The following essay was written February 9, 2020 (on the verge of but prior to Andrew Yang’s presidential race drop-out, the coronavirus pandemic, and the crash of the U.S./world economy) for my government class. Although Senator Mitch McConnell has taken credit for this idea (following Mitt Romney and others), the points made in this article and by Andrew Yang remain applicable, perhaps now more than ever.
“Not Left. Not Right. Forward.” Andrew Yang’s campaign slogan calls for progressive change, with the goal of putting “Humanity First” over political extremism. Yang’s core policy platform revolves around Universal Basic Income (UBI). An old idea, UBI originated during the European Renaissance and influenced (and was influenced by) the political and economic theories of Thomas Paine, Milton Friedman, Fredrich A. Hayek, and John Maynard Keynes (Andrews; Caldwell; Heiner; Hoover; Jackson; Krumm; Widerquist). Support grew during the 1960s as Martin Luther King Jr. and “over 1,000 economists from over 125 universities . . . signed a letter to President Nixon requesting income guarantees” (“Freedom Dividend”). Today, Mark Zuckerberg, Elon Musk, Marc Andreessen, and Noam Chomsky (and many others) support UBI (“Freedom Dividend”). UBI would help Americans span the grand chasm between demagoguery and technocracy and prepare Americans for the encroaching technological (AI) revolution. Best of all—UBI works.
“The problem of factionalism” glares indignantly at both political extremes; the “warring tribes fac[ing] off along yet another dividing line—one group seeking to establish an American social order on the basis of egalitarian norms, the other less sure that this new order was worth creating and in some cases actively working to retain the old social order” (Allen). Though admittedly left-leaning, entrepreneur and non-profit founder Andrew Yang could help Americans span the chasm between demagoguery and technocracy with his 2020 presidential policy platform.
A by-product of Silicon Valley economic development, Yang’s core policy highlights the technological and economic changes facing America, such as automation, artificial intelligence (AI) development, the fourth industrial revolution, and the already occurring consequences of all (“Andrew Yang”; Foster; Schwab). Yang’s “Freedom Dividend” is based on a UBI giving “$1000/month paid to every single American above the age of 18 regardless of their income or need” and would “try to mitigate the harm that is likely to be caused by many Americans who would be displaced in the event that we do see a great deal of innovation over the course of the next couple of decades” (Foster 3:40; 3:50). Whether displaced American workers “exacerbate the gap between returns to capital and returns to labor” or the displacement “result[s] in a net increase in safe and rewarding jobs,” as economists Erik Brynjolfsson and Andrew McAfee point out, remains to be seen (Schwab). In either case, the fourth industrial revolution stares us straight in the face, necessitating compromise between the demagogues and the technocrats, between the classical and Keynesian economists.
In bridging the gap between these philosophical debates, American politicians should use the third industrial revolution as a template for the fourth. The third industrial revolution created factories and assembly lines, displacing thousands and leading to “mass riots that killed dozens of people and caused billions of dollars-worth of damage . . . origination of labor unions in 1886 that came up to agitate for worker rights . . . Labor Day become a national holiday in response to mass riots . . . [and] universal high school [got] implemented in 1911 . . . in part to try and bring social order” (Foster 20:20). Those solutions worked well in the twentieth century, but the twenty-first century beckons us forward, especially since economists think this fourth industrial revolution is “going to be three to four times more severe in terms of worker displacement than [the previous] one” (Foster 21:00).
The U.S. education system, both K-12 and higher education, is in a state of disarray, and Americans—economists, politicians, educators, scientists, administrators, parents, homeschoolers—know it. “What we need more than anything else is actual innovation, because we’ve been educating kids in the same damn way for a hundred years” (Foster 42:40). School choice is necessary to facilitate competition, which encourages innovation, which promotes individuality and creativity and perpetual learning, which cycles back to facilitate competition in the markets and economic growth (Foster; Manyika).
Americans have this mindset of scarcity but what we need is a mindset of abundance, and “the quickest path to a mindset of abundance is actual resources that improve people’s lives, get their heads up so they actually have a sense of optimism and faith in the future and feel like their future is secure, their kids’ futures are secure, and then we’re gonna be able to take advantage of the bounty that the fourth industrial revolution will bring us” (Foster 59:45).
According to Andrew Yang, though, “there are going to be beneficiaries [of the AI revolution], but the beneficiaries will likely be different people in different places with different skills than the ones that are being lost” (Foster 21:20). Like most other institutions, “educational battleships” are hard to turn (Foster 45:05).
Recently in the Midwest, automation has already destroyed certain communities and ways of life (Foster 19:50). An increasing economy of automation and AI would be detrimental to about half of Americans “comprised of high school graduates . . . work[ing] in one of five sectors mainly: administrative and clerical work, including call centers; retail and sales; food service and food prep; truck driving and transportation; and steel manufacturing” (Foster 7:53). But “if you put $1,000 per month in the hands of families . . . children’s health improve[s], graduation rates go up, mental health improves, [children’s] personalities . . . become more conscientious and agreeable . . . domestic violence goes down, [and] hospital visits go down” (Foster 4:35).
On the surface, UBI sounds expensive, but it could be funded by current spending, a VAT, new revenue, and taxes on top earners and polluters (“Freedom Dividend”). Opponents argue there would be “some administrative overhead . . . some bureaucracy . . . fraud” (Foster 14:30); however, Andrew Yang argues “it’s going to super-charge the resources available to individuals to be able to manage this transition for themselves, their families . . . [and] a lot of that money is going to go directly into a nonprofits, religious organizations, volunteer organizations, arts, creativity” (Foster 23:42), “so you end up transferring resources into the hands of people that are closest to the action” (Foster 24:20). UBI would create a “trickle-up economy” (Foster 12:58). If the “way we actually get growth is by expanding our productive capacity, inventing new amazing things, and investing that capital in smart, intelligent ways” (Foster 25:20), then “an unlocking of human capital” via the Freedom Dividend “would end up enhancing our system’s dynamism [because] people are able to express their preferences” and bolster the market’s ability to innovate or allocate capital efficiently (Foster 31:00).
Diminished incentive to find a new job is a non-issue in this kind of empowered society (Foster; Perkins; Zimmerman), and UBI would help create an empowered society. Numerous pilot studies have been conducted throughout the U.S. and the world, such as in Alaska, California, France, Switzerland, Netherlands, Canada, Finland, and others with promising results (Freedman; “Basic Income”; “Research Depository”). UBI’s success rate in small-scale U.S. experiments, coupled with relatively low risks and high potential for contributing to the common good, proves it can work in America on a larger scale.
A probable alternative to UBI, or worse—a laissez fair approach to the woes plaguing America—would be an economic downturn of Depression-era levels. Without efforts to curb the spending and balance the budget, America will be led into a tailspin.
“Science fiction has raced ahead of economic analysis to imagine a future in which a tiny minority of rich rentiers enjoy the almost unlimited services of a minimally-paid majority. The optimist says: leave it to the market to forge a new, superior equilibrium, as it always has. The pessimist says: without collective action to control the pace and type of innovation, a new serfdom beckons.”
The AI Road
Politicians should not throw more money at the problem nor should they simply ignore it. A policy utilizing UBI, such as the Freedom Dividend, would tighten the belts of fiscal policy, curb entitlement spending, decrease the bureaucracy, and return both money and power to the people, who are ultimately responsible for the government’s success or failure.
Works Cited
Allen, Danielle. “The Road from Serfdom.” Atlantic, vol. 324, no. 6, Dec. 2019, pp. 92–101. EBSCOhost, search.ebscohost.com/login.aspx?direct=true&db=lfh&AN=139493522&site=eds-live.
“Andrew Yang: Parent. Patriot. Not a Politician.” Yang 2020. www.yang2020.com/.
Andrews, David. “Keynes and Christian Socialism: Religion and the Economic Problem.” European Journal of the History of Economic Thought, vol. 24, no. 4, Aug. 2017, pp. 958–977. EBSCOhost, doi:10.1080/09672567
“Basic Income: History.” Basic Income Earth Network. https://basicincome.org/basic-income/history/.
Caldwell, Bruce. “F. A. Hayek and the Economic Calculus.” History of Political Economy, vol. 48, no. 1, Mar. 2016, pp. 151–180. EBSCOhost, doi:10.1215/00182702-3452327.
- —“Keynes and Hayek.” History of Political Economy, vol. 51, no. 1, Feb. 2019, pp. 89–94. EBSCOhost, doi:10.1215/00182702-7289288.
Foster, Kmele, host. “134 w/ Andrew Yang: The Universal Basic Income (and a few other things besides).” The Fifth Column – Analysis, Commentary, Sedition, episode 134, Radio Public, 11 March 2019, www.radiopublic.com/the-fifth-column-analysis-commen-WJbONJ/s1!f765d.
Freedman, David H. “Basic Income: A Sellout of the American Dream.” MIT Technology Review, vol. 119, no. 4, July 2016, p. 48. EBSCOhost, search.ebscohost.com/login.aspx?direct=true&db=f6h&AN=116542354&site=eds-live.
Heiner, Stephen. “10 Most Important Paragraphs in ‘The Road to Serfdom’ by Friedrich Hayek.” Intercollegiate Review, Fall 2018, pp. 1–4. EBSCOhost, search.ebscohost.com/login.aspx?direct=true&db=a9h&AN=133534535&site=eds-live.
Hoover, Kevin D. “Keynes and Economics.” History of Political Economy, vol. 51, no. 1, Feb. 2019, pp. 83–88. EBSCOhost, doi:10.1215/00182702-7289276..2017.1323936.
Jackson, Ben. “At the Origins of Neo-Liberalism: The Free Economy and the Strong State, 1930–1947.” The Historical Journal, vol. 53, no. 1, 2010, pp. 129–151., doi:10.1017/S0018246X09990392.
Krumm, Brian Kingsley. “Regulatory Policy in the Trump Era and Its Impact on Innovation.” Mercer Law Review, vol. 70, no. 3, Spring 2019, pp. 685–704. EBSCOhost, search.ebscohost.com/login.aspx?direct=true&db=a9h&AN=136195944&site=eds-live.
Manyika, James, et al. “Jobs lost, jobs gained: What the future of work will mean for jobs, skills, and wages.” McKinsey Global Institute, Report, McKinsey & Company, November 2017.
—“Jobs Lost, Jobs Gained: Workforce Transitions in a Time of Automation.” McKinsey Global Institute, Report, McKinsey & Company, December 2017.
Perkins, Douglas D. and Zimmerman, Marc A. “Empowerment Theory, Research, and Application.” American Journal of Community Psychology; Oct 1995; Vol. 23, No. 5; Research Library Core; pg. 569.
“Research Depository.” Basic Income Earth Network. https://basicincome.org/research/research-depository/
Schwab, Klaus. “The Fourth Industrial Revolution: What it Means, How to Respond.” World Economic Forum, 14 January 2016. www.weforum.org/agenda/2016/01/the-fourth-industrial-revolution-what-it-means-and-how-to-respond/
“The AI road to serfdom?” Times of Oman [Muscat, Oman], 25 Feb. 2019. Gale in Context: Global Issues, kidd.blinn.edu:2221/apps/doc/A579227188/GIC?u=txshracd2489&sid=GIC&xid=9cc1749f. Accessed 8 Feb. 2020.
“What is the freedom dividend? The freedom dividend, defined.” Yang 2020. www.yang2020.com/what-is-freedom-dividend-faq/.
Widerquist, Karl. “The Cost of Basic Income: Back-of-the-Envelope Calculations” Basic Income Studies (2017). Available at: http://works.bepress.com/widerquist/75/
—“Was Thomas Paine a Proponent of Universal Basic Income? Short answer: yes.” The Independentarian, 14 January 2020. https://basicincome.org/news/2020/01/was-thomas-paine-a-proponent-of-universal-basic-income/
Zimmerman M.A. “Empowerment Theory.” In: Rappaport J., Seidman E. (eds) Handbook of Community Psychology, 2000. Springer; Boston, MA.
