Economics, Interview, Top Stories

A New Kind of Economy—An Interview with Andrew Yang

Andrew Yang is a 43-year-old American entrepreneur who is seeking the Democratic Party’s nomination for president in 2020. His campaign focuses on solving the problem of job losses to automation—an issue many politicians seem happy to ignore. Starting right now, Yang wants to create a whole new kind of economy from the ground up, in which automation is transformed from a threat into the foundation for widespread human flourishing.

Briefly, his policy proposals include implementing a form of Universal Basic Income (also known as UBI, or what he calls the “Freedom Dividend”), universal healthcare, a “digital social currency,” and a redefinition of GDP that more accurately reflect the health of the nation. If this sounds like socialism then, according to Yang, your thinking about the economy might be antiquated. He contends that the capitalism/socialism spectrum is no longer relevant or useful if we take an honest look at the modern world.

The following is a transcription of my phone conversation with Andrew Yang, lightly edited for length and clarity.

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Peter Clarke: Let’s say Donald Trump wins again in 2020 and the government continues on its current path of ignoring automation. What can we expect to happen in the near future?

Andrew Yang: You would expect the current trends that we’re seeing to accelerate. Many of the trends I’m most concerned about will accelerate with either a Democrat or a Republican in the White House, because we’re talking about how technology is going to displace millions of retail workers, call center workers, fast food workers, and truck drivers. And there’s no dramatic halting of that trend that would occur if a different political party were in office.

Now, if I were president, my goal would be to accelerate meaningful countermeasures and solutions. That does not mean putting a stop to Artificial Intelligence (AI) and autonomous vehicles, but that we need to dramatically reshape the way that both value and work are experienced in our society. And that’s a generational challenge. It’s not going to happen overnight.

What I’m most concerned about is the trends we’ve seen of the automation of four million manufacturing jobs in the U.S. between 2000 and 2015. When that gets applied to retail workers and truck drivers and fast food workers, which are some of the most common jobs in the U.S. economy, we’ll witness a continued disintegration of American society, which we can see in the numbers right now.

A lot of the automation is happening more quickly than almost anyone projected. I think I just read this week that Waymo is releasing its autonomous taxis in 2019. Do you think that this is going to sneak up on everyone in the next couple of years?

Well, I’m going to use call centers as an example. There are about 2.5 million call center workers in the United States right now making $14 an hour—typically high school graduates. So, if you’re reading this right now, how long is it going to be before Artificial Intelligence can outperform the average call center worker?

Let’s say that timeframe is two or three years. How many call center workers will that effect? How many will be out of a job shortly thereafter? And so that’s not speculative at all. That’s something that we know Google and other companies are working on right now.

If you take that one fact pattern and apply it over and over again in the economy, you’ll wind up with a massive displacement of workers. And it will sneak up on us quite quickly because that replacement of call center workers won’t affect five or ten thousand workers; it may well effect 500,000 or a million.

I know that it might take a while, even in the best case scenario, to implement Universal Basic Income or some of the other measures you’re proposing. So, is it already too late? Are we already going to see a massive dip in jobs because of automation and then huge swaths of the country are out of work?

It’s a little late in the day, truly. If you look at the labor force participation rate in the U.S., it peaked around 2000 and has declined ever since over the last 18 years—to a point where now it’s 62.9 percent, which is the same level as El Salvador and the Dominican Republic. And almost one out of five prime working-age men—between the ages of 21 and 30—have not worked in the last 12 months.

So, this is already with us. If you wait until the truckers start to riot and the taxi drivers start to riot—then it is late in the day. And that’s one of the reasons I’m running for president now. If I can get to the Oval Office and make this happen in 2021, then we can at least be able to prevent some of the disintegration that accompanies loss of work.

By the numbers, when men in particular get idle, we tend to degenerate into self-destructive and antisocial behaviors. You can see that in the surge of suicides among middle-aged Americans around the country that have brought down our country’s life expectancy over the last two years—and the fact that eight Americans are dying of opiates every hour. Again, if you look beneath the surface, all of these trends are already here with us.

In your recent speech in Iowa, you said that people in Washington are pretty much ignoring the problem of job displacement from automation. Is that still true? It just seems crazy to me. How could that be the case?

That’s 100 percent true. The Trump administration is completely uninterested in it. And there are very few Democrats who are focusing on this challenge, even though in my opinion it’s the main reason why Donald Trump is president today.

If you blast away 4 million manufacturing jobs in Ohio, Michigan, Pennsylvania, Wisconsin, and Iowa, and then all of those states turn red, then that to me should be the central problem that Democrats are trying to solve. But Democrats for whatever reason are not addressing the elephant in the room, so to speak. So, if you look at the reports out of this administration, they are completely absent on the impact of technology. They’re still in the mind frame where starting a trade war with China will somehow spur more jobs—even though, again, that’s not the central challenge.

I am curious about how Democrats are addressing this—or not addressing this. Just this week Bernie Sanders was on Facebook saying that workers at Whole Foods, owned by Amazon, need to unionize so that they can keep their jobs and not be displaced by robots. To me this seems possibly shortsighted, but do you see any role for unionizing jobs to keep them around?

There are a few different approaches to this. And one of the things I disagree with Bernie Sanders on is that I believe he has a vision of the economy that functions like it did decades ago, where the path to prosperity is to get fair treatment by employers for workers. That relies upon a notion of the economy where, in order for a company to succeed and grow, it needs to hire more and more people and it needs to treat them well.

Unfortunately, we’re increasingly entering an age where companies can become very, very successful and profitable without hiring lots of people. And then when it does hire people, the most efficient way for them to do so is as temporary or gig workers or contract workers or outsourced workers. And so, trying to force companies to change their employment models, and then empowering workers through unions to do so, might be the right thing to do in some contexts; but in my opinion, it’s highly unlikely to solve the problem because we’ve been heading in this direction for decades, and in some ways Bernie Sanders’ solution is an attempt to turn back the clock.

As an example, let’s say that you were a fast food restaurant, and you’re paying your employees $10 an hour. Then, fast food workers quite rightfully say, hey, we can’t live on that; we need to be paid $15 an hour. So, one approach could be to say, the fast food workers should unionize and then bargain for $15 an hour. Another approach might be for the fast food companies to say—and they would do this if they had to pay $15 an hour in many instances—that maybe we can make our locations work with fewer workers.

At that point, you have to ask yourself whether you would purposefully want the fast food company to not automate its locations for the purpose of having more people in jobs that pay them between $10 and $15 an hour. And that becomes a very interesting question about what you think the purpose of jobs is.

If the purpose of jobs is to get a certain task done, then you would obviously want to automate that task because if the fast food company can serve the food with fewer workers, then that would be a good thing. If you think jobs are a way to maintain social order and make sure that someone has to be somewhere for certain shifts of the day—and that, without that, that person would struggle to find a degree of structure or purpose—then maybe you say, let’s make these fast food companies employ people just for the sake of it. That to me is a really fundamental question that we have to ask ourselves.

Outside politics, I do see a lot of intellectuals talking about how we need to redefine jobs. I know Steven Pinker recently said that we need to protect the interests of people, not the interests of jobs. Do you think it’s possible for the country at large to ever shift their perspective on jobs like this, where we don’t worry about loss of jobs, we worry about loss of human wellbeing?

I completely believe it is possible. And I think that the Freedom Dividend—the Universal Basic Income—that I’m proposing and will implement as president would enable that shift in a real way for millions of Americans quite quickly.

I will say that if you dig into the data, you find that men and women experience idleness differently. …Women who are idle, I believe, would very, very naturally adopt this project-based approach that you’re talking about. The data shows that women who are out of work get involved in the community and go back to school and do things that are quite productive and pro-social. Whereas, men who are out of work spend 75 percent of their time on the computer playing videogames and surfing porn—and then tend to devolve into substance abuse and self-destructive behaviors. Men who are out of work volunteer less than employed men, even though they have more time. And so, men and women seem to experience idleness differently.

When you talk about this project-based approach to work—for women it would be entirely natural and attainable, in my opinion, for many, many women. And for many men it would be as well. But for some men it might be less natural. …The providing of structure and purpose and fulfillment to millions of relatively unskilled men who are making transitions over the next number of years is one of the great projects of this age.

Again, one out of five primary working-age American men between the age of 21 and 30 has not worked in the past 12 months. And so, we’re already behind on this. We need to implement a different approach to work and value to energize more and more of our people. Trying to stuff everyone into a nine to five job is getting increasingly unrealistic and anachronistic.

Andrew Yang at the Ecosystem Summit in New Orleans on 30 April 2018. (Photo by Stephen McCarthy/Collision)

I want to ask a couple of questions that go to the heart of your proposed policies. Under the umbrella of creating a new kind of economy, there seem to be three pillars: Universal Basic Income, universal health care, and redefining the GDP—along with the new digital social currency. So, let’s say you win the election in 2020 and you take the helm as president. How do your proposed policies help with the question on everyone’s mind, the question of saving and restoring the middle class?

If I became president in 2020, I would have won the election on the promise of rewriting the rules of the economy from the ground up—from people up, from families up, from communities up—on the promise that I would pass the Freedom Dividend of a thousand dollars per adult per month. Americans are right now distressed because median wages have not moved for decades. And education, housing, and healthcare have all gotten more expensive, to a point where 57 percent of Americans cannot pay an unexpected $500 bill. So, you ask how do you restore the middle class. The best way to do so is to give Americans a raise.

As president, I would pass the Freedom Dividend and implement it during my first term. So that, if everyone were to get a $12,000 a year raise, that would be an enormous boost to tens of millions of Americans and put many into the middle class immediately. Let’s consider a town of 50,000 people in Missouri or Georgia. With the Freedom Dividend, they would be getting approximately $60 million in spending power in that town. And so, the majority of that money would go into local businesses, car repair shops, restaurants, tutoring services for your kids. So, there would be many more robust opportunities for people at every point in the educational spectrum.

The Freedom Dividend, according to the Roosevelt Institute, would create about 4 million new jobs and that would end up creating many, many bridges toward the middle class for people who are aspiring to join the middle class.

How do you see automation interacting with people starting new businesses? Will automation put a dent in people’s hopes and dreams to create small businesses in town?

Right now, business formation is at a multi-decade low in the U.S. and 80 percent of new businesses formed in the last several years were in only 20 counties in the U.S.—only a very small handful of metropolitan areas. And so, if you’re a small-town entrepreneur and you want to start a business, right now it’s getting harder to do so because Main Street stores are closing right and left because of the flight to e-commerce, where Amazon is getting another $20 billion a year. This is pushing Main Street businesses into extinction.

If you ask why it is that Main Street businesses aren’t getting started right now, it’s not that they’re competing with some robot barista. It’s that the people in the town don’t have money to spend. And if they do have money to spend, more and more of it is going online. If you put the Freedom Dividend into people’s hands, that addresses the first issue, which is that everyone in that town has another $1000 a month to spend. And then the types of businesses that they would start—as long as they’re businesses that people in their communities would happily patronize—then they would not, again, be in competition with the robot barista or the robot baker or something along those lines. You would end up with a robust artisanal economy based upon people’s own consumption patterns and desires.

Look at the impact of automation in many of these environments. So, in food service and food prep, it would be fast food companies that would adopt many of these practices [of automation], but it’s not like some mom and pop is going to get some robot short order cook. There are many, many jobs that will be with us for a long time to come. The main issue really is that people don’t have money to spend in these communities that would fuel these businesses, which is one reason why these communities are emptying out in terms of new companies being formed.

Since you hold yourself out as the Universal Basic Income candidate, that kind of puts you in the realm of being the futurist candidate. I’ve seen you labeled that in articles here and there. Do you think that’s fair? And how much thought do you give to other futurist technologies—technologies which, depending on who you talk to, may be implemented and effect society in the near future? I’m thinking of neural lace, CRISPR, AI disrupting everything from weapons of war to…whatever. How much thought do you put into all of that?

What you’re describing, it’s funny: I’m ambivalent about the futurist label because, to me, all of that stuff is with us right here and now. It’s not speculative. So, I’d be concerned if someone labeled me a futurist because then it’s, oh, he’s worried about what’s happening years from now. I’m worried about it happening today. What’s the timeframe of self-driving cars and trucks? You just said that Waymo’s going to have it in 2019—that’s before the election.

The only reason I seem futurist is that our current politicians are decades behind the times. So, if you’re talking about problems in 2018, that makes you seem like a futurist—that’s ridiculous. I was going to joke, I call myself a present-ist because I’m actually here in the here and now, unlike these politicians that are stuck in the past.

I want to ask about the digital social currency. Can you give me an example of how exactly it would work?

Digital social currency, in its simplest form, would be that the federal government goes into a particular region—let’s call it Mississippi—and then says, there are some social problems here, Mississippi, that we might be able to help address. Like, maybe child obesity…or educational outcomes… Then, the government comes in and says, organizations that are doing work in those areas, we’re now going to put the equivalent of the financial incentive in place for people and companies who help meet certain goals. And here’s how you can help measure their work and participation.

So, if someone were to…spend lots of time tutoring kids—that might help with educational outcomes—then, if they document what they were doing, and there’s a local nonprofit that says, yes, they did tutor these kids for X hours, then they could get this social credit that they could then exchange for dollars if they chose. But there would be other ways for them to get rewarded that didn’t involve just running to the bank to cash [the social credits] in for dollars. You could use your social credits to get experiences or discounts at certain vendors or trade them with others.

Then, let’s imagine that that’s successful and then over time that improves educational outcomes in Mississippi, then you put social credits to work for other various goals. And then, over time, you end up building a fairly robust set of opportunities for people.

The social credit system would be something that would be very easy to implement in various regions and communities. If you think about it, we already have 15 or so currencies that we’re already dealing with. There’s cash, but then we also have credit cards, and then our points, and then a punch card from the deli, and then your Airbnb credits… We all have myriad currencies that we’re currently using. So, this would be another way for us to be able to push people to work that drives social goals that right now we know we need more of but that the monetary market would not currently reward.

Some of those areas could include arts and creativity, nurturing and caregiving, environmental sustainability, volunteering, and civic engagement. And journalism would be another. Right now, the monetary market is rewarding many of these activities not at all or at much lower levels than it used to. So, this would be one new way that we can positively reinforce things that we need more of.

I saw Yuval Noah Harari speak recently with Sam Harris in San Francisco, and he has a pretty interesting critique of UBI. His perspective is that it’s not actually universal basic income that anyone’s talking about; it’s national basic income. So, what happens if, let’s say, we get basic income for everyone in America, while all the developing countries are decimated with automation and there’s no wealth flowing to them. This brings up questions of humanitarianism, immigration, and more.

I think the reality is that if a country implements Universal Basic Income, it will serve to inspire many other societies to do the same thing. If you imagine I become president in 2021 and I implement the Freedom Dividend, how many Western European countries and Asian countries would look at that and say, wow, the United States implemented Universal Basic Income? Because they regard us now as sort of lagging behind. So, I think that many of the European countries would take that as a mammoth challenge and would adopt Universal Basic Income quite quickly.

I think that there, of course, would be issues of people trying to come into the U.S., but those are issues that we have right now. And under my plan, it’s not that a noncitizen—if they manage to arrive in the U.S.—all of the sudden is automatically eligible for $1000 a month. You have to be a citizen. Landing in this country would not bestow citizenship upon you. So, the incentives already exist.

I don’t see what Yuval Noah Harari is describing as really a critique; I think it’s more of a factual description of at least some of the things you’d have to consider if you were to implement Universal Basic Income, but certainly not a disincentive to do so. Again, hundreds of millions of people want to come to the U.S. right now because of better economic opportunities; this doesn’t really change that equation.

You hold yourself out as a strong capitalist, which separates your campaign from Bernie Sanders, who embraces the term ‘democratic socialism.’ Do you have any strong feelings about the term socialism? Do you think it’s ever something that you’ll incorporate into the branding of your campaign, or are you shying away from that?

My honest feeling is that the entire capitalism/socialism framing is decades old and unproductive. So, what I’m suggesting is that we need to evolve to the next stage of capitalism, which prioritizes human wellbeing and development. If someone were to say to me, for example, hey, you’re for universal health care, and that’s an idea I associate with socialists…I would shrug and say, sure. [Laughs.] You know? I just think the labels are unfortunate. People have very strong associations with each one.

A friend of mine, Eric Weinstein, said a couple of things that I thought were very profound. First, he said we never knew that capitalism was going to be eaten by its son—technology. Second, we have to become both radically capitalist and radically socialist in different aspects of American life and the economy. And I think both of those things are true.

I just don’t think it’s constructive to try and pick a spot in this arbitrary capitalism/socialism spectrum. What I believe is we have to redefine our economy and re-write the rules so that it centers around us. Capitalism’s efficiency and GDP are going to have an increasingly nonexistent relationship to how most Americans are doing.

Do you have anything else you want to add?

Just that we need to advance our government and society forward to meet the challenges of 2020. I’m running for president because I see the challenges very clearly and they’re not going to get solved on their own.

Unfortunately, our political class is decades behind and the goal would be that we could catch up. But we don’t have limitless time. We are decades behind where we should be and we need to catch up as fast as possible.

 

Andrew Yang is a Democratic candidate for the US Presidency in 2020, founder of Venture For America, and author of The War on Normal People. You can follow him on Twitter @AndrewYangVFA

Peter Clarke is a Silicon Valley-based writer with a BA in psychology and a JD in intellectual property law. You can follow him on Twitter @harveydukeman