Q&A: Andrew Yang on gun violence, the decline of the American worker and ‘freedom dividends’
Andrew Yang, a tech entrepreneur running for the 2020 Democratic presidential nomination, met recently with members of the Los Angeles Times editorial board to discuss his candidacy. This is a transcript of that conversation, lightly edited for clarity.
For the record:
11:51 AM, Aug. 15, 2019Because of a transcription error, an earlier version of this piece quoted Andrew Yang saying that Alaska’s dividend program has been in effect for “almost four years.” He actually said “almost 40 years.”
Andrew Yang: Thank you so much for this opportunity, really appreciate it. I’m a huge fan of the work that journalists do. I think that it’s vital to a functioning democracy. And unfortunately in over 1,000 communities around the country, local papers are now going out of business, because they relied upon classified ads for their revenue source, then all that revenue went up to Craigslist and the internet, and they never really found a new one.
And so now local papers are dying, and studies have shown that democracy becomes more polarized and less informed, shocker, if you don’t have a local paper. Because then people just vote consistently along party lines, nobody really knows what the local government is doing.
So if you believe in democracy, you have to believe in journalism. And to me it’s a mistake to think that, right now in America, we just worship the almighty market. And so if the market says local papers shouldn’t exist, then everyone’s like, “Well, then I guess local papers shouldn’t exist.” Which, to me, is a tremendous error. And so one of the things I proposed is a transition fund for local papers to try and find new ownership models, either cooperative, or public-private partnerships. Because many communities could sustain a local paper if they didn’t have to put up double-digit profit margins every period, because they don’t have hedge fund owners or public markets to be accountable to.
So if you had a public-private or philanthropic model, then you could have a break-even, sustainable local paper in many of these communities. And so I proposed a transition fund to help with that. But I just want to say that I appreciate what you all do, and I appreciate the opportunity.
So that’s one. You guys aren’t going to go out of business in the same way that, frankly, what happened in Iowa and New Hampshire, to a lot of local papers. And I feel like a jerk [when speaking to reporters], just like “Talk about me,” and literally I know they’re going back to their office like, “How are we going to pay bills next month?” So in your case you’re a robust institution with very cool offices and the rest of it.
Nicholas Goldberg, editor of the editorial pages: So welcome, we’re glad to have you. Why don’t you start by giving us a three- or four- or five-minute intro. Tell us a little bit. You’re known to some degree as a one-issue candidate. I’d love to hear you talk just a little bit about what you stand for. We’re going to talk about —
Yang: Yes, that issue is local journalism.
Mariel Garza, editorial writer: All right!
Goldberg: You won’t find anyone here who will argue with that as top priority.
Jon Healey, deputy editorial page editor: Interesting play for endorsements.
Goldberg: That and giving everybody $1,000 and you can’t go wrong.
Yang: Give all journalists $1,000 a month, that’s the platform.
So I’ll just give you my own background, my journey to get here. Which is, I certainly didn’t intend to run for president at any point over the last number of years. Before this I ran an organization I started called Venture for America that I started in 2011. I donated it some seed money and then ran the organization for seven years, and the organization’s budget grew from about $200,000, when I started, to about $6 million, so it grew at 30X.
And during that time ... Where are you all from, in terms of your hometowns, or geographically? I imagine you’re from California or Los Angeles? ?
Michael McGough, senior editorial writer: Don’t jump to conclusions.
Terry Tang, op-ed editor: I am. Here.
Garza: I’m San Diego.
Yang: San Diego, OK?
Yang: Ohio, what part?
Yang: Wow, I spent a lot of time there.
Goldberg: New York City.
Carla Hall, editorial writer: Chicago.
Brian Boyle, editorial page intern: Chicago.
Yang: Pittsburgh. Oh, then you know, at least some of you know. So I grew up in upstate New York, my parents immigrated in the ‘60s, met at UC Berkeley as grad students, then I was born in Schenectady and my dad was an engineer for GE.
So when I started Venture for America, I had never been to Columbus or Pittsburgh or Detroit, or New Orleans or Birmingham, or St. Louis. And I was stunned by the disparities between those places and the coasts, where if you fly between Michigan and Manhattan, or St. Louis and San Francisco, you feel like you’re traversing dimensions or eras rather than just a few time zones.
And my organization was helping entrepreneurs start businesses in Detroit, Cleveland, St. Louis. And I saw firsthand what that actually meant in the trenches for these businesses. It was a very, very different landscape than the startup landscape that I’d been exposed to in New York and San Francisco.
And when Donald Trump became president, I realized that the driving force behind it was that we’d automated away 4 million manufacturing jobs in Michigan, Ohio, Pennsylvania, Missouri, Iowa, Wisconsin, all the swing states he needed to win and did win. Those were the hubs of these manufacturing jobs.
And I studied economics, and according to economic theory, these manufacturing workers would find new jobs, they’d get retrained, the economy would grow, the invisible hand would do its work, and all would be well. But if you go to western Pennsylvania, or parts of Ohio, you see the aftermath of automation of these jobs. And the real numbers are that almost half these workers left the workforce and never worked again. And then of that group, about half filed for disability. And then you saw surges in suicides and drug overdoses in these communities.
There’s also a direct lineup between the adoption of industrial robots in a voting area and the movement towards Trump in that area. It’s one of the strongest correlations you can find. So if you look at these swing states that all went to Trump, and you realize that the automation of these jobs was one of the major drivers over the last number of years, and you realize that what we did to the manufacturing jobs we will now do to the retail workers. Thirty percent of American stores are closing in the next four years, and being a retail clerk is the most common job in the country. The average retail clerk is a 39-year-old woman making between $9 and $10 an hour. The next most common job is call center workers. Artificial intelligence is coming; that’s going to take over that role in the next number of years. Food service is No. 3. If you’ve been to a fast food restaurant lately, you’ve seen the self-serve kiosks, you know that they’re just trying to move automation even further into their operations.
And No. 4 is driving a car or truck. And you’ve probably seen here in L.A. some of the cars with the LIDAR systems and the cameras mounted. My friends in Silicon Valley are working on cars and trucks that can drive themselves, because of the massive financial returns. The estimated savings from automating away truck driving are $168 billion a year. So think about what that would mean in terms of your financial incentives. If you’re a venture capital firm and someone says, “I might have a chance to advance self-driving trucks, invest a billion dollars. Well, if this has any chance of working, then this is a really good bet.” And so some of my friends, who are some of the smartest people in the country, are working on these technologies.
So these are the most common jobs in our society, and they’re all in danger of getting blasted away the same way we blasted away manufacturing jobs. And our mainstream economic analysis or our media figures are just like, “Oh, it’s all right, the market will take care of it. Get rid of 3.5 million truckers, the most common job in 29 states, the truckers will get retrained as something.” That’s literally the laughable fantasy that actually passes as conventional wisdom. Where if you spend any time actually either thinking about that or, better yet, meeting truck drivers, you would see that the last thing they have on their mind is getting retrained as a logistics engineer or a coder. It’s the last thing on their list. I think it would be much more likely for them to react either self-destructively or destructively. Tens of thousands of the truckers in particular are ex-military.
And so we’re starting to see already the disintegration in these communities. And it’s going to accelerate dramatically as some of the new technologies become more and more functional. And there’s nothing standing in the opposite direction. Only 13% of truckers, as one example, are unionized. So there’s not even this massive collective bargaining opportunity. Eighty-seven percent of them are just small mom-and-pop [operations], like, “I bought my truck, I made some money, so I then took out loans and have another three trucks, and six people that I hired.” And so when the robot trucks come, what is that business owner going to do? And then you multiply that times literally hundreds and thousands of truckers and small business owners. So I realize that we’re in the midst of the greatest economic transformation in our country’s history, what experts are calling the fourth industrial revolution.
You have never heard a politician breathe the words “fourth industrial revolution.” I’m the first from whom you’ve ever heard it, and I’m barely a politician. So this is the true explanation for what is happening to our country. And imagine running a nonprofit that helped create thousands of jobs in Detroit, Cleveland, Baltimore, St. Louis, New Orleans, and getting awards from the White House, and a movie gets made about your work, and then you realize that you’re pouring water into a bathtub that has a giant hole ripped in the bottom. No one wants to talk about the hole in the bathtub.
That was me, circa 2017. And so I looked up and I said, my country does not understand what’s happening to it. We’re scapegoating immigrants for things that immigrants have nothing to do with. The numbers show very clearly that 80% of the job loss in manufacturing was due to automation and technology, not globalization or trade or immigrants. And there’s a very confused conversation happening or lack of conversation.
And so if that’s the situation, and you believe that you can do something about it, then you should do something about it. So I said, OK, what can I do that’s going to help galvanize energy around the real problems and advance real solutions?
So when you talk about the one-issue candidate, you all know me as the universal basic income candidate who wants to give everyone $1,000 a month. And there are very good reasons I want to give everyone $1,000 a month. We’re blasting away the most common jobs in our society, and social dysfunction is spreading, our life expectancy is declining. Our labor for participation rate, as we’re here together. So I’m going to segue into something else.
Garza: Before you do, can I ask you, why did you settle on UBI? Were there other options you looked at? Why is this the holy grail?
Yang: Well, the most conventional countermeasure to the displacement of American workers is education and retraining. So you say, “I’m going to retrain the workers.” And then if you dig, you find that the retraining programs for manufacturing workers were almost completely unsuccessful. They had success rates of between 0% and 15%. No one ever talks about that, though. It’s just, “We retrained them.” You didn’t actually retrain them.
When you dig into the reality on the ground, what would happen is, some government agency would look up and say, “OK, we have to retrain these people, who’s going to retrain them?” And then some fly-by-night operator says, “I’ll retrain them.” And then they create a new school, they get the government money, they give everyone valueless certificates, they fold up shop, the government checks the box that everyone got retrained. And then if you talk to the actual workers, they’re like, “I got a valueless certificate. I got a check from the government, gave it to this school. And that was the whole story, and now I’m at home depressed.” So that’s the reality.
But if you actually talk to a politician, you’ll never get past the talking point. All you do is say, “We’re going to educate and retrain Americans to do the jobs of the future.” And everyone’s like, “All right, good.” And then they’ll just go home. So universal basic income is one dramatic solution. It’s to start distributing economic value more broadly to people, and let them make transitions more effectively. And it would rejuvenate local communities, supercharge nonprofits, recognize different forms of work. That’s universal basic income.
The conventional one is educate and retrain workers. Ignoring the fact that our programs don’t work, many Americans aren’t actually eager to be retrained for something new. And I’m now a little bit too old to tell this joke, but it’s like, how many of you would want to retrain your parents? The average trucker is a 49-year-old man. So if you think about “infinitely adaptable,” you would find an army of 49-year-old men who’ve been sitting behind the wheel of a truck for a number of years. All you have to do is actually dig in for a minute and [you’ll realize], wait a minute, this doesn’t make any sense.
So education and retraining is the conventional recipe, and it doesn’t make sense. Raising the minimum wage is another suggestion, which also does not make sense in this context. Because all you’re doing is elevating the incentives to replace workers. And if you’re a fast food chain and you’re paying people $8.60 an hour, and then I say, “I’m going to fix this, I’m going to elevate their wages.” Now I’m for a higher minimum wage and the spirit of it, because people shouldn’t work full time and be poor. But the reality is, as a former CEO, if you increase my wages by 40%, then I’m going to go to the robot burger-flipper manufacturer and say, “Huh, these numbers actually look a lot more appealing than they did just last month when we were talking about this.”
So these are some of the mainstream, conventional recipes that politicians suggest, and none of them make any sense. Except for universal basic income.
Goldberg: So you’ve told us what doesn’t work. You’ve told us you think universal basic income could work. Is that your whole solution? No effort to get people working again, just gonna give them some money and let them make their way on $12,000 a year?
Yang: Oh, we should dramatically do a number of things. So No. 1 is we have to invest massive resources in vocational, technical and apprenticeship training programs. Right now only 6% of American high school students are in technical tracks. In Germany, that’s 59%. So think about that gulf.
What we’ve done is we’ve stigmatized vocational programs and elevated college to the point where we say everyone should go to college. And a lot of kids are going to college who probably should not have gone to college. And you have millions of unfilled high-skilled manufacturing jobs, and HVAC repair jobs, and plumbing jobs, all this stuff. Because kids today are like, those jobs are second rate.
Meanwhile, a lot of those jobs actually pay very well and are very steady and are going to be very hard to automate away. One of the jokes I tell is, can you imagine what it would take to make a robot plumber?
Hall: Oh, gosh.
Yang: That’s really hard. A human is going to show up and be your plumber for quite some time. And then they charge you extortionate rates and you pay, because what are you going to do? So we need to dramatically invest in what’s called middle skill jobs, economically.
Goldberg: This is for young people just coming out of school. What about for all those people you say are going to get automated out of existence, the 49-year-old truckers?
Yang: Or older people. You could have some of the older workers get trained as HVAC repair people or line repair people.
Goldberg: How is that different from the kind of retraining that you just said doesn’t work and is laughably unsuccessful?
Yang: You have to expect the same success rate that has been 0% to 15%. So if you look at that and say, “OK, I can solve 15% of the problem with retraining programs,” then you should try your hardest to try and get that 15% up to 18%, 20%. Because any percentage point you’re talking about is helping tens of thousands of workers.
The problem then is that all you’re doing is you’re moving the shape of the bell curve, incrementally, and you still have this massive volume of workers for whom these programs will not work. And so the reality of our society today is that, despite the headline unemployment rate being near record low, 3.7% or whatever it is, our labor force participation rate right now is 63%, a multi-decade low, the same level as El Salvador and Costa Rica.
There are hundreds of thousands of American men who have already gotten marginalized and pushed to the sidelines. And they’re deteriorating. Men in particular do very badly when they’re idle. They become less employable over time, not more. Women are more adaptable. Women tend to go back to school at higher levels, get involved with various community projects at higher levels. Unemployed men volunteer less than employed men. So think about that; they have a lot more time, but they volunteer less.
So the male disintegration is ongoing. And the fundamental question facing us is how do you try and address it? Now the bigger picture, this actually hearkens back, and this was unintentional, but this hearkens back to what I said at the open. Which was that in America, everything runs on the almighty dollar, and the market forces have destroyed all these local papers.
So what’s happening right now is our market is valuing our time at certain levels. So it values a housewife’s work at zero, because that’s value. It’s about to value the soon-to-be-former truck driver’s time at near zero. And so he’s going to go from $46,000 a year to near zero. And that transition is going to be too much for him to bear, in many, many cases.
So No. 1 is, you have to look at it and say, technology is about to change the game for much of our labor force. And it’s not just truckers and retail workers and fast food workers, it’s accountants. I was an unhappy lawyer for five whole months, and I guarantee you can automate that job. If you have friends who are lawyers, they’re like, “Oh, yeah.” You already have AI that can do document review faster and more inexpensively than any human lawyer.
So this is like a buzz saw that’s just going to tear up certain verticals. And the verticals are associated really just with the economic returns. If there’s enough money to be made, or saved, by automating your job, then my incentives are high. If there are enough of you. It’s like automating a bartender’s job. It seems fairly low value. But then if you have 400 bartenders, you’re like, that actually adds up. And so MGM just automated away all its bartenders in Las Vegas.
So there’s this market pressure that we have to revise as fast as possible, which is that the market tells us how much our time is worth, and then we just plug in. And as it starts zeroing out more and more people, more and more people are going to get moved to distress. But because of the way we’re programmed, we’re like, “Oh, that’s your problem, you’re now worth zero, you should get educated and retrained so you’re not worth zero anymore, and let’s move on.” And that’s breaking down as we speak.
So big move No. 1 is, you lay the foundation and say everyone’s worth a thousand bucks a month, minimum. Just because you’re a citizen, you’re an American. It’s a foundation, it’s a floor. And $12,000 a year is actually a game-changer for tens of millions of Americans. You know this, 78% are living paycheck to paycheck, almost half can’t afford an unexpected $400 bill. So $1,000 a month? Game-changer.
It also has so many positive byproducts, where if you look at a town of 100,000 people, and they’re getting $12,000 a year, you’re talking about tens of millions of dollars that then circulate through that local economy. It ends up going to car repairs and day care and little league sign-ups and all these things, and ends up creating accessible opportunities in that community. So it’s not like the money just comes into your hands and stays there in your household. It actually circulates through the community and creates accessible jobs, for some of these people that are about to get automated away.
So if you’re the former truck driver and you move back to your town, and you’re like, “OK, my trucking job doesn’t exist anymore, that’s terrible. But I’m getting this freedom dividend of $1,000 a month from President Yang, there’s a trucker transition fund which is taking some of the $168 billion in savings and distributing it to truckers so that they have a cushion and a path forward.” Then you go back to your town, and then there’s more money being spent there, the garage is hiring, the nonprofit wants you to volunteer with the Little League. There are actually just more things to do in your community. So No. 1, you’re getting the boot off their throat to some extent. No. 2, you’re supercharging local economies.
And then the bigger challenge is trying to find new ways of valuing our time around our own needs and values. So one of the things I said at last week’s debate was that we have record-high GDP and record-high stock market prices, and also record-high suicides, drug overdoses, financial insecurity, stress, depression, anxiety. All these negative social ills are also at record highs. And the reason is that GDP has become this almost unrelated measurement of how we’re doing. And so the challenge then is to revise GDP so that instead of being this narrow measure of productivity, it integrates our health and well-being, our mental health and freedom from substance abuse, childhood success rates, environmental quality. Even engagement would work. Like you could do — you can plug in different measurements and build a composite.
And then if you make these the new measures of economic progress, then all of a sudden, if I go back to my hometown and I do something that helps these kids, instead of it being a cost, it’s actually like an economic driver. It turns teachers into economic drivers and investments. It turns caregivers into economic investments. And that sounds very fundamental, but it’s actually crucial, because the capital efficiency measurement’s going to punish more and more of us very, very quickly.
And we came up with GDP almost a hundred years ago. Even the inventor of GDP said it’s a terrible measurement for national well-being; we should not use it as that. And now we’re following it off a cliff, because GDP now is going up. Like when I make self-driving trucks, that’s going to be tremendous for GDP. That’s going to be terrible for the 3½ million truckers and the 7 million Americans who work at truck stops, motels, diners and retail establishments that rely on the truckers getting out, having a meal.
Garza: Have you given any thought to the structure of how this would function? How we’d distribute these funds? Where the initial capital outlay would come from? How it would fare over the years? Would it look like our other entitlement programs, or something completely new? Or are you just sort of thinking about it conceptually, leaving the nuts and bolts for later?
Yang: The implementation. Yeah, no, we have some really good examples of implementation. And the biggest example is Alaska. It’s had a dividend for almost 40 years, passed by a Republican governor. Everyone gets $1,000 to $2,000 a year, and it’s wildly popular. Has improved children’s health, has created thousands of jobs, and it’s decreased income inequality. So you don’t have to look that far. And they don’t means-test it. They’re just like, “If you’re in Alaska, you get your money.” And they pay for it with oil money.
What I’m saying to the American people is that technology is the oil of the 21st century. That when I have artificial intelligence that can do the work of hundreds of thousands of call center workers, that counts. Right now, how much of that value is the American public going to see?
Garza: So Facebook, Google, Twitter, those companies would —
Garza: ... shell out the initial outlay?
Hall: So you would force them to pay it into some giant fund?
Yang: I mean, of course. That’s what government is for. But I’m happy to say that I have hundreds of techies who support me on this. They’re not all assholes.
Garza: Do any of them work for these big companies?
Yang: I’m sorry?
Garza: Do any of them work for Google, or Amazon or —
Yang: So Amazon is the most prominent example. Amazon is $1-trillion company that literally paid zero in taxes last year, and that’s not unusual. They routinely pay zero or near zero in taxes. So if you look around and say, “OK, let me get this straight. Amazon’s closing 30% of our stores in malls, putting hundreds of thousands of Americans out of work, investing billions in artificial intelligence and paying zero in taxes.”
I mean, that’s like the current American economic system summed up, essentially. And then we look around and be like, “Oh, where are we going to get the money?” It’s like, it’s so obvious.
Goldberg: You’re not talking about imposing your fee on certain companies. You’re talking about changing the tax structure, right? To raise the money necessary to cover this program. That was my understanding of your position.
Yang: That’s correct. But if you look at putting a tax in place that harnesses the value that’s getting generated by these companies, who are the biggest winners in the 21st century economy, it is the Amazons, Googles, Facebooks, Ubers of the world. And again, right now, when we devise artificial intelligence that replaces hundreds of thousands of clerical workers, how much of that value is the American public going to see? Right now in our current system: zero. Because the global tech company that comes up with that artificial intelligence will just move their earnings through Ireland, and the American public will see zero.
And so the trends of distress are just going to get higher and higher, because then you’re going to be looking around again being, like, “Where’d the money go? Where’d the jobs go?” And we know where it’s going. It’s just the American public is not actually seeing any of those gains. And our politicians, none of them understand technology. Not none of them — virtually none of them understand technology to any significant degree. And so if you talk to them about this stuff, their knowledge will be superficial at best.
They certainly don’t understand the way it’s interacting with the labor force and the phenomenal value that’s about to get generated. None of our economic models predicted zero marginal cost. It’s like, if I come up with AI that can replace a truck driver, I can replace 3½ million truck drivers. The cost to me after the first truck driver — the first truck driver might cost me $10 billion. The next [will] cost very, very little.
Anyway, so this is tied in too to the roll-out of 5G, which is that, if you get to 5G, then you can equip these trucks with tele-operating software that will enable a user to beam into the truck in real time. Because right now, these trucks struggle with bad weather. If you have bad weather, then self-driving trucks are very error-prone. So the most realistic solution is to beam a driver virtually into the truck.
Goldberg: A remote driver.
Yang: Yeah. And then they just look out the front through video cameras and play it like a video game. And then the computer beeps at them and says, like, “I’ve got it from here, it’s higher visibility.” I mean the economics are so good, that it would actually pay off just to pave, like, a highway, just for self-driving trucks, like, across the country. Then you’d still end up saving billions of dollars very quickly. And you could make that highway, you can make it self heating. You could have it be, like, very, very clearly marked in every place, so that even a really, like, uncertain computer would see all of the — like, you wouldn’t have to deal with any passenger cars that make unpredictable decisions.
And right now, states are fighting over themselves to try and get any share of this money, because we’re in this society where every locality is competing against every other locality for any shred of money. I mean, you saw it with this garish Amazon HQ bake-off, where it was obscene. Dozens of American communities spending thousands of man and woman hours on these proposals that were just going to get tossed in the trash, because [Amazon] was going to go to one of three places.
Anyway, and so you know, it’s — the problem in American life is that we have essentially just given up on everything about the market and said, like, “Whatever the market says goes.” And the market’s going to destroy us.
Healey: So if we could circle back to a couple of things? First, you talked about fourth industrial revolution.
Healey: If you look at the previous industrial revolution, there’s no question that the invention of all the equipment that John Deere makes put a whale of a lot of people out of work.
Yang: Yes, it did.
Healey: But it also created an enormous number of jobs. There’s a recent book [“The Fourth Age” by Byron Reese] written by a tech guy, who pointed out that every major industrial transition has raised the same fears and produced the same result, which is more jobs. So clearly, as problematic as automation may be for somebody in a job like a cashier’s job, or a truck driver’s job, it’s also an opportunity being created for other people.
Yang: Oh, it’s going to create many jobs that we cannot predict. The problem is that those jobs will be for different people, in different places, with different skill sets than the jobs that are being lost. The other problem is that the new jobs that are created will be in smaller numbers than the jobs that are being lost.
Healey: History disagrees.
Yang: Yes, but —
Healey: So what’s different this time that makes you think that, unlike every previous revolution in terms of economies, this one is going to create fewer jobs?
Yang: Sure. So I’ll say three things. The industrial revolution that most people cite is the one at the turn of the century. And if you look at what happened in society during that period, you had mass riots that killed dozens of people and caused billions of dollars’ worth of damage. And we implemented universal high school in 1911 as a response.
So the timeline is 1884, labor unions come into being, start protesting for rights: massive conflict. And then we implemented universal high school in 1911. And things get better after this incredibly difficult period. Now experts, when they look at the labor market, predict an absolute worker displacement at two to three times the level of that industrial revolution, faster. So if last time, 120 years ago, you had mass riots and had to implement universal high school and had all this social change, and this time it’s going to be two to three times that rate, then you would predict terrible things, and then very, very dramatic responses. That’s just based on history.
No. 2 is that the technology that’s coming online this time is just very, very different than the ones that had come before. Where in the past you are getting rid of primarily repetitive manual labor in factories and assemblylines, this time you’re going to get rid of repetitive cognitive labor. And unfortunately, that’s a lot of Americans. Forty-four percent of American jobs are either repetitive manual or repetitive cognitive.
The third thing is that if you look at right now what’s happening in our labor market, there is no reason to think that our labor market is going to respond to this dramatic change through massive worker relocation, retraining and dynamism, because the numbers just don’t show it. If you look at right now, the rates of interstate migration among American workers as one example, [are at a] multidecade low. Instead of seeing this massive refitting of our economy, you’re actually seeing millions of Americans just hunker down. So to the extent that you expect this massive evolution in our economy, it just does not show up in the numbers.
Hall: Can I ask you a question?
Healey: Before that, if I could get back to —
Hall: Sure, of course.
Healey: ... the other thing. Sorry. Your tax plan? If you could get into maybe just a little bit more detail, because if you’re talking about essentially finding money in Uber or Amazon, Uber has never made any money, and Amazon doesn’t make money because it is pouring money back into its business.
Yang: That is exactly the problem, because what happens right now is if you say, “Hey, a company X, like, has to share profits.” They’re too smart to ever show profits that you can then tax. So what you have to do is you have to join every other advanced economy, and even some of the not-so-advanced economies, and have a value added tax. And then if Amazon comes to you and says, “Hey, I didn’t make any money last year,” you’d be like, “I don’t care. You have to give me a toll on every transaction, because you’re benefiting from our market infrastructure, society, protection, everything else.”
Every other advanced economy has already made this move.
Healey: And do you do that in addition to income taxes, and sales taxes, and property taxes, etc.? Is it another layer, or does it replace some of the existing —
Yang: It’s the most important layer. Because again, if you imagine a world where I have a truck that can drive itself, the American public will see zero of that. But if I get 10%, then that’s tens of billions of dollars, very, very quickly.
I mean, what’s the joke? It’s like, “Why did I rob the bank? Because that’s where the money was.” It’s like right now, the confusion in American life is everyone’s talking about everything but where the money actually is. It’s like if you have, like, a trillion-dollar tech company paying zero taxes, you’re like, “Well, that’s a broken system.” And it’s not Amazon’s fault. It’s their job to pay zero taxes. Their accountants are high-fiving [CEO] Jeff [Bezos] at the end of the year, and then they’re getting briefcases of money and going back to their mansions, and drinking some fine wine or whatever. I mean that’s more or less their job. It is our job to build a system that makes that impossible. And our current politicians are not up to the task. They’re getting —
Goldberg: To Jon’s question, are you going to remove the sales tax, local state sales taxes? You’re gonna get rid of the federal income tax in order to do this? Or are you going to raise the tax burden generally in order to raise the —
Yang: I would pass a value added tax that would generate $800 billion a year in new revenue, conservatively. And then I would be distributing all of that money back to the American people immediately in a way that would then make our people, families, communities, stronger, make our consumer economy stronger, and make it so that more Americans actually have a path forward. And a lot of that money just ends up absorbed right back into these businesses that are paying in. You can create a virtuous cycle very quickly.
Hall: Well, also, without changing the other layers of tax, it means a lot of that is going to be siphoned to sales tax, property tax, to whatever tax. Income tax. So why not tinker with those as well?
Yang: Oh, I’d want to tinker with them over time. So I would make our income taxes generally a bit, or a lot, more progressive than they are right now, because they’re anomalously low at the higher levels, relative to other developed countries.
But again, the example I use, like, Jeff Bezos post-divorce is worth, what, $120 billion? If you were to go and say, “Hey, I’m going to increase the marginal tax rate to 70%, 75%, how much of Jeff’s $125 billion are you gonna get?”
Healey: None, if it’s not annual revenue.
Yang: None. Because he’s way too savvy to pay himself billions in salary and then pay taxes on it. Like, most all of his wealth is in Amazon stock. So what you do is you ding him when he takes out his billion dollars every year to pay for rockets to Mars. It’s like you get him on the consumption.
This is one of the mistaken approaches, is that most ordinary Americans rely upon income. So that’s the way we think about it. But most super-wealthy Americans do not rely upon income. And so we argued about income taxes, we’re missing the real value drivers.
Hall: So speaking of taxes, the thousand dollars a month that you’re going to give everyone, will that be taxed?
Yang: It will not be taxed. But it would likely move your income levels up to a point where it does — where some money is going to get taxed if you’re making any additional money.
Hall: So then that’s taxing. I mean, if $12,000 gets added to your income, and then it’s being taxed.
Yang: Oh, so in theory you could be doing nothing and get the $12,000 and not pay taxes.
Garza: Would this replace welfare?
Yang: So it’s universal. It’s opt in. And if you opt in, then you’d be choosing to forgo benefits from certain other welfare programs.
Garza: Oh, it’s opt in. OK.
Goldberg: What’s the benefit of giving $1,000 a month to people who don’t need it? Why not make this specifically money that goes to the people you’re talking about who are going to be automated out of their jobs, or people who are currently living below the poverty level?
Yang: Sure. So there are there three things. No. 1 is, you have something like the EITC, or the earned income tax credit, which is phenomenal. It’s fighting poverty. It’s doing great work. About 30% of the people that are eligible for the EITC do not receive it because of administrative barriers, or they don’t know. It doesn’t get to them. There’s also a timing issue, whereas if you have like an adverse circumstance or a health problem in July of this year, like, the EITC is not going to come into your pocket until significantly later. So if you look at trying to tailor it towards certain people, you end up having this 30% or so administrative fall-through, and a time and a payments problem.
No. 2, Alaska has made it universal, and one of the benefits of it being universal: no stigma, everyone likes it. No means testing. No incentive to report, like, lower income in a particular period. Like all of that stuff disappeared. It’s just: You’re an American, you get your thousand bucks. And then if you’re Jeff Bezos, you remind him that he’s an American, being like, “Hey, Jeff, do you want your thousand bucks a month?” And it’s true him getting his thousand bucks a month is an economic non-event. Like it has literally zero impact on the economy. But you do something very dramatic by making it universal. You make it so that there’s no, “You get it. I don’t.” No, “I’m doing this for you.” It’s just like, “Look, you’re an American. You’re a citizen of the richest country in the history of the world, and you get your dividend.”
Goldberg: It’s a very costly way, though, of just getting rid of stigma.
Yang: Well, there aren’t that many rich people. If you look at our income distribution, [for] the majority of Americans who are going to get this money, it’s going to be like a game-changer. If you include the people at top — the other thing is that if you’re paying for it through a value added tax, most of the truly wealthy will end up paying into — it’s not some vast multiple of $1,000 a month. That was the third point.
The third point is that if you’re literally just taxing those who benefit society the most, then your millionaires or billionaires will end up paying in hundreds of thousand dollars. And if they decide to opt in for a thousand bucks a month, then it’s not very expensive.
Hall: Also, there might be social pressure to not opt in, if you’re very wealthy. Like to make a big deal about not opting in.
Yang: Or you opt in, and you give it all to charity. You opt in, you give it to another American. There are a million things you could do.
Goldberg: What’s the cost of the whole program?
Yang: So the headline cost is $3 trillion, if you don’t include the fact that a lot of the spending is going to get knocked out by existing welfare. So I just want to start with the $3 trillion just so you can all understand it. And then you see how it shrinks very quickly. So the $3 trillion goes to about $2.2 trillion after current welfare spending.
Then if you have this value added tax, that gets you another $800 billion or so plus. So you’re down to something like $1.4 [trillion]. Now here’s where the magic —
Goldberg: Sorry, the VAT gets you how much?
Yang: Eight hundred billion. Now here’s where the magic kicks in. And it’s so fun. If you put that money into people’s hands and they spend it, then you end up spurring significant economic growth. You end up growing the consumer economy by between 10% and 12%, create 2 million new jobs. And that conservatively ends up generating between $400 billion and $500 billion in new tax revenue.
Garza: Is that what happened in Alaska? With the oil dividend?
Yang: Yeah, I mean it certainly — it’s had all of these effects at lower levels, because you’re talking about $1,000 to $2,000, but it does —
Garza: They’re having real economic problems right now.
Yang: Yeah, they are.
Garza: Because the well’s run dry.
Yang: Yeah. Well, the technology well may never run dry. So all right, so you have hundreds of billions in new revenue. And then here’s where it gets awesome. If you were to make our family stronger and healthier, what would actually happen in real life? You’d have better educational outcomes, better physical health, better mental health. And one study showed that alleviating extreme poverty would increase GDP by $700 billion a year, based on just better health and education outcomes.
So you get back a lot of that money. And then you save hundreds of billions on things like incarceration, homelessness, services, emergency room, health care. I was with a prison guard in New Hampshire. Very, very politician sounding of me, I know. But. And he said we should pay people to stay out of jail, because it costs so much when they’re in jail.
So right now, the way our society works is we try and get away with not investing in people, and then we end up paying for it in much more expensive, and punitive, and destructive ways in the back end when they have problems, or commit crimes, or fall through the cracks or any of these things.
So the cost actually goes down very, very quickly as soon as you start realizing all of the gains from what I’m calling the trickle-up economy. From people, families and communities up. This is actually a much less expensive way to approach this set of problems than anything else anyone’s proposing.
Hall: Do you have any thoughts on homelessness and how to deal with it?
Yang: Yeah, I do. So the problem right now is if there’s a homeless person on the street, what’s my economic incentive to help that person? Nothing. Maybe if I’m a business and I want to clear them out from my block, then I have an economic incentive. But other than that, I don’t have any incentive to do so. [Or if] I’m a government agency. Now it’s my job to take care of him, because I’m tasked with trying to help homeless people. But it’s not like I’m getting paid per person I help.
But with the freedom dividend, all of a sudden, that person’s worth 1,000 bucks a month. And you know, if I help that person — if I’m a government agency, I’m getting 1,000 bucks a month from the federal government just by helping a person. If I was an entrepreneur and I helped the person, it could be worth money to me too. It infuses that —
Healey: I’m not following.
Yang: All right, so let’s say I’m a 50-year-old homeless person on the street. Am I getting my freedom dividend? Of course not. I haven’t signed up. I don’t have a bank account. I don’t have anything. Now, let’s say that an entrepreneur were to show up and say, “Hey, let me help you. I’m going to invest thousands of dollars, and weeks, and months of time in your rehabilitation and treatment. And a month in, I’m going to sign you up for your freedom dividend from the government. And then we’re going to keep half of it for a certain period of time, because that’s the deal I made with the government. That, if I can help someone get on their feet then I get paid, like, you know, 500 bucks —
Garza: Why would you expect charities to do that? Which they already do now, particularly for indigent seniors, and helping them capture their Social Security —
Yang: Exactly! And so I ran a nonprofit for seven years. So when I say “entrepreneur,” I’m not saying some Silicon Valley whiz-bang; I’m talking about, it could be the local nonprofit, where they look up and say, “I help these people anyway, and I’m not getting paid back for it. I’m getting money from donors, but now if I help get 100 people off the street and on their feet, that’s $100,000 a month. I’m not going to keep it all, because it’s the person’s, but maybe I keep some of it?”
Hall: But that’s economically exploiting the homeless people. I mean, wouldn’t it be better —
Yang: It’s —
Hall: Go ahead.
Yang: It’s actually saying that homeless person has value.
Hall: Yeah, but wouldn’t there be a better way to, and by the way, now, when outreach workers go to a homeless person, one of the first things they do is figure out if you have money coming to you through SSI, or whatever kind of disability [subsidy]. So I’m sure they would just add the freedom dividend to that, and find a way to get them the freedom dividend, which would actually make them more viable when it came to trying to house them, I think.
Yang: Yes, that’s right.
Hall: Which might actually be better than just the entrepreneur pocketing half of that —
Yang: No, no, not that. It’s just, the entrepreneur’s trying to get them into housing, or the nonprofit is trying to get them into housing. They’re trying to solve the problem. So the way I — I shouldn’t use the word entrepreneur, because apparently that has various associations.
Garza: No, no. It’s OK. We’ve been talking about Amazon, and Google, and Facebook —
Yang: Yeah, sort of the dark side of it.
Goldberg: Why should American voters have confidence that you, who have all these out-of-the-box, as-yet-untried ideas, and yet have no public policy experience, no experience — why should they have confidence that you can accomplish these things you’re talking about?
Yang: So the first thing is that I’m already one of only two candidates that over 10% of Trump voters say they would vote for. And the reason for that is that I’m non-ideological, and everyone can sense that about me. I’m just solutions oriented, I want to solve the problems, I see what’s happening. And right now we have this incredibly polarized, gridlocked political system, and they’re just headbutting. Confidence in Congress is, what, 12%? When we elected Donald Trump, [it was] in part because the American people, tens of millions of American people, had thrown up their hands and said, “This government is not responsive to our needs and problems. Is not able to solve the true issues.” And so the question is, how can you shake up right now this gridlock in a way that will enable us to solve the problems, to get things done? And my campaign is already drawing in tens of thousands of disaffected Trump voters, and independents, and libertarians, and conservatives. The freedom dividend is bipartisan. Alaska is a Republican state that implemented it, and if you look at conservatives, what they detest is a giant government bureaucracy and making everyone’s decisions. They do not mind the idea of a dividend that puts economic independence into people’s hands.
And if you are a liberal and a progressive, then you like it because you’re eradicating poverty, you’re helping make children and families stronger, and healthier. You’re valuing the work that women do, like my wife, who’s at home with our two young boys. One of whom is autistic. That right now gets valued at zero. You help balance racial inequity. You start doing all the things that many liberals value deeply, and you can do it in a way that it appeals to people at every point in the ideological spectrum.
Garza: How do you sell this to people who are already worried about illegal immigration, and people “invading” this country to get welfare benefits? I mean I’m not saying I agree with that, I’m just saying there are people obviously who believe this, and would just see this as another draw to the United States that’s going to —
Yang: Well, what I’d say is No. 1, only citizens get it. No. 2, the incentives right now to immigrate to this country are sky-high anyway. And so it’s not like the fact that citizens enjoy this new benefit is going to somehow make it, like, “Oh, I wasn’t going to go there before, but now I will.” I mean people have wanted to come here for generations, because of the opportunity relative to their home country.
Garza: Would you make it easier for people to become immigrants, to become citizens, and to immigrate into this country?
Yang: I am for a long-term path of citizenship for people who are here and undocumented, yes. But when I say “long-term,” I mean years and years. And so, the path would be difficult enough so that citizens looking at it would say, “I understand the balance and the trade-off.”
McGough: Yeah, I was just going to say in the same vein, how does this proposal at all map on to what you would do in, say, health care?
Yang: So there are three things that are driving Americans crazy right now in terms of our costs. They are housing, education and health care. And if you look at the rates of inflation, those are the causes of consumer-based inflation. If you look at media, electronics, clothing, toys, cars, everything is getting better or cheaper except for housing, education and health care.
So health care right now is getting to a point where it’s actually starting to break the back of our economy. We’re up to 18% of GDP. We spend twice as much as other countries to [produce] worse results. So, I believe we need a quality public option. I would not immediately get rid of private insurance, but if you do a good enough job then you can out-compete private insurance very straightforwardly by negotiating lower rates, getting access up and prices down.
There’s just so much waste in our health care system right now. It’s staggering, because it’s built around revenue and not health. Right now all of the incentives for the companies are around doing more and profiteering. I have a friend who’s a private investor who said she has never seen gouging and profiteering at any level that currently exists among the device companies, the drug companies and the health care companies.
So the only way to try and get those costs down for the American people is to have a quality public option. So if you look at my vision for our economy, it’s everyone gets 1,000 bucks a month and there’s a public option for health care that’s free, or near free. And then this ends up making our labor force and our economy much more dynamic, because right now so many of us are fixed in place because of a combination of factors, but health care is one of the big ones.
Healey: Every four years or so we’re seeing “change” elections, whether they’re changing the control of one chamber of Congress, or control of the White House. So there is a persistent — it’s been this way for more than two decades — a persistent feeling in the country that Washington is not performing for them. How do you analyze that, and how do you fix it?
Yang: I think that sentiment is dead on. Washington has not been performing. It’s not actually responsive to the will of the people anymore, in large part because it’s been overrun by corporate money, and the individual legislators’ incentives do not actually align with the incentives of their constituents, or the will of the people, at all. If you were the average congressperson, you spend a lot of your time hustling for money and trying to get reelected. And then that leads you to want to be in lockstep with your party’s leadership. And so you wind up with these two parties that actually all do fine if no problems get solved.
I mean, Washington, D.C., is the richest metro area in the country now. And reflect on that for a moment. How the heck did that happen? You’ve had this systematic siphoning off of our society’s wealth, and it goes back again to the original point, [which] is that money has overrun our society, our government, our politics, our political class. They all just do what is going to make the most sense for at least someone, generally themselves, but someone financially.
And so we’ve been casting about for a genuine change agent for at least 12, 15 years at this point. And if you reflect on it, what happened? Barack Obama wins in ’08. That’s a change election. Last cycle, Bernie Sanders’ outside success, and Donald Trump’s victory — I mean, like it or not, that’s a change election, though a change in the wrong direction. And the pendulum’s going to swing in the other direction because the American people are still looking. The opposite of Donald Trump is an Asian man who likes math. You’re sitting with him right now.
Healey: But as you pointed out, there is a sense in Washington that doing less is better for the occupants.
Healey: So you’ve got big ambitious ideas. How do you get them done?
Yang: The fun thing about this is that, imagine a world where the Asian man who wants to give everyone a thousand dollars a month wins. And it’s very, very conceivable. If you look at the map, New Hampshire — what’s the third party of New Hampshire? Libertarians. Libertarians love the freedom dividend. It’s almost named after them, and one of their foremost patron saints championed it, Milton Friedman. So Andrew Yang finishes top one, two or three in New Hampshire, and then that dominates the headlines for a solid week, because everyone looks around and is like, “Wow, Andrew Yang did what in New Hampshire?” Steve Marchand who ran for governor in 2018 as a Democrat endorsed me, and the Boston Globe looked up and said, “Steve Marchand endorsed Yang?” So, it’s an open primary. You do not need to be a registered Democrat in New Hampshire. So you’re going to see tons of Republicans, and Libertarians come out for me in New Hampshire, drive tons of headlines for a solid week, shock the world. Then we go to —
Garza: You think you’re going to draw some off of Trump as well?
Yang: I’m already drawing. If you go online right now, you’ll see thousands of people saying, “I voted for Trump and I’m voting for Yang this time.” And if you think about even Donald Trump’s narrative in the last election, what did he say? “You’re struggling, you’re getting left behind. I’m going to bring the jobs back, build a wall, turn the clock back.” And they knew on some level that was nonsense, but they also said, “OK, he’s speaking to my problems.” So what was the Democrats’ response to that?
Healey: You can’t do that.
Yang: America is already great. That is what the Democrats said, remember that? And then Democrats lose that group of people. You do not see Andrew Yang saying, “We’re already great.” I’m saying, “We’re falling apart.” And so there are a lot of Republicans who are going to come out for me, because I’m calling out some of the same problems that Trump called out, but I have real solutions. Solutions that they can sense would actually improve their lives. They look up and say, “Wait a minute. My jobs are disappearing. My main street’s closing. My hometown’s a mess. My kids are addicted to opiates. My school’s shrinking. My property taxes are going up because the population’s shrinking. And Andrew Yang wants to give me a thousand bucks a month, and that at least makes sense to me.”
So I win New Hampshire, or come very, very close. We go to Nevada, go into South Carolina. Super Tuesday. And so imagine a wave that sweeps me into the Oval Office. Democrats and progressives will be so thrilled to have beaten Donald Trump, they’ll be like, “Wow, we took a bet on Andrew Yang, and it actually worked.” And so every Democrat in Congress is like, “Let’s get it done.” And everyone will know I won because of the freedom dividend, so they’ll be like, “All right, let’s get the freedom dividend going.” And then the Republicans in Congress will look up and say, “Wait a minute. Do I really want to stand in the way of my constituents getting money in rural areas, red states in the interior, and places that have gotten blasted by automation?” Can you imagine that congressperson being like, “This money is going to hurt you”? And you don’t need 80% of Congress, you just need 51%. Then you get this done, this dividend done, and then you’d see tens of millions of Americans look up and say, “Wow, that happened? The government did something right that actually makes my life better, that I like? This is a very different feeling.” And then after you get that dividend done, that’s bipartisan. Who doesn’t like the dividend? Then you look at getting other things done that people can get behind.
Healey: You just asked a question that I’d like to try to answer. Who doesn’t like the dividend? There is a strain of thought out there that says, you are disincentivizing work. That the dividend amounts to a damper on productivity and output.
Yang: Sure. Studies have shown that two groups work less if they get some extra money. New moms who spend more time with their kids, teenagers who spend more time in school and graduate on higher levels. Other than those groups, work levels remain essentially constant. And if you think about it, it makes sense. If someone gets 1,000 bucks a month, is that enough that they’re going to quit their job? Of course not; it’s below the poverty line. Who can thrive on 1,000 bucks a month? Virtually nobody. But does it give you an actual leg up and path forward where maybe you might switch jobs? Or maybe you might spend a little bit of time with the kids while your spouse does something? Yes, it does. So it ends up being this almost lubricant, or transitional step. But it’s not enough to thrive, or disrupt the labor market to that high of degree. And the studies bear that out.
Garza: How do you account for employers who realize that everyone’s now getting this $12,000 a year, and just adjust their wages downward, thinking, “You made $80,000 before, this was an $80,000 job before and now it’s a $68,000 job?”
Yang: You know what’s interesting is that what would happen is that, certain jobs might actually have to pay more. Where if you look at, let’s say, a punishing subsistence-salary job where you’re paying someone nine bucks an hour and you’re mistreating them, they’re getting 1,000 bucks a month and they say, “You know what? I really don’t need this job that much. I hate this job. Everyone hates this job.” And then they’d look up and be like, “OK, No. 1, maybe we can automate some of this job. But then No. 2, maybe I need to start paying people 12, or 13 bucks and hour, or 14 bucks an hour because — “
Garza: Or be nice to them?
Yang: Or be nice to them, right! Like, I can’t exploit people, I can’t abuse people, I can’t act like, “Oh, if I fire you then you’re going to die.” Right now, unfortunately, most Americans actually feel that way — like, “If I lose my job, my survival is at stake.” So there are some instances, what you’d actually see is, you’d have certain types of work that might pay a little bit less because people really love those forms of work. So that might be volunteering, teaching, coaching, like a bunch of stuff that we would just do naturally ‘cause we like it. And then journalism maybe. And then certain jobs —
Healey: Wait, I don’t think that that’s possible.
Yang: And then certain jobs — yeah, no, I understand. Journalists couldn’t get paid less than [they’re being paid]. I agree with that. And then on the flip side, you might have to pay really punishing, miserable jobs more.
Goldberg: We’re just about out of time —
Garza: Can we just ask about the —
Yang: Please —
Garza: ... shootings, since it’s the big news of the last couple weeks? If this happened during your term, what would you do? What’s your response to mass shootings, and the calls for gun control?
Yang: I mean as a parent and American it’s horrifying and tragic seeing these lives getting taken when they’re shopping, or going out. So I’m about to announce an eight-point plan to address gun violence, and it starts with the things that other people are talking about, which is common sense gun laws, and universal background checks, and red flag laws. And calling out the fact that we have political leaders, especially President Trump, who’ve helped incite an atmosphere where some of this violence is happening. And we have a government that’s being held captive by gun manufacturers and lobbyists in the NRA.
So those are the three that I think most Democrats would agree with and are talking about. But then I also have plans to address the economic insecurity that is elevating stress levels and dysfunction around the country, which is a factor, and an educational system that some find deeply alienating and regimented. And so if you show up and you’re not fit for the school, or the environment, then you end up being marginalized. And sometimes that turns into someone lashing out in various ways. The fact is that we’re in the midst of a mental heath crisis in this country, and we need to invest more.
My brother is a clinical psychologist, and I know that a very small fraction of the people that could benefit from treatment are receiving it. Addressing the spread of these ideas online through the dissemination of hate-filled ideologies on these websites, ’cause the internet’s much more powerful at transmitting negative ideas than positive ideas. And it’s a fundamental reality that we’ve not gotten our arms around at all. And then trying to help families in various ways. ’Cause right now 40% of American children are born to single-parent households, primarily moms, like 90% single moms.
And the data shows that little boys in particular are sensitive to parental time input, or the lack thereof. So if you have a single mom who’s working all the time, and you got a little boy, and you’re not getting much parental time, then the odds of you having behavioral problems or functional problems are much higher. So we need to do the front line, which is addressing white nationalism, and guns, and the gun lobby, and political rhetoric. But we also need to try and solve the fundamental problems in our society that end up creating these conditions.
And I would suggest that economic insecurity is a massive driver of a lot of the stresses in our society right now. Where someone looks up and again, they don’t see a future for themselves, for their kids, you become much more subject to hatred and terrible ideologies in that kind of environment.
Goldberg: How old are your kids?
Yang: 6 and 3.
Goldberg: Great, thank you. Thanks for coming in.
Yang: Thank you all.
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