent challenge — the so-called Fourth Industrial Revolution.

“Technologies are emerging and affecting our lives in ways that indicate we are at the beginning of a Fourth Industrial Revolution, a new era that builds and extends the impact of digitization in new and unanticipated ways. It is therefore worthwhile taking some time to consider exactly what kind of shifts we are experiencing and how we might, collectively and individually, ensure that it creates benefits for the many, rather than the few.” — World Economic Forum

But is a massive government handout really the solution? To start, it is worth understanding what is being suggested in Yang’s UBI, or “Freedom Dividend.”

“Andrew would implement a Universal Basic Income, ‘the Freedom Dividend,’ of $1,000/month, $12,000 a year for every American adult over the age of 18. This is independent of one’s work status or any other factor. This would enable all Americans to pay their bills, educate themselves, start businesses, be more creative, stay healthy, relocate for work, spend time with their children, take care of loved ones, and have a real stake in the future.” — Yang 2020

· Why does Andrew Yang want to implement Universal Basic Income (UBI) in America?

· Additional research on Basic Income

How Do You Pay for UBI?

I understand his concern but struggled at the idea that handing every adult $1,000 a month was going to be a miracle solution to solve all our problems. Around one hour and two minutes into the podcast, Rogan challenges the idea that $1,000 a month can really make a significant difference and says, “I don’t mean to sound skeptical, but I just don’t believe that $1,000 a month is gonna fix that.” Andrew acknowledges that this amount is not meant to be a solution to all of an individual’s or our country’s problems, but it “takes the edge off… then we can hopefully start reconstituting what that person’s purpose is in their community, in their neighborhood… The money is not the solution, the money helps set the stage for the solution.” Hearing his Rogan interview, there was a lot I can agree with, and a lot I question and object to. Chief among these objections is the addition of a Value-Added Tax.

“It would be easier than you might think. Andrew proposes funding UBI by consolidating some welfare programs and implementing a Value-Added Tax (VAT) of 10%. Current welfare and social program beneficiaries would be given a choice between their current benefits or $1,000 cash unconditionally — most would prefer cash with no restriction. A Value-Added Tax (VAT) is a tax on the production of goods or services a business produces. It is a fair tax and it makes it much harder for large corporations, who are experts at hiding profits and income, to avoid paying their fair share. A VAT is nothing new. 160 out of 193 countries in the world already have a Value-Added Tax or something similar, including all of Europe which has an average VAT of 20 percent.” — from “How would you pay for Universal Basic Income? from Yang2020.

I’m very weary of creating a new tax, and the opportunity for Congress to ever-increase the amount of UBI and the tax burden to fund it. Yang partially addresses that in stating, “Any change to the Freedom Dividend (UBI) would require a constitutional amendment.” Sounds good, but I’m not sure that would be implemented, and I can’t get on board with the introduction of a new way for elected officials to pillage our pockets. However, there are tax proposals I can get behind that may be able to fund UBI, be it, there may need to be some tweaks to the proposals and / or the amount of UBI distributed.

An idea that I have long believed in is the FairTax, the most transparent, honest, manageable, fair, and progressive tax proposal I know of. This post won’t go into all the merits of the FairTax, of which there are many, but I strongly encourage those that aren’t familiar with it to take some time to learn more.

Rather than considering UBI as true income, there is perhaps more to be appreciated in seeing his idea along the lines of the FairTax’s prebate.

“U nder the FairTax, all Americans consume what they see as their necessities of life free of tax. While permitting no exemptions, the FairTax (HR25/S122) provides a monthly universal prebate to ensure that each family unit can consume tax free at or beyond the poverty level, with the overall effect of making the FairTax progressive in application.”

It was connecting these two ideas — UBI and the prebate — that got me to first really consider this as a possibly sensible idea.

What Does a UBI Really Achieve?

Beyond the costs and how we would fund UBI, I also question some of the hopeful benefits Yang and his supporters suggest will follow UBI. It is optimistic, at best, and perhaps naïve, to think that a basic income of $1,000 a month is going to improve some conditions considerably. The below is from the Yang 2020 website.