Andrew Yang's Freedom Dividend: Could Basic Income Rebalance Our World?

Lauren Razavi
Lauren Razavi
Andrew Yang's Freedom Dividend: Could Basic Income Rebalance Our World?

Why it's a good idea for governments to give citizens free money.

What if citizenship came with a universal basic income attached?

I’m not talking about a welfare scheme or tax break if you happen to fit into the right box — I’m talking about an actual cash income, paid straight into your bank account each month. No questions. No judgement. No strings.

It could help with essential expenses like food, rent, and utilities, or provide some extra money to spend on family, friends, and hobbies. The important thing is you don’t have to do anything to “earn” it. If you’re entitled to citizenship, you’re entitled to your guaranteed dividend payment from the government.

Basic income: An idea whose time has come?

While it sounds radical, the idea is actually far from new. Philosophers, economists, politicians, and activists all over the world have spent decades discussing and advocating for basic income, especially in the United States.

In fact, one of America’s founding fathers, Thomas Paine, wanted to provide citizens with a guaranteed income from the very beginning, dubbing the payments a “natural inheritance”. Nobel Prize-winning economists Milton Friedman and Friedrich Hayek were also advocates of basic income during the 20th century.

By the 1960s, Martin Luther King Junior had declared his support, and more than 1,000 economists from 125 universities signed a letter requesting that the government implement basic income.

President Richard Nixon tried to do just that. In 1969, he introduced a bill to make basic income a reality. It passed through the House of Representatives with ease, but the Senate rejected it. Why? Because they felt the bill wasn’t ambitious enough. They wanted a higher rate of basic income for Americans.

Addressing the impact of technology

Today, Mark Zuckerberg, Elon Musk, Richard Branson, and Noam Chomsky all support the idea. But perhaps its most prominent advocate is Andrew Yang — a tech entrepreneur who’s running for U.S. President.

Yang’s signature policy is the “Freedom Dividend” — a basic income of $1,000 per month for every American aged 18 and over — as a response to automation and worker displacement.

Around half of the U.S. population currently works in fast food, retail, manufacturing, admin, or truck driving. Within two decades, robots and software will perform these jobs instead. Yet, in this new economy, people will still need to earn money to house, feed and clothe themselves.

Technology has increased human productivity exponentially over the past 50 years, but workers’ salaries haven’t risen in tandem. Commentators already point to employees feeling reluctant to ask for pay increases, in case their bosses decide to automate their jobs instead. So what can we do as the impact accelerates?

Andrew Yang believes basic income is the answer. Projections indicate it could boost the U.S. economy by $2.5 trillion within eight years, and it’s easy to see why.

Yang’s proposed Freedom Dividend is funded by a 10% federal sales tax, which includes capturing fresh revenue from companies like Amazon and Google — big tech firms that tax policies haven’t kept pace with.

Experimenting with free cash

Countless studies have shown that basic income is effective at reducing poverty and promoting equality. The policy rewards invisible but crucial work in the global economy. For example, people are compensated for the value they create by raising a family, caring for elderly relatives, or volunteering in their community.

Decades of real-world experiments have debunked fears that recipients will simply stop working, waste their money on drugs and booze, or decide to have bigger families.

Instead, basic income eliminates the bureaucracy and disincentives of present-day welfare systems; no more jumping through hoops to prove you’re in need or finding you’ll lose income by taking a job. You receive the payment regardless of employment status or salary bracket.

The policy also transforms people’s relationship with work: Having a financial buffer to take risks and try new things encourages entrepreneurship and experimentation. As a result, people are more likely to seek out work they enjoy and stick at it, making the labour market more efficient and productive.

Since 1998, more than 450 research papers on the effects of basic income have been published, and the findings are unequivocal: When governments give people free money, it enables them to live better lives.

It’s been 50 years since Nixon’s basic income bill was rejected and forgotten by Congress. Will the U.S. be bold enough to finally make it happen in the 2020s? It would certainly be an impressive show of global leadership in the Fourth Industrial Revolution.


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