Is Universal Basic Income Really a “Freedom Dividend”?

On Thursday night, the Democratic presidential candidates will meet for the next presidential debate in Houston.

One surprising candidate who qualified for the Houston debate and has attracted a small but growing following of supporters (known as the Yang Gang) is Andrew Yang.

Yang’s platform consists primarily of one issue – a call to establish a universal basic income system in the U.S.  Setting himself up as a potential real life Santa Claus, his plan would give every American – regardless of their income status – a $1,000 a month stipend, or $12,000 annually.

We’ve written previously on Right by the Bay about the universal basic income push in the City of Stockton.  Launched earlier this year, the plan overseen by Stockton Mayor Michael Tubbs relies on private foundation funds for now to give $500-a-month stipends to selected city residents.  This basically amounts to handing out people free cash to nothing.

Yang’s plan is estimated to cost $2.4 trillion annually, which he proposes to pay for through reprioritizing current spending, a new $800 billion annual value added tax, a capital gains tax increase, and a new carbon tax.  He also argues that the plan would generate $2.5 trillion in new economic opportunity and create 4.6 million new jobs through increased purchasing and consumption of goods and services – generating significant tax revenue.

He told Fox News recently that his plan would not be frittered away by most people, but would actually be spent on real needs, especially for families living in poverty.

“The money doesn’t disappear and go anywhere,” he said.  “We have it and spend it and it makes our families stronger and healthier.”

But would it really?

PRI fellow in Business and Economics Damon Dunn would argue the contrary.  He has just released a new brief on socialism, called “My Rise from Poverty and Why Socialism Doesn’t Work”.  If you’re not familiar with Damon, he’s a former college and professional football player who overcame significant poverty in his youth to become a successful real estate developer and businessman today.

In his brief, Damon writes that, “some government programs helped . . . but around us were the constant lessons of becoming too dependent, for with greater government assistance came greater government rules.”

“Generations became mired in a cycle of dependence,” he argues, “because assistance creates barriers to moving ahead.”

Ironically, Yang calls his basic proposal a “freedom dividend.”  Dunn argues that basic income would be the opposite – taking away freedom from many Americans living in poverty.

As Dunn writes, the push for basic income and other socialist programs “is at its core dismissive of the human potential in a significant portion of our population. It is at its worst an attempt to expand the cycle of dependency that surrounded my family and institutionalize it on a broader basis.”

Sharing his personal story, he writes that, “a newfound commitment to learning opened up the doors to (me for) a good college education . . . We built a good business and provided jobs that opened the same opportunities for the people who worked them . . . These chances came from the market economy.  Socialism instead would have meant waiting until the government decided to give it to us.”

Rather than establishing a new government handout that taxpayers can’t afford, government’s focus should be unleashing the free market and eliminating the government-mandated barriers to prosperity that our Wayne Winegarden has written about, such as costly and unnecessary occupational licensing requirements for the privilege of working.

While Yang certainly deserves plaudits for coming up with a non-traditional approach to fighting poverty, it falls into the same trap as free college, Medicare-for-All, and the other socialist programs being advocated on the campaign trail.   Basic income is just another unrealistic plan that would require significant tax increases and a loss of personal freedom to make it a reality.

It’s just too bad that we won’t see the debate this week that I would pop some popcorn to watch – Dunn vs. Yang on basic income.

Tim Anaya is the Pacific Research Institute’s communications director.


Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.

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