Universal Basic Income – FAQ

How will we fund a universal basic income of $1,000/month for every U.S. citizen over the age of 18?
Just like Democratic Presidential Candidate, Andrew Yang, I also propose funding the $1,000/month by implementing a Value-Added Tax (VAT) of 10%.

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.

What is the evidence that providing $1,000/month UBI is a good thing for society?

Experiments with unconditional cash benefits around the world have proven to be one of the most successful ways of reducing poverty. The fear that cash recipients would waste their money on drugs or alcohol, stop working, or have more kids have been disproven by the World Bank. http://blogs.worldbank.org/impactevaluations/do-poor-waste-transfers-booze-and-cigarettes-no Many of these behaviors were actually reduced. http://www.journals.uchicago.edu/doi/abs/10.1086/689575

Since 1998, there have been a total of 461 research papers published on the topic. You can view them all here: http://basicincome.org/research/.

In the last 50 years, there have been more than 30 cash transfer programs studied. Here are a few of our favorites:

  • The “Mincome” Experiment, Manitoba, Canada http://basicincome.org/news/2017/03/simpson-et-al-manitoba-basic-annual-income-experiment-lessons-learned-40-years-later/ (reduced hospitalization and no reduction in work hours)
  • BIG Pilot Project, Namibia http://www.policyinnovations.org/ideas/briefings/data/000163  (reduced crime, reduced school dropouts, and improved health)
  • Give Directly, Kenya https://www.givedirectly.org/  (increased assets and nutrition, and no change in drugs or violence)
  • View a list of all these programs at an archived link provided by previous 2020 Democratic Presidential Candidate Andrew Yang’s campaign site: https://web.archive.org/web/20190826124225/http://yang2020.com/35-ubi-programs-cash-transfer-experiments/ 

The data is clear – giving people money enables them to live better lives.

Providing a $1,000/month UBI to every U.S. citizen will transform our society for the better.

We have the ability to fund a $1,000/month UBI for every U.S. citizen.

So, why aren’t we implementing this when it’s been brought up by a few of our American leaders before?

It’s because our leaders in Washington don’t want to. Not for any reason at all, other than it’s something we haven’t done before. Period.

How will we pay for this Freedom Dividend?
The following sources would help pay for this Freedom Dividend:

  1. Current spending.  We currently spend between $500 and $600 billion a year on welfare programs, food stamps, disability and other safety net programs and the like.  This reduces the cost of the $1,000/month UBI because when people start to receive UBI, many choose to opt out of receiving benefits because they’re not necessary anymore. Additionally, we currently spend over one trillion dollars on health care, incarceration, homelessness services and the like.  We would save $100 – 200+ billion as people would take better care of themselves and avoid the emergency room, jail, and the streets, and would generally be more functional.  The $1,000/month UBI would pay for itself by helping people avoid our institutions, which is when our costs start soaring.  Some studies have shown that $1 to a poor parent will result in as much as $7 in cost-savings and economic growth.
  2. A VAT.  Our economy is now incredibly vast at $19 trillion, up $4 trillion in the last 10 years alone.  A VAT at half the European level would generate $800 billion in new revenue.  A VAT will become more and more important as technology improves because you cannot collect income tax from robots or software.
  3. New revenue.  Putting money into the hands of American consumers would grow the economy.  The Roosevelt Institute projected that the economy would grow by approximately $2.5 trillion and create 4.6 million new jobs.  This would generate approximately $800 – 900 billion in new revenue from economic growth and activity.
  4. Taxes on top earners and pollution.  By removing the Social Security cap, implementing a financial transactions tax, and ending the favorable tax treatment for capital gains/carried interest, we can decrease financial speculation while also funding the $1,000/month UBI.  Additionally, we can add to that a carbon fee that will be partially dedicated to funding the $1,000/month UBI, making up the remaining balance required to cover the cost of this program.
Wouldn’t a $1,000/month UBI trigger inflation?

No, because in monetary economics, the leading theory states that inflation is based on changes in the supply of money.

By providing a $1,000/month UBI to every U.S. Citizen, we are not changing the supply of money. We are just redistributing the money supply that is already in the system and economy. And this $1,000/month UBI for every U.S. citizen, would be funded by a Value-Added Tax and other redistributions of budgets, and budgets now made available because of the positive effects created by providing the American mass and people the purchasing power to put back into the economy, from bottom up.

The federal government even recently printed $4 trillion for the bank bailouts in its quantitative easing program, which happened with no inflation.

Now, it is likely that some companies will increase their prices in response to people having more buying power, and a VAT would also increase prices marginally. However, there will still be competition between firms that will keep prices in check. Over time, technology will continue to decrease the prices of most goods where it is allowed to do so (e.g., clothing, media, consumer electronics, etc.).

The main inflation we currently experience is in sectors where automation has not been applied due to government regulation or inapplicability – primarily housing, education, and healthcare. The real issue isn’t the $1,000/month UBI, it’s whether technology and automation will be allowed to reduce prices in different sectors.

So, what are the benefits of providing $1,000/month UBI to every U.S. citizen over the age of 18 ?
Providing $1,000/month UBI would transform society in many positive ways and actual evidence from already implemented programs show this. Trials of various UBI plans have led to all kinds of benefits—some expected, some surprising. Here are just a few of them:

  • UBI encourages people to find work. Many current welfare programs take away benefits when recipients find work, sometimes leaving them financially worse off than before they were employed. UBI is for all adults, regardless of employment status, so recipients are free to seek additional income, which most everyone does.
  • UBI reduces bureaucracy—with no-strings-attached coverage, determining who is eligible is far simpler and the cost of administering benefits is greatly reduced.
  • UBI increases bargaining power for workers because a guaranteed, unconditional income gives them leverage to say no to exploitative wages and abusive working conditions. Employers can’t push workers around as much.
  • UBI increases entrepreneurship because it provides for basic needs in the early lean days of a company and acts as a safety net if the business fails. It also gives you more consumers to sell to because everyone has more disposable income. The Roosevelt Institute found that a UBI would create 4.6 million jobs and grow the economy by 12 percent continuously. http://rooseveltinstitute.org/modeling-macroeconomic-effects-ubi/ UBI would be the greatest catalyst for new jobs, entrepreneurship, and creativity we have ever seen.
  • UBI improves the mental health of recipients because it reduces conditions of scarcity, poverty, and financial insecurity, major sources of stress for millions of people.
  • UBI helps people make smarter decisions. Studies have shown that people in straits of economic insecurity have a reduced cognitive ability equal to 13 IQ points. http://www.sciencemag.org/content/341/6149/976.abstract UBI would provide the security people need to focus on important things like their families.
  • UBI improves physical health. With increased economic security, people are less prone to stresses, disease, and self-destructive behavior. A UBI experiment in Canada saw hospitalization rates go down 8.5%.
  • UBI increases art production, nonprofit work and caring for loved ones because it provides a supplementary income for those interested in labor that isn’t supported by the market.
  • UBI improves labor market efficiency because fewer workers are stuck in jobs that are a bad fit. National productivity will improve because people will be able to seek work that is more rewarding and promote higher job satisfaction.
  • UBI improves relationships by reducing domestic violence, child abuse, financial stresses, and sources of conflict. It ensures that everyone has an optimistic sense of his or her own future and has the mobility to get out of abusive relationships.

As you can see, a steady source of money can transform people’s lives. When growing up, my parents fought a lot because of money. And in many American families, the domestic violence that occurs is sometimes related to stress, mental, emotional and physical anguish and pain that come with having no money and struggling to pay the bills.

We are the wealthiest and most technologically advanced society in human history. And it’s time to invest in our people and care for them, every single one of them. For not one soul is less than another. We were all created equal and should be treated equally in all aspects.

What existing welfare programs will stack on top of the UBI?

UBI will stack on top of non-means-tested welfare programs, along with welfare programs where the average benefit is greater than – and thus cannot be covered by – $1000/month (Medicaid, Housing Assistance, etc.).

In addition, UBI will stack on top of all existing disability benefits, including SSI, since many disabled individuals rely on their SSI eligibility to receive Medicaid and Long Term Services & Supports (LTSS), which can’t be covered by $1000/month alone.

Social Security retirement benefits will stack with the UBI, since it is a benefit that people pay into throughout their lives and that money is properly viewed as belonging to them.

Means-tested welfare programs (programs based on income level) often trap their recipients in poverty if they wish to continue receiving benefits, and discourage people from earning additional income or finding a job. Thus, means-tested welfare programs that can be covered by $1000/month will not stack on top of the UBI, since the $1,000 per month will provide an increase in benefits and won’t trap recipients under a certain income bracket.

By providing every adult with an $1000/month UBI, stacked with the programs listed above, we can provide every American with a financial floor. This money is given with no strings attached and not dependent on one’s employment status, and thus each recipient would be empowered to obtain a job and seek additional income on top of the $1,000/month UBI.

But wouldn’t providing $1,000/month UBI discourage people from working or finding work?

Decades of research on actual cash transfer programs that have been implemented in parts of the country (i.e., Alaska) and the world, have found that the only people who work fewer hours when given direct cash transfers are new mothers and kids in school. In several studies, high school graduation rates rose. In some cases, people even work more. Quoting a Harvard and MIT study, “we find no effects of [cash] transfers on work behavior.” https://economics.mit.edu/files/12488

With each adult receiving an annual $12,000 UBI, this is barely enough to live on in many places and certainly not enough to afford much in the way of experiences or advancement.  To get ahead meaningfully, people will still need to get out there and work.

Well, wouldn’t people spend the $1,000/month UBI on dumb things like drugs and alcohol?
No, not according to the decades of data that we have. In many of the studies where cash is given to the poor, there has been no increase in drug and alcohol use. https://economics.mit.edu/files/12488 Rather, many people use it to try and reduce their alcohol consumption or substance abuse. In Alaska, for example, people regularly put the petroleum dividend they receive from the state in accounts for their children’s education. The idea that poor people will be irresponsible with their money and squander it seems to be a biased stereotype rather than a truth.

Decision-making has been shown to improve when people have greater economic security. Giving people resources will enable them to make better decisions to improve their situation. As Dutch philosopher Rutger Bregman puts it, Poverty is not a lack of character. It’s a lack of cash.” 

Further, by taking away the immediate, continuous high tension anxiety and worry that comes with making ends meet, barely paying rent, and struggling with finances, day-after-day, month-after-month, we would start to unshackle the financial bondage and chains that our people have been subjected to for the past 30 years.. And by this unshackling of our American people and restoration of financial freedom to our people, our Nation will begin to be able to place their focus, time and energy on their creative talents, passions and academic pursuits more easily, and begin to unleash their creativity and power from within, thereby contributing to our American economy, nation and its advancement in the arts, in technology, in business, in education, and in policy-making, all for the better.

Wouldn’t employers start paying less?
With consistent, unconditional cash to cover expenses, every U.S. citizen would be able to be more selective about the working conditions they’re willing to accept, thereby making employers up their game in offering more competitive salaries, wages, employment terms and benefits to U.S. citizens.
Is providing $1,000/month a Democratic Party view, or Republican Party as well? Is it Communism/Socialism?
If you see who’s talked about universal basic income in American history, they’re leaders on both sides of the aisle. Universal basic income has been an issue championed by people of all political backgrounds.

For the conservatives, providing universal basic income means less red tape, less bureaucracy, less government involvement, as the $1,000/month would be given unconditionally and consistently.

For the liberals, providing universal basic income means leveling the playing field, providing equal access, opportunity and help to all people.

So, if providing $1,000/month to U.S. citizens involves a program and policies that aren’t solely Democratic, or solely Republican, shouldn’t we take advantage of this and address the poverty that our American people are in and pull them out? YES.

Is providing Universal Basic Income, a form of Communism or Socialism? Communism, by definition, is a revolutionary movement to create a classless, moneyless, and stateless social order built upon shared ownership of production. With Socialism, the core principle is the nationalization of the means of production – i.e. the government seizes Amazon and Google. Providing $1,000/month to our U.S. citizens is none of those things and actually fits so seamlessly into capitalism, it is projected to grow the economy http://rooseveltinstitute.org/wp-content/uploads/2017/08/Modeling-the-Macroeconomic-Effects-of-a-Universal-Basic-Income.pdf $2.5 trillion in eight years.

Really, providing $1,000/month UBI is necessary for the continuation of capitalism through the automation wave and displacement of workers as well. Markets need consumers to sell things to. Providing such universal basic income is capitalism with a floor that people cannot fall beneath.

Now, is this Technological Unemployment and Surging Automation Real?

Software has already replaced thousands of helpdesk workers.

Cars have started driving themselves.

Malls have closed down because everyone now shops from their computer or smartphone.

We are in the fourth inning of automation. Four million manufacturing jobs have been taken since 2000 and automated trucks are already making deliveries in Colorado. 1 out of 10 American workers works in retail. https://uk.reuters.com/article/us-uber-trucking-beer/ubers-otto-hauls-budweiser-across-colorado-in-self-driving-truck-idUKKCN12P13N If we wait any longer, we will be out of time. It took the Affordable Care Act seven years to go into full effect. The time to make $1,000/month UBI for all is a reality is right now, before the unemployment crisis reaches full swing.

If universal basic income is so great why haven’t we done it already?
We came very close in the late 1960s – it actually passed the House of Representatives in 1969 before stalling in the Senate because Democrats wanted a higher floor. 1,000 economists signed a letter saying that it would be the right thing for the economy.

Since then we’ve been brainwashed into thinking that what’s good for people isn’t good for the economy, but what serves big corporate interests is.

The reason we haven’t done it yet is because we’d rather give money to wealthy corporations and hope it trickles down – we trust institutions more than we trust our people. This is what we must change. We must empower our people and rebuild our economy from each individual and family up.

Shouldn’t job training programs help with automation?
They should, but unfortunately not.

The Trade Adjustment Assistance (TAA) program, a Federal program for displaced manufacturing workers, was found to have only 37% of its program members working in the field of work they were retrained for. (Click link here.) Michigan’s No Worker Left Behind Program found that one-third of its members remained unemployed after the program, similar to the 40% unemployment rate of their peers who did not enroll. (Click link here.) About half of all Michigan workers who left the workforce between 2003 and 2013 went on disability and were not retrained for a new job.

Many of the workers who are most at risk for displacement are middle-aged and past their primes. Many have health problems. Retraining will be difficult and many employers will prefer to hire younger employees with lower job requirements.

The goalposts are now moving – by the time someone goes through a retraining program, the job they were retrained for could have changed or been automated. Technology is going to get better and better. It will also be hard to keep track of who merits retraining. If a mall closes, do the retail workers get retrained? How about a call center?

Though training programs are a great idea, we should acknowledge that we’re historically very bad at it even when we know displacement is happening. Retraining a massive population over a range of industries is unrealistic and won’t address the displacement caused by new technologies.

Why give $1,000/month to the rich as well?
By giving everyone $1,000/month, the stigma for accepting cash transfers from the government disappears. Additionally, it removes the incentive for anyone to remain within certain income brackets to receive benefits. If it’s paid for by a Value-Added Tax, a wealthy person will likely pay more into the system than he or she gets out of it.
What about differences in cost of living for major cities and rural areas?
Every eligible recipient of this $1,000/month universal basic income, regardless of location, would receive $1,000 a month. Varying the dollar amount by location would add expensive layers of bureaucracy. Plus, this $1,000/month would actually help many more Americans live where they want to. The Census Bureau shows that Americans are moving between states at the lowest levels on record, contributing to a stagnant economy and labor market. (Click link here.) Moving requires a lot of money up-front, and Americans are increasingly strapped for cash. $1,000/month would make people and families much more mobile and improve the dynamism of the labor market as people seek out new environments and opportunities.

$1,000 a month goes farther in some places than others. $1,000/month would lead to a revitalization of many communities as people take advantage of lower costs of living in certain areas instead of piling into expensive metro areas.

What other effect would this $1,000/month basic universal income have on the economy?
The Roosevelt Institute found that adopting an annual $12,000 basic income for every adult U.S. citizen over the age of 18 would permanently grow the economy by 12.56-13.10 percent—or about $2.5 trillion by 2025—and it would increase the labor force by 4.5-4.7 million people. (Click link here.)

Putting money in people’s hands grows the economy, particularly when those people need the money and will spend it. Even in just our district alone, $1,000/month would bring an extra $500,000,000+/month of additional income into the community, most of which would be spent locally. Then imagine that playing out in every community across the country, big and small. Districts all over America will have more vibrant local economies, creating more jobs and leading to new businesses.

So, who’s supported Universal Basic Income before?
It was first supported in America by founding father Thomas Payne, who referred to universal basic income payments as a “natural inheritance”.

UBI and similar cash programs began picking up steam in the mid 20th century during the industrial revolution as early as 1918. With developed countries producing more than ever, the idea resurfaced with intensity being backed by numerous Nobel-Prize winning economists such as Milton Friedman and F.A. Hayek.

In the 1960s, Martin Luther King Jr. gave his support, alongside over 1,000 economists from over 125 universities who signed a letter to President Nixon requesting income guarantees. (Click link here.)

The idea of a guaranteed income floor was pushed into a bill under President Nixon in 1970 where it passed the United States House of Representatives. It died in the Senate because Democrats sought a higher guaranteed income.

Today the idea has gained support from Mark Zuckerberg, Robert Reich, Elon Musk, Bill Gross, Richard Branson, Ta-Nehisi Coates, Noam Chomsky, the conservative Cato Institute, and many others.

Universal Basic Income is not new – it is an old idea whose time has come.