Freakonomics Radio - Why Is This Man Running for President? (Update)

Episode Date: December 19, 2019

A year ago, nobody was taking Andrew Yang very seriously. Now he is America’s favorite entrepre-nerd, with a candidacy that keeps gaining momentum. This episode includes our Jan. 2019 conversation with the leader of the Yang Gang and a fresh interview recorded from the campaign trail in Iowa.

Hey there, it's Stephen Dubner. Today's show is an update to an episode we ran in January called Why Is This Man Running for President? It featured our interview with Democratic presidential candidate Andrew Yang, who at the time was borderline anonymous. But Yang has turned out to be one of the biggest surprises of the campaign, outlasting many candidates with bigger names and bigger titles, including U.S. senators, governors, and more. Yang's poll numbers are still only in the 3% to 5% range, but he continues to gain momentum

and money, and he's one of just seven remaining candidates to qualify for the sixth Democratic debate. What you'll hear today is our original conversation and then a follow-up interview we did just a few days ago. Hope you enjoy. Today is our original conversation and then a follow-up interview we did just a few days ago. Hope you enjoy. Andrew Yang is not famous. Not yet, at least. Maybe he will be someday. But let me tell you his story.

He's 44 years old. He was born in Schenectady, New York, a city long dominated by General Electric, the sort of company that had long dominated the American economy, but which, as you likely know, doesn't anymore. Yang's parents had both immigrated from Taiwan and met in grad school. His mother became a systems administrator and his father did research at IBM. He got his name on 69 patents. Their son, Andrew, studied economics and political research at IBM. He got his name on 69 patents. Their son, Andrew, studied economics and political science at Brown. He got a law degree at Columbia and ultimately became a successful entrepreneur with a focus on widespread job creation. In the American dream sweepstakes, Andrew Yang was a pretty big winner. But along the way, he came to see that for every winner, there were thousands upon thousands of losers. The economist Joseph Schumpeter famously described capitalism

as an act of creative destruction, with new ideas and technologies replacing the old, with nimble startup firms replacing outmoded legacy firms, all in service of a blanket rise in prosperity. The notion of creative destruction has for decades been part of the economic orthodoxy, and it's undeniable that global prosperity has risen, not just by a little bit. But Yang, like many others, has stopped believing in the economic orthodoxy of creative destruction. As he sees it, there's just too much destruction and the blanket rise in prosperity isn't covering enough people. We are living through what Yang calls a war on normal people, a war that Yang fears is getting uglier all the time. And that's why he has taken to saying this. I'm Andrew Yang, and I'm running for president as a Democrat in 2020.

I can think of a million things that you personally, Andrew Yang, with your resources and abilities and so on, could have done other than running for president of the United States. And yet that's the one you've chosen. So why? So imagine if you were the guy getting medals and awards for creating jobs around the country and realizing that the jobs are about to disappear in an historic way. And all of the solutions involve really a much more intelligent, activated government than you currently have. And I went around and talked to various people being like,

hey guys, is anyone going to solve the biggest problem in the history of the world? And I could not identify anyone who was going to run and take it on. So you put your hand up and said, I guess I will? Yeah, you know, I'm a parent like you are. I've got kids who are going to grow up in this country. And to me, just believing that we're going to leave them the show that I think is coming

and not doing something about it struck me as really pathetic. Today on Freakonomics Radio, what Yang sees happening in the middle of the country that coastal elites don't see. We are blasting communities to dust and then pretending like we're not and pretending like it's their fault and pretending that somehow it's unreasonable to be upset about your way of life getting destroyed. What he fears will happen as the problem continues to metastasize if, for instance, autonomous trucks put three million drivers out of work.

F*** this. Let's get 30 guys together with our trucks and our guns and show up and protest the automation of their jobs. And we'll hear Andrew Yang's proposed solutions, including this one. A psychologist in the White House. From Stitcher and Dubner Productions, this is Freakonomics Radio, the podcast that explores the hidden side of everything. Here's your host, Stephen Duffner. The conversation you're about to hear is in many ways a continuation of conversations we've had in multiple episodes over the years. Episodes like, is the American dream really dead? And is the world ready for a guaranteed basic income? Episodes like, yes, the American economy is in a funk, but not for the reasons you think. And did China eat America's jobs?

You may want to give those episodes a listen for a deeper look at the economics involved. But first, who exactly is Andrew Yang? Years ago, he worked as... A knife salesman. A knife salesman? Oh, yeah, Cutco. I still know the sales pattern. Let's hear it. You know what's really dangerous? It's not a sharp knife. It's a dull knife because then you start putting elbow grease into it and that's when accidents happen. So here's how I would thumbnail your story. Immigrant kid, smart, got good education, tried a few things in the labor force, including high-end lawyer, then some entrepreneurship, got involved with a company that was sold, so you cashed out, then took the nonprofit route to try to inspire other people to become entrepreneurs in places where there wasn't a lot of drive for that already. And then during that process, you got exposed to the way the economy was failing in large parts of America. But then instead of just like saying, wow, that's tough, but I got mine and I'm going to go back to my coast and lead my comfortable

life. And for the people who are not leading this life, you know, I wish them well, but I got mine and I'm going to go back to my coast and lead my comfortable life. And for the people who are not leading this life, you know, I wish them well, but I'm out of here. You disrupted your life in order to do something about it. As an entrepreneur, I feel driven to try and solve problems. And this seems like the greatest problem that we face. And you think, hey, if I bust my ass for several years, I have a chance to potentially accelerate the eradication of poverty and helping my country manage through the most difficult transition in decades. And I think if I put my heart and soul into it, I have some chance of making that happen. And then if you don't do that,

you must be an a**hole. When he was 24, Yang landed a job in New York at Davis Polk, one of the most prestigious law firms in the world. I was making $125,000 plus a bonus of maybe another $25,000 or so. And I have Asian parents, so they were quite pleased with this state of affairs. And I thought, wow, this is a really lousy job. When I was growing up as a kid playing Dungeons and Dragons, I didn't dream about being the scribe. I dreamt about going in the woods and killing something, which did not help my parents feel any better about my decision to quit the firm. So yes, he quit what many people might see as a dream job.

He got involved in an internet startup that combined celebrity and charity. So we called it StarGiving.com, and we got Hootie and the Blowfish and MTV and Magic Johnson to donate meet and greets with themselves to their nonprofits. The launch of StarGiving coincided with the bursting of the dot-com bubble. The firm lasted just five months. I mean, I was a very sad 26-year-old who still owed $100,000 in law school loans and had parents still telling people I was a lawyer, even though I was not. And so I joined another startup, and I was very worried that it was also going to go under. So I started throwing parties on the side as a side hustle. And then I also started teaching the GMAT on the side for a

friend's company. So I had three jobs during that time. The job that stuck was the GMAT teaching, GMAT being the standardized test you take to get into business school. The company was called Manhattan Prep, and Yang ended up becoming its CEO. That's right. So I personally taught the analyst classes at McKinsey, Goldman Sachs, J.P. Morgan, Morgan Stanley. And so imagine doing that for six, seven years, and then seeing the country go to shit

during the financial crisis, and then think, well, I know why that is, is because the smart kids have been becoming Wall Street bikers and management consultants while the rest of the country was getting hollowed out. In 2009, Yang's company was bought by the testing firm Kaplan, which was owned by the Washington Post Company. We were acquired for low tens of millions. So I walked away with some number in the millions. He soon left the Washington Post company to start a nonprofit called Venture for America, modeled on Teach for America. Yeah. So Venture for America takes a recent college graduate, trains them with various business skills, and then sends them to work at a startup or early stage growth company in Detroit, New Orleans, Cleveland, Baltimore, a city that could use the talent. Then you work at

that startup for two years, helping it grow. And at the end of two years, if you want to start your own business, we have an accelerator and a seed fund to help you do so. It's going to create 100,000 jobs around the country. We've helped create over 3,000 jobs to date. And dozens of our alums have started companies, some of which have now raised millions of dollars and generated millions in revenue. So you said you hope to create 100,000 jobs and then you just said you've created 3,000 jobs. So that sounds like you're a little short. Well, create 100,000 by a certain date.

What's the date? So we had 2025 as our target date. Okay. So we would need algorithmic growth. I gather what you learned about how the world worked outside of the coastal corridors and outside the Ivy League and so on was an awakening, yes? Yeah, yeah, it was for sure. What was different in Detroit and Pittsburgh and elsewhere that you went from what you

imagined? Well, so some of the structural force, and I'll describe this company. It had a couple of very bright founders at a Brown University, and they got started in Providence. And the company starts to do well, hits its strides, doing a couple million in revenue. And then an investor in Silicon Valley says, hey, you guys should come out here and we'll invest 10, $20 million in you, but you should really come here. So then the guys say, well, I guess we have to take that.

So that company goes from 100 employees in Providence, Rhode Island, to zero employees. And I can feel the mayor of Providence and the governor of Rhode Island thinking right now, no, no, no, please don't go. Oh, they were there. I mean, the mayor was there saying, please don't go. And then the guys were like, well, you've got to do what's right for your business. And so they went out to Silicon Valley and now the company has 100 employees in San Francisco. And so there becomes this really unfortunate dynamic that if you're an entrepreneur who's succeeding in a place like Detroit or Providence or St. Louis, the goal is to get sucked up to the big leagues and wind up in San Francisco or Boston or New York. But the other part is that what we used to think of as, you know, the backbone jobs

of this country, that the nature of that is changing really, really fast due to technology and particularly automation. How much of that were you starting to see up close and how surprising was that to you? Yeah. So my thesis was that if you started, let's say, a tech company in a place like Detroit, that it would create additional jobs in that community that were not necessarily skilled jobs. But what I learned was that these companies, in order to be successful, did not need to hire huge numbers of people. That right now, the way businesses grow is that businesses grow lean and mean. And so they're not going to hire the thousands of employees that industrial companies used to employ in a place like Detroit or Cleveland or St. Louis.

And it became clear to me that as much as I was excited about and proud of the work I was doing, it felt like I was pouring water into a bathtub that had a giant hole ripped in the bottom. Because we're blasting away hundreds of thousands of retail jobs, call companies that might employ 20, 30, 40 people was not going to be a difference maker in the context where that community was going to lose 20, 30, 40,000 retail jobs, call center jobs, transportation jobs, et cetera. And I was horrified. Like I was flying back and forth being like, what the hell are we doing? We are blasting communities to dust and then pretending like we're not and pretending like it's their fault and pretending that somehow it's unreasonable to be

upset about your way of life getting destroyed. And so it's, I had a wake up call, a reckoning, as you said, but then when Donald Trump became president in 2016, I was like, I'm convinced that the reason why he won the presidency is that we automated away 4 million manufacturing jobs in Michigan, Ohio, Pennsylvania, Wisconsin, Iowa, Missouri. And we're about to triple down on that by blasting away millions of retail jobs, call center jobs, fast food jobs, truck driving jobs. It's been tempting, especially from a political view, to blame all this job loss on global trade, immigrant labor, and offshoring. But most economists argue that the much larger driver of job loss is technology, and automation in particular.

Andrew Yang agrees with this diagnosis, but not with the rest of the economic dogma. Now, I studied economics, and according to my economics textbook, those displaced workers would get retrained, reskilled, move for new opportunities, find higher productivity work, the economy would grow. So everyone wins the market, invisible hand has done its thing. So then I said, okay, what actually happened to these 4 million manufacturing workers? And it turns out that almost half of them left the workforce and never worked again. And then half of those that left the workforce then filed for disability, where there are now more Americans on disability than work in construction,

over 20% of working age adults in some parts of the country. So the former manufacturing workers, a lot of them are on disability. A lot of them are also, especially if they're younger men, they're spending 25 to 40 hours a week playing video games. Yeah. So it did not say in my textbook, half of them will leave the workforce, never to be heard from again. Half of them will fall for disability. And then another significant percentage will start drinking themselves to death, start committing suicide at record levels, get addicted to opiates to a point where now eight Americans die of opiates every hour. And so when you say MI4 automation and artificial intelligence and all these fantastic things, of course I am. I mean, we might be able to do things like cure cancer,

help manage climate change more effectively. But we also have to be real that it is going to displace millions of Americans. People are not infinitely adaptable or resilient or eager to become software engineers or whatever ridiculous solution is being proposed. And it's already tearing our country apart by the numbers where our life expectancy has declined for the last two years because of a surge in suicides and drug overdoses around the country. None of this was in my textbook, but if you look at it, that's exactly what's happening. And so the fantasists, and they're so lazy and it makes me so angry because like people who are otherwise educated are just like literally wave their hands and be like, Industrial Revolution, like 120 years ago, been through it before.

And it's like, man, if someone came into your office and pitched you an investment in a company based on a fact pattern from 120 years ago, you'd freaking throw them out of your office so fast. The Industrial Revolution is a textbook example of creative destruction. Old technologies giving way to new, the rising tide lifting all boats. But history doesn't actually happen that smoothly.

If you look at the Industrial Revolution, there was massive social change. Labor unions were originated in 1886 to start protesting for rights. There were massive riots that led to dozens of death and caused billions of dollars worth of damage that led to Labor Day becoming a holiday. Universal High School got implemented in 1911 in response to all of these changes. And it was a tumultuous time. I mean, there was like a whiff of revolution the whole time. And according to Bain, this labor force displacement this time, the fourth industrial revolution, is going to be three to four times faster and more vicious than that industrial revolution was. So even for those lazy ass people who are just like, we've been through this before, industrial revolution, be like, well, the industrial revolution was hellacious.

And it's going to be three to four times worse, according to Bain, who presumably you respect because, you know, like they're good at figuring this stuff out. I mean, if you look at government-funded retraining programs, the efficacy level, according to independent studies, is between 0% and 15%. And only 10% of workers would even qualify for these programs anyway. So we're talking about a solution that will apply to between 1% and 2% of displaced workers. And that's the kind of lazy crap that people are putting out there as a solution. So if a revolution happens, how does it start and what's it look like? So to me, the rubber hits the road with the truck drivers. I mean, there are three and a half million truck drivers in this country. Only 13% of them are unionized. And so the odds of there being a collective negotiation, very low.

87% of them are part of small firms of let's call it 20 to 30 truckers. And 10% of them own their own trucks. So think about that. If you borrowed tens of thousands of dollars to be your own boss and be an entrepreneur, and then your truck cannot compete against a robot truck that never stops. The odds then of these truckers showing up at a state capitol saying, f*** this, let's get 30 guys together with our trucks and our guns and show up and protest the automation of their jobs. So we're disintegrating by the numbers. You can see it in our political and social dysfunction. And so expecting that disintegration process to be gentle would be ignoring history.

Well, even though revolutions do happen and armed violent revolutions obviously have happened, most bold predictions turn out to be wildly wrong. And usually there's a lot less deviance from the past than predictors predict. So what makes you think you're not wrong on this one? I don't know thousands of truck drivers, but I do know some. And they do not strike me as the sort who will just shrug and say, okay, I guess that was a good run. I'm going to go home now and figure out what job is there for someone who's a 50-year-old former truck driver. But you also are going to see call center workers, fast food workers, retail workers. I mean,

there are 8.8 million people working in retail in this country. The average retail worker is a 39-year-old woman with a high school degree who makes $11 to $12 an hour. And so when 30% of malls close in the next four years, what is their next opportunity going to be? So we have to start being honest about what's happening where the market does not care about unemployed cashiers or truck drivers or fast food workers. And the biggest issue to me is that we're measuring economic value

in a very narrow, archaic way. We invented GDP almost 100 years ago during the Great Depression. The government's looking around saying like, things are going really badly. We need a number for this. And then Simon Kuznets comes up with GDP and says a few things. He says, we should not use this as a measurement for national well-being because it's really bad for that. We should include parenthood and motherhood in the calculation because it adds so much value. And we should not include national defense spending in the calculation because- If I remember my history, all three of those were ignored then, yes? Yes, yes, yes. We're like, that's great, Simon. And then now it's like our end all be all. My

wife is at home with our two boys right now, one of whom is on the autism spectrum. And what is her work valued at? I'm guessing zero. Yeah, about zero. And I know that she's working harder than I am and that, you know, the work she's doing is more important. So your wife doesn't really factor into GDP. In fact, she's probably kind of a drain on it, really, right? Because she could be out there where there's opportunity cost of her not working. She might be able to be a management

consultant somewhere, and that would be a much more valuable use of her. So, management consultants and the finance industry, financial services, banking, real estate, you argue that many of the most remunerative occupations in America are rent-seeking activities. Rent-seeking, as economists use it to describe, basically extracting value from transactions without really adding value. And you argue that many of the most beneficial for society jobs, teaching, nurturing, caring, creating, etc., are the least remunerative jobs. How can you rail against that disparity while also wanting to bask in the benefits of the capitalism that set up those incentives? Capitalism is a wonderful, magical, powerful thing.

But it optimizes for capital efficiency and capital gains above all else, really. And that worked well for a long time because in order for capital efficiency, workers needed to benefit, consumer economy needed to benefit, middle class needed to benefit. It's like Henry Ford and his, like,

how can my workers buy my car? But we're now at a point where Ford does not need those humans to build that car and that they can have markets all over the place. They don't really care what's going on in their own backyard. They're just these big changes afoot. And the question is how we're going to manage them as a country. And that's what I'm trying to answer. That's why I'm running for president. Coming up after the break, one of the first things that a President Yang would do. We need to join every other industrialized country in the world and give the public a slice, a sliver of every Amazon transaction, every Google search.

The conversation continues right after this. You're listening to our interview with Andrew Yang, one of the most surprising stories of the 2020 Democratic presidential race. This episode was originally published last January when Yang was pretty much an unknown. But we re-interviewed him just last week, and you'll hear that update toward the end of this episode. Until recently, Andrew Yang was running Venture for America, a nonprofit that tries to persuade young, would-be Wall Streeters to launch startups in places like Cleveland, Baltimore, Detroit, and St. Louis. In 2014, he published a book about this effort. It was called Smart People Should Build Things.

While the book pointed out the need for a dramatic overhaul of the American economy, it was for the most part an optimistic book. Last year, Yang published another book called The War on Normal People, and it is not remotely optimistic. He argues that the American economy has failed most Americans, and that the American political class has failed them again by refusing to focus on the underlying fault lines in the economy. This collapse in Andrew Yang's optimism is what led him to run for president. There's one idea in particular that he's banking on. Sure.

My first big policy is the freedom dividend, a policy where every American adult between the ages of 18 to 64 gets $1,000 a month free and clear, no questions asked. So the freedom dividend is your phrase for what most of us know as the universal basic income, yes? Yeah, yeah. It's a rebrand of universal basic income because it tests much better with Americans with the word freedom in it. You mean the actual, right, as nomenclature.

The idea is the same. Yeah, yeah. So universal basic income tests great with about half the country. And then the other half of the country do not like it. Because? Because, you know, there's... It's got welfare connotations. Something along those lines.

We tested a bunch of names. And then when you had the word freedom in it, then all of a sudden testing shot up among self-identified conservatives. They like hated universal basic income, hated prosperity dividend, all of a sudden freedom dividend. It's like ding, ding, ding. What about progressives, liberals, Democrats? Progressives, liberals, Democrats liked it no matter what the name was. What were some of the other names that didn't work?

Citizens dividend, future dividend, prosperity dividend. We had a lot of dividends. I think of a dividend as a payout on an investment. What does it mean in this case? Well, it's a payout to ownership. And we are the owners and shareholders of this, the most wealthy and advanced society in the history of the world. So this is a dividend for us. And there's nothing stopping a majority of shareholders, majority of citizens from voting themselves a dividend. It's been law in Alaska, and it's wildly popular in a deeply conservative state where a Republican governor said, hey, who would you rather get the oil money? The government who's just going to screw it up, or you, the people of Alaska. And so the people of Alaska now love it. Wildly popular, has created thousands of jobs, has improved children's health and nutrition, has lowered income inequality.

And it's untouchable through many different regimes. The Alaska dividend comes from oil revenues from the state, whereas a freedom dividend that would go to every person in the U.S. would be funded how? So the headline cost of this is $2.4 trillion, which sounds like an awful lot. For reference, the economy is $19 trillion, up $4 trillion in the last 10 years, and the federal budget is $4 trillion. So $2.4 trillion seems like an awfully big slug of money. But if you break it down, the first big thing is to implement a value-added tax, which would harvest the gains from artificial intelligence and big data from the big tech

companies that are going to benefit from it the most. So we have to look at what's happening big picture, where who are going to be the winners from AI and big data and self-driving cars and trucks? It's going to be the trillion-dollar tech companies, Amazon, Apple, Google. So the big trap we're in right now is that as these technologies take off, the public will see very little in the way of new tax gains from it. Because if you look at these big tech companies, Amazon's trick is to say, didn't make any money this quarter, no taxes necessary. Google's trick is to say, it all went through Ireland, nothing to see here. And so even as these companies and the new technologies soak up more and more value and more and more tax, which would give the public a slice, a sliver,

of every Amazon transaction, every Google search. And because our economy is so vast now at $19 trillion, a value-added tax at even half the European level would generate about $800 billion in value. Now, the second source of money is that right now we spend almost 800 billion dollars on welfare programs. And many people are receiving more than a thousand dollars in current benefits so we're going to leave all the programs alone. But if you think a thousand dollars cash would be better than what you're currently receiving then you can opt in and your current benefits disappear. So that reduces the cost of the freedom dividend by between $500 and $600 billion. Now, the great parts are the third and fourth part. So if you put $1,000 a month into the hands of American adults, who right now, 57% of Americans can't pay an unexpected $500 bill,

they're going to spend that $1,000 in their community on car repairs, tutoring for their kids, the occasional night out, it's going to go directly into the consumer economy. And so if you grow the consumer economy by 12%, we get $500 billion in new tax revenue. And then the last $500 billion or so we get through a combination of cost savings on incarceration, homelessness services, healthcare, because right now we're spending about a trillion dollars on people showing up in emergency rooms and hitting our institutions. So we have to do what good companies do, which is invest in our people. So what persuades you that that number, $2.4 trillion, could even be close to justified through the menu of savings that you just described? I guess more broadly, why should someone believe that this Democratic-inspired version of higher taxes or new taxes with a VAT and more income redistribution, why should someone believe that any more than Democrats disbelieve the Republicans'

idea of lower taxes and trickle-down economics? Oh, man. I mean, if you put $1,000 into the hands of a struggling American, it's going to make a much bigger difference, not just to that person, but it's also going to go back into the economy. If you give a wealthy person $1,000, they wouldn't even notice. You could just slap it into into their account and, you know, it'd be like a non-event. And so everyone knows that putting money into the hands of people that would actually use it is going to be much more effective at strengthening our economy and society. One easy argument against a UBI is that if you give everyone a dividend, like you're proposing a thousand dollars a month per person, all that new money in the economy will cause the kind of inflation that will render that $1,000 much less powerful. What's your argument against that?

Yeah, so I looked into the causes of inflation that are making Americans miserable right now. And they are not in consumer goods like media or clothing or electronics. Those are all getting cheaper, still getting much cheaper. Yeah, and a lot of that is being made more efficient by technology and supply chains and everything else. The three things that are making Americans miserable in terms of inflation are housing, education, and healthcare. And each of those is being driven by something other than purchasing power.

Housing is being driven by the fact in some markets people feel like they need to live in, let's say, New York or Seattle or San Francisco to be able to access certain opportunities. And then there's not much flexibility in terms of their ability to commute a long distance. Education, it's because college has very, very sadly gotten two and a half times more expensive, even though it has not gotten two and a half times better. And then the third is healthcare, which is dysfunctional because of a broken set of incentives and the fact that individuals aren't really paying in a marketplace. So if you put $1,000 in the hands of Americans, it's actually going to help them manage those expenses much better, but it's not going to cause prices to skyrocket because you can't have

every vendor colluding with every other vendor to raise prices, and there's still going to be price sensitivity among every consumer and competition between firms. The idea of a universal basic income has been around for a long time, and you might be surprised by the political diversity of its supporters. In the 18th century, founding father Thomas Paine argued for a universal payout, representing our collective share of America's natural resources. In the 20th century, the economist Milton Friedman pushed for a different version called a negative income tax. Then and now, there is a common objection that if you just give people enough money to survive on, it will destroy their incentive to work, to be productive. But the research on the subject, in the few cases where it's been tried,

suggests this isn't necessarily the case. A neuroscientist in Seattle said something to me that really stuck with me. He said the enemy of universal basic income is the human mind. And what he meant by that is that people are programmed for resource scarcity. They think, hey, there's not enough to go around. You get it, I don't get it. And then if we all get it, it's somehow going to harm us. And that's what we have to overcome.

We have to overcome this knee-jerk sense of scarcity that is baked into, in many ways, the way we're trained to perceive value in money. So that's big policy number one. All right. And what's big policy number two for would-be President Yang? Number two is digital social credits. Which are what? Digital social credits are a new way to reward behaviors that we need more of in society. So right now the monetary market does not recognize things that we know are crucial to humanity,

like caregiving and raising children, volunteering in the community, arts and creativity, journalism, environmental sustainability. And so we're getting less and less of those things because the market does not care about them. What I'm proposing is we create a new currency that then maps to various activities that we want to see more of. All right. So give me a for instance of how it would work. Let's pretend that I am a 58-year-old laid-off carpenter. Maybe you, President Yang, are already giving me a shelf break and they could use some help repairing it. And then you click on your phone and say, yeah, I'll do that. Then you drive over, repair the shelf, and then the person thanks you, gives you a hug, takes a picture of it. And then you then get this digital social credit, let's say call it 300 points. So you have these

300 points and you're like, okay, that's good. And then you get another ping and saying, hey, your neighbor needs a ride and they don't have a vehicle and you do. So you give them a ride and then you get some more points. And then at the end of the week, you say, you know what? If I go to Cabela's, I can trade those points in for hunting gear or camping gear. I could use it to go to the local ball game. Okay. And then the vendors who are giving their goods or services to you for those social credits, what do they do with the social credits? They can take the social credits and go to the government and then the government can exchange it for money.

And what's funding the money for the social credits from the vendors? So, I mean, the U.S. government would be backing it or foundations or various companies. Because if you're a company, you're a sponsor of this, I mean, you'd kind of enjoy the heck out of it and it would drive business to your establishments. But the great thing about this is you could induce hundreds of billions of dollars worth of social activity at a small fraction of the cost. Because right now, if I have 100,000 American Express points, how much does that cost American Express? A thousand dollars, maybe? Zero, because I haven't done anything with it yet. Before I redeem it, it costs them nothing.

But I love my points. I look at them. They seem to have value. I could trade them in whenever I want. And so what you'd see is you'd end up building up a parallel economy around people doing things for each other. This is based on a practice called time banking that's in effect in hundreds of communities around the country. So time banking is one of these ideas that's been around for a while now, and it's met with

some success in some places, but it's certainly never been scaled up the way that you're talking about. What makes you think that it's attractive enough for enough people to want to use it and that it is ultimately scalable? Time banking holds that everyone's time has intrinsic value and that if I do something for you for an hour, I then get a time credit that I can then give to someone else to do something for me for an hour and everyone can do something, watch your kids or walk your dog or move some trash or whatever the task happens to be. So the obstacle to more widespread adoption of time banking has been the administration, because you need a person in each community who is tabulating and keeping track

of transactions. And now with technology... Oh, this sounds like a job for the blockchain. Yes. So you could have a public ledger on the blockchain. You could make this happen much, much more easily, much more cost effectively. And there are people, I'm happy to say, who are working on technical solutions for this. Andrew Yang believes that injecting all that undervalued work into the, quote, real economy would solve a couple problems at once. It would give people access to more of the goods and services they need and can't afford. And it would boost morale by revaluing skills that the market no longer values.

Yeah, that's right. I don't mean to be a skeptic or a cynic, but what makes you think that the best overseer of a big scaled up time banking or digital social currency is the government itself? I don't think so. I mean, one thing I'll say, to quote my friend Andy Stern, the government is terrible at most things, but it is excellent at sending large numbers of checks to large numbers of people promptly and reliably. And so the government would not be administering this at all. I mean, the best the government would be doing would be allocating social credits to various communities who could then have the credits flow through nonprofits and NGOs and organizations that are closer to the ground and could administer it more effectively.

But ultimately, when all those vendors want to take in their DSCs, their digital social currency, coins, whatever, and cash them in for real cash. It's the government they're coming, it's Treasury they're coming to, yes? Yeah, yeah. So there's like a government budget allocation, but the government budget allocation would be essentially like proportional in population, and then each community would be doing different things with it, because like something that would be effective in Mississippi would not be necessary in Montana or Missouri. So digital social credits and a universal basic income. These are Andrew Yang's two most prominent proposals in his presidential campaign. There are, of course, many others, most of which align with a

standard democratic platform. You can see them all at yang2020.com. I had asked him his most outlandish position. So, my most outlandish. We should have a psychologist in the White House that's looking in on the mental health of the executive branch because it doesn't make any sense to me to have that much power and responsibility without some sort of mental health professional monitoring. Did you have this idea before the current presidency? You know, I always thought so. I mean, my brother's a psychology professor. And so I think it would also help destigmatize

mental health issues and anxiety and depression around the country and just say, look, we all have struggles. That includes people at the top of the government. Another thing I think is really important is that right now we expect people to be sort of martyrs if they enter into government service, and then they turn around and become lobbyists to make a lot of money. So we need to take advantage of the fact that the government can pay much, much more, and then just require people to not go back to industry afterwards. Because if you're a human being, and you know your stint is going to end in two or three years, you don't want to be too harsh on the companies that could end up paying you and giving you lots of money later. So you're arguing for a $4 million salary for the U.S. president?

Yeah, because it's true for presidents too. I mean, if you're going to get paid a quarter of a million by some company after you leave office just to show up and schmooze and give a speech, then human nature is like, maybe I shouldn't be too harsh on this company. And I'll say this raise can go into effect for the president after me. Like I do not give a shit how much I get paid. But the president after me should get paid enough so that we know that they're just looking out for us and not going to just speech it up afterwards. You happen to be the Democratic entrepreneur as would-be president who happens to be running after the successful campaign of a Republican entrepreneur as president who a lot of people agree his entrepreneurship and CEO-ship have not contributed to a stable presidency or to a business-like presidency, etc., etc. Does that not strike you as potentially terrible timing? Well, the reason why Donald Trump, in my mind,

aside from the fact that we've blasted away all these manufacturing jobs, is that many Americans are desperate for some kind of change agent. And if you look at it, there's been a thirst for that, not just with Donald Trump, but with Bernie Sanders' outsized success, even to some extent with Barack Obama winning in 08, where the citizens of the United States have not necessarily a terrible president because he was not steeped in our government for decades. And genuine entrepreneurs like myself regard Donald Trump as a bullsh** marketing charlatan. So, you know, he gives us all a bad name. And the goal is to show what real builders and entrepreneurs would do to solve some problems. If you were a bookmaker, what are the odds that you're laying off for Andrew Yang winning the presidency in 2020?

I think the latest odds I saw were I was like 201. Let's pretend for just a second that you don't win the presidency, but that you do impress a lot of people with your energy and ideas and vision. And you are invited to run as VP on the Democratic ticket. One of the fun things about running for president is you spend time with other candidates on the trail. I have some ideas, but my vision is that there is a set of patriots that are all heading to D.C. to try and save this country. I plan to be in that group. And, you know, if it's as president, fantastic. If it's as vice president,

also fantastic. I just want to solve problems, man. I don't really care about the seating chart. You know, and someone said to me, it's like, hey, what if Joe Biden takes all your ideas? I would say that's fan-freaking-tastic. Like, I'm not some freaking, like, you know, crazy person who's like, you know, been measuring the drapes since I was 16 or any of that jazz. You know, I just want to, like, keep this country together for your kids and mine. In the roughly one year since we had that conversation with Andrew Yang, a lot of people have decided that he is not some crazy person with no good reason to run for president. The Yang gang, as his supporters call themselves, has been steadily accruing money, attention, and like-minded voters.

We caught up with Yang again last week when he was in Cedar Falls, Iowa. He had just qualified for the next Democratic debate to be held December 19th. So, no disrespect, because you know that I respect and admire a lot of your ideas and diagnoses and solutions. But when you started out, did you honestly think you'd still be around by now? No disrespect taken, Stephen. I mean, if someone were to put money on the Yang campaign being one of the last campaigns standing when a dozen or so sitting senators, governors, and congresspeople have already left the field. It'd be a tough bet. So in the roughly one year since we spoke, tell me one thing in your platform that you've, let's say, doubled down on and maybe one that you've changed your mind or backed off from.

I've doubled down on the freedom dividend of $1,000 a month. And it's changed since we spoke last year, where I believe at that point it was between 18 and 64, with the understanding that Social Security would kick in at 65. But after talking to thousands of Americans around the country, I realized that Social Security is insufficient to help Americans retire with dignity. And we have a retiree crisis. We have a retirement savings crisis that's going to get worse for Americans of different generations. And so now the freedom dividend goes from 18 until you expire. And one thing that convinced me of this is that many women who took time off from the workforce to raise kids have much lower Social Security benefits than others.

And that struck me as deeply unfair. So you recently qualified for the sixth Democratic debate, and this one had the toughest qualifications yet and therefore will also be the smallest. But I have to ask you, in all but one of the previous debates, you have come in dead last in speaking time. In one case, it took 32 minutes before you were asked a single question or got to contribute at all. So what's the problem there? Are you not getting called on enough? I mean, plainly you're not, but should you be interrupting more? Should you not be so succinct in your answers? No, it's been a constant source of frustration, but we're really excited that we're still on the debate stage, given that now the field has shrunk to seven and I'll get more and more airtime. Do you have a strategy for this sixth debate? We do have a strategy, though one

thing that I think people have caught on to, some of the candidates get rewarded with more airtime for using rehearsed attack lines that invoke the name of other candidates, and then you have a tit-for-tat spat, and then it gets your airtime up, but it tends to irritate a lot of voters and observers. And I will say that even though I've gotten less speaking time in some of these debates, we've always had a really strong surge of support afterwards, regardless of how much I got to talk. And I'm not naturally geared towards fake attacks on other people. If I engage with someone, it should be on the substance of a policy that they actually stand for. I have noticed that in debates especially, you really seem to stick to issues rather than people, which in politics seems to often fail,

unfortunately. Are you saying you're willing to diverge from that a little bit and get in the mud? I'm willing to fight very hard for our vision of the country. But the fact is, I respect and even admire many of the other people on the stage. And even if my advisors told me that we would score political points by pretending that they're terrible people, I don't think I could pull it off, honestly. So now that you are a veteran of American electoral politics at the highest level, let me ask you this. Some people argue that the Democrats and Republicans are essentially a duopoly that colludes really to perpetuate their power at the expense of the average voter. How much do you agree with that argument?

The two-party duopoly is a major problem. At this point, more Americans self-identify as independents than either Democrats or Republicans. And as someone who's gone through the nomination process for a number of months now, it's easy to see how many, many candidates could not get through this Democratic nominating process because they don't have a certain background or their ideas don't fit with the Democratic primary voters who may or may not represent many, many Americans. So I'm for ranked choice voting in part so we can have a more robust multi-party system and Americans don't fear they're going to quote unquote throw their vote away if they vote

for anyone that doesn't have a D or R next to their name. Name a position or two of yours that you feel is most at odds with the current Democratic Party. Unfortunately, I think putting money into people's hands is at odds with the Democratic Party because the Democratic Party has a lot of faith in programs and institutions where it's more likely to champion something like free college, even though only 33% of us will go to college, than just putting cash into people's hands. There's a mistrust of people in the Democratic Party that I frankly don't understand because I feel like people are the point. Where do you think that comes from? I think that over the last number of years, Democrats have become the champions of programs

and institutions, even as unfortunately many Americans have lost faith in programs and institutions. It's one reason to me why Trump won is that he was saying something that many Americans agreed with, which is that D.C. has stopped serving the American people. The feedback mechanism is broken. People in D.C. will succeed whether the rest of us succeed or fail. And that message really hit home for many, many Americans. And unfortunately, the Democratic response seems to be D.C. is not the problem. Trump is the problem. And then the solutions they recommend seem like

more layers of government. And I'm concerned that if that's the primary message, then we may end up losing to Trump yet again in 2020. What do you think is the single worst thing that President Trump has done during his tenure? And then I'll ask you to give me the single best thing as well. Among the worst things he's done is really stoke this feeling of racial divisiveness and xenophobia. And it's had real effects on families around the country that I've spoken to. The fear is real, and it's totally hateful and unnecessary.

The best thing he's done is question Washington orthodoxy around how we can move forward and solve problems. I do not mind the fact that he sat down with dictators like Kim Jong-un. I think that he should have gotten much more out of sitting down with them than just a photo op. But the fact that he's questioning established practices to me is not intrinsically a bad thing. What do you make of the state of the China trade negotiations? Well, I'm here in Iowa, and I'll tell you, the farmers here have no idea why their businesses are being jeopardized by Chinese piracy of intellectual property that has nothing to do with them. The sad part is that it's unclear what really has been gained by this trade war,

where you get into this tit for tat, and then the resolution is that you stop, stop elevating, and maybe go back to what it was at square one. But then at that point, you have to ask, what was the point? Why has all this damage been done? So when it comes to the American economy overall, Trump's first term has been marked by record low unemployment, record high stock markets, and at least a slight uptick in wages, all of which is tempered, of course, by a lot of trade uncertainty, particularly with China. Still, Trump's message, whether justified or not, is that the economy is strong and that he had a lot to do with that. So how do you counter that claim? Let's imagine in a debate for a moment.

I would just tell American people the facts they already know, that you have record high levels of corporate profits, but also at record highs in the United States of America right now, stress, anxiety, mental illness, depression, even suicides and drug overdoses, student loan debt, record highs. And so you have to ask what good are corporate profits if people are literally dying earlier because of surges in suicides and drug overdoses. And when Donald Trump was running for president, he himself said that the headline unemployment rate was fake news. It didn't reflect the fact that millions were dropping out of the

workforce. But now that he's president, somehow the numbers are real. He was right the first time. And when I go around campaigning around the country, I cannot tell you how many heads nod when I talk about how their lived experience has nothing to do with corporate profits, the headline unemployment rate or GDP. The other part of it, Stephen, is that we know that a lot of the headline economic numbers are due to the $1.5 trillion tax cut, the vast majority of which went to big companies. So if you have a sugar rush because of an irresponsible tax cut, you shouldn't be celebrating. I mean, anyone could have predicted that. All right, here's a scenario for you. What if you continue to surge, but you end up not getting on the Democratic ticket as either president or vice president, and that somehow Trump asks you to run with him as VP? What do you do? I laugh at him. I say thanks, but no thanks. And I get behind the Democrat to beat Donald Trump. Mission one is to get him out of office.

I'm not going to do anything that increases the chances of him sticking around for another four years. Certainly not help him run. Tell you what, if I did become his VP, it would be like a WWE style thing where I hit him over the head with a steel chair, take off my shirt, and it turns out I've got a Democrat blue jersey on underneath the thing. That would be hysterical. He'd bring me in, we'd have a ceremony, and then while he's gloating to the press, I'm like taking off whatever jacket I have on and then I pick up the steel chair. In some quadrants of society, you are incredibly popular. For instance, I think if the presidential election were being held on Reddit, you would definitely win. So I am curious about the demographics of your supporters.

What does your internal polling tell you about the areas where you're particularly weak? Who are the voters that are not getting yanged yet? The more people hear about us in the campaign, the more they like us. And so we're weakest among voters who have not heard of us. I guess that might seem kind of obvious. And the people that haven't heard from us tend to be older. They tend to be women. They tend to be people that aren't getting their information from the internet. So we need to do more in that direction. We raised $10 million last quarter in increments of only $30 each. And now we're spending that money on TV ads to reach Americans that are not on the internet or on the YouTube channels. And you're going to see our poll numbers rise and rise in the days to come.

We've been investing a lot of time and energy in Iowa and New Hampshire in particular. You should know that this 3%, 4%, 5%, we have a chance to actually contend and win this thing. So before you have to go, let's have a prediction. November 3rd, 2020, who really, truly in your heart of hearts and in your mind, who's running for president and VP on the Democratic ticket, and who wins the election? This is going to sound like a cop-out, but I think that we're going to wind up with a very fragmented field that lasts all through the spring. And there are going to be a bunch of us sitting together in a conference room in Milwaukee trying to answer that very question. So it's very tough for me to forecast how that particular conference room conversation is going to go. But that gives you a sense of how I think that the campaign is going to go, where you have five or six candidates that each have a base of

support. It's going to be very, very hard for anyone to get the 51% of delegates that you need to be voted in as the nominee. And so then how do you decide? That's going to be one of the most fascinating historic conversations in our country's history. And I plan to be at that table. Coming up next time on Freakonomics Radio. Stephen, I have a question. Angela Duckworth, question for you.

The author of Grit and I sit down to ask each other some questions, mostly fail to come up with answers, but in the process have a fine time. How many Prince Charleses can there be in the room, right? That's next time on Freakonomics Radio. Freakonomics Radio is produced by Stitcher and Dubner Productions. This episode was produced by Harry Huggins with the update handled by Zach Lipinski. Our staff also includes Allison Craiglow, Greg Rippin, Matt Hickey, Corinne Wallace, and Daphne Chen.

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