3 Top Andrew Yang Moments from Democratic Debate #4
By: Aaron P
Tags: Andrew Yang, Elizabeth Warren, Basic Income, Bernie Sanders

On Tuesday October 15th, 2019 the top 12 Democratic presidential candidates faced off for the 4th time. It was by far Andrew Yang’s strongest performance and there were some key moments during which he differentiated himself from the other candidates.

DISCLAIMER — I am a biased human being, and here are my biases:

a) I donated to and voted for Bernie Sanders in the 2016 primaries

b) I donated to both Andrew Yang and Tulsi Gabbard in 2019

c) My four favorite candidates, in order:

Andrew Yang

Tulsi Gabbard

Bernie Sanders

Elizabeth Warren

With that out of the way, here are the 3 most crucial Andrew Yang moments of the Democratic Debate:

Universal Basic Income (Yang) vs. Federal Jobs Guarantee (Bernie)

CNN asked: What is the best way to face the threat of automation eliminating American jobs?

Bernie Sanders’ proposal is to create a Federal Jobs Guarantee. Bernie’s argument is that there is plenty of work that needs to be done, from our crumbling infrastructure to creating more sustainable energy sources, and that Americans want to work. According to Bernie, he’ll be able to create 15 million jobs for Americans rebuilding our roads, bridges, and airports and create another 20 million jobs with his Green New Deal.

Andrew Yang’s flagship proposal to combat automation is to provide a Universal Basic Income (UBI) of $1,000 per month to every American citizen 18 and older.

Yang’s response to Bernie’s proposal:

a) Not everybody wants to work for the federal government. And what if the job you are assigned by the government is not something that you are good at? What if it’s a job you have no interest in doing?

b) A Federal Jobs Guarantee does not recognize the work being done by our caregivers such as stay-at-home moms and those who take time off of work to take care of an elderly parent. These are also meaningful roles which may not contribute to our GDP but nonetheless adds value to our society.

Let’s take a step back and truly evaluate what implementing a Federal Jobs Guarantee would look like.

Remember how tough it was to pass and implement Obamacare? From the Republican opposition to the HealthCare.gov rollout?

How much more difficult would it be to CREATE a jobs program for 35 million Americans? Jobs that are in every city and state. Jobs that provide value to its workers and society at large.

Most importantly, jobs that match people’s skills and interests.

After all, it won’t do much good to force people into a job they dislike and they’re not very good at.

Furthermore, there will be additional expenses on top of the salaries and benefits paid to the millions of Americans. Buildings for people to work out of. Computers and equipment that are used to do the work. Recruiters, HR, administrative assistants, the whole nine yards.

But another question is: what will these workers do when their project is complete? For example, let’s say they fix a road, which is a part of the crumbling infrastructure. What’s the next step when that particular road has been built?

Now compare that to collecting taxes and shooting a direct deposit of $1,000 per month to every American citizen.

Much easier to implement.

Interestingly enough, studies done on Universal Basic Income have shown that a UBI actually has a positive correlation with entrepreneurship. In both India and Namibia, UBI was correlated with working even longer hours and starting new businesses. Specifically, in Namibia’s UBI experiment, entrepreneurship rates quadrupled and in India’s UBI experiment, entrepreneurship rates tripled. This makes intuitive sense because if you know that the people around you have extra money to spend, you can launch a new service or product they are capable of paying for.

It makes much more sense to increase entrepreneurship through UBI, meaning people will be doing jobs they are good at, instead of assigning them a federal job they may suck at.

But this doesn’t have to be a zero sum game. Bernie’s proposal makes sense. For example, 73% of the roads in Illinois and Connecticut are structurally deficient. The increased business costs from having bad infrastructure costs us about half a trillion dollars of GDP every year.

So yes, some federal jobs definitely need to be created to address our crumbling infrastructure and sustainable energy problem. But whether there is enough work for 35 million people to do for a lifetime is worth questioning.

Just cut them a monthly check. Quick and easy win. And then we can move on to creating federal jobs as well.

As a quick side note, a Universal Basic Income of $12,000 per month automatically lifts everyone out of poverty and has positive correlation with mental/physical health outcomes as well as educational outcomes. And no it does not cause inflation because we would not print new money, we would transfer the wealth. I cannot do the concept of UBI justice here, so please check out Scott Santens the UBI expert.

2. Automation (Yang) vs. Bad Trade Policies (Warren)

Elizabeth Warren stated that blaming automation was a “good story” but not true. Instead, Warren blames bad trade policy as well as corporate greed. She proposes requiring 40% of every board of directors to be elected by the employees, so that companies will not be able to make decisions without the input of its workers.

Andrew Yang countered by sharing that it is indeed automation which is eliminating American jobs. We can already see that there are self-serve kiosks at McDonald’s. In addition, Amazon is the reason 30% of our small businesses are closing. (Given that Amazon’s warehouses are run by robots, the small business closures should count under job losses due to automation.) Yang also brought up the fact that with 3.5 million truck drivers and 7 million other Americans who work at the gas stations, motels, and diners the truckers spend money at, almost 11 million jobs will be eliminated once the technology for self-driving trucks are perfected in the mid 2020's.

Sure, job loss is partially due to bad trade policy and corporate greed, but according to a study done by the Ball State University, 85% of job losses have been due to automation. According to another study done by Princeton, which focused specifically on the steel industry, the invention of the minimill eliminated 75% of the jobs in steel.

And though Elizabeth Warren and Bernie Sanders blame “bad trade policy”, NAFTA destroyed 700,000 jobs but created 5 million more jobs. Meaning yes, it eliminated manufacturing jobs in the Rust Belt, since Mexican plants could produce them more cheaply. But it created service jobs, since more truck drivers and warehouse shippers are now needed to import the products from Mexico into the United States.

Elizabeth Warren’s angle is that corporate greed is causing job loss, but the corporation willing to move a manufacturing job to Mexico is the same corporation that is willing to automate its workers’ jobs away. Her proposal is to limit this greedy behavior.

And although the spirit of her argument is correct, just like Bernie Sanders’ Federal Jobs Guarantee, it sounds like another implementation nightmare. I suppose that there would be a government agency which audits and checks to make sure corporations are following the rules set down in a Warren administration. But of course these corporations would hire an army of lawyers and accountants to continue screwing over their workers as much as possible without going to jail.

Both Bernie Sanders and Elizabeth Warren will be fighting an uphill battle….because greed is a part of human nature.

But we can flip the script and use human greed to our collective advantage. If putting $1,000 a month in every American’s pockets triples or quadruples the entrepreneurship rate like it did in India and Namibia, we would no longer need to depend on corporations for jobs.

All around the economy we already see how technology and entrepreneurship is dissolving the power corporations once had. The entertainment industry is one good example, in which independent artists are doing much better than they ever had in the past as they are no longer at the mercy of record labels. We can also see the same dynamics play out in the food and beverage industries, in which new, innovative products are constantly taking away market share from the established big food companies. A Universal Basic Income would only accelerate this process further.

3. Value Added Tax (Yang) vs. Wealth Tax (Warren)

Elizabeth Warren correctly points out that we cannot generate the funds we need by increasing income tax. This is why both she and Bernie Sanders propose implementing a wealth tax.

The problem with a wealth tax is that it’s surprisingly tricky to implement. There is a great article written by N. Gregory Mankiw (Harvard economics professor and author of the economics textbooks used at most colleges). In the article, Mankiw argues:

a) Wealthy people will find ways to avoid their taxes. Specifically, Elizabeth Warren proposes implementing a 2% wealth tax on anything above $50 million. A married couple worth $100 million would end up paying $1 million per year in taxes. But if that married couple decides to “divorce” on paper, they would “only” by worth $50 million each, exempting them from Warren’s tax. If a married couple with $250 million and three adult children wanted to avoid the tax, they would get divorced on paper and give $50 million to each of their adult children as a gift. This would help them avoid paying $4 million taxes per year.

b) It’s tough to evaluate someone’s net worth. For example, what is the best way to evaluate Riahanna’s net worth? Sure we may know how much cash she has on hand today, and we may know how much her assets are worth. But we don’t know how much money her songs are currently “worth” and how much they will generate in royalties several decades from now. Yet, both those estimates need to be made in order to come out with someone’s net worth. Another example is a small business owner. Part of the value of any small business is its “goodwill”, comprised of its reputation and network of customers. How do you go about measuring this?

More importantly, Andrew Yang countered Elizabeth Warren by pointing out that European countries like Germany, France, Denmark, and Sweden have already tried a wealth tax and gotten rid of it because it’s hard to implement and did not generate as much revenue as anticipated.

On the other hand, the same European countries which tried and failed at implementing a wealth tax successfully switched to implementing a Value Added Tax (VAT), which, for simplicity’s sake, will basically manifest as a sales tax on non-essential items. Essential items, which are exempt from VAT, include groceries and internet access in these European countries.

The common argument against VAT is that it will cause inflation in prices since the companies manufacturing non-essential items will increase the price and pass it on to the customer.

This is only partly true but does not explain the full story.

Andrew Yang proposes a 10% VAT on non-essential items. All Americans will receive $1,000 a month in return.

The only people this will impact negatively are people spending more than $10K a month on non-essential items. If someone spends $10K a month on non-essential items, the 10% VAT will now increase that spending to $11K a month. However, receiving $1,000 a month will offset that increase, and so this person breaks even.

According to a study, most Americans spend $1,500 a month on non-essential items. The 10% VAT will cause the prices of these things to rise to $1,650, penalizing the average American by about $150 per month, but the $1,000 freedom dividend will allow them to be ahead by $850 for the month.

The VAT is a much more efficient way to collect taxes from the wealthy since it’s only the wealthy who would spend more than $10K per month on non-essential items. Studies have shown that unlike the wealth tax, the VAT is much harder to avoid.

CONCLUSION

In all three of these instances, Andrew Yang used facts and numbers to differentiate himself from the other progressive candidates and to explain why his policy proposals would be easier to implement.

Please check out Andrew Yang’s other proposals such as Democracy Dollars (which will eliminate corporate lobbying by giving every American $100/year that can only be sent to politicians) and opioid decriminalization.

Go to www.yang2020.com to learn more.

Previous writings:

Why Layoffs Are a Good Thing: How we all benefit from robots taking our jobs

God’s Opinion on Trumpcare

3 Life Lessons from Playing Beer Pong