In early April, the quarterly campaign earnings of possible Democratic frontrunners were released to the public. Among these candidates were familiar faces—ones that have been in the public eye for months now: Bernie Sanders, Kamala Harris, Beto O’Rourke, and others, most of whom echo a cacophony of basic ideals that reflect those of their base. However, one of these candidates, Andrew Yang, caught my attention—not because of an increasingly popular policy, but rather, one that is fairly novel.
For a Democrat, Yang is at first an interesting character: He supports the Second Amendment and only proposes mild regulations on firearms,Yang’s UBI policy would pay $1,000 per month to every American over the age of majority. has vowed to increase funding for Customs Enforcement and border patrol agents on the southern border, and hopes to modernize the military. To put it lightly, he barely makes the cut for a Vox interview.
However, things get interesting with one of the key policies on which his campaign is built: the implementation of a Universal Basic Income (UBI), or as Yang calls it, “The Freedom Dividend.” This government program would be implemented in addition to current government assistance/aid programs in the United States. Yang’s UBI policy would pay $1,000 per month to every American over the age of majority.
Hard Work and the American Dream
Now, where does youth come into all this? I ask this not disinterestedly, as I am a current high school student contemplating the US economy of 10, 20, and even 30 years from now. The youth of this nation does not pay taxes and would not receive direct benefits from a UBI, and a lot of us barely understand what a Universal Basic Income even means. What we do understand, however, is hard and honest work and why we need to do it.
There are several groups of minors who would be disincentivized or harmed by a UBI.
America was built on a dream: Everybody can achieve success so long as they work hard and provide a product or service to a market economy. This dream begins with us when we are kids. Why do we aim to get good grades? Why do we want to get a higher education? For almost all people, it is to achieve success later in life through wealth and general happiness. If the government were to adopt some version of the UBI, it would single-handedly undermine this dream by disincentivizing young people and would also be catastrophic for our economy.
Who would be affected the most by such a policy and why? There are several groups of minors who would be disincentivized or harmed by a UBI: those graduating high school to directly enter the workforce, lower class children, and people who are not seeking and do not plan to pursue any form of higher education.
First, consider statistics regarding the annual salary of high school graduates who do not attend college but seek immediate employment. The average male high school graduate with no college diploma makes about $28,763 per year, while his female counterpart makes about $15,962. Certainly, these young adults are not financially secure in most areas of the US.
Yang ostentatiously advertises the Freedom Dividend as an opportunity for financial security on his website. However, under the FAQ section of his UBI page on his website, Yang responds to the question "Won’t people stop working?” His answer is not as extensive as his responses to other questions:
In our plan, each adult would receive only $12,000 a year. 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.
So, then, what is this "financial security" Yang keeps referring to on other sections of his website? Isn't it problematic that the Freedom Dividend is advertised as "financial security" but is "barely enough to live on"? The disconnect between the UBI’s advertised benefits and the reality would confuse youth entering the job market right after college and would lure some of them into foregoing work and relying on just the UBI. This reliance could easily turn into a financial trap, especially if these high school grads become less employable as they age without accumulating relevant workplace experience.
Next, the negative effect on lower-class children as a whole would be incalculable. In particular, some or many of these children may be born into families that rely, in whole or in substantial part, on the UBI. Growing up in such an environment will tend to normalize non-work and will short-circuit the inculcation of a strong work ethic in these children. In short, a UBI will damage the historically strong American work ethic, further dampening American innovation, which is critical in the 21st-century economy.
A Degree's Impact on Wages
Finally, we also need to consider those who never intend to go to college, as well as those who drop out of college and do not plan to return. In 2017, the US Census Bureau reported that only 33.4 percent of Americans have obtained a four-year degree from a collegiate institution.
The Cooperative Institutional Research Program found in a 2014 survey that 86.1 percent of American college freshman deemed “being able to get a better job” as a “very important” reason to go to college. We can conclude that almost all young Americans who aim to complete courses at a university are already incentivized to find a good job and would not benefit materially from the UBI.
Where do the other two-thirds of Americans who have not received a diploma from a four-year college stand socioeconomically? Most are in the lower class, and many make less than $40,000 per year. The vast majority of these people make around $18,000 per year. These people would be disincentivized from working if the Freedom Dividend ended up adding another two-thirds of their annual income on top of what they were already making. These people might rightly ask:
What is the point of working an eight or ten-hour job just to make slightly more than what the government already gives to you annually for free?
On top of all of this, just as millennials have seen the consequences of paying tremendous sums of money for Social Security benefits for baby boomers, “Generation Z” will have to face the consequences of paying for the Freedom Dividend. How does Yang propose that we pay for his UBI policy? Well, by pickpocketing future taxpayers, of course!
A Value Added Tax
A “Value-Added Tax” and reallocating annual revenue, etc., are all on Yang’s mind, according to his website. According to Lexington Law, the United States already spent an estimated $851.1 billion on government assistance programs such as Medicaid and family/children assistance in 2018 (this figure does not include Medicare).
As stated by the US Census Bureau, there are 236,450,000 Americans over the age of 18 as of 2010. Through basic arithmetic, we can see that the $12,000 per person that the Freedom Dividend would guarantee would be catastrophic for the next generation of taxpayers: $12,000 x 236,450,000 = $2,837,400,000,000 (that’s over $2.8 trillion).
A UBI policy is a false panacea for economic insecurity and will lead us down a dark path for years to come.
If this sum were added to current programs (which already amount to 90.1 percent of the entire 2018 federal budget), then the total would be over three times the amount the government currently spends on social programs, coming in at a whopping $3.689 trillion. National debt—to the moon!
For Andrew Yang to call his Freedom Dividend a shot at financial stability would be a misnomer, especially for future generations of Americans. The increased taxes that would be required to fund such a program would be difficult to comprehend and impossible to sustain, and the program would undermine the American work ethic, particularly among younger Americans.
A UBI policy is a false panacea for economic insecurity and will lead us down a dark path for years to come. As adults weigh their voting options in the 2020 Democratic primary election, it is important that voters, especially parents, understand the true impact of a UBI not only on them but also the country’s children.