The War on Normal People: The Truth About America's Disappearing Jobs and Why Universal Basic Income Is Our Future

by Andrew Yang

The Obama White House published a report in December 2016 that predicted 83 percent of jobs where people make less than $20 per hour will be subject to automation or replacement. Between 2.2 and 3.1 million car, bus, and truck driving jobs in the United States will be eliminated by the advent of self-driving vehicles.

Automation has already eliminated about 4 million manufacturing jobs in the United States since 2000.

The number of working-age Americans who aren’t in the workforce has surged to a record 95 million.

High rates of unemployment and underemployment are linked to an array of social problems, including substance abuse, domestic violence, child abuse, and depression. Today 40 percent of American children are born outside of married households, due in large part to the crumbling marriage rate among working-class adults, and overdoses and suicides have overtaken auto accidents as leading causes of death. More than half of American households already rely on the government for direct income in some form. In some parts of the United States, 20 percent of working-age adults are now on disability, with increasing numbers citing mood disorders.

this case, the market will not solve the problem—quite the opposite. The market is driven to reduce costs. It will look to find the cheapest way to perform tasks.

As Bismarck said, “If revolution there is to be, let us rather undertake it not undergo it.” Society will change either before or after the revolution. I choose before.

We need to establish an updated form of capitalism—I call it Human-Centered Capitalism, or Human Capitalism for short—to amend our current version of institutional capitalism that will lead us toward ever-increasing automation accompanied by social ruin. We must make the market serve humanity rather than have humanity continue to serve the market. We must simultaneously become more dynamic and more empathetic as a society.

you have a graduate or professional degree, you are in the top 12 percent of the population by educational attainment.

So what’s normal? The normal American did not graduate from college and doesn’t have an associate’s degree. He or she perhaps attended college for one year or graduated from high school. She or he has a net worth of approximately $36K—about $6K excluding home and vehicle equity—and lives paycheck to paycheck. She or he has less than $500 in flexible savings and minimal assets invested in the stock market. These are median statistics, with 50 percent of Americans below these levels.

We joked at Venture for America that “smart” people in the United States will do one of six things in six places: finance, consulting, law, technology, medicine, or academia in New York, San Francisco, Boston, Chicago, Los Angeles, or Washington, DC. Conventional wisdom says the “smartest” things to do today are to head to Wall Street and become a financial wizard or go to Silicon Valley and become a tech genius.

Instead of seeing college as a period of intellectual exploration, many young people now see it as a mass sort or cull that determines one’s future prospects and lot in life.

We say success in America is about hard work and character. It’s not really. Most of success today is about how good you are at certain tests and what kind of family background you have, with some exceptions sprinkled in to try to make it all seem fair.

Our system rewards specific talents more than anything.

The SAT came into its own during World War II as a way to identify smart kids and keep them from going to the front lines.

Intelligence and character aren’t the same things at all. Pretending that they are will lead us to ruin. The market is about to turn on many of us with little care for what separates us from each other.

Imagine living somewhere where your best people always leave, where the purpose of excelling seems to be to head off to greener pastures. Over time it would be easy to develop a negative outlook. You might double down on pride and insularity.

Virtual worlds give back what has been scooped out of modern life… it gives us back community, a feeling of competence, and a sense of being an important person whom people depend on. —JONATHAN GOTTSCHALL

That said, I still understand and appreciate video games on a visceral level. I even imagine that I could get into them again. They speak to a primal set of basic impulses—to world creating, skill building, achievement, violence, leadership, teamwork, speed, efficiency, status, decision making, and accomplishment. They fall into a whole suite of things that appeal to young men in particular—to me the list would go something like gaming, the stock market, fantasy sports, gambling, basketball, science fiction/geek movies, and cryptocurrencies, most of which involve a blend of numbers and optimization. It’s a need for mastery, progress, competition, and risk.

Bureau’s time-use surveys, young men without college degrees have replaced 75 percent of the time they used to spend working with time on the computer, mostly playing video games.

Now, more than 50 percent of lower-skilled young men live with their parents, and as many as 67 percent of those who are unemployed do so. More U.S. men aged 18–34 are now living with their parents than with romantic partners, according to the Pew Research Center.

I can’t really say that the food service job is more intellectually stimulating or social than playing

video games.

Many men have within us the man-child who’s still in that basement. The fortunate among us have left him behind, but we understand his appeal all too well. He’s still there waiting—ready to take over in case our lives fall apart.

Membership in organizations like the PTA, the Red Cross, labor unions, and recreational leagues has declined by between 25 and 50 percent since the 1960s. Even time spent on informal socializing and visiting is down by a similar level. Our social capital has been declining for a long time, and there is no sign of a reversal.

The first major change would be to implement a universal basic income (UBI), which I would call the “Freedom Dividend.” The United States should provide an annual income of $12,000 for each American aged 18–64, with the amount indexed to increase with inflation. It would require a constitutional supermajority to modify or amend. The Freedom Dividend would replace the vast majority of existing welfare programs. This plan was proposed by Andy Stern, the former head of the largest labor union in the country, in his book Raising the Floor. The poverty line is currently $11,770. We would essentially be bringing all Americans to the poverty line and alleviate gross poverty.

UBI eliminates the disincentive to work that most people find troubling about traditional welfare programs—if you work you could actually start saving and get ahead.

Warren Buffett, January 2017: “[Y]ou have to figure out how to distribute it… people who fall by the wayside through no fault of their own as the goose lays more golden eggs should still get a chance to participate in that prosperity, and that’s where government comes in.”

Elon Musk, February, 2017: “I think we’ll end up doing universal basic income… It’s going to be necessary… There will be fewer and fewer jobs that a robot cannot do better. I want to be clear. These are not things I wish will happen; these are things I think probably will happen.

Twelve thousand dollars a year is not enough to do more than scrape by. Very few people will quit their jobs because of a guaranteed income at this level unless

value-added tax (VAT)—a consumption tax—that would generate income from the people and businesses that benefit from society the most.

The best way to ensure public gains from the automation wave would be a VAT so that people and companies just pay the tax when they buy things or employ services. For businesses, it gets baked into the cost of production at every level. It makes it much harder for large companies, which are experts at reducing their taxes, to benefit from the American infrastructure and citizenry without paying into it.

gets paid based on volume, not profits.

Out of 193 countries, 160 already have a VAT or goods and services tax, including all developed countries except the United States. The average VAT in Europe is 20 percent. It is well developed and its efficacy has been established. If we adopted a VAT at half the average European level, we could pay for a universal basic income for all American adults.

And with the backdrop of a universal basic income of $12,000, the only way a VAT of 10 percent makes you worse off is if you consume more than $120,000 in goods and services per year, which means you’re doing fine and are likely at the top of the income distribution.

You may not recall that the U.S. government printed over $4 trillion in new money for its quantitative easing program following the 2008 financial collapse. This money went to the balance sheets of the banks and depressed interest rates. It punished savers and retirees. There was little to no inflation.

Labor leader Andy Stern comments: “The government is not great at many things. But it is excellent at sending large numbers of checks to large numbers of people.”

Money is easy. People are hard. For all of the immense good a UBI will do, it is just the first step. The ongoing challenge will be to preserve a mindset of growth, responsibility, community, humanity, family, and optimism in an era when so many bastions of the past are going to topple into obsolescence and so many ways of life will be changed irrevocably.

Richard Garfield, wrote about UBI in a way that I really liked: “UBI… is not shaming—everyone participates. It does not try to control the economy from the top—people can spend their money on what they want and therefore steer the economy as it has always been best steered, by the consumer. It could free up the job market in ways that are hard to appreciate… I am entranced by UBI, not just as a needed fix but as an institute that unleashes people’s potential… I find myself convinced that UBI is natural, and would lead to a more productive and happier world—and it would allow us to fully harness people’s creativity and the technology they create.”

line. Researchers found minimal impact on work—men worked one hour less per week, while women reduced their work weeks by five hours. Mothers spent more time with their children, whose performance at school improved. High school graduation rates rose substantially over the period, by as much as 30 percent.

Denver and Seattle found work hour decreases of about 9 percent for men, 20 percent for wives, and 14 percent for single mothers. The Denver study also showed an increase in marriage dissolution,

Instead, she found minimal effect on work. The only groups who worked substantially less were new mothers

and teenagers, with the latter spending more time in school. Birth rates for women under 25 dropped. High school graduation rates went up. Perhaps most dramatically, Forget found that hospital visits went down 8.5 percent, with reductions in workplace injuries and emergency room visits. Domestic violence went down as did mental illness-related appointments and treatments. Basically, life got significantly better in a town without poverty.

petroleum dividend of between $1,000 and $2,000 per person per year; a family of four received more than $8,000 in 2015. The dividend reduces poverty by one-quarter and is one reason that Alaska has the second lowest income inequality in the country.

Akee found that the impact of the extra cash actually impacted the children’s personalities over the years. Behavioral and emotional disorders went down. Two personality traits became more pronounced—conscientiousness and agreeableness. Both correlate strongly with holding a job and maintaining a steady relationship. These changes were most significant among children who started out the most deficient.

Kenya,

That summer, Michael and Paul gave a few thousand dollars of their own money to poor villagers and started to measure results. They found that among cash recipients, domestic violence rates dropped, mental health improved, and people started eating better.

started businesses. Children weighed more. Girls went to school more often. Women had more independence. It turns out that giving cash is very effective. Unlike most organizations, they documented all of their results and brought them back to show the world.

Iran implemented a full-blown equivalent of UBI in 2011 of approximately $16,000 per year in response to heavy cuts to oil and gas subsidies. Economists measured labor rates and found no reduction in hours worked—if anything they found people in the service industry expanded their businesses. This is hugely indicative because of the enormous sample size—Iran has 80 million people, equivalent to the combined total of New York, California, and Florida—over an extended period of time.

It is less an expenditure and more a transfer to citizens so they can use it to improve their lives, pay each other, patronize local businesses, and support the consumer economy.

Instead of hiring a new army of government employees, every dollar will be put into the hands of an American citizen and then largely spent within the American economy.