Home
/
RELIGION & LIBERTY ONLINE
/
The #YangGang has a $3 trillion problem
The #YangGang has a $3 trillion problem
Sep 21, 2024 12:37 AM

Entrepreneur Andrew Yang is running for president as a Democrat. Yang has made a Universal Basic e (UBI) of $1,000/month to all American adults the centerpiece of his campaign.

While Yang doesn’t show up in any polls, he has a growing internet following that can be found under the hashtag #YangGang (not to be confused with Chinese politician Yang Gang).

The idea of a UBI has proponents on the political right and left. Proponents on the right tend to emphasize that an unconditional UBI would be more efficient than our current mishmash of welfare programs, which require a large bureaucracy tasked with determining each applicant’s eligibility and then making the paternalistic calculus of what services or products the truly deserving should be given. While I’m skeptical even of this argument in its favor, I state it here to show that there are small-government reasons to support a UBI.

As justification for his proposal, Yang rightly notes that our decline in manufacturing employment over the last few decades is not due to trade or immigration but automation. So he should get credit for having more insight into this problem than President Trump, for example.

That said, just because Yang has some understanding of the problem does not mean that he has a workable solution. Indeed, his proposed UBI would be a social and economic disaster.

According to Yang’s campaign website, he would pay for his $1,000/month UBI to every American adult by

reducing current welfare spending by giving people already receiving benefits the choice to opt-in to the UBI instead (but not do both), reducing spending by up to $600 billion (a very generous estimate);adding a Value-Added Tax (VAT) on business to “generate $800 billion in new [tax] revenue”;adding “$500-600 billion in new revenue from economic growth and activity” spurred by the UBI; andreducing costs of healthcare, incarceration, and homelessness of “$100-200 billion as people would take better care of themselves and avoid the emergency room, jail, and the street.”

First of all, even granting Yang’s generous figures and presuming no negative distortion to the economy (which is unlikely), the total amount to fund a UBI this amounts to, between increased tax revenue and decreased government spending, is $2.2 trillion. There are currently more than 250 million American adults. Giving each of them $1,000/month adds up to $3 trillion/year, leaving $800 billion of Yang’s UBI unaccounted for.

Second of all, Yang’s figures are fanciful.

Lets begin with Yang’s #1 source of funding: reduced spending on welfare benefits. The progressive Center on Budget and Policy Priorities (CBPP) notes, “About 9 percent of the federal budget in 2017, or $357 billion, supported programs that provide aid (other than health insurance or Social Security benefits) to individuals and families facing hardship.” Thus, even if every person receiving these benefits opted-in to Yang’s UBI, he still has overestimated the savings by roughly $200 billion.

One might object that these are not the only entitlement programs that could be cut. The CBPP notes, “Four health insurance programs — Medicare, Medicaid, the Children’s Health Insurance Program (CHIP), and Affordable Care Act (ACA) marketplace subsidies — together accounted for 26 percent of the budget in 2017, or $1 trillion.” Unfortunately, Yang doesn’t want to cut healthcare spending. He wants to increase it: he supports Medicare for all. Thus, it is possible — if not likely — that any savings he might gain from cutting welfare benefits would be overshadowed by increased healthcare spending before any of it could be used to fund a UBI.

If we look at his second and third sources of funding, we see the risk of what I have elsewhere described as “a cannibalistic circularity of redistribution.” Technology is displacing jobs (never mind that it is also creating jobs), so a tax is proposed, in Yang’s case at each stage of production, to give to people who have lost their e so that they can then spend it … on items produced by those panies, ultimately paying part if not all of the tax in increased prices. You can’t “increase your bank account by writing yourself a check.” Increasing prices and/or reducing profits through taxes (Yang’s source #2) in order to subsidize spending will not result in “economic growth” (Yang’s source #3). At best, the result will be net zero, but only if everyone is required to spend 100 percent of their UBI check every month. If not, it will shrink the economy, not grow it.

Last, Yang’s #4 source of funding is optimistic at best. Who’s to say that people will use their UBI to take care of their health, stay out of trouble, and stay off the street?

Worst case: I presume $1,000/month, no-strings-attached, could buy a lot of illegal drugs, for example, funding an addiction that could land someone on the street and/or in jail and wreak havoc upon that person’s health. I’m not a fan of paternalism, but the reason our current programs are so paternalistic is (ostensibly, at least) precisely out of concern for things like the health and shelter of welfare recipients. I’m more sympathetic to UBI arguments that acknowledge that cost than those like Yang’s that try to claim the opposite.

Of course, I hardly think most people would suddenly e drug addicts and do not wish to imply that. The point is simply that drug addicts exist, and Yang’s proposal would guarantee them $1,000/month just as much as a struggling undergraduate who wishes she had time to do more yoga and afford to eat organic. A more medium-case scenario: someone like me who totally would have blown at least a portion of $1,000/month on video games, Mountain Dew Code Red, and Taco Bell when I was in college, doing nothing positive for my health, to say the least.

All that is to say, while an $800 billion shortfall is the best-case scenario for Yang’s UBI, I’m not convinced any of his funding sources would get him anywhere near even that. Leading people on with the promise of $1,000/month without proper attention to these details is not simply imprudent, it is irresponsible and could be dangerous. I’m not convinced any UBI is feasible, but Yang’s would bring a slew of unintended consequences that would amount to an additional $3 trillion social problem, rather than alleviating the ones we have now.

As is the case with so many similar social panaceas, if it sounds too good to be true, it usually is.

Image credit: Andrew Yang by Marc Nozell

Comments
Welcome to mreligion comments! Please keep conversations courteous and on-topic. To fosterproductive and respectful conversations, you may see comments from our Community Managers.
Sign up to post
Sort by
Show More Comments
RELIGION & LIBERTY ONLINE
A call for harmony — and a demand for truth
Pope Francis’ recent Christmas message, ‘Urbi et Orbi’, was a meditation on the roots of fraternity in the incarnation: What does that Child, born for us of the Virgin Mary, have to tell us? What is the universal message of Christmas? It is that God is a good Father and we are all brothers and sisters. This truth is the basis of the Christian vision of humanity. Without the fraternity that Jesus Christ has bestowed on us, our efforts for...
Toward ‘humanomics’: Deirdre McCloskey on honoring the world of human creation
In her transformative Bourgeois Era trilogy, economist Deirdre McCloskey challenged our popular theories about the causes of our newfound economic prosperity, arguing that it sprung not from new systems, tools, or materials, but rather the ideas, virtues, and rhetoric behind them. “The Great Enrichment, in short, came out of a novel, pro-bourgeois, and anti-statist rhetoric that enriched the world,” she writes. “It is, as Adam Smith said, ‘allowing every man [and woman, dear] to pursue his own interest his own...
The Brexit deal defeat and confidence vote: Why Christians should care
UK Prime Minister Theresa May suffered the largest defeat in modern history last night, as Parliament rejected her Brexit deal by a vote of 202-432; she now faces a confidence vote that could turn her out of office.Rev. Richard Turnbull – who is both ordained in the Church of England and the directorof the Centre for Enterprise, Markets, and Ethicsin Oxford – explains the likely es in a new essay forthe Acton Institute’sReligion & Liberty Transatlanticwebsite.Christians should be concerned about...
Govt may deny homeschool families custody to teach tolerance: ECHR
The government has the right to remove children who are homeschooled from their parents’ custody if authorities believe their parents will not teach children “tolerance,” the European Court of Human Rights (ECHR) ruled last week. The Wunderlich family had claimed German authorities violated their innate human rights by denying them custody and forcibly enrolling their children in public schools to further their “social integration.” But the ECHR disagreed. Nearly three dozen police and social workers stormed the family’s home in...
What Christians should know about marginal tax rates
Note: This is the latest entry in the Acton blog series, “What Christians Should Know About Economics.” For other entries inthe series seethis post. What it means: A marginal tax rate is the amount of tax paid on an additional dollar of e. The Explanation: What is the tax rate you pay on your current e? For most Americans, the question is surprisingly difficult to answer. The reason we don’t know our tax rate is because we have a progressive...
Samuel Gregg: Bringing natural law to the nations
“If sovereign states ordered their domestic affairs in accordance with principles of natural law,” says Acton research director Samuel Gregg at Law & Liberty, “the international sphere would benefit greatly.” During periods of resurgent national feeling, mon for enthusiasts of liberal international order and human rights activists to begin emphasizing the importance of international law and the way they think it should guide and restrain the choices of nations. Since the United Nations Assembly adopted theUniversal Declaration of Human Rights(UDHR)...
Understanding the quantity theory of money
Note: This is post #106 in a weekly video series on basic economics. The quantity theory of money states that there is a direct relationship between the quantity of money in an economy and the level of prices of goods and services sold. According to the theory, if the amount of money in an economy doubles, price levels also double, causinginflation. The consumer, therefore, pays twice as much for the same amount of the good or service. In this video...
Is a no-deal Brexit a ‘moral failure’?
After a long postponement, the UK Parliament has resumed its debate leading up to the “meaningful vote” on Prime Minister Theresa May’s Brexit deal. As of this writing, the promise is predicted to fail by an historically large margin – and some clerics consider this not just unfortunate but immoral. Rev. Richard Turnbull analyses that argument, and the status of Brexit, in a new essay written the Acton Institute’s Religion & Liberty Transatlantic website. Rev. Turnbull writes: In the upper...
The irony of Patagonia’s tax cut ‘protest’
In response to the recentRepublican-led tax reform—which reduced corporate taxes from 35% to panies have responded by handing out surprise bonuses, increased 401(k) matches, and various wage bumps. For pany like Patagonia, however, the tax cuts have been labeled “irresponsible,” a symbol of the federal government’s reckless apathy. In response, Patagonia CEO Rose Marcario recently announced that the outdoor pany will donate its $10 million tax-cut windfall to its preferred partners in battling climate change. “Instead of putting the money...
C.S. Lewis on how the humanitarian theory of punishment threatens liberty
Over the past decade conservatives have, once again, e champions of criminal justice reform. To some this appears to be a surprising development. Why would conservatives, the self-proclaimed champions of law and order, have concern for the treatment of criminals? On reflection, though, the interest and connection es more obvious. Conservatives are concerned with how law and order leads to human flourishing, and so are necessarily troubled by a criminal justice system that is neither just nor serves the interest...
Related Classification
Copyright 2023-2024 - www.mreligion.com All Rights Reserved