Mr. Yang’s appeal was very much in evidence as he met with us last week to advocate a new “human-centered capitalism” that emphasizes social indicators such as addiction rates and life expectancy, as well as economic growth. Attractive in theory, his vision gets complicated when Mr. Yang argues for a guaranteed $1,000 monthly cash payment to every U.S. citizen over the age of 18. In Mr. Yang’s view, this is the best way to break the link between a job and subsistence, in a world where robots will inevitably take on more tasks, and in which the market does not adequately compensate many valuable kinds of work (such as child care and artistic creation).
Like other proposals for a universal basic income, Mr. Yang’s “Freedom Dividend” could enable many people to optimize both what they do and how much time they spend at work, relative to the status quo. It could also, however, enable others to underachieve or even drop out of the labor force. We just can’t foresee the impact of such a vast change in incentives; limited universal income experiments so far don’t provide nearly enough data.
Undoubtedly, a cash benefit could be simpler, administratively, than the current array of means-tested safety-net programs. Yet as Mr. Yang proposes it, the Freedom Dividend would be enormously expensive — $2.8 trillion per year, according to a Tax Foundation analysis. Mr. Yang says the money would come partly from savings from eliminating other transfers, enhanced economic growth and a 10 percent value-added tax (VAT). The first two remind us of too many other “pays for itself” promises we’ve heard before. As for the VAT, congressional passage would be a major political challenge, and administration of it, potentially, no less complex than current benefit programs.
Notably, most of the Freedom Dividend would be transferred to people who are not poor. Mr. Yang argues that everyone up to billionaires must be included so as to remove the stigma that might otherwise attach to “welfare,” and to send the signal that basic income is a birthright. Yet there is no getting around the fact that he is proposing to tax a lot of money from people at every income level , then send much of it back to people who already are perfectly comfortable.
We think that the next industrial revolution, like others in the past, will create jobs as well as destroy them.. That doesn’t lessen the urgency to look out for those who are displaced through no fault of their own. But the smart way to do so is to focus support on those most at risk, through better education and enhanced subsidies for low-wage workers such as the earned-income tax credit. Perhaps our billionaire president needs the pink slip Mr. Yang wants to hand him; he definitely doesn’t need a government check.