Market Mad House

In individuals, insanity is rare; but in groups, parties, nations and epochs, it is the rule. Friedrich Nietzsche


What’s Wrong with Andrew Yang’s Basic Income Scheme

We need to discuss what’s wrong with Andrew Yang’s Basic Income scheme because the Democratic presidential candidate designed the plan badly. In fact, I think Yang’s plan is so poorly thought out it could give the basic income a bad name.

Essentially, Yang proposes a plan in which the world’s richest man Jeff Bezos can collect a $12,000-a-year basic income. Meanwhile, a homeless child, a single-mother on food stamps, and a retired worker on Social Security could receive nothing from Yang’s plan.

Sadly, my assessment is no fantasy. Specifically, Yang’s website promises a “Freedom Dividend,” of $1,000 a month or $12,000 a year for every American adult over the age of 18.” To clarify, the Freedom Dividend is Yang’s euphemism for a basic income.

Memo to Andrew Yang Children are Expensive

Thus, the Freedom Dividend will not help the 15 million or 21% of American children who live in poverty according to the National Center for Children in Poverty.

Children drag families into poverty because they increase expenses but do not generate income. For example, kids do not work but they still eat, require a place to sleep, wear clothing, and want things like toys.

In addition, children often limit a family’s ability to make money. For instance, women leave work because of pregnancy and the need to care for infants. Plus, most parents must take time off work to be with kids.

Having kids hurts middle-class families because each family spends $12,350 to $13,900 a year on the average child, CNBC writer Yoni Blumberg estimates. Hence, having kids increases families’ expenses while reducing their ability to make money.

Thus a better solution is to pay every parent or guardian a Freedom Dividend for each child. In fact, a Freedom Dividend for each child will give the average middle-class family a $12,000 a year income boost. Note: to Andrew Yang a per-child Freedom Dividend will guarantee you the Soccer Mom vote.

Andrew Yang wants to pay Jeff Bezos a Basic Income

Bezos; who has a fortune of $146.6 billion, could collect Yang’s Freedom dividend because there is no income limit. Therefore, Yang is giving critics the perfect argument against all basic income.

Meanwhile, Yang tells Joe Rogan he will subtract benefits like Food Stamps or Social Security from the Freedom Dividend. Hence, a waitress who receives $700 a month in food stamps will receive a Freedom Dividend of $300 a month. Conversely, Bezos could receive the full $1,000 a month basic income.

Additionally, a retired factory worker; whose only income is Social Security, will not receive the Freedom Dividend. Yang’s plan dooms the worker to poverty because the average Social Security benefit for an individual was $16,010 a year in 2015, The Pension Rights Center calculates.

Moreover, the average Social Security Benefit for a couple was $26,990 a year in 2015. Plus, the average Social Security benefit for a widower or widow was $15,435 a year in 2015.

Consequently, Yang’s Freedom Dividend will not be available to tens of millions of older Americans who worked hard all their lives. However, people like Bezos, Warren Buffett, Bill Gates, Donald J. Trump, and Beyonce could collect a $12,000 a year Freedom Dividend. Therefore, Yang’s Freedom Dividend proposal is both stupid and insidiously cruel.  

How to Fix Yang’s Freedom Dividend

Fortunately, fixing Yang’s Freedom Dividend to cover the poor and senior citizens and eliminate the billionaire’s gravy train is easy.

First, we can put an income eligibility cap of $300,000 a year on the Freedom Dividend. Under those circumstances, over 99% of Americans will receive a basic income. However, we can eliminate the news stories about movie stars, Ivanka Trump, and hedge-fund billionaires collecting the basic income.

Second, ignore entitlements like Social Security, unemployment insurance, veteran’s pensions, welfare, housing vouchers, and food stamps when determining Freedom Dividend eligibility. Instead, pay everyone who makes less than $300,000 a year a basic income regardless of the government benefits they receive.

Therefore, our hypothetical retired worker will receive a $12,000 a year raise from the Freedom Dividend. Hence, the retired worker will run to the polls to vote Yang. Plus, the waitress on food stamps will receive the full $1,000 a month.

Third, eliminate the 18-year age requirement from the Freedom Dividend. Instead, we should begin the Freedom Dividend at birth but send the money to the parents until the child turns 18.

Consequently, a family with two kids will receive a $24,000 a year income boost from the Freedom Dividend. My guess is that will turn most soccer moms and football dads into enthusiastic Yang boosters.

Yang is right about Basic Income

In the final analysis, Andrew Yang’s Basic income scheme has some serious flaws.

However, Yang is doing us all a service by making basic income an issue in the presidential campaign. Hopefully, some candidate will offer a better Basic Income proposal that helps all Americans.