Universal Basic Income

Andrew Yang is a presidential candidate for 2020 that you may have seen in headlines over the last couple weeks.  What separates this random guy from the competition?

Proposal for a universal basic income.

The concept is that everyone gets $1000 each month.  Every single adult citizen in America.  They will be guaranteed $12000 a year.  It sounds too good to be true, so let's explore that.

How can a program like this possibly be funded?

Andrew Yang recommends we first abolish our welfare system: this will get us between $500 and $600 billion.  The idea here is that UBI will replace the welfare systems in place and also rides the argument that our current welfare is inefficient and in other words 'bad'.  What about the people currently on a welfare program that is more generous than UBI?  They can opt to keep their current program if they would prefer.  This is why UBI is being marketed as the freedom dividend.  It gives you the power to decide for yourself what you spend it on and if you want it.

Next he proposes a Value Added Tax (VAT) which is a tax on how much a company's value has increased.  This would be a way to tax massive companies that are reporting no profits, yet are still massive market holders such as Amazon.  A VAT at half the level of Europe would generate $800 billion in revenue.  The idea is that this way we can tax companies using robots (which maximize production, but take jobs) and provide a system from it that gives people a basic income.

It is also worth considering that the money given to the people will then be added back into our economy because the people will spend some of it, put it back into the economy, or it may give them the time and security they needed to pursue an education or find a different job.  This is projected to generate nearly $600 billion in economic growth.

His final argument is that studies have shown giving $1 to a poor family equates to $7 in saving.  Imagine the savings at $1000.  It would keep people out of hospitals, prisons, and homelessness which, as a combined industry, is the cause of more than $1 trillion of spending. 

Could it cause inflation?  No, because we are not printing money and introducing it, we are simply taking it from other existing sources and changing its allocation - this means that inflation cannot occur.  Okay... but couldn't renters simply raise the rent by a thousand bucks on each of its residents.  Theoretically, yes, if every land lord raised rent this would happen, but this is unlikely for two reasons.  First of all, with minimum wage's introduction there is no evidence this occurred.  When minimum wage increased, there is no evidence this phenomenon occurred.  Secondly, if some land lords raise rent, then the demand for their space should decrease and other options should take priority for consumers.

The automation wave will replace workers with robots, so how are we going to plan ahead and give people quality of life?  How are we going to give people the security to pursue an education?  Andrew Yang believes Universal Basic Income, dubbed the 'Freedom Dividend', is the answer.

Image result for money clipart



https://www.yang2020.com/what-is-ubi/

Comments

  1. AnonymousMarch 4, 2019 at 4:22 PM

    Wow Benjamin great Article! After speaking about this at dinner, I was pleasently surprised to see this as a blog post. The Value Added Tax, seems like a great idea. Holding large corporations accountable for taxes that they may or may not be paying. However, I wonder if Universal Basic Income, will be more benificial than the current welfare system. Does the top 1% need that $12,000 a year, or is it better off being spent on the lower class?

    ReplyDelete
    Replies
    1. AnonymousMarch 4, 2019 at 8:35 PM

      Hey Kabir! Very cool! This is a point many people discuss and an absolutely valid opinion! Surprising! However, I think it is important to consider the idea that the people who wish to remain on their Welfare system, assuming it is simply a received check, can. Another thing is, imagine all of the bureaucracy we can eliminate by eliminating the current welfare structure. This may be a great opportunity to implement a more efficient infrastructure. Thanks for being my long time supporter :)

      Delete

Post a Comment

Popular posts from this blog

The Cost of Inelastic Goods

Image
Many goods that are inelastic in terms of demand are ones that are essential or, in other words, necessary to one's self. There are several examples: basic foods, gasoline, or even medicine. I was interested in how producers can manipulate the prices of these goods and how the total revenue can change over time because those goods are inelastic. The first example I thought of was insulin. Considered inelastic because, without it, those who are diabetic might physically suffer, I looked at the price trends in the past couple of years. Just as I predicted, the price has been rising dramatically in the past decade or so as producers are taking advantage of the consumers' essential need for this good. There are about 7.4 million Americans that use insulin and many struggle to pay the costs of this increasingly expensive drug. So, while rising prices benefit insulin manufacturers, those same prices come at a serious cost for patients as the demand for insulin is inelastic. Other...
Read more

The New Taxi: Ubers

Image
In recent years the transportation industry has begun to change dramatically. At first, ride-sharing companies did not have much hold over the industry as taxicabs and rental cars dominated the needs of business travelers as they searched for transportation so they could reach their destinations. However, recently this industry has suffered a loss has rates of people using these amenities have dropped, but the rates of people using Uber have dramatically increased. Uber is a ride-sharing platform where you can request a ride from an app (sounds familiar right?) it's almost exactly like a modernized taxi. However, there are a couple key features that services like Uber provide in which taxis and the traditional temporary transportation do not. One of the key factors that draw its consumers is the easy use of the app and its services. Before you would need to take a chance and wave your hand in the street to see if you can catch a taxi or even call the number of a taxicab comp...
Read more

The Hidden Monopolies of the World

 Monopolies are all around us in the world, and not all of them are  obvious on the surface level like Google and Facebook. For example, you might be searching for hotel rooms and browse multiple "competing" sites like Travelocity, Trivago, or Hotel.com. What you most likely do not know however, is that all three websites are actually all owned by the same company; Expedia group. This illusion of free choice is used to hide the fact that Expedia essentially hold a monopoly over the industry and all hotel bookings actually go through them. These fake competitors which are all owned by Expedia Group controls 75% of the US online travel agency industry, Similarly, apple fans and Microsoft fans stubbornly stick to their respective brands of computers; not knowing that the laptops all come from the same Chinese manufacturer. Throughout all types of industries such as the ones listed earlier and others such as smartphones, supermarkets, beer, and even sunglasses, hidden parent co...
Read more