The automation revolution is coming for American jobs and this Democratic 2020 candidate believes a “Freedom Dividend” will help us cope with the fallout
In a year when the progressive Democratic platform is coalescing around variations of Medicare-for-All, free college and the Green New Deal, presidential candidate Andrew Yang stands apart — with a bold proposal to provide a “Freedom Dividend” of $1,000 a month to every adult in America.
Yang — a lawyer, technologist and entrepreneur based in Manhattan — believes Donald Trump was elected because of anger over the decimation of millions of American manufacturing jobs. And the problem will only get worse, Yang warns, as the engineers of Silicon Valley race to automate-away millions and millions of other jobs with robots and artificial intelligence, including truck drivers, grocery store checkout clerks and call-center representatives. (Yang’s outlook aligns with reporting by Rolling Stone on automation in trucking; read: Death of the American Trucker.)
Yang, 44, wants to cushion Americans from the pain of this technological revolution by creating a form of universal basic income, which would give Americans money in their pockets as a right of citizenship, alleviating poverty and stagnant wages, while stimulating Main Streets from coast to coast. He’d pay for it with a Value Added Tax (common in Europe) that captures 10 percent of the value of each transaction in the economy.
The idea of a universal basic income is actually a throwback. The House of Representatives passed a basic income bill during the Nixon administration. And Yang points to Alaska, where residents receive an annual dividend based on the state’s oil-extraction income, as a proof of concept. The petroleum dividend there, he argues, has created jobs, improved children’s health, reduced income inequality and is wildly popular — even among conservatives. “Technology is the oil of the 21st century,” Yang says. “And what we’ve done in Alaska we can do for everyone in America.”
The son of Taiwanese immigrants, Yang is a Columbia-educated lawyer who pivoted to the tech world, sold a GMAT test-prep company, and then launched a non-profit, Venture For America, which fosters young entrepreneurs to start businesses in struggling cities like Detroit and St. Louis.
Yang spoke at length with Rolling Stone after we added him to our 2020 Democratic Primary Leaderboard this week. Yang, who began his longshot bid in late 2017, has already visited Iowa and New Hampshire seven times each, even hustling himself into an Iowa CNN poll. He does not speak with the sweeping rhetorical flourishes of a politician. He prefers hard numbers and statistics. But his arguments are persuasive, and he insists he has rich backers in Silicon Valley who will help him mount a credible national campaign.
The following Q&A has been edited for length and clarity. We have not independently checked Yang’s many, many statistics.
Why are you running for president?
I spent about six years helping hundreds of entrepreneurs build businesses in Detroit, Cleveland, St Louis, Birmingham and other cities around the country. I was stunned when I saw the disparities between Detroit and San Francisco or Cleveland and Manhattan. You feel like you’re traveling across dimensions and decades and not just a couple of time zones.
And then when Donald Trump became president it shocked me even further. I realized that the reason that Trump won was that we automated away 4 million manufacturing jobs in those cities and around the country. There’s a direct correlation between the automation of jobs and the movement toward Trump in each individual voting district.
My friends in Silicon Valley know that what we did to the manufacturing worker we’re about to do to the retail worker, to the call-center worker, the fast food worker, the truck driver — and on and on through the economy. But when I talked to politicians and policymakers about what we’re going to do about the fact that we are in the midst of the greatest economic and technological transformation in the history of the country — and we already have Donald Trump in the White House — the answers I got were, frankly, somewhere between disappointing and horrifying. None of our political leaders are willing to acknowledge the elephant in the room that is tearing our communities apart, in the form of technological change. That’s why I decided to run for president.
I’ve reported on automation in trucking, and the jobs future there is bleak —
Truck driver is the most popular job in 29 states in this country. There are 3.5 million truckers, 94 percent are male, the average age is 49, the average education is high school, and they’re making $46,000 a year. Then add in another 5 million or so Americans who work in truck stops, hotels and diners that rely on the truck driver stopping everyday.
On the other side of the country you have my friends in Silicon Valley who tell me they are 98 percent of the way to automating away truck driving jobs. The economic incentives for them to solve that problem are staggering: $168 billion dollars per year not just in saved labor cost but in fuel efficiency and equipment utilization, because the trucks can run day and night, and [there would be] fewer accidents. About 4,000 Americans die in accidents with truck drivers every year. We have some of the smartest people in the country working on solving this problem — but when they succeed it’s going to be disastrous for hundreds of thousands of workers, and thousands of communities around the country.
You see Trump as an outgrowth of this kind of automation in our economy — with the suggestion that this could get much worse.
Donald Trump is not the cause. He’s the symptom of the fact that we’re in the third inning of the greatest economic and technological transformation in the history of the world. And we need to start attacking the disease as fast as we can. Yeah, certainly it could get much worse. If you look at the trucker: What will the next best economic alternative be when they start losing their jobs that pay $46,000 a year? Unfortunately, there aren’t tons of other jobs that pay that level for a middle-aged man with a high school education. And only 13 percent of our truckers are unionized. So anyone hoping that there’ll be some kind of grand negotiation will be disappointed. The vast majority of truckers are in small, individually owned firms of 20 or 30 drivers. And 10 percent of truckers own their own trucks. So imagine spending and owing ten of thousands of dollars on a truck that can no longer compete against a robot truck. Anyone who thinks that the truckers will just go home and say, “Well, I guess that was a good run, I’ll figure out the next step,” doesn’t understand our history or how hard people will fight to retain their livelihoods.
Or lash out at people who they perceive as scapegoats—
We’re the most heavily armed society in the history of the world, and there’s a significant overlap between truck drivers and gun owners. About 80,000 truck drivers are ex-military. This is not that hard to predict if you just look down the road.
I’ve spoken with economists who say this automation will be great for the economy and we just need to retrain the truckers and the others displaced by automation. What’s your take on that?
We’ve been brainwashed into thinking that people are infinitely adaptable or retainable, when the facts clearly indicate otherwise. I dug into what happened to the 4 million manufacturing workers in [places like] Ohio and Michigan that lost their jobs. My economics textbook said that they would be retrained for new jobs and that the economy would grow and all would be well. But that’s not what the facts were. Turns out that almost half of those manufacturing workers left the workforce and never worked again. And of those that left the workforce, about half file for disability.
We then saw massive surges in suicides, deaths of despair and drug overdoses in many of these communities. It’s clear that the manufacturing workers were not all magically reskilled. The success rate of government-funded retraining programs for manufacturing workers is estimated to be somewhere between zero and 15 percent, according to independent studies. So what happened to the manufacturing workers is about to happen to the truckers. There are irresponsible people out there saying that we will somehow magically retrain hundreds of thousands of truckers to become software programmers or something else equally ridiculous. If you actually go to these communities, you’ll see that the vast majority of these people do not enroll in these retraining programs, and even if they did, they would not work most of the time.
Your big proposal is a “Freedom Dividend” — or a universal basic income. Can you connect the dots between displaced truckers and giving every American money each month?
We spent a lot of time talking about the truckers, but there are a lot of other massive economic shifts that are going to displace millions of Americans working as retail clerks and sales clerks. That’s the most common job in the country. And 30 percent of American malls are going to close in the next four years. The average retail worker is a 39-year-old woman with a high school degree who makes between $11 and $12 an hour. And right now 57 percent of Americans can’t pay an unexpected $500 bill. If you’re dealing with an economic shift this historic, then you need to bring real solutions to bear that are going to help people manage the transition. And the most efficient way to do that is a universal basic income, which, as you say, I’ve rebranded a Freedom Dividend, because that tests much better with conservatives.
Is that true?
[Laughing] Yeah. Yeah. The numbers are very, very clear. Progressives, liberals and Democrats like it whatever you called it. Conservatives disliked it until it had the word “freedom” in it and then they liked it a great deal.
So the idea is $1,000 a month, no strings attached?
Upon adulthood. So when you turn 18, you start getting $1,000 a month.
And that’s regardless of whether you’re Jeff Bezos or—
The opposite of Jeff Bezos, that’s right.
Help me with the idea that Jeff Bezos needs an extra thousand bucks a month.
You want to universalize it so it’s seen as a true right of citizenship, instead of a transfer from rich to poor. But the way we need to fund it is by harnessing the gains from artificial intelligence and Big Data and autonomous vehicles. We’re in a trap right now where the big beneficiaries of all these new technologies are going to be Amazon and Google and Facebook — these behemoth companies that are not paying a lot of taxes [because they use accounting tricks and international tax shelters]. We have to join every advanced country in the world and have a value-added tax, which would give the American public a slice of every Google search and Amazon transaction. In your example, Jeff Bezos is going to end up paying much, much more into the system, so we won’t really care if he’s getting $1,000 a month.
Most Americans don’t have any experience with a value-added tax. Can you give a simple definition of what it taxes?
It’s a consumption tax on goods and services that gets paid by businesses at every point in the production chain. And the reason why other countries like it so much is that it is almost impossible to game, or escape, if you’re doing business in, or selling to a given population.
With the Facebook example — they’re getting advertising dollars. That doesn’t sound like “consumption” in the regular sense. How does that work?
Their advertisers would be paying a tax on the advertising services that they were getting. The point is the public always gets a slice.
So even out there in the digital ether, the value-added tax is still at work — and it’s not just for tangible things like cars or electronics?
Essentially when money is changing hands, value is changing hands, and we get a slice.
And all that adds up to what?
A value-added tax at half the European level would generate about $800 billion in new revenue. And that new revenue, combined with our existing spending on welfare, plus all the economic growth from putting $1,000 a month into Americans’ hands, plus the cost savings and value gains, would be enough to pay for a $1,000 dividend for every adult
A lot of moving pieces in that. But the idea is that if you imposed the 10 percent tax you can end up with $1,000 a month in everyone’s pocket?
That’s the basic idea. But it is important to consider the second-order effects. If you have a town in Missouri with 50,000 adults and they’re all getting $1,000 a month, that’s another $50 million in purchasing power that comes right into that town’s local economy — into car repairs, tutoring or food for your kids, the occasional night out, home repairs. And that money ends up circulating all through that town. So it’s not as straightforward as just we get the value-added tax and give everyone the money. The money doesn’t disappear. The money is growing the consumer economy and creating millions of new jobs because every Main Street is more robust and has more of a need to hire.
But $1,000 a month / $12,000 a year doesn’t sound like a great replacement for a truck driver who’s been earning $46,000.
It’s not meant to be a labor replacement. The hope right now is that if you’re a truck driver you can still have another number of years to drive your truck, and you’ll be getting $12,000 a year to be building up a savings cushion. Trucking as a distinct industry I believe needs some form of [additional] transition plan because that $168 billion that we’re going to save every year is enough to fund a significant portion of truckers’ current compensation and still have tens of billions of dollars left over.
But the Freedom Dividend actually would create millions of jobs throughout the economy and would start to broaden definitions of work to include things that we need much more of in this society. Things like caregiving and nurturing, arts and creativity, volunteering, journalism — which is dying in many, many communities. These are all things that right now we profess to value, but the monetary market is valuing them at lower and lower levels.
The Freedom Dividend frees us up to do more forms of work that more people want to do. And this in particular helps women, who right now are doing the vast majority of the unrecognized and uncompensated work in our society. My wife is at home taking care of our two young boys, one of whom is autistic. And the monetary market and GDP would both value her contributions at zero, when really that’s exactly the kind of work we’re going to need more of.
All of this seems like a great conversation starter. Are you just putting forward the ideas, or is it actually your ambition to become president?
My ambition is to solve what I see as the biggest problem of our time. And for whatever reason, our politicians on both sides are unable to even acknowledge it, much less try to address it. So if you’re asking, would I be upset if somebody else were to win the White House and do everything that I’m recommending? I’d be thrilled with that outcome.
We’re leaving a total shambles of our country for our children. Most people think about that in terms of climate change, which is a very real issue and an existential threat. But we’re also leaving them an economy that is going to marginalize and minimize the labor and contributions of more and more Americans.
And it doesn’t matter if you are a really hard-working, conscientious truck driver, or a lazy, careless truck driver. The self-driving truck is going to replace both. So we have to start facing facts that it’s no longer an economy that rewards us based upon merit. It’s about to throw hundreds of thousands of us overboard with very little distinction between different people in different roles.
You brought up journalism a bit ago as another dying industry. I was intrigued by your proposal to fund a journalism fellow in every congressional district in the country.
It’s virtually impossible to have a functioning democracy if people don’t know what’s going on. We’re coming out of a lucky time where many, many communities could have local papers that were supported by local advertising and classified ads. But then we got rid of the classified ads, replaced them with Craigslist, and journalism is now dying, and millions of Americans live in news deserts. So expecting Americans to be able to make intelligent decisions about their local issues or vote accordingly in the absence of local journalism seems ridiculous and impossible. With the fellows program, we’re going to fund a journalist in every congressional district. If you believe in our democracy we have to believe in journalism, and you have to put your resources in it to make it work.
You’re a successful guy, but don’t have a national profile. What should readers know about you?
I’m the son of an immigrant. My father is a Ph.D in physics who generated 69 U.S. patents for GE and IBM. My mom’s an artist. My brother is a psychology professor. I was an unhappy lawyer for five months in New York City and then left and started a dot-com that flopped very quickly. I worked for a health care software company in New York for four years and then I became the head of an education company that grew to become number one in the U.S. [in GMAT test prep] and was acquired by The Washington Post in 2009. At that point, I thought that we needed to get more young people starting businesses around the country and not all heading to Wall Street and Silicon Valley. So I started Venture for America and we helped create several thousand jobs in cities like Detroit, Cleveland and St Louis. And it was during that time that I realized we were blasting away hundreds of thousands of jobs in industries around the country.
You have a number of interesting policy proposals, including free marriage counseling for all. Is there one other issue you’d like to dive in on?
One of the key pillars of my campaign is that we need to start measuring economic progress and value differently. Right now we’re following GDP — and even the inventor of GDP says it’s a terrible measure of national well-being and we shouldn’t use it as that. Self-driving trucks will be great for GDP but it’s going to be very, very bad for a great many communities. So we need to update our measurements to things that actually correspond to how we’re doing — things like childhood success rates, mental health and substance abuse, average income, average health and life expectancy. If we had these sorts of measurements we would have a much better grasp on how to make progress. Because as a CEO, if you have the wrong measurements then you start driving in the wrong direction. And right now we’re following GDP, stock market growth, and headline unemployment off a cliff. All those numbers now have very little relationship to how most Americans are doing. Headline unemployment is particularly misleading because if someone leaves the workforce they no longer count. Our labor-force participation rate is down to 63 percent, which is the same level as El Salvador and the Dominican Republic. And almost one-in-five prime working-age men has not worked for a year. And this is the 10th year of an economic expansion when times are supposed to be great. There are all these people cheerleading these stats, when these stats are incredibly misleading and need to be updated for the 21st century.
What has your reception been like in the early voting states? This a pretty high-level stuff to try to communicate simply. Do you feel like you’re getting a message out?
When I go to Iowa, I ask: “Have you noticed stores closing near where you live?” And they say, “Yes. Yes. Yes.” And I ask, “Why is that?” And they think about it for a bit and then they say, “Amazon.” And I say, “That’s right, and is that going to get better or worse?” And then they say, “Much, much worse.” And I’m like, “Now my question for you is, what are you going to do about it?” And people are like, “Wow, I can do something about this?” And I say, “Yeah, you can if you make me president. I will bring back $1,000 a month that’s getting sucked up into the cloud, right back here to Iowa or New Hampshire to create tens of thousands of jobs in your Main Street economies and give your children a reason to stay.” And that’s been enough to get a lot of people in Iowa and New Hampshire behind me.
© 2021 PMC. All rights reserved.