Andrew Yang and UBI Are NOT the Answer for Progressives
I heard about Andrew Yang and UBI in the early stages of his campaign. Like, really early stages. Before anyone I knew had heard of him. I was served his ads on Facebook, and the political circles I’m connected to would occasionally share his content. I even wrote about the systemic importance of his appearance on the Joe Rogan Experience before everyone else.
Yang’s campaign was and still is compelling. And, for a brief moment, Andrew Yang was sort of kind of my favorite candidate. His plan for Universal Basic Income (UBI) has life-changing ramifications for my family. An extra thousand dollars per month would significantly reduce my stress, allow me to pay off debt, go on a honeymoon with my wife, save money, and buy a house. It all sounds so good! But, after a closer examination, it became clear to me that Andrew Yang is no champion for Progressives and UBI would be a burden on the working class in a broken American economic system.
Sure, an extra grand a month sounds nice. That is until you consider where that money will end up. It doesn’t take long to realize that YangBucks will increase income inequality by making the rich richer, and keeping the poor, poor.
Landlords Will Raise Rent Costs
It’s not difficult to imagine rents suddenly spiking by, say, $1000 per month if Yang wins and signs his universal basic income plan into law. Because, why wouldn’t they? The rules of supply-and-demand say more demand equates to increased prices. And there would be more demand.
Without housing mandates or rent control, this could actually make issues of homelessness worse. Let’s game this out:
Example 1: Modern Day
A landlord owns a building with 10 units. The landlord rents each of them out for $1000 a piece. On average, the landlord pays about $400 per month in total costs per apartment, meaning he profits $600 per month, per apartment.
10 apartments x $600 profit = $6,000 per month profit.
But what if the building wasn’t full and only 7 apartments were rented?
7 apartments x $600 profit = $4,200 minus $1,200 in costs for empty apartments = $3,000 per month profit.
That’s the difference between the Landlord making $72,000 per year and making $36,000 per year. That is a life altering amount of money. That landlord would be heavily incentivized to rent out those three empty units as soon as possible. To do so, the landlord could lower the price, offer new tenants a free month of rent, or reduce the required deposit. All options which benefit renters in our weird capitalist dystopia.
Now imagine a different scenario.
Example 2: Andrew Yang and UBI World
The landlord is now charging $2000 per month per apartment without upgrading anything, because, why not? And still only 7 apartments are rented. But this time, there’s little urgency to fill them.
7 apartments x $1600 profit minus $1200 in costs for empty apartments = $10,000 per month profit.
Now, with 3 empty apartments, the landlord is making $120,000 per year. At that salary, there’s no significant reason the landlord would need to go out of his way to fill the other apartments. His costs didn’t change, but the demand did. His now $2,000 apartment could go unrented for three years, and still turn a profit, covering the total cost of sitting empty for three years, after only ten months of being rented.
While this is a simplified example, it proves a point. Because profit margins would be greater for rent, some landlords would face scenarios where they could make more money by leaving apartments empty and have little incentive to do otherwise. That means families who can’t afford to buy will be made poorer, those looking to buy will see skyrocketing costs due to the value of being able to rent to others, and homelessness is likely to increase.
Which reminds me… how would the homeless get their Yangbucks?
Healthcare costs will Increase, Industry Will Profit Big
Why would an industry that regularly raises prices for no good reason not use the gigantic opportunity UBI offers them to raise prices on prescription drugs? Will patients who have been saving for surgeries they desperately need or want suddenly find that the price has increased? Will deductibles, co-pays, out-of-pocket maximums, and premiums go up? What mechanism would prevent them from doing so?
Trusting insurance companies and the healthcare industry to keep prices down is like going camping with a serial killer. You shouldn’t be THAT surprised when you end up dead. Not to mention, Yang has—and I don’t use the term lightly—lied about his support of Medicare For All, going so far as to say he just likes the framing. Not cool.
Other industries too will be empowered to screw people too. UBI is simply a band-aid. It says, “Hey, we know things are messed up, everyone is corrupt, healthcare is broken, the rent is too damn high, there’s rampant homelessness, and you’re probably living paycheck to paycheck. But, instead of solving any of the root causes of those issues, here’s $1000 so you maybe don’t starve to death.”
Income Inequality will Skyrocket
According to Andrew Yang, people will have the option of choosing between his UBI YangBucks, or, the welfare benefits they currently receive. Because of that, the people most in need of help will actually receive the least amount of money. Moms receiving aid through WIC, home heating cost assistance, or EBT, will not be eligible to receive the full YangBucks amount, making its effect on our most vulnerable citizens negligible, especially considering the likelihood of costs increasing across the board.
Keep in mind, the poorer you are, the more important every dollar is, which is why we and most other countries use a progressive tax system. But, Yang is proposing a regressive VAT tax to help pay for his UBI plan.
What’s a VAT Tax?
A VAT, or value-added-tax, is a consumption tax added at every point in a supply chain, whenever value is added. Like when raw steel is melted into car rotors. The cost is usually passed on to consumers, which chews up a larger percentage of lower wage-earners’ incomes. Regressive VAT taxes disproportionately affect the working class and working poor and are fundamentally not progressive.
Because the VAT and restrictive means-tested measures Yang supports, UBI will actually do the opposite of one of Yang’s most widely used rhetorical strategies. He claims UBI will unite Americans, knowing we’re all getting it. However, he doesn’t seem to consider the poorest and most vulnerable among us in those discussions. When he talks about uniting us, he’s not talking about the poor who will not receive the same amount as other Americans, he’s talking about the well-off folks he hangs out with.
Speaking of the well-off folks he hangs out with…
Technocrat Yang Shows no Compassion or Empathy for Workers
Someone, anyone, please send me a clip of Andrew Yang talking about the labor struggle, the importance of strengthening unions, or his deep connection to the struggles of everyday Americans.
Yang pretends to understand working class issues. But, I can’t seem to find any evidence that he actually does. He was born in a wealthy part of New York, to successful and highly educated parents. His dad had nearly 70 patents. His brother and uncles are professors. Who else can say that? While it’s certainly extraordinary, I’m not sure it’s the type of extraordinary we need.
Don’t get me wrong, I don’t begrudge him. His family lived the American Dream. But, why should we keep electing wealthy people who don’t understand what it’s like to struggle and who we can’t be certain will stand beside the working class through thick and thin? I accept that opinion may not be very fair, but it is proven true in Trump and other elites who hold elected office today. Like establishment Democrats who will not fight for Medicare For All because the burden of healthcare does not weigh particularly heavy on them or their families personally.
Yang’s professional career doesn’t offer much optimism either. He briefly practiced law and then hopped from working in healthcare, to education, to starting an app that connected college grads to start-up jobs. A brief survey shows he’s taken a lot of risks, and some of them paid off. But taking risks is a lot easier when mom and dad and everyone you know are loaded.
Maybe it’s not fair, but his background does nothing to make me believe he’s going to still be in the fight ten years from now. I won’t be surprised if he’s hosting something on CNN by 2021.
A Good Version of UBI Can’t Pass Yet
UBI is not the main issue. How we pay for it and how it is implemented is. And I don’t mean that in the establishment “How you gonna’ pay for it?” kind of way. I’m talking about the mechanisms for generating the revenue to pay for the system (not a VAT tax) and the implementation, which would require a lot of other bills to be passed beforehand in order to work smoothly.
A lot of things have to be done correctly in order to prevent the wealthy from systematically absorbing that money from the working class who could actually use it.
A progressive UBI bill would need to include federal housing legislation, Medicare for All, components to battle income inequality, and would need to include business loan programs and other efforts to lift up disadvantaged communities and keep money in the communities who need it most.
Andrew Yang’s Experience
Keep in mind, Andrew Yang has never passed legislation. He has no idea what it takes to negotiate bills and we have no idea how good of a negotiator he is. Does he understand the process? We don’t know. Trump certainly didn’t. We have no idea how much he would give up to get what he wants and we have no reason to believe his principles would assuredly put poor and working class families above other interests. Andrew Yang is a complete mystery when it comes to his political motives. Other than his family motivating him, and choking up at the thought of one of his children being victimized in a mass shooting, I’m not really sure who he’s fighting for.
In the end, if Yang can’t pass UBI, we can only look at his other policies. Which, honestly, are decent. But do we think he’ll be able to solve them faster than the people who have been in those fights and built coalitions of support over decades of political activism?
Or should we, again, leave our country in the hands of a political newcomer with minimal experience, a business background, and a few taglines? Kind of sounds familiar to be honest.