Andrew Yang’s Curious Plans

In the 2020 Democratic primary, there are two real “wild card” contenders: self-help guru Marianne Williamson and “serial entrepreneur” Andrew Yang. Yang has attracted something of a cult following, including on the alt-right, who have somewhat inexplicably taken to making memes about him. He does not have a political background; before running for president, his most notable initiative was “Venture For America,” which sends elite college graduates to economically struggling cities like Baltimore, New Orleans, and Detroit to run start-ups. Yang believed this would “promote innovation and job growth” in these places, but concedes that the start-ups tended not to hire local people. (To me, Venture For America sounds extremely dubious as a means of actually bringing benefits to working class people in these cities. But here in New Orleans, it does appear to have created jobs for smiling Brown University graduates at companies with inscrutable mission statements. I do not mean to diminish this contribution to the local economy.*)

Yang is mainly in the race to push his signature issue, a Universal Basic Income (UBI). Yang proposes to give every U.S. citizen between the ages of 18 and 64 $1,000 a month, no strings attached. (Well, one string: It makes them ineligible for other existing welfare benefits, and if they are currently receiving any welfare benefits they would have to give them up if they wanted the 1k.) The policy section of Yang’s website includes dozens of proposals, but he has made clear that the UBI is his #1 plan for fixing the country. It’s the subject of his recent book The War On Normal People: The Truth About America’s Disappearing Jobs and Why Universal Basic Income Is Our Future. During one of the few speaking opportunities he was given in his first Democratic debate (Yang says his microphone was cut), Yang made clear that the UBI would be his first priority as president.

The oddly-titled War On Normal People actually contains some important and accurate analysis of the American economy. As Honda Wang wrote in Jacobin, Yang “correctly identifies many social issues stemming from capitalism and wealth inequality.” He talks about a “winner-take-all economy,” in which the stock market is doing well, but “the bottom 80 percent of Americans own only 8 percent of all stocks.” Yang is acutely sensitive to the “destructive” part of capitalism’s “creative destruction,” warning of a “wave of automation” that will drive millions upon millions out of the labor force and decimate their communities. He understands that capitalism’s ceaseless drive for “efficiency” and greater profits means that if a job can be done cheaper by a robot, it eventually will be, and as bad as conditions for Amazon warehouse workers are, there will be fewer and fewer of them as the company finds ways to replace them with machines. Yang looks at people’s staggering debt loads, the stagnation of wages, the increasing divide between the bottom and the top, and recognizes that there is a serious problem. “Capital doesn’t care about us,” he says.

His UBI is intended as a way to deal with the coming “tidal wave” of automation, by making sure that nobody ever falls below the existing poverty line in the coming “world without jobs.” “Everyone from a hedge fund billionaire in New York to an impoverished single mom in West Virginia would receive a monthly check of $1,000,” Yang writes.

Universal Basic Income is not really a “left” or “right” wing policy. As Yang points out, it has been floated by everyone from Martin Luther King to Milton Friedman, and favorable discussion by both the libertarian Cato Institute and the socialist Catalyst. (It was also discussed on the first-ever episode of the Current Affairs podcast.) Does this mean that the divide between socialists and free-marketers is illusory and we should all simply come together around this mutually agreeable policy? Not quite. We can still imagine two very different kinds of worlds with a basic income: a world in which the vast majority of people merely subsist, just above the poverty line, while a few billionaires have extraordinary power, and a world in which everyone lives well and the fruits of what society produces are shared relatively equally. To see what I mean, think about feudalism: The lord could choose to grant his peasants an annual subsistence income, or he could choose to let them starve, but he would still be the lord either way. The feudalist UBI proponent would retain the basic existing relationships. The socialist UBI proponent wants to change those relationships altogether. As Matt Bruenig, Antti Jauhiainen, and Joona-Hermanni Makinen have warned, after they have survived the political process, actually existing UBIs might end up being far less helpful to working people than they seem. They write that while:

…it’s technically possible to create a broad-based UBI that increases worker bargaining power and leisure while decreasing inequality and poverty.., it is just as possible to redirect the energy behind a liberatory UBI into implementing a conservative one — forcing unemployed workers into bad jobs while undermining organized labor, earnings equality, and the welfare state. Indeed, it is even possible to pull off such a bait-and-switch while convincing the rest of the world that you are engaged in progressive policymaking.

In 2006, Charles Murray endorsed a UBI in his book In Our Hands: A Plan To Replace The Welfare State. Murray proposed eliminating all existing welfare benefits, including Social Security and Medicare, and instead giving every adult $10,000 a year. Murray’s plan was a UBI, but it was horrible: Average disability payments are around $1200 a month, so disabled people would have had their benefits cut. Anyone on Medicare or Medicaid who had a major medical expense would be completely fucked. Murray made it clear from the outset that his UBI was an attempt at Welfare Reform, i.e., slashing existing “entitlements.”

Andrew Yang’s plan resembles Charles Murray’s in many ways. In fact, it’s even less generous! In today’s money, Murray’s 2006 basic income would be $12,700, more than the $12,000 Yang is proposing. And while Yang doesn’t propose replacing existing welfare programs, he does make clear that people on food stamps and disability would not be getting less than the “hedge fund manager.” His first answer to the “how do you pay for it” question is:

We currently spend between $500 and $600 billion a year on welfare programs, food stamps, disability and the like. This reduces the cost of Universal Basic Income because people already receiving benefits would have a choice but would be ineligible to receive the full $1,000 in addition to current benefits.

So if you get $1,200 a month in disability, Andrew Yang would not give you your UBI. Now, you might think “Well, but they can stick with their current benefits. They wouldn’t be worse off.” But no! They would be worse off, because Andrew Yang plans to fund his UBI with a giant Value Added Tax (VAT). From his website:

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.

What does this mean in practice? It means that if you’re on disability, the only change you see under a Yang administration is that everything you buy now has a 10 percent tax added to it. Assuming you spend all of your benefits each month, it means that you’ll be functionally ending up with over $1,000 less per year. And as my friend Benjamin Studebaker points out in his critique of Yang’s plan, this makes the tax highly “regressive.” Because it’s a tax on spending, and poor people spend a greater percentage of their income than rich people spend, poor people have to pay a higher percentage of their income to fund the UBI than rich people have to pay.

Dylan Matthews, in his Vox appraisal of Yang, found the funding mechanism peculiar:

VATs are basically sales taxes levied at each stage of production (when a lumber company sells wood to a paper mill, when the paper mill sells paper to Dunder Mifflin, when Dunder Mifflin sells paper to you), and as such, economists generally believe that consumers bear most or all of the cost of increased VAT rates. Recent empirical studies confirm this: While decreases in VATs are often captured by businesses that pocket the money as increased profit, businesses are savvy about passing on increased VAT rates to their consumers. Corporations would probably bear some of the burden — for one thing, VATs would reduce the value of corporate profits by making all the stuff profits can buy more expensive — but it’s mostly a consumption tax.

So the burden would fall mostly on you, the humble consumer, rather than on corporations. In fact, in The War On Normal People, Yang implies that one reason to tax consumption is that “technology companies are excellent at avoiding taxes,” citing the hundreds of billions of dollars that Apple is keeping overseas. Instead of trying to take on the companies, he treats their power as inevitable.

There are unanswered questions about the Yang plan. It doesn’t vary by people’s location, meaning that it functionally gives far less to poor people in more expensive urban areas than to poor people in cheaper rural areas. (A fact that undoubtedly has racial implications.) I am not an economist, but I’d also be interested in knowing how much we could expect to see landlords hike poor people’s rents to gobble up as much as possible of people’s new incomes. Single parents seem like they’re going to have an especially hard time—their children don’t get a UBI, and Yang’s proposal for them is to supplement it not with more money but through creating “responsibility-sharing networks, allowing single parents to work with each other for childcare” and “a national recruitment drive for Big Brothers Big Sisters of America for male volunteers to spend time with children of single mothers who would like a positive male role model.” (Not too surprising that the sexually-deprived men of 4chan have gotten behind the “government program for you to meet single moms” candidate!)

Then there’s the “old people” question: In some places, Yang says that every American “over 18” would get the $12,000, while other places he says it’s Americans from “18-64.” Presumably, that means Social Security beneficiaries wouldn’t get it, but there again: They still have to pay the new tax. So anyone on Social Security or disability (or whose food stamps, Section 8 vouchers, TANF, or anything else adds up to more than $1,000) is going to see exactly one change under the Yang plan: a new 10% tax on everything they purchase, while a wealthy miser with a giant income and little spending will get $1000 a month extra. Then there’s the biggest question of all: If we’re really heading for a “world without jobs,” with mass unemployment caused by automation, how much is $12,000 a year—actually closer to 10 for the very poorest, thanks to the spending tax—going to do? If people are going to lose their jobs completely, as he forecasts, are they really going to survive in expensive cities on this? The average rent for an apartment in San Francisco is $3,600! (Your UBI won’t even rent you this bunk bed.) Are people just never going to own homes again?

All of this means that I don’t think anyone should support Andrew Yang, since his signature policy proposal hits poor welfare beneficiaries with a giant new tax without giving them anything new except the choice to have benefits in cash instead of in kind. Even if you think a UBI is a great idea, why support a guy so unconcerned with the implications of his UBI plan for the lives of the most vulnerable people?

Of course, Yang has other proposals. In fact, he has lots of them—the policy section of his website is overflowing with ideas, to the point where one questions how committed he is to any of them individually. Some of these are good progressive notions that will be widely shared among the leftish candidates, like raising teacher salaries, introducing paid family leave, making D.C. a state, restoring felon voting rights, legalizing marijuana, automatic voter registration, ranked-choice voting, postal banking. Some are quirkily technocratic, e.g., eliminating the penny, introducing a government “time banking” app for tracking volunteer hours, “making taxes fun” by allowing Americans to allocate bits of their taxes to specific projects, permanent daylight saving time, having the Vice President agree to any nuclear launch decisions, a $1 billion local journalism fund, a plan to keep dying malls open (why on earth would we want to?) He supports Medicare For All, though as with so many candidates, it’s difficult to tell quite what he means by it.

Some of it is downright strange. For example:

Rechannel 10% of the military budget – approximately $60 billion per year – to a new domestic infrastructure force called the Legion of Builders and Destroyers. The Legion would be tasked with keeping our country strong by making sure our bridges, roads, power grid, levies, dams, and infrastructure are up-to-date, sound and secure. It would also be able to clear derelict buildings and structures that cause urban blight in many of our communities and respond to natural disasters. The Legion would prioritize projects based on national security, economic impact, and regional equity. Its independent budget would ensure that our infrastructure would be constantly upgraded regardless of the political climate. The Commander of the Legion would have the ability to overrule local regulations and ordinances to ensure that projects are started and completed promptly and effectively.

Your first observation, undoubtedly, is that this seems like a trick to get gamers interested in infrastructure by rebranding it “creation and destruction,” thereby making them feel like repairing a sewage main is the act of a demigod. Personally I have no problem with calling the person overseeing a hydroelecrtic project the Gatekeeper Of The Waters. I am more concerned with this “overrule local regulations” part, which sounds as if Yang wants to make his Legion Of Ex-Gamers the dictatorial power to veto city council decisions.

Yang had a similarly terrifying approach to combating “fake news,” proposing new “penalties for persistent and destructive misstatements that undermine public discourse.” His site said:

We must introduce both a means to investigate and punish those who are seeking to misinform the American public. If enough citizens complain about a particular source of information and news is demonstrably and deliberately false, there should be penalties.

Yang seems to have thought better of this horrible unconstitutional idea, as it has now been wiped from his website. But the fact that he initially thought to “investigate and punish” those who “enough citizens complain about” suggests he is a person with a very dim awareness of how political power is used and abused.

The President of the United States does, of course, have to oversee the world’s largest military and a giant nuclear arsenal, meaning that their understanding of foreign affairs should probably be somewhat strong. Yang has some encouraging foreign policy principles on his website about avoiding military entanglements, restraining spending, and improving the “international order.” But it’s clearly not an area he thinks much about, and it’s worth reading this excerpt from a conversation he recently had with the Intercept‘s Mehdi Hasan, in which Hasan asked Yang a few basics about how he’d approach some of the most pressing diplomatic issues in the world:

HASAN: A lot of people would look at someone like yourself again, looking at Trump — he’s in the UK right now making a fool of himself — and say do we want another inexperienced president when it comes to the global stage, national security, thorny foreign policy problems? What do you say to them?

YANG: Well, what I’d say to them is that there is no prior experience that can truly prepare you for the incredible responsibility of being commander-in-chief, but what I can convey is the principles that I would bring to the office. I’ve already signed a pledge to end the forever wars. I think that the United States needs to put the power to declare military intervention back in the hands of Congress where it belongs, in the Constitution and where it has not been for unfortunately almost two decades, that we need to be more realistic about what we can and can’t accomplish internationally, and we need to be more judicious and restrained. And that is the way I would pick up that 3 a.m. phone call. That’s the way I would approach all of these foreign policy issues.

HASAN: And I think those are great principles, let me just say. That’s all music to my ears. But in terms of the actual dealing with the issues, let’s say you’re in the White House, January 2021. You’ve just become president. You get the 3 a.m. call from your joint chief saying that Indian Prime Minister Narendra Modi has launched airstrikes in what he says is a Pakistani terrorist training camp and the Pakistanis are threatening to launch nuclear missiles in response. What do you do?

AY: Well, the first thing I do is I sit down with my joint chiefs of staff. I get all the information about the situation and then they lay out, I’m sure, like an array of appropriate responses and then I confer with the people who are closest to the situation and people whose judgment that I trust and then I make a decision. And the American people will have confidence that I’ve made the best decision based on the information that I have.

MH: It’s day one of your presidency, prime minister of Israel Benjamin Netanyahu decides to test the new progressive Democratic President Andrew Yang. He says Israel is annexing the occupied West Bank. What’s your response?

AY: I mean, Israel and the West Bank, It’s been an historic morass. And so I don’t have any quick answers or solutions. But clearly that would be against the principles that have been in place in terms of trying to reach a solution that — In my mind, the two-state solution be ideal and that would be against my vision for the region.

MH: So, what would you do? Would you punish it? Would you put in sanctions? Would you make U.S. military aid conditional, as Peter Beinart and others have suggested, Bernie Sanders has suggested?

AY: You know, we have a very distinct relationship with Israel. Like if that happened, I would sit down with the right people in my administration and determine the appropriate response.

So, good first principles—he’s disinclined to start new wars. But the specifics are nonexistent. “I would listen to the military chiefs of staff and make a decision” is an answer Donald Trump could give. America has a “distinct” relationship with Israel—what does this mean?

It might not be that fair to judge Andrew Yang for not having a foreign policy, because (1) Elizabeth Warren and Bernie Sanders aren’t that much better and (2) he’s clearly running to push a narrow set of policy ideas, even if he says he wants to win. But there’s something really concerning about the worldview behind those policy ideas themselves. Here, in an excerpt from The War On Normal People, he revealingly describes his reaction to a conversation with a fellow vulture capitalist:

I recently had dinner with a friend of mine who works for a real estate investment firm… After catching up a bit, I asked him if he’d bought any fancy hotels lately—he’d gotten me a discount to one a few years ago.

He responded, “Our appetite for risk has gone down. You know what we’ve been buying? Trailer Parks.”

I became more interested. “Really? Why is that?”

He answered, “They’re good investments. Tenants pay to keep their mobile home in a space with water and utilities. All we really have to do is keep the place clean and keep the water flowing.”

I asked him if he ever had problems with delinquency.

“The delinquency rate is very low because, first, they get a late notice on the day after their rent is due if they haven’t paid. We are very diligent about monitoring and everyone knows it. Second, there’s no place cheaper to live. It’s really these places or the street for a lot of people. They find ways to pay. It’s a nice stable investment for us.”

“Fascinating. How do you grow?”

He shrugged, “We’ll probably look at raising prices over time.”

This has nothing with automation but I thought it was a pretty good illustration of what we do. We maximize market efficiencies and take tolls… The technologists and entrepreneurs I know are generally good people. If they were given a choice to ‘Do your job and eliminate normal jobs’ or ‘Do your job and create abundant opportunities,’ they would choose the latter… But this isn’t the choice they’re given. They do their own jobs to the best of their ability and let the market do the rest. They may feel troubled at times that their success will displace hundreds or thousands of American workers, but they believe in progress and that their work is overall for the good.

You may find this objectionable. Here’s the thing—it is not the innovator’s job to figure out the social implications of what they do. Their job is to create and fund innovation in the market as cost-effectively as possible. This is itself a difficult job. It is our job to account for society. That is, it’s the job of our government and our leaders.

Yang appears to be saying that it is not actually objectionable to be a parasitic landlord who squeezes as much money as possible out of the poor residents of trailer parks, threatening them with eviction the moment they fall a day behind on their rent and knowing you can be harsh because they have no place else to go. He doesn’t judge his friend at all. He says that the “innovators” are not responsible for what they do—their job is merely to “innovate.” Then our job is to make up for the disastrous social consequences of their purely self-interested actions.

Yang’s view of capitalism, then, is that it is unstoppably selfish and destructive, but that capitalists should not be blamed for this. Instead, we should simply ameliorate the worst effects by giving poor people enough to subsist on (if they’re willing to give up the benefits they already receive). While Yang says that he wants to move to a “human capitalism” that puts people over profits and measures value in means other than money (a part of the book that I really liked), he also doesn’t think to say to his friend: “Hey, maybe you should cut those poor trailer park residents a break instead of trying to raise prices as much as you can.” And he certainly isn’t trying to create a future in which the trailer park residents own their land instead of it being owned by a predatory property management company.

So while Yang is acutely sensitive to the way profit-seeking can destroy the lives of innocent people, he’s not a leftist. A leftist fundamentally wants to shift power and ownership. We do not want to give people a check that they can immediately sign over to their Wall Street landlord. We want them to be the lord of their own land, and to eliminate the divide between the working class and the ownership class. We think it’s everyone’s job to “figure out the social implications of what they do,” and if a thing has horrendous social implications, then you shouldn’t do it. Yang’s vision is ultimately quite depressing, because he seems to think that a techno-feudal dystopia with mass unemployment and concentrated wealth is inevitable, and the best we can do is mitigate the inequality a bit by getting the super-wealthy to transfer some of their income to pay the rent on poor people’s trailers (which then goes back to more wealthy owners).

As some commentators have observed, it can be difficult to know how serious Andrew Yang even is about his own campaign. He sells hats that say “MATH” on them and lapel pins featuring a cartoon of his own head wearing a hat that says MATH. What the hell is that all about? A candidate who has seemingly spent more time coming up with a fun name for his public works agency than he has thinking about Israel/Palestine is not a candidate worth taking very seriously.

Yet Yang is also talking sincerely about ordinary people’s economic problems, and his book is probably one of the most intelligent manifestos ever written by a Silicon Valley venture capitalist, in that it shows an awareness of what the lives of people who are not Silicon Valley venture capitalists are like. He sounds great when he speaks of getting away from measuring success by GDP and starting to measure it instead by whether people’s lives are actually going well. Still, to the extent that Yang is serious, makes good points, and offers useful ideas, they are things Bernie Sanders and Elizabeth Warren are already running on (e.g., Medicare For All). A few of his unique ones, such as moving some federal agencies out of D.C., or reducing airline overbooking, should perhaps be adopted more widely. Further, the things that are bad range from merely bizarre/useless to things that are downright worrying. And the signature proposal is a bad one that will make life worse for some of the most vulnerable people in society. No progressive can seriously contemplate supporting someone who openly says he wants to “replace the vast majority of existing welfare programs,” an idea that should put him in the Republican primary instead. (Ben Studebaker calls Yang’s plan “stealth welfare reform,” but this doesn’t seem very stealthy!)

To the extent that Yang is repeating Bernie Sanders’ talking points about the economic difficulties facing “normal” Americans, he is a refreshing change from the usual “business world” candidates. To the extent that he stimulates a conversation about UBI, an idea that—if designed generously and implemented well—could have significant potential to liberate working people, he’s a valuable addition to the field. But to the extent that he is actually asking for people to vote for him and his specific vision for the world, he should be rejected entirely. We need candidates who want to shift power from capitalists to the working class, not candidates who want to replace the welfare state with a meager monthly check and a hefty sales tax.

[UPDATE: Since this article was published, Andrew Yang has updated his campaign platform and now promises that SSDI payments will be unaffected by the Freedom Dividend. This is good news, and confirms the importance of critiquing politicians’ plans in order to force them to make important commitments.]

*To his credit, Yang now believes that Venture For America was not the optimal solution to America’s ills, and his campaign is about proposing a more systemic fix.

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Correction: This article originally referred to Yang as a “venture capitalist.” He is, in fact, a “serial entrepreneur” who merely founded a thing with “venture” in the name. Current Affairs regrets the error.