If you’ve been keeping up with the Democratic presidential debates, you may notice a black sheep in candidate Andrew Yang, embodied by his insistence on skipping the tie and his “gimmicky” plan to save our economy. The “Freedom Dividend,” as he calls it, would provide every American with a monthly stipend of $1,000.
His plan is rooted in an idea that has, until now, only persisted in small independent experiments conducted in other countries: Universal Basic Income (UBI). Put simply, it is the concept that the government should provide citizens with a flat sum of money — no strings attached.
In a previous article I wrote about UBI, I explored how implementing this scenario might play out for an everyday student. I speculated and daydreamed about the great things that this added source of security would bring: less stress, more opportunities for creative pursuits, more time after college to travel.
This idea has become increasingly relevant with mounting pressure on younger generations to go into fields that are considered financially practical. A cultural shift is visible as statistics indicate that more and more students are flooding into STEM-related fields while the number of people studying subjects like history and literature is dropping. The number of STEM-related degrees in California has increased by 39% over a span of six years.
If young adults felt more financially secure while making decisions about their education, perhaps these numbers would be different.
The primary argument for implementing a national UBI program is that once someone is freed from the financial imprisonment of working purely out of necessity, they would gravitate toward the types of jobs they feel passionately about. Andrew Yang connects meaningful work to “freedom from scarcity”, drawing a causal relationship between having money and having options.
In a study reported by Forbes, 53% of Americans were found to be unhappy with their jobs. We can’t fully grasp the consequences of this statistic, because it has always been a fact of life in America.
People work to pay their bills, support their families and buy food, and these reasons are good enough to keep them anchored to an occupation that doesn’t bring much personal fulfillment. I grew up hearing about my mother’s dreams of being a chemist and the pressure my father was under when he couldn’t find a job in a lab and needed employment. The result of these circumstances is that they gravitated toward a well-paid field that was in high demand for labor at the time — computer science.
Once someone is freed from the financial imprisonment of working purely out of necessity, they would gravitate toward the types of jobs they feel passionately about.
Anecdotally and emotionally, I know this wasn’t ideal for them, but what does this mean on a societal level? Many people other than my parents share this narrative. There is a hidden emotional and monetary cost incurred when members of a population must choose between fulfillment and financial security. We just don’t know how serious this cost is, because we cannot envision an alternative when this is the only reality we’ve ever known.
This is all the more dramatic when it becomes apparent that the relationship is actually between financial security and adeptness. Yang’s policy, though simplistic, has a good amount of mindfulness and reason behind it. Recent studies show that members of the lower class experience a phenomenon of “tunnel vision” when it comes to meeting obligations such as buying toilet paper, paying off debt and feeding children. The effect of this tunnel vision is that they have less “mental bandwidth” to see their life in broader terms, and often get stuck on short-term goals.
A single example would be that a mother is stressed about making enough money to buy food for her kids, she’s forgetting to call back the insurance company, pay the credit card bill and apply for childcare assistance. She becomes diligent in honing in on a single important goal and achieving it—feeding her children. The result is that her kids are fed, but she has no insurance, high interest to pay and no assistance. Yang talks about the bandwidth phenomenon in interviews and on social media. A tweet in July even comments on these studies: “Getting the economic existential stress off our minds would actually make us smarter, more rational and optimistic.”
Back when I wrote my first article about UBI, I treated the idea more or less as a speculative concept that was fun to consider, but now that this issue has moved from the niche intellectual spheres of techies and academics into national politics, I find myself feeling less optimistic.
Let’s say I get $1,000 every month and spend it all on cigarettes and alcohol. Herein lies the problem: No one can be sure that a person will use this money wisely, so no one can know for certain that UBI would ultimately benefit society.
When presented with such a possibility during an interview, Andrew Yang replied, “I’m not naive enough to believe that everyone would go and do what I would see as optimally responsible.” Yet he followed this with: “Big picture, I think it’s their money … it’s going to be [their] life, [their] choices.” Although Yang believes his policy will produce practical results — that people will use it in ways that ultimately benefit society — he recognizes the uncertainty in how many people would actually use it this way. This response correlates to another conceptual argument for UBI, and that is one of Libertarianism, small government and the freedom to choose. In a sense, he’s highlighting the “no strings attached” appeal of his policy over the “we will be better off as a whole” appeal of his policy. Because again, none of us can really know.
No one can be sure that a person will use this money wisely, so no one can know for certain that UBI would ultimately benefit society.
The ideological beauty of UBI is the notion of the government having no jurisdiction over how you spend your sum, which Yang calls a “dividend” that makes citizens shareholders of America. The analogy is that we have invested in the government as taxpayers, and just like a corporation, when the government has disposable money, they should distribute it as a dividend, or return to shareholders.
The justification for UBI is founded on a results-based payout: It assumes that people will become more productive and more creative, and that we will all be better off. This is exceptionally optimistic, and is essentially a bet on the goodness of humanity.
But what if this isn’t the case? If people spend their money unwisely this practical promise of creativity and productivity is swept away. Without this argument, Yang’s policy is only propped up by the belief that the government should not restrict or manage the way money is used. As you’ve probably noticed by now, the idea of limited government is not really the flavor of Democratic policy.
In fact, the one state that has implemented such a dividend for years now is historically Republican, and that is the state of Alaska. The Alaskan Permanent Fund is run by a state-owned institution, the Alaska Permanent Fund Corporation (AFPC). It was established in 1976 after the state government started making money from oil reserves. Since then, it has been popular with constituents and run without issue, though the payments are not enough to live off of: last year, the annual dividend was $1,600. The idea is that 25% of earnings from oil would go into the fund, and the annual payout would be based on a formula factoring in how much citizens earned that year.
Yang sees this as a model for his own policy, since a proposition with free money needs protection from voters who might vote to up the payout to an impossible amount. The idea of tying the payout to an asset, like oil, is a successful precedent to consider.
It is not just Yang’s policy that makes him stand out in the Democratic Party. With no political background, his headline during the debates is always “entrepreneur.” His collared shirts render him a charming invocation of the Silicon Valley aesthetic. And, indeed, his $1,000-a-month plan not only applies an understanding of business to the state, but is also born out of a very Silicon Valley concern, the worry that we will be left behind by technological innovation.
One thing’s for sure: UBI doesn’t fit into the conventional Democratic spectrum and has never been considered a serious topic of national conversation. With Yang’s Freedom Dividend, that may be about to change.
Annabel Li encourages Gauchos to start thinking critically and innovatively about new ideas, such as UBI.
Annabel Li is a first-year math major who has an active interest in finance. In her free time, she likes to listen to podcasts and take walks.