Global Ethics Forum: The Case for Universal Basic Income, with Andrew Yang

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(upbeat music)
- Welcome to Ethics Matter.
I'm Stephanie Sy.
Our guest here in the Carnegie Council Studio
is Andrew Yang.
He is an entrepreneur and the founder
of Venture for America,
a fellowship program that's given young
entrepreneurs the opportunity to start
businesses and create jobs in American cities.
He's also an author, and his most recent book is called
The War on Normal People:
The Truth About America's Disappearing Jobs
and Why Universal Basic Income Is Our Future.
It is jobs that Andrew Yang clearly cares about.
Andrew, thank you first of all, so much,
for being here.
The reason you have written this book about universal
basic income is because you worry about automation.
When I read about you, a lot of times it was associated
with this concern that there would be some sort of robot
apocalypse, so let's start there first.
Are you worried that robots are going to take over?
- I am, but it's not like walking robots
are going to come in and replace you and me in the studio.
It's actually the case that robots started arriving
in the American economy around 2000 and started displacing
large numbers of manufacturing workers from
then until now.
If you look at the numbers, American manufacturing
workers went down from about 17 million to 12 million
between 2000 and 2015.
Of those five million jobs lost, the vast majority,
80% were due to robots and automation.
It's not that robots are on the horizon,
they've actually been here for a while.
The reason why I'm so passionate about this is I
spent the last six years in Detroit, Cleveland,
St. Louis, Baltimore, and other cities that have
really experienced the throes of automation over
the past couple of decades.
I worked with hundreds of entrepreneurs in these
regions trying to create new jobs,
and I learned a number of things over those years.
One was the impact of automation on these communities.
It's been very, very negative.
You can see very large numbers of distressed people
in these communities that haven't found new opportunities.
The businesses that are coming up typically do not
employ large numbers of high school graduates.
They employ smaller numbers of engineers and college
graduates very typically.
- It's the blue-collar workers that have suffered.
We have been hearing, definitely in this last
election cycle, that that's globalization,
that's bad trade deals.
But you're saying that, based on the statistics you've seen,
80% of manufacturing jobs in 2000
were actually lost to automation.
- Automation's a much bigger driver of job displacement
than globalization and certainly immigrants.
That's something the American people, I believe,
are coming around to.
There was a recent survey that showed 70%
of Americans believe that technology, AI, software,
and all of these things are going to eliminate many more
jobs than they are going to create over the next 10
years, which is 100% correct.
They're right.
We're waking up to the reality.
We're right now on the third or fourth inning
of the greatest technological and economic shift that we've
ever experienced as a society.
It's the greatest shift in human history.
- That shift, though, again I take it back to the time
horizon starting from the Industrial Revolution but
really in earnest in the '60s and '70s with machines
replacing workers on the assembly line.
What is different about this time
that calls for drastic solutions?
Is it AI and machine learning?
- Part of it and one of the reasons I'm so passionate
about this is that if you start digging into
the numbers, you see that we are in the midst
of this process and that our society
is not dealing with it very well.
You see these misleading numbers about
the unemployment rate in the headline saying
it's 4.2%, it's near-full employment.
Near-full employment, not full-on employment.
Then you think, things must be good in the labor market.
What that's masking is that our labor force
participation rate is down to a multi-decade low
of around 62.9%, which is comparable to the rates
in El Salvador and the Dominican Republic,
much lower than it has been in past periods.
Ninety-five million Americans are out
of the workforce and aren't considered as part
of the unemployment rate, including almost one out of five
in their prime working age of 25 to 34.
There's a lot of weakness that our headlines are not
digging into, and a lot of that is driven
by this progression.
When people talk about the Industrial Revolution,
I honestly get a little bit frustrated because it
was a different transition.
It was much less dramatic.
It didn't affect as many industries.
If you look at it, there were actually widespread
protests and problems that arose.
Labor unions came into existence around 1886
in response to the early industrialization.
- There was real social instability.
Are you concerned about social instability becoming
an issue with automation, or do you think that is happening?
- If you look at the numbers,
it's definitely happening.
The suicide rate among middle-aged white Americans
has surged to unprecedented levels.
Our life expectancy as a society has declined
for two straight years.
- There's the opioid crisis.
- Seven Americans die of opioid overdoses every hour.
The social disintegration is already clear.
It's just we're not paying attention to it because our
government, instead of putting up measurements that
we can all understand, like life expectancy
declining-that's shocking and terrible
in a developed country.
That's actually almost unprecedented.
How is this happening?
Why?
Automation has been tearing its way through the economy
and society already, and we are coming apart at the seams.
Donald Trump in my opinion is president today because
we automated away millions of manufacturing jobs
in Michigan, Ohio, Pennsylvania,
which were essentially the swing states he needed to win.
- But you don't hear of Trump talking about that.
There's a lot more focus.
Why do you think there is less political engagement
on this issue?
By the way, I forgot to mention that you have
announced your candidacy for president in 2020.
Why do you think there hasn't been more political
engagement on this issue?
I don't know of any other candidate that's made
universal basic income, which by the way we're going
to get to, his platform.
- Well, one of the reasons I'm running for president is
that leading up to this-I'm the CEO of Venture for America.
My organization has helped create thousands of jobs,
so I'm meeting with senators, and governors,
the president, and other people.
With a couple of them, I would say to them,
"According to what I'm seeing,
"we are automating away millions of jobs,
"and it's about to get much, much worse very fast."
I have dozens of friends in Silicon Valley,
and they will tell you in private that what they are
doing is going to get rid of many, many jobs.
- I mean Mark Zuckerberg and Elon Musk,
they've actually come out in favor of--
- Universal basic income. - some sort of universal
basic income because they know.
- They do know.
If you put them on a panel, they might say,
"Some jobs will be created, some will be destroyed,"
but they know that the focus of their activities
is trying to save companies money.
Most of the time that means taking an activity that
humans are doing and automating it.
The example that I talked about in The New York Times
was truck driving.
The incentives to automate truck driving
are $168 billion per year.
That's why we have the smartest people
in the country working on it because they know there's
a giant pot of gold.
That's the way our system works.
I saw that this was happening,
and I would talk to these government leaders.
I would say, hey guys, this seems to be the main problem.
It's driving all of these other issues.
What are we going to do about that?
I literally had politicians say to me,
"We cannot talk about that."
The reason why they cannot
talk about it is because the solutions are too dramatic,
and it makes them seem extreme and alarmist.
What they'll do is they'll talk about
education and re-training.
They will say, "We need to re-train American workers
"for the jobs of the future," which sounds great.
- Where are the jobs going to come from?
- Exactly.
Well part of it too is if you dig into my book
The War on Normal People talks about this.
If you dig into the data on the success rates
of government re-training programs,
they're essentially entirely ineffective;
there's almost no difference in outcome between
a re-training group and a not-re-trained group.
Another study had the efficacy rate at about 37%,
which in some of those,
37% might have succeeded without the program.
This is in instances when the government is spending
thousands of dollars trying to re-train the worker,
which is not going to be the case most of the time.
Because one in 10 Americans works in retail,
30% of the malls are going to close,
and it's not like when a mall closes,
there will be government re-trainers around saying,
"Hey you just lost your job."
Most Americans are not going to go through
government-financed retraining.
Even when it is offered, it doesn't work.
- Before we get into the details of your universal
basic income plan, one issue that I see right away
with it, in other words giving people a monthly income
without conditions is it doesn't seem to address
the problem you're describing in the large, broader sense,
which is there are going to be fewer jobs for humans.
How does it address an evolving economy where
the top five companies in the world by market
capitalization are all tech companies that don't hire
nearly the number of workers that AT&T did in the 1960s
when it was the largest company?
How does this really address an evolving economy?
Or do you just have a society where people don't
work and it's sort of a Robin Hood economy in some
ways where you sort of take and tax big tech that's using
automation and redistribute to those that
aren't engineers and that don't get a piece of that pie?
- This is where it gets really deep,
human, and philosophical.
- Sorry.
I got there a little earlier than you probably expected.
- No.
I got there too.
I was writing this book, and I consider myself
sort of like a practical economist type
but then you end up heading
to the human and philosophical very quickly because you
realize, hey what should people be doing if so using
the truck drivers as an example,
there are 3.5 million of them.
Number-one job in 29 states; 94%, male; average age, 49.
So you start imagining, okay.
Let's say we automate significant numbers of those
jobs in the next 10 years.
What does the new world look like?
It can be shocking and frightening.
Because let's say that transition goes poorly,
and then the ex-truckers riot in large numbers
and block highways with their trucks,
because a lot of them own their trucks,
which is another problem.
The reason why our politicians struggle so much
with this is that there is no quick fix.
Universal basic income is a huge part of the solution,
but it's only one facet of it.
The great thing about universal basic income is
that it may allow us to redefine work because right
now, we have this model of work that essentially is
a subsistence model.
You should work to survive.
You must show up.
We'll pay you based upon how much time you spend,
and you'll get enough, maybe.
There are actually very few great things about this
entire technological shift, but the one potential bright
spot is that it may allow us to redefine
why we do what we do.
My platform has a few main components.
Universal basic income is one, but the second one,
which is as important, is that we need
to change how we measure value.
GDP did not exist as a measurement
until the Great Depression.
Then things were going so badly that the government
was like, "We have to have a measurement to see how
"things are going and then try to improve it."
that's now a terrible measurement for our society
because with automation and software, and robots,
GDP can go to the moon and more and more people
can be completely excluded from that and left behind.
Instead of GDP, we should be measuring things like
childhood success rates, mental health,
freedom from substance abuse,
engagement with work broadly defined,
proportion of elderly in quality situations.
- One might put environmental quality in that.
- Environmental sustainability.
Journalism, because not everyone's here
in New York working for organizations
that are still vibrant journalistically.
In small towns around the country,
there's actually no--
- We could have a whole discussion just about that.
What you're describing is what I have heard CEOs that
I've interviewed describe as a triple bottom line.
It's a version of that.
It's a different way to measure,
but it's really quite radical, Andrew,
what you're suggesting.
By introducing a universal basic income,
you're really talking about transforming society
and transforming the way culture views value.
Where do you think we are right now as a society
in accepting that?
I will say, what were very academic discussions
on the Carnegie Council stage
about universal basic income seem
to have gotten more and more in the mainstream.
- Oh yeah. - I mean are we getting there,
and what's propelling that?
- I'm where I am because I believe that this is
inevitable and we don't have a choice.
The sooner we get there, the better off our society will be.
If we go too late, it's actually catastrophic.
If we go too early, that just gives us more time to
build the new institutions that are necessary to complement
and get us through this transition.
The truth is we are the richest and most
technologically advanced society in human history,
and we can easily afford $1,000
per American adult per month.
- I've heard that would be 10 to 12% of GDP.
That's expensive.
- The great thing is that every dollar goes into
the hands of an American consumer,
and then the vast majority is going to be spent
and circulated through the economy.
- [Stephanie] It would actually grow the economy,
that's the hope.
- Well, the Roosevelt Institute tried to model it out,
and you probably saw this.
They found that universal basic income at $1,000
a month, which is what I'm proposing in my campaign,
which we've called the Freedom Dividend,
would grow the economy by 4.6 million jobs.
- $2.5 trillion by 2025. - 2.5 trillion, yes!
- I pulled the information from the left-leaning
Roosevelt Institution, who is, to their credit,
doing a lot of research on how this will happen.
- I want to say it's common sense
that most Americans are struggling.
If they got $1,000 a month, what are they going to do?
They're going to spend it in their town,
on their children, paying bills.
You can imagine Walmart, AT&T,
every major consumer company, all of a sudden,
their consumers would have more to spend.
That's where the money is going to go.
It would clearly grow the economy.
I've worked with hundreds of entrepreneurs
around the country.
Entrepreneurs have their heads up
and are trying to solve problems.
They are often not people that are desperately trying
to scramble to pay their bills month to month.
If we implemented a universal basic income,
it would be the greatest catalyst for
entrepreneurship and creativity we have ever seen.
They would create, tens of thousands,
hundreds of thousands of new businesses.
- Two questions, the first being the downside,
some have said, is just human psychology is whether
for a lot of people giving them free money, $1,000 a month,
would take away their incentive to work.
What's your explanation for how we wouldn't end up
in a society that would be less productive
and less innovative?
- I consider myself a facts-driven or data-driven person.
The data just does not show a reduction in work hours
when you have income support,
either here in the U.S.
or Canada or in the developing world.
In the U.S. when they ran large-scale trials,
a slight reduction in work hours for two groups:
Young mothers and teenagers who stayed in school longer.
So universal basic income of $1,000 a month,
it's not enough to prosper.
It's enough to take the edge off of your need to survive,
but virtually no one is going to look at that
and say, "Oh, I'm all set."
- But let me ask you the other, I think,
really important question.
In your plan, how would you pay for this?
- It's actually much more affordable than most people think.
The headline number is about $2 trillion.
Our economy is about $19 trillion,
so that seems like a lot.
But if you dig into the numbers,
you find that we're spending about $500 billion right now
on income support in various ways: In-Kind, food stamps,
welfare, housing, Social Security Disability.
This would be overlapping, so if someone's receiving
$700 in benefits right now, then you go to them and say,
"You can keep your current benefits or go to
"the Freedom Dividend to get $1,000 a month free and clear."
- So they would have the option.
- They would have the option.
But, because we're already spending $500 billion,
this thing is 25% paid for before you even get started.
So, the big problem we're facing as a society is that
more and more work is being done by machines,
robots, AI, software.
Income tax is a terribly inefficient way of actually
harvesting that value for the public.
If you look at it, who are going to be
the beneficiaries of this transition to automation?
It's going to be large tech companies who are excellent
at not paying a lot of tax.
- Very good at offshore tax havens.
- Yeah, they just move it over
and say it all went through Ireland.
Small tech companies, which often not profitable,
and then if they do get acquired,
it's maybe a one-time thing.
They might have to pay acquisition at a certain
point, but even then it's at a capital gains rate.
There's just not a lot of money that's gonna be
coming to the public even as more and more work is going
to be done by robots and software.
That's what we need to change,
and that's the way we pay for universal basic income.
The way we pay for it is we implement a value-added tax,
which right now is in practice in every other
industrialized country in the world except for us.
And through a value added tax.
So Amazon now it's 43% of e-commerce,
largest market cap.
Jeff Bezos could be the first trillionaire.
There are periods when they say,
"We didn't even make any money this quarter,
"so no income tax," where with a value-added tax,
they pay based on transaction,
and that's inescapable.
It's one reason why other countries use it is that it
is a much more effective way to get revenue.
If you're a self-driving truck company,
you might not have many humans making money,
so there's not much income tax coming.
With a value-added tax, we get our fair share.
A value-added tax would generate between $700 billion
and $800 billion if we were to implement at half
the European level.
The European average VAT is 20%.
Our economy is so vast that if we added a VAT of 10%,
it would generate $700 billion to $800 billion.
That is my primary mechanism to pay for the universal
basic income because you have $500 billion
plus $800 billion with VAT.
Then you're at about 65% of the $2 trillion.
This is the beauty of universal basic income.
We are already spending hundreds of billions on
health care, incarceration, homelessness,
all these services for people that are falling
through the cracks.
Those expenses would go down if these people were able to
stay out of the emergency room.
- Well that's interesting.
The Peterson Institute, I was looking at some
of their research.
Apparently in the '70s in Manitoba, Canada,
there was an experiment done with several thousand people
that looked at universal basic income.
There is some empirical evidence of what happens.
I found it interesting that once a universal income
was provided, there were better outcomes when it came to
things like health and education.
What's happening there?
- This is the most powerful stuff of universal basic income,
it that it's very human.
Mincome in that Canadian town you are describing,
what they found was that hospital visits went down 9%.
They found that domestic violence went down.
Mental health went up.
Children stayed in school longer.
In another study in North Carolina,
they actually found that children's personalities
changed to become more conscientious and agreeable,
which are both very positive traits for academic
and professional success.
This is what we're talking about at the human level.
Right now, do you know what is really expensive?
Dysfunction.
People coming to the emergency room and having
massive problems that we as a society end up paying for
in various ways.
Functionality is actually much less expensive.
We're going to get hundreds of billions back from things
we're currently spending on health care,
incarceration, and homelessness.
Then, as the economy grows because we're putting money
in the hands of American consumers,
we get 25% of the growth back because
that's the ratio of revenue to GDP growth in the U.S.
With a VAT of 10%, you essentially pay for
$1,000 a month per American adult in perpetuity.
- You bring up this notion of improving lives
with economic security.
It reminds me that this show is called Ethics Matter,
so we talk a lot about what rights are and what
human rights are.
I feel like this country is not in a place yet where
there is a sense that it's government's responsibility
that everyone has economic rights,
and environmental rights, and economic security.
What do you think?
- I think America has been very fortunate for a very
long time, but I think our economy and society are
progressing to a point where the absence of a government
point of view or action is actually going to greatly
diminish individual economic rights
and our quality of life, really.
If we just let this thing go,
we can all see what's going to happen.
The value is just going to get gathered up
in a relatively small number of hands of people,
generally at the heads of major technology companies,
and the people that work in those organizations.
I'm friends with those people.
They are generally good people.
The thing that I think is ridiculous is when people
imagine that it's somehow the innovator's responsibility
to figure out all of the downstream
economic and social impacts of their innovations.
They have their heads down just trying to make
the thing work.
It is our government's job and our leaders' job to figure
out all of the downstream effects and make
appropriate policies and changes.
That's where we've fallen asleep at the switch.
Our government has become very backward and dysfunctional.
We've lost faith in it.
Over the last 50 years, we have just been stuck
with this '60s-era bureaucracy, having food fights from
decades ago, instead of a government
that's appropriate to the challenges of 2018 and 2020.
That's why I'm running for president.
About universal basic income,
the social benefits, and it was a lot of fun reading
the studies, some of which you cited,
But I go through it in my book in detail.
It's clear to me that universal basic income would
improve the lives of millions of Americans,
that we can easily afford it.
The thing most people do not realize,
and I didn't realize it until I dug into it,
we actually came this close to passing
a universal basic income in 1971.
Martin Luther King was for it.
- That was under Nixon. - Nixon was for it.
A thousand economists signed a letter
saying this would be great.
It passed the House of Representatives.
Then it stalled in the Senate because the Democrats
wanted more money.
It wasn't that conservatives tanked it.
It was that Senate Democrats thought
that it should be more generous.
It's not even very radical.
We came this close, and it's been implemented in Alaska
for 25 years in essence through the petroleum dividend.
- How do you change the narrative around it being
a government handout that will lead to a lazy society?
I can just see that's what you're going to be up against.
- You're probably right.
- You said that you've met with lawmakers
throughout your career.
How do you sell it?
- I'm actually very confident that people are
over the welfare/handout framing in large part
because the suffering is so widespread.
The welfare framing was often about the other.
It was like oh you're going to give them the money.
- Now it's a lot of us.
- Yeah.
It's enough people now.
The most recent polling shows that support for
universal basic income is about 50-50 right now,
and it's just going to go up from there.
- Andrew Yang, what an interesting and fascinating
and, I think, relevant, perspective you bring.
Thank you so much for joining us.
- Thanks for having me.
It's been a pleasure.
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