The Philip DeFranco Show - PDS 4.10 Can Universal Basic Income Save Us? Free Money After Coronavirus Makes Millions Unemployed

Starting point is 00:00:00 Where were you when I was running for president, Philip? No, I'm just kidding. I was like, I think we were talking to your team. You're right. I should go back there and figure out who dropped that ball. Sup, you beautiful bastards. Hope you've had a fantastic Friday. Welcome back to the Philip DeFranco Show.

Starting point is 00:00:14 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. 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

Starting point is 00:00:32 $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.

Starting point is 00:00:48 And there are many different 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. 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

Starting point is 00:01:04 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. Or in other words, UBI can't have strings attached like current welfare programs. People are eligible regardless of income, job status, or other socioeconomic factors.

Starting point is 00:01:27 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 the 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,

Starting point is 00:01:42 but just kind of think of this as a starting point. The next time a pun's in or some 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 are 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

Starting point is 00:01:57 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

Starting point is 00:02:14 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. And this is an argument that's been echoed by high tech executives like Elon Musk and Mark Zuckerberg. Well speaking at 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.

Starting point is 00:02:47 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.

Starting point is 00:03:00 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 could force employers to make pay better and improve conditions.

Starting point is 00:03:13 But beyond that, UBI could give people more flexibility in general, whether it's the ability to just 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 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,

Starting point is 00:03:27 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.

Starting point is 00:03:42 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

Starting point is 00:03:57 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. That both disincentivizes people for making more money or finding a job.

Starting point is 00:04:11 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. But 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.

Starting point is 00:04:24 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 Stockton, 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,

Starting point is 00:04:40 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, right, because welfare programs have rules about eligibility. In order to qualify, each person has to go through this complex and often confusing process

Starting point is 00:04:58 that requires high administrative capacity and costs. For example, Social Security alone, which is one of the biggest social programs, has relatively low administrative costs at 0.7% of funding. And even then, that still comes out to more than $6 billion a year. But, according to the Cato Institute, other programs specifically aimed at helping the poor run closer to 5%, 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 will provide other benefits that go along with poverty reductions.

Starting point is 00:05:25 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 there was a decline in doctor visits, 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 for why UBI is a good idea, but these are the main ones

Starting point is 00:05:51 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 that it will 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.

Starting point is 00:06:07 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. 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,

Starting point is 00:06:23 a universal payment of $12,000 per year to each adult US resident over age 18 would cost roughly $3 trillion per year. 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,

Starting point is 00:06:38 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. 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.

Starting point is 00:06:54 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. So to offset that, some people have proposed taxing

Starting point is 00:07:11 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 corporations pay their fair share and bring in $800 billion in new revenue.

Starting point is 00:07:24 But even if that number is real, it still falls way short of the projected annual cost, which most experts place in the trillions. 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 all together, 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

Starting point is 00:07:48 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. Right, so the argument is we would still need

Starting point is 00:08:03 some programs in place. And what's more, some people would be better off from the current welfare they receive now than from the UBI. Right, 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.

Starting point is 00:08:15 According to a study by the Bureau of Labor Statistics in 2014, single parent families with children under the age of 18 got over $14,000 a year on average just from social security, public assistance, and food stamps. And that is massively significant because according to that same study, nearly half of the families

Starting point is 00:08:29 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

Starting point is 00:08:43 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. Right, because basically current programs are targeted for the poorest and most at-risk Americans, but UBI would be for everyone.

Starting point is 00:08:56 Other common arguments against UBI are that it would disincentivize people to work. Right, 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 dollars 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.

Starting point is 00:09:19 There 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

Starting point is 00:09:38 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 two trillion dollar stimulus, the $1,200 that is, that is a one-time payment bailout sort of situation.

Starting point is 00:09:58 Right, under that bill, every adult 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. Right, and lawmakers are hoping that the stimulus will boost the economy or at least support it for now.

Starting point is 00:10:20 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, I mean, a lot of them don't know how they're going to afford life. Right, and that also has an adverse effect on the economy,

Starting point is 00:10:32 which is already struggling and at risk of 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,

Starting point is 00:10:46 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, more people are not putting money into the economy.

Starting point is 00:11:01 And so in order to combat this problem, most economists say that we basically have to just put massive amounts of money into the economy. So that's exactly, at this problem, most economists say that we basically 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.

Starting point is 00:11:15 Right, for some people, $1,200 barely covers one month of expenses. But there are also other problems as well. For instance, the $500 for each child only applies to kids 16 and under under but not for any other dependents, right? And 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 a number of those kids won't get the $1,200 sent out to individuals.

Starting point is 00:11:35 Also you have people pointing out that many immigrant families are ineligible because everyone in the household needs to have a valid social security number. So if 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

Starting point is 00:11:58 from their tax filings, 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 reports saying millions of people will get it next week and some will even see money as early as this week.

Starting point is 00:12:10 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. And because those paper 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 amount of checks at a time.

Starting point is 00:12:24 But the IRS has also said that it will 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

Starting point is 00:12:39 for the duration of the coronavirus crisis, as well as Republican Senator Josh Hawley, who proposed a plan that would give families 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 And in fact this last 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

Starting point is 00:13:07 he told me. So it's heartbreaking that we're in the 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 going to last that long. We're going to 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 going to 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

Starting point is 00:13:55 visibility, where even if you put $1,700 into my hands right now, if I don't know where my next paycheck is going to come from, and I don't know when things are going to 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 is 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 is going to be secure even if this drags on for

Starting point is 00:14:39 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 of it being there forever. It's not a Trojan horse in my mind. It's just a horse, like, just ride up and be like, let's do it. The great thing is 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

Starting point is 00:15:07 and no one can feed themselves. And then when you can all feed yourself 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,

Starting point is 00:15:22 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 that'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.

Starting point is 00:15:39 It's not going to turn us into different people. It's not going to turn our neighbors into different people. It's not gonna make us all lazy. It's just going to help us into different people. It's not going to turn our neighbors into different people. It's not going to make us all lazy. 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 basic income is gaining steam, not just here, but Spain just said they're going to adopt a minimum income program that's not universal basic income, but it does provide an income floor. And other legislatures are looking at it because

Starting point is 00:16:14 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 could shape not only discussions, but real policies domestically and internationally moving forward. But with everything we've said, the arguments for and against,

Starting point is 00:16:34 and now we're at the point of the video where I want to pass the question off 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

Starting point is 00:16:44 in those comments down below. But ultimately, we are now at the end of the video. And hey, if you like this video, you like diving into the news and newsy type things every day with me, hit that like button. Also, if you wanna continue doing it, hit that subscribe button, definitely tap that bell to turn on notifications.

Starting point is 00:16:58 Also, quick side note, if you wanna watch the full interview with Andrew Yang, because I thought we only had 15 minutes, but we actually had 50. We talked about a lot more, we're looking to post it somewhere publicly next week But if you want to watch it all now you can go to DeFrancoElite.com and subscribe there Also, if you're looking for more to watch after this video, maybe you missed one of the last two shows I did you can click or tap right there to catch up and watch right now

Starting point is 00:17:16 But with that said of course as always my name is Philip DeFranco. You've just been filled in I love yo faces, and I'll see you next time. I hope you liked the video subscribe if you liked it

The Philip DeFranco Show - PDS 4.10 Can Universal Basic Income Save Us? Free Money After Coronavirus Makes Millions Unemployed

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