Andrew Yang’s likes to proclaim, he’s some Asian guy wanting to give everyone a thousand dollars. He also wears a MATH cap to Make America Think Again. Though it doesn’t seem like anyone has really thought much at all when Yang cites Martin Luther King Jr, conservatives and the State of Alaska to justify his Universal Basic Income proposal, which Yang mirthfully refers to as a “Freedom Dividend.”

Why MLK Jr and conservative like Nixon and Milton Friedman supported a UBI or basic income for people on assistance was because not only did it simplified compliance, it also simplified regulatory oversight. So it more directly delivered assistance while REDUCING the need for government. So the the intent was to REPLACE the array of different assistance programs directed to the poor with the UBI or basic guaranteed income specifically for poor people who needed assistance. Thus under these versions, there’d be no “neoliberal paternalism”.

Now with Yang’s program, if you currently receive some form of assistance (e.g. SNAP) you can opt-in to receive the UBI or opt-out and still receive assistance from other programs. So all the oversight still needs to remain for those who choose to opt-out of Yang’s UBI, so there isn’t the downsizing of oversight that people like Friedman wanted. But for those who opt in, despite being freed from “neoliberal paternalism”, they’re still making a trade of one type of assistance for another. So their net benefit from a UBI, when unemployed because an automated self driving Uber car took their taxi job, is the difference between the UBI and current assistance which noted in the article was on average $833.00. This difference is $167.00 per month or $2,004 per year. Though, at least, if the UBI recipient now wants to buy alcohol or drugs with his “freedom dividend”  instead of food with food stamps, he or she is free to do so. There’s no nanny state stopping this recipient. 

But unlike MLK Jr, Nixon’s or Friedman’s basic income, Yang’s isn’t solely directed toward people on or in need of assistance, that is poor people. Nope it’s not means tested. So these people don’t have to make a decision to opt in or out . No trade off has to be made so these middle and upper class people are now netting the full monthly $1000 or annual $12000. That’s a benefit of nearly $10,000 more than the person who had to make a decision as to whether opting in or out gave him or her the most benefits.

I don’t disagree with a critique of conditionality and neoliberal paternalism, those are fine and essentially the same critiques of MLK Jr and conservatives. My problem is that Yang’s UBI isn’t mean tested, so the greatest benefit of the money are people who aren’t poor and don’t need any assistance. Here I’d at least make a precondition. for such people that if they wanted to get the money, that they’d have to do public service be that tutor kids or pick up trash on the beach. Though being a fiscal conservative, since the intent is BASIC income for poor people, I’d means test any UBI. (Note I also believe SS should be means tested- it was originally designed to be insurance not an annuity).

Now from listening to Yang explain his VAT, my understanding of how this application of a VAT tax works is a little different that the author’s. With VAT’s usually the costs are passed on to the consumer. From my understanding, Yang therefore wants to make sure that any costs paid by corporations are only passed onto more wealthy individual so the VAT isn’t regressive. Thus staples are not subjected to a VAT but luxury goods are. I haven’t heard Yang specify exactly what is a luxury good, but cars over a certain price, yachts. diamonds, etc typically fall into that category. The problem with this limiting the VAT to luxury items is that has occurred previously is that sales of such items drop, and the revenues anticipated don’t materialize.This was the case with G.W. Bush’s luxury sales taxes imposed in 1991 that were repealed in 1994.

Yang also always refers to Alaska to validate his “freedom dividend”. Though Yang should look a little closer at what’s transpired with the dividends in that state. When the dividend was cut, in part due to lower energy revenues, the candidate who became the new governor campaigned on restoring the full amount of the dividend. To do this, the now elected Governor has had to cut other programs including education. These cuts have caused a big brouhaha in the state. Here’s a good article on this topic: The fight over Alaska’s annual oil dividend teaches a harsh lesson about entitlements 

So bottomline, Yang’s UBI isn’t progressive and most likely would be underfunded. Moreover he’s being extremely misleading with the precedents he cites to validate his big proposal.