362. Why Is This Man Running for President?

Jan 9, 2019

In the American Dream sweepstakes, Andrew Yang was a pretty big winner. But for every winner, he came to realize, there are thousands upon thousands of losers — a “war on normal people,” he calls it. Here’s what he plans to do about it.

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hey there it's Stephen Dubner hope your New Year is off to a good start hope you haven't broken all your resolutions yet a couple quick announcements before we start today's episode first next week we will be resuming our Hidden Side of sports series with a look at the mental side of sports but also in a couple of months we will be participating in the famous MIT Sloan Sports analytics conference which means we will have access to some of the sharpest Sports analysts and coaches and owners and athletes in the world so we want your questions for them send us the sports questions you've always wanted answered on any aspect of any sport whatsoever the weirder the question the better our email is Radio at Freakonomics.com thanks and now onto today's episode

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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 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

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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 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 Young and I'm running for president as a Democrat and

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20 I can think of a million things that you personally Andrew Young with your resources and abilities and so on could have done other than running for president 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 anyone going to solve the biggest problem in the history of the world and I could not identify anyone who is going to run and taken up so you put your hand up and said I guess I will yeah I'm you know I'm a parent like you are I've got kids are going to grow up in this country and to me just believing that we're going to leave them to show that I think is coming and not doing

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think about it struck me as really pathetic today on Freakonomics radio what Yang sees happening in the middle of the country that Coastal leitz don't see we are blasting communities to dust and then pretending like we're not and pretending like it's their fault 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 3 million drivers out of work this let's get 30 guys together with our trucks and our guns and show up and protest the automation of their jobs and will hear Andrew Yang's proposed Solutions including this one a psychologist in the White House

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from Stitcher and Dubner Productions this is Freakonomics radio the podcast that explores the Hidden Side of Everything here's your host Stephen Dubner

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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 of 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 the sales pattern let's hear you know what's really dangerous is not a sharp knife it's a Dull Knife because then you start putting elbow grease into and that's when accidents happen so here's how I would thumbnail your story immigrant kid smart got good education tried a few

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things in the labor force including high-end lawyer than some entrepreneurship Carnival 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 the people who are not leading this life you know I wish him 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

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it the eradication of poverty and helping my country managed through the most difficult transition and 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 asshole when he was twenty four Yang landed a job in New York at Davis Polk one of the most prestigious law firms in the world I was making a hundred twenty-five thousand plus a bonus of maybe another 25 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 described 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 start-up that combined celebrity

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charity so we called it star giving.com and we got to D and the Blowfish and MTV and Magic Johnson to donate meet and greets with themselves to their nonprofits the launch of star giving coincided with the bursting of the.com bubble The Firm lasted just five months I mean I was a very sad 26 year old who still owed $100,000 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 he 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 class

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that Mackenzie Goldman Sachs JP Morgan Morgan Stanley and so imagine doing that for six seven years and then seeing the country go to during the financial crisis and then think well I know why that is is because the smart kids have been coming Wall Street bankers and management Consultants while the rest the country was getting hollered 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 recent college graduate trains them with various business skills and then sends them to work at a start-up or early stage growth company in Detroit New Orleans Cleveland Baltimore city that could use the talent then you work at that start up for two years helping it grow

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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 a hundred thousand jobs around the country we 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 hoped to create a hundred thousand jobs and then you just said you've created 3,000 jobs so that sounds like you're a little short well create a hundred thousand by a certain date so what's the date so we had 2025 as our Target date okay so we need a logarithmic 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 it was for sure what was different in Detroit and Pittsburgh and elsewhere that you went from what you imagined also some of the structural force and I'll describe this a company that had a couple of very bright Founders at a Brown University and they got

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in Providence and the company starts to do well it's strides doing couple million in revenue and then an investor in Silicon Valley says hey you guys should come out here and we'll invest ten twenty million dollars in you but you should really come here it's so then the guys say well I guess we have to take that so that company goes from a hundred employees in Providence Rhode Island 20 employ and I can feel the mayor of Providence in the governor of Rhode Island thinking right now no no no please don't know they were there I mean the mayor was like they're like saying please don't go and then the guys like well you got to do what's right for your business and so they went out to Silicon Valley and now the company has a hundred employees in San Francisco and so there that becomes is really unfortunate Dynamic that if you are an entrepreneur who 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

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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 we're not necessarily skilled jobs but what I learned was that these companies in order to be successful do 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

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we're blasting away hundreds of thousands of retail jobs call center jobs food service jobs eventually truck driving jobs and so my Army of entrepreneurs doing incredible work starting companies that might employ 20 30 40 people was not going to be a Difference Maker and the context where that Community was going to lose twenty Thirty forty thousand retail jobs call center jobs transportation jobs Etc 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 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 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

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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 I think if we had realized how traumatic the pace of change would have been we would have at a minimum had much better policies in place to assist workers and communities that suffered these very severe and immediate consequences that's the MIT labor Economist David otter from our 2017 episode did China eat America's jobs and we might have tried to moderate the pace at which it occurred and we also had a huge trade deficit and that meant that we simply did a lot less manufacturing so that meant that workers had to make a tougher transition out of manufacturing into something altogether new and I think that upped the challenge I think

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other thing that we have to recognize and that economists have tended not to emphasize is that jobs aren't purely income they are part of identity they structure people's lives they give them a purpose in a social community and a sense of relevance in the world and I think that is a lot of the frustration that we see in manufacturing intensive areas and I think that that's costly even beyond the direct Financial costs it's been tempting especially from a political view to blame all this job loss on global trade immigrant labor and offshoring but otter and most other economists agree that the much larger driver of job loss is technology and Automation in particular so we automated away 4 million manufacturing jobs back to Andrew yang this was like the auto manufacturing plants like a lot of the the even like consumer good like Furniture Manufacturing in North Carolina like a lot of that stuff that

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gotten automated away now I studied economics and according to my economics textbook those displaced workers would get retrained Reese killed I 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 these four 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 they're now more Americans on disability than working construction over 20 percent 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 file for disability and then another significant percentage will start drinking themselves to death start committing suicide at record levels

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get addicted to opiates to a point where now eight Americans died of opiates every hour and so when you say am I for Automation and artificial intelligence all these fantastic things of course I am 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 resilient or eager to become software Engineers or whatever ridiculous like solution is being proposed and it's already tearing our country apart by the Numbers where our life expectancy is decline 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 it just like literally wave their hands and be like Industrial Revolution

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a hundred twenty 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 a hundred twenty years ago you'd freaking throw them out of your office so fast

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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 a 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 and according to beIN 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

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should be like well the Industrial Revolution was hellacious and it's going to be three to four times worse according to Bean who presumably 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 percent and only 10 percent 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 let me 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 percent of them are part of small firms of let's call it twenty to Thirty truckers and 10% of them own their own trucks

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think about that if you borrow tens of thousand dollars to be our 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 the state capitol saying 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

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all right he'll 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 eight point eight 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 eleven to twelve dollars an hour and so when 30% of malls closed 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 a hundred years ago during the Great Depression the government's looking around saying like things are going really badly like we need a number for this and then Simon kuznets comes up with GDP

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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 and the calculation because if I remember my history all three of those were ignored than yes yes yes yes we're like that's great Simon and then that sounds 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 by C 0 yeah but 0 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 like be a Management Consultant somewhere that bad okay like a much more valuable use of her so management consultants and the finance industry

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Financial Services banking real estate you argue that many of the most remunerative occupations in America are rent-seeking activities rent-seeking as Economist 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 etcetera 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

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consumer economy needed to benefit middle-class needed to benefits like Henry Ford and his like how can my workers by my car but we're now at a point where for does not need those humans to build that car and that they can have markets all over the place and 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

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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

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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 is 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

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ever been to Iowa and New Hampshire several times but let's be honest he is a very long shot and what's expected to be a very crowded field let's use Twitter followers as a proxy for the viability of some other possible Democratic candidates Joe Biden has three million followers Cory Booker for million Elizabeth Warren 4.6 million Bernie Sanders 9 million Mike Bloomberg has 2 million Twitter followers and over 40 billion dollars Andrew Yang meanwhile has raised about $600,000 and has roughly twenty seven thousand Twitter followers but he also has ideas that he thinks will compensate 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 and 64 gets $1,000 a month free and clear no questions asked

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to the freedom dividend is your phrase for what most of us know is the universal basic income yes yeah it's a Rebrand of universal basic income because it tests much better with Americans with a word freedom in it you mean the actual right as as nomenclature the idea is the same yeah yeah so Universal basic income test great with about half the country and then the other half 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 like hated hated Universal basic income hated Prosperity dividend office on freedom dividends 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

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L on an investment what is 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 Republican Governor said hey who would you rather get the oil money the government is 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 is 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 US would be funded how so the headline cost of this is two point four trillion dollars which sounds like an awful

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lat for reference the economy is 19 trillion dollars up for trillion in the last ten years and the federal budget is for trillion so two point four 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 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

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even as these companies and the new technologies soak up more and more value and more and more work the public is going to go into increasing distress so what we need to do is we need to join every other industrialized country in the world and pass a value added 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 dollars a value-added tax that even half the European level would generate about 800 billion in value now that 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 $1,000 in current benefits so we're going to leave all the programs alone but if you think $1,000 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 five and six hundred billion dollars

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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 thousand dollars 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 two point four trillion could even be close to justified through the menu of savings

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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 V8 e 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 like slap it into their account and you know it could be like a non-event and so everyone knows that putting money into the hands of people that actually use it is going to be much more effective at strengthening our economy and Society one easy argument against the Ubi is that if you give everyone a dividend like you're proposing a thousand dollars a month per person all that new money

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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 cause of inflation that are making Americans miserable right now and they are not in consumer goods like Media or clothing or Electronics Israel 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 our 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 like not much flexibility in terms of their ability to commute like 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

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the third is health care which is dysfunctional because of broken set of incentives and the fact that individuals aren't really paying in a Marketplace so if you put a thousand dollars 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 they're still going to be price sensitivity among every consumer and competition between firms

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I think people have a guaranteed minimum income that again is the MIT Economist David otter so essentially our system income distribution is primarily based on the scarcity of Labor right the most valuable asset you own is your human capital and if all of a sudden you know there was a machine that could do exactly what you did it wouldn't be clear what skills would you sell to the market the idea of the 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 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 you know if you give people money for nothing why won't they just quit their jobs The Economist Evelyn 4J studied the

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of a small Canadian experiment the paid out a universal income her finding the finding was that primary earners really don't reduce the number of hours they work very much would you offer guaranteed annual income neuroscientist in Seattle said something to me that really stuck with me Andrew Yang again 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 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

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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 already giving me a freedom dividend which I appreciate so talk to me about what digital social credits would do for me

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how it would actually work right so you get a message on your phone saying hey a neighbor has had 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 called 300 points so you have these three hundred 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 in 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 ballgame 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

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and what's funding the money for the social credits from the vendor's so I mean the the US government would be backing it or foundations or various companies because if you're a company your sponsor this I mean you kind of enjoy the heck out of it and drive business tear 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 a hundred thousand American Express points how much does that cost American Express

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$1,000 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 whatever 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 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 than 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

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ask 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 like tabulating and keeping track of transactions and now with technology this sounds like a job for the blockchain yes so you could 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

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people like this my name is Anita B Berg and I'm the CEO of save exchange corporation which is an AI and blockchain startup that's Reinventing volunteerism using time banking the chairman of saiva is Edgar Khan who helped launch the modern concept of time Banking and wrote a book about it called No More throwaway people he came up with this in 1980 when he was actually given a diagnosis after having a heart attack at 46 and he was only given two years to live and maybe two hours a day to do anything so what he was thinking about was what can I do in this world to still be useful so he came up with the idea of time banking where you give an hour of your time within a community and you'll receive a credit of that our redeemable for something you need so it's a give-and-take system rather than

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a one-way volunteering Edgar con obviously lived on and so has time banking it exists in a few dozen countries usually quite small scale one of the larger exchanges similar to what Andrew Yang is proposing is a British organisation called Tempo it found that nearly 60% of its participants had rarely or never volunteered before be Berg's time banking group meanwhile savea exchange Corporation that's s EV a save actually means volunteer in Sanskrit or service to serve the saver app is a spin-off of time Banks dot-org what we're doing is trying to create the largest volunteer exchange Network how would it work we offer powerful motivators to retain volunteers motivators like gamification it's a lot more exciting to run up a score and earn badges especially if you're doing good also skills

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matching whatever you're passionate about or you're you know highly skilled at and willing to offer you get matched to the critical needs of either an organization or a person and rewards via the blockchain our digital social credits is called save a coins and they will be redeemable for more time or you can donate them we're also working with colleges for loan forgiveness and micro scholarships for students B Berg and sebu have gotten some pushback from religious institutions they've said oh we volunteer for the sake of volunteering and I said that's wonderful the more people like that the better because now they can just donate those to an institution need or give it back to the church for hours so every hour you give another hour can go to someone else in need those are the micro components of how Savers digital social credits would work but it's the macro view that makes this idea particularly

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of to a would be politician like Andre Yang we're redefining work so there are some forms of work that money will not easily pay for like building strong families revitalizing neighborhoods making democracy work advancing social justice so time credits were specifically designed to reward recognize and honor that work that most people never valued before or felt valued for Andrew Yang believes the injecting all that undervalued work into the quote real economy with 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

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so mean one thing I'll say the quote my friend and Eastern 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 that the best the government 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 or digital social currency coins whatever and cash them in for real cash it's a government they're coming its treasury they're coming to the US yeah yeah so that there's like a government budget allocation but the government budget allocation would be essentially like proportional to 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

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thanks to 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 and yang 2020.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 many my brother's a psychology professor and so I think 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 of the enter into government service and then they turn around and become lobbyists to make a lot of money so we

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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 four million dollar salary for the u.s. president yeah because it's true for presidents to mean if you're going to get paid a quarter of a million by some company after you leave off is 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 Rays can go into effect of 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 uh 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

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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 wanna aside from the fact that we've blasted away all these manufacturing jobs is that many Americans were 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 outside success even to some extent with Barack Obama winning in 08 where the citizens of the United States have been casting about for some kind of change because they know that our government is failing us and so Donald Trump is a terrible president because he's a terrible president he's not necessarily a terrible president because he was not steeped in our government for decades

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and genuine entrepreneurs like myself I'm regard Donald Trump as a bulk marketing Charlotte in so you know he gives us all a bad name and that goal is to 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 are running for president is your 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 DC to try and save this country I plan to be in that group and you know

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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 they've been measuring the drapes since I was 16 or any of that jazz you know like that's what I like keep this country together for your kids in mind

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coming up next time on Freakonomics radio or Hidden Side of sports series resumes with the look at the mental side of the game everybody in the NFL is that a really tight range physically and what separates Great players from average players is on the mental peace I was a poop show in my head I was so afraid there's a lot of pitchers who pitched no-hitters in the bullpen and can't take it with them across the lines gymnastics is terrifying I was just thinking you know he just no idea what's coming if you're trying to run a race except you've lost one of your feet that's next time on Freakonomics radio

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Freakonomics radio is produced by Stitcher and Dubner Productions this episode was produced by Harry Huggins our staff also includes Alison Craig low Greg Rippin Alvin Mellows and Zach Lipinski our theme song is mr. Fortune by The Hitchhiker's all the other music was composed by Luis Guerra you can subscribe to Freakonomics radio on Apple podcasts or wherever you get your podcast the entire archive is available on the Stitcher app or at Freakonomics.com or we also publish transcripts and show notes and much more if you would like to hear the entire archive ad-free plus lots of bonus episodes go to Stitcher premium.com Freakonomics we can also be found on Twitter Facebook and Linkedin or via email at Radio at Freakonomics.com Freakonomics radio also plays on many NPR stations check your local station for details as always thanks for listening

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Stitcher

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the mob the mafia The Syndicate the family once you're in you're in you can't get out what we know about the mafia it's all about the guys but there's another side of the mop in the 20th century and it's just as dangerous but in a totally different way especially if you're a gay man a drag queen or a woman we're talking about the underworld of New York City's very first drag clubs and the woman that's right a woman who ran them a woman named Anna Genovese the goddess she's a tough old bird who was this mob queen with the insight and ability to write her own ticket in a man's world that's what we want to know who is Anna Genovese

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Mark Wiens is out now you can listen on Stitcher Apple podcasts or wherever you get your podcasts