- Where were you when I was running for president, Philip?
No, I'm just kidding (laughing).
- Honestly, I think we were talking to your team.
- [Both] (laughing together)
- You're right, I should go back there and figure out
who dropped that ball.
- What's up you beautiful bastards?
Hope you've had a fantastic Friday.
Welcome back to the Philip DeFranco Show.
And this Friday, I want to do something
a little bit different.
Today, I wanted to take a longer look at
and explore universal basic income or UBI.
But before we jump into that, I want to take a second
to thank these sponsors of this show, especially during
this uncertain time, but also, especially to the sponsor
of today's show, Roman.
In times like these, it can be especially hard
to get treatment for common health issues,
and Roman is a digital health clinic for men
that's making high quality care accessible and convenient.
From connecting you with a US licensed physician
to delivering treatment from their licensed pharmacies,
but more on that later.
Now when you hear UBI, a lot of you probably
think of Andrew Yang and even though he's no longer
in the presidential race, he still succeeded
in bringing this idea to the mainstream
in the United States with his freedom dividend,
that being the idea to give every American adult
$1,000 a month.
And now, with the Coronavirus causing millions of people
to lose their jobs and creating serious concerns
around the long-term stability of the economy,
discussions about UBI are probably
more prevalent than ever.
But basic income is not a new concept, in fact,
ideas about basic income have been around
for hundreds of years.
And they're many kinds of income support
or guaranteed income policies that have been proposed
and even tested over the years, but let's focus
specifically on UBI for right now.
All right, UBI is essentially a fixed amount of money
given to people on a regular basis with no strings attached
and, while experts don't agree on an exact definition
for UBI, there is a general consensus
of two core principles: universality and unconditionality.
Universality means that UBI must be open to everyone,
although, there is some debate whether that means
literally everyone, just adult citizens,
or if permanent residents would be included, as well.
And unconditionality means that there can't be
any conditions or qualifiers to receive it.
In other words, UBI can't have strings attached
like current welfare programs.
People are eligible, regardless of income, job status,
or other socio-economic factors.
But from there, a lot of other elements of UBI
are up for debate like whether or not
payments must be given in cash,
how often payments are made,
and how it's paid for.
There are also a lot of different arguments
both for and against UBI.
Now we won't be able to cover every single
possible detail on this topic because that would take
literal hours, but just kind of think of this
as a starting point.
And the next time a puns in or politician says
universal basic income, you'll have a basic understanding
of what it means, and some of the pros and cons.
So for starters, there're several main arguments
for why we should have some kind of basic income,
especially in America.
And UBI specifically has gained momentum
over the last few years for a number of reasons.
One big argument is that UBI could be an answer
to rising fears and concerns about automation,
the idea that many people will eventually lose their jobs
to machines, which is a very valid concern
in our modern world.
According to a study by the McKinsey Global Institute,
a think-tank specializing in economic research,
as many as one out of every three American workers
may risk losing their job because of automation by 2030;
that's as many as 166 million American workers.
And that's where UBI comes in, the idea here,
being that people who lose their jobs to automation
could use UBI payments to go back to school,
start a business, just simply use it as a cushion
to survive as they look for work.
This is an argument that's been echoed by high tech
executives like Elon Musk and Mark Zuckerberg.
Well speaking of the Harvard commencement, in 2017,
we saw Zuckerberg say,
- The greatest successes come
from having the freedom to fail.
We should explore ideas like universal basic income
to make sure that everyone has a cushion to try new ideas.
- And that actually brings us to the second major argument
for UBI, freedom.
Those who support UBI argue that it will give people
more financial freedom and mobility.
When people have more money, there are not as many
financial constraints on their decisions
and they have more options, agency, and independence.
Similar to the automation argument,
having extra income could give people more freedom
to decide what kind of work they wanna do based more
on interest than financial need.
UBI could also give workers more power to refuse work
in bad conditions and for low wages, which would
force employers to make pay better and improve conditions.
But beyond that, UBI could give people more flexibility
in general, whether it's the ability to find a better job
or simply have enough money to buy groceries and pay bills.
It brings everyone to a baseline
where not only can they more freely make decisions,
they can also have more security
which brings us to the third major argument for UBI,
rising income inequality and poverty in the modern economy.
Right now, the gap between the richest and the poorest
people in America is wider than it's been
in the 50 years since the Census Bureau
started recording wealth data.
People who support UBI argue that it will help
close the gap and even the playing field
by putting more money into people's pockets.
That, according to UBI supporters, could break
cycles of poverty that many people are trapped in
for generations, and to that point, those in favor of UBI
also argue that it can break the cycle of poverty
in another way, by supplementing or even replacing
welfare programs, especially in the United States.
People across the political spectrum argue that
welfare programs like food assistance and unemployment
are expensive and ineffective at actually
breaking people out of poverty.
That is largely because if someone on food stamps
or another kind of welfare starts making more money,
they lose that assistance,
an example that dis-incentivizes people
for making more money or finding a job.
And the thing is, it also causes a lot of people
to fall through the cracks like those who make
too much money to qualify, but not enough to be
lifted out of poverty, where UBI could provide a simple,
maybe even less expensive way to give people money,
and unlike welfare programs which are targeted,
recipients could spend it whatever way they wanted.
Now here, some argue that people who need the money
the most will waste it on buying drugs, alcohol,
or other non-essentials.
But on that note, early data from a study
in Stockon, California, which gives 125 people
$500 a month for a year and a half
found that of the money that was tracked,
recipients spent around 40% of their UBI on food,
24% on sales and merchandise, 11% on utility bills,
9% on car repairs and gas, and 16% on other expenses.
Supporters also argue that this could cut down
on bureaucracy and administrative costs
in the current welfare system because welfare programs
have rules about eligibility.
In order to qualify, each person has to go through
this complex and often confusing process that requires
high administrative capacity and cost.
For example, Social Security, alone, which is
one of the biggest social programs, has relatively low
administrative cost at 0.7% of funding,
and even then, that still comes out to
more than six billion dollars a year.
But, the according to the Cato Institute,
other programs specifically aimed at helping the poor
run closer to five percent, adding up to roughly
$50 billion a year.
And from an administrative standpoint, UBI is simple
because it goes to everyone.
And so with all these tools to address poverty,
supporters of UBI believe that it'll provide other benefits
that go along with poverty reduction, things like
improving health and education outcomes and reducing crime.
And in fact, a UBI study that gave money to a farming town
in Canada between 1974 and 1979 found that there was
a decline in doctor visits and an 8.5% reduction
in the rate of hospitalization and high school
graduation rates improved.
Other pilot programs in developing countries
like Namibia showed both reduced poverty and crime rates
while also raising school attendance, as well.
And with all of that said, you know, there are plenty
of other arguments of why UBI is a good idea,
but these are the main ones we're gonna focus on, for now.
And from there, we move to the arguments against UBI.
Now to start off, the most common
and generally accepted reason people oppose UBI
is of course, it'll be incredibly expensive
to give money to everyone.
You know, there are a lot of different estimates
for how much UBI would cost, depending on the country,
and how much that UBI is, but in general,
for most developed countries, experts largely agree
that in order to see all the potential benefits
that we just described, the base amount would need to be
around $1,000 a month.
All right, so a huge chunk of money for any country,
but especially a country as big as the United States.
And according to a working paper by the
National Bureau of Economic Research or NBER,
a universal payment of $12,000 per year
to each adult US resident over age 18 would cost
roughly three trillion dollars per year.
All right, that's around 75% of the total
federal expenditures in 2017, alone.
So the question becomes how would the federal government
pay for this?
And there are two main proposals:
increasing taxes or cutting existing programs.
We'll touch on taxes first.
According to the authors of the NBER paper,
"implementing this UBI without cuts to other programs
"would require nearly doubling federal tax revenue."
All right, so the federal government would need to collect
twice as much in taxes as they do, now.
But there's a few major problems with that.
First of all, the political will might just not be there.
Many Americans do not want to pay more taxes
and many politicians don't want to raise them.
Second, if the federal government were to
drastically raise taxes across the board, including
for lower and middle-income Americans,
that could undermine the benefits of giving those groups
UBI in the first place, and so to offset that,
some people have proposed taxing the wealthier corporations.
For example, when he was running for president,
Yang proposed a value-added tax of 10%
which would tax the production of goods or services
businesses produce.
And according to Yang's Website, the tax
would make the corporations pay their fair share
and bring in $800 billion in new revenue.
But even if that number is real, it still falls way short
of the projected annual cost, which most experts place
into the trillions.
And that's why we also saw Yang say that he would
consolidate more welfare programs.
But in order to pay for UBI, we would need to massively cut
welfare programs, if not replace them altogether,
which creates a different set of problems.
According to the NBER paper, even if we
eliminated all welfare programs, it would only make a dent
in the total cost, with the paper going on to say,
"The kinds of UBIs often discussed would cost
"nearly double current total spending
"on the 'big three' programs," social security,
Medicare, and Medicaid.
"Moreover, each of these programs would likely be necessary
"even if a UBI were in place, as each addresses
"needs that would not be well served
"by a uniform cash transfer."
All right, so the argument is we would still need
some programs, in place, and what's more,
some people would be better off on the current welfare
they receive now, than from the UBI.
If you're a single parent and your kids are under 18,
you only get $12,000 a year from UBI,
but under the current welfare system,
you could get a lot more.
According to a study by the Bureau of Labor Statistics,
in 2014, single parent families under the age of 18
got over $14,000 a year on average,
just from social security, public assistance,
and food stamps.
That is massively significant because
according to that same study, nearly half of the families
that received welfare assistance were headed
by a single parent.
According to a report by the Center on Budget
and Policy Priorities, cutting welfare programs
could hurt those who need the help the most,
while benefiting those who don't, writing,
"If you take the dollars targeted on people
"in the bottom fifth, or two-fifths of the population
"and convert them to universal payments
"to people all the way up the income scale,
"you're redistributing income upward.
"That would increase poverty and inequality
"rather than reduce them."
All right, because basically, current programs are targeted
for the poorest and most at-risk Americans, but UBI
would be for everyone.
Other common arguments against UBI are that it would
disincentivize people to work.
Instead of using that money to find a better job
or go back to school, some people would just work less
or in some cases, not at all.
For example, in one of the most well known
UBI pilot programs Finland gave 2,000 random,
unemployed citizens a check of 560 Euros,
about $635 every month, for two years,
but according to the preliminary results from that program,
the money didn't actually help them get jobs,
though it did make them happier.
They are also concerns that UBI may cause inflation
because everyone would be getting this additional
$12,000 a year, which means they would be spending
more money, and the thinking is when everyone has
more money, and retailers and landlords know that everyone
has more money, what's to stop them from jacking up prices?
However, the counter argument to this is that
it wouldn't create that much more inflation
because major inflation is caused by printing more money
and UBI wouldn't require that.
And on top of all of that, of course, one of the biggest
arguments against UBI in the United States is that
it is simply not politically viable in the
current political system.
But now with the Coronavirus pandemic
upending the lives of Americans, we're finally getting UBI.
Just kidding, we're not.
That's not what this is.
The $2 trillion stimulus, the $1,200 that is
that is a one time payment bailout sort of situation.
Under that bill, everyone who makes under $75,000 a year
will get a check for $1,200 and an additional $500
for each child.
The amount is also phased out for people who make
between $75,000 and $99,000 and those who make
over $99,000 don't get anything.
But that's still a lot of people.
According to the think tank Tax Policy Center,
about 90% of households will get some kind of payment.
And lawmakers are hoping that this stimulus will
boost the economy or at least support it, for now.
With this pandemic, businesses and workplaces
all over the country have shut down, leaving many
without jobs.
There are already millions of Americans who live
paycheck to paycheck, and now, a lot of them
don't know how they're going to afford life.
Right now, it also has an adverse affect on the economy
which is already struggling in that risk
from sliding further into a recession.
As more people lose their jobs and the economy gets worse,
there is a multiplier effect.
For example, if you lose your job, you're not going to
spend as much money, you won't be going out for drinks,
food, buying unnecessary clothes or electronics,
or making other non-essential purchases.
Now imagine that thousands, even millions of people
are now in that situation.
That hurts the bars, the restaurants, the stores,
all the people that are employed at those places.
Those places stop making money, they have to lay people off,
now even more people are unemployed, and more people
are not putting money into the economy.
All right, so in order to combat this problem,
most economists say that we just have to just put
massive amounts of money into the economy.
So that's exactly, at least in part,
what the federal government did with the stimulus package,
and specifically, by putting money directly
into the hands of Americans.
But many still feel that these checks fall short.
For some people, $1,200 barely covers one month of expenses
but there're also other problems, as well.
For instance, the $500 for each child only applies
to kids 16 and under, but not for any other dependents.
So that means that parents who have kids in high school
or college over the age of 16 who rely on them, financially,
won't get the extra $500, and the number of those kids
won't get the $1,200 sent out to individuals.
Also, you see people pointing out
that many immigrant families are ineligible
because everyone in the household needs to have
a valid social security number, and so anyone
without a social security number has used what's called
an individual taxpayer identification number.
When they file taxes, then no one in the household can get
the stimulus money, even citizens, and according to reports,
that could impact 16.7 million people who live
in mixed status households.
And of course, also, there's the big issue of timeliness.
Most people will be sent their checks based on information
from their tax filing, so how you file your taxes matters.
So for people who signed up to get their tax refund
by direct deposit, the government already has
their banking information and they'll actually
get it pretty fast.
We have the report saying that millions of people
will get it next week and some will even see money
as early as this week, but for people who didn't do that,
meaning anyone who got their last refund
in the form of a check, it's going to take longer
because those checks will be sent out incrementally
with lower income people getting theirs first.
The IRS has said that some people might not get their checks
until as late as September because they can only print
a certain number of checks at a time.
But, the IRS has also said that it would set up a portal
for people to upload their banking information,
so if you want your money faster, keep an eye out for that.
But with all of this said, we've also seen
a number of politicians on both sides pushing
for more long-term payments, this, including the likes
of Bernie Sanders who wants to give every household
$2,000 a month for the duration of the Coronavirus crisis,
as well as Republican Senator, Josh Hawley,
who proposed a plan that would give families
from between $1,400 and $2,200 every month
as long as the crisis lasts.
Also, even before the House passed the most recent
stimulus bill, Speaker of the House, Nancy Pelosi,
said that House Democrats will push for another
round of checks in the next emergency stimulus package.
And actually, according to reports, that next stimulus bill
is already in the works.
In fact, this past Monday, we saw President Trump
say that another round of checks are
"under serious consideration."
And as far as what Andrew Yang thinks
about this whole thing, well, I was actually
able to ask him, myself, and here's what he told me.
- So it's heartbreaking that we're in this situation.
Certainly, I'm excited that we're at least partially
adopting universal basic income to put money
into people's hands, immediately.
I will say it's disappointing that a relatively
small proportion of the $2.2 trillion
is going directly into our hands,
I think it's like $250 billion or so.
And I'm disappointed that it's only once
because the fact is, you put $1,200 or $1,700
into our hands in April, that money's
not gonna last that long and we're gonna be
in the same boat in May if we're all still
in the midst of this crisis.
So Congress should have had triggers and said
look, you're gonna get this not just once,
but every month until the crisis is over,
whenever that happens to be.
Because a lot of it is not just concrete, it's also
people's visibility where even if you put $1,700
into my hands right now, if I don't know where my
next paycheck's gonna come from and I don't know
when things are gonna reopen, I'm still stressed out,
I'm still not going to feel good about my future, at all,
whereas if you say look, your future's assured
while we're in this crisis, then we might have more people
that are, frankly, adhering to public safety guidelines.
- When I asked him what he would put in the next
stimulus bill, if it were up to him, he said that
he agreed with Bernie Sanders' proposal.
- It would be $2,000 per person, per month of the crisis,
and then you would see everyone ease up.
You'd have people feel like their future's
going to be secure even if this drags on for a long time.
And there's a very real chance it will drag on
for a long time.
- We also talked about the criticism,
that this is some sort of a Trojan horse UBI
because it's open-ended and it's much easier to give
the American public something than it is to take away.
- Well you're talking to Andrew Yang, so I love the idea
for it being there forever.
It's not a Trojan horse in my mind, it's just a horse.
Just ride up and it'll be like, "Let's do it."
The great thing is though, there was clear consensus
that we needed to do this
and so from their perspective, it's like,
"Well, we're doing this because the house is on fire
"and no one can feed themselves, and then
"when you can all feed yourselves again,
"then we'll stop doing it."
- And finally, I asked Yang if he thought
there's enough political will in Congress
to give Americans an actual UBI and he told me
that he thinks that there is.
With him noting that when he ran for president,
initially, people thought that this idea was impossible,
but now just two months after he dropped out,
this conversation is now at the forefront
of how this country can move on with Yang adding,
- And then there's also this recognition, it's like,
"Wow, we can do that?"
And we can do it.
Tens of millions of us are going to get a check
for $1,200 and we're going to like it.
It's not going to turn us into different people,
it's not going to turn our neighbors into different people,
it's not going to make us all lazy (chuckling).
It's just going to help us pay our bills
and have a path forward.
And after we all have that experience,
I think many, many Americans are going to say
we should probably do that again.
So universal based income is gaining steam
not just here, but Spain just said they're going to adopt
a minimum income program that's not universal based income
but it does provide an income floor, and other legislatures
are looking at it because it's the right thing to do
in a circumstance where millions of people
aren't going to be able to provide for themselves
in any other way.
- And so with all of this, it'll be really
interesting to see if and when this idea takes off
and how it can shape not only discussions
but real policies, domestically,
and internationally, moving forward.
But with everything we've said, the arguments for
and against, and we're at the point in the video
where I want to pass the question on to you.
What are your thoughts on UBI?
Are you for or against it?
Has this Coronavirus pandemic changed your opinion
on it, at all?
Why, why not?
Any and all thoughts, I'd love to see
in those comments down, below.
And last thing, once again, a big thank you
to the sponsor of this video, Roman.
As I mentioned at the top of this video,
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