Regressive “Progressivism”: Andrew Yang and the Freedom Dividend.
Do not be fooled by Andrew Yang!
I’ve seen otherwise well-meaning Liberals and Progressives falling for Yang’s “Freedom Dividend”-centred presidential candidacy.
Yang’s plan seems simple and obviously beneficial to the very constituencies Liberals and Progressives tend to fight for.
Nevertheless, Yang either does not understand very basic macroeconomics or he is a right-wing wolf in Progressive clothing.
My goal, in what follows, is to explain why Yang’s proposal is not only not progressive, but why it is actually regressive: It takes money and economic power from the poor and gives them to the rich, the very opposite of what Liberals and Progressives claim to want.
1. According to Yang’s Website, “In the next 12 years, 1 out of 3 American workers are at risk of losing their jobs to new technologies.”
This is a very serious misunderstanding of capitalism.
While it is true that a substantial portion of low-wage, low-to-medium-skilled workers are at risk of losing their jobs in the immediate future, it is not “new technologies” that take people’s jobs away from them, but capitalists, i.e., the owners of the factories, plants, restaurants, chain stores, etc., that take people’s jobs away from them.
When a new production or retail technology is invented and marketed, capitalists have the opportunity to purchase this technology and lay off workers.
Why would they do this?
So that they can make more profit for themselves.
Capitalist profits and worker wages are always at odds with one another within capitalism—the higher the profits, the lower the wages; the higher the wages, the lower the profits.
Yang takes it as inevitable that capitalists will do whatever they can to increase their own profits, even at the expense of the lives of workers, and his “Freedom Dividend” is a way to fundamentally change nothing about the power capitalists wield over the workers.
2. Yang’s plan to fix what he misdiagnoses as a technological problem, rather than as a problem inherent to the distribution of economic power within capitalism, is what he calls the “Freedom Dividend” (which is not actually a dividend, since a dividend is a payment made by a company to its shareholders), a type of universal basic income (UBI) payment—$1,000 per month to all citizens over 18 years of age.
Yang wants to fund the “Freedom Dividend” with two sources (from his Website):
(2a) a 10% value-added tax (VAT) on commodities paid for by consumers at the point-of-sale (this is similar to an additional sales tax), and
(2b) a reduction in current funding on social welfare programs like food stamps and public healthcare.
Both (2a) and (2b) are essentially regressive, which means that these funding sources dramatically proportionally affect poorer people more than they affect wealthier people—a higher percentage of a poorer person’s income and wealth is paid to a VAT than is a richer person’s, and it is only poorer people who receive social welfare programs.
If the goal of the “Freedom Dividend” is to help poorer people, then it is unclear how taxing poorer people proportionally more in order to distribute the results of this taxation equally across all citizens over 18 is going to accomplish this goal.
3. Since the point of everyone’s having an extra $1,000 a month is that those people are able to spend that extra $1,000 a month, it is important to look at where that money will be going once it is spent.
As per 1., Yang has no intention of changing the structure of the economy, a structure in which capitalists are able to exert ever more economic power over workers.
Since capitalists exert this economic power by lowering wages or laying off workers in order to increase their own profits, any money spent by consumers within the U.S. economy will return, in greater and greater percentages, to these very capitalists.
Again, as with 2., far from empowering poorer people and challenging the power of capitalists, Yang’s plan gives even more money and more power to those very capitalists.
4. Combining 2. and 3. together, we can see that since the funding for the “Freedom Dividend” is regressive, and since the money dispersed in the form of the “Freedom Dividend” eventually ends up back in the pockets of the very capitalists whose quest for profits Yang thinks makes the payment necessary in the first place, the “Freedom Dividend” is an upward-transfer of wealth from the poor to the rich.
To reiterate the reason: The poor shoulder more of the burden of paying for the “Freedom Dividend” than do the wealthy, and the wealthy benefit more from the “Freedom Dividend” than do the poor.
5. The only way for a UBI to function so as even to partially challenge the economic power capitalists have over workers and to redistribute some of this economic power downward, from the rich to the poor, is fully to fund the UBI from profits, rents, and returns on capital investment.
In this way, instead of disproportionately economically burdening the poor in order to ultimately give money to the rich, it will be the rich who are economically burdened in order to provide a UBI payment to everyone.
The reason to have this funding come from profits, rents, and returns on investment is that these are the precise income streams capitalists are attempting to increase by laying off workers in favour of the automation that Yang claims to think is a problem.
Of course, this money will still end up back in the hands of capitalists themselves, as per 3., but at least it won’t be the poor who are disproportionately funding the program.
Yang takes the current economic structure of capitalism as inevitable and, instead of trying at least to give poorer people more power within this structure, is proposing a plan that would take money and power away from the poor and give it to the rich.
So Andrew Yang is not a solution to current economic problems; he is a manifestation of those problems and would only make those problems worse.