#130 — Universal Basic Income
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Summary
Andrew Yang has been a CEO and co-founder and executive of several technology and education companies, and this year he announced his candidacy for the presidency of the United States in 2020. And the central plank to his platform is universal basic income. In this episode, we talk about what UBI is, the principal arguments against it, and what its likely consequences would be. We don t run ads on the podcast, and therefore, therefore, made possible entirely through the support of our listeners, we are making possible by becoming one. So if you enjoy what we re doing here, please consider becoming a supporter of the podcast by becoming a subscriber. If you re not a subscriber, you ll need to subscribe to the podcast to access full episodes of the Making Sense Podcast. You ll also get access to our private RSS feed, where you ll get weekly updates on all things Making Sense, including our most popular podcast, The Making Sense and much more. Subscribe today using our podcast s RSS feed! Subscribe to make sense today! Subscribe in Apple Podcasts! Learn more about your ad choices. Use the promo code MONDAYSAMS to receive 10% off your first month's mailbag discount when you sign up for the MONDREAMING MADE MADE SENSE PODCAST! Become a Friend of the Podcast by clicking here to receive $5 or $10 or more when you become a Member! You get 5% off the first month of MONDemyrtlever when you buy a copy of Making Sense's newest book, The MONDORDS and receive $25 or more than $50 or $50,000 when you get a VIP membership when you review the book is reviewed by Audible starts shipping through Audible or Best FiDOGA starts shipping by clicking through the Audible? Subscribe for $4 Provenza, Hurrys4 Pro? You can get 5-get 5-of-a-place get $5, and get a discount on the MADE IN-PRICING 4-place discount when they also get a course that gets an ad-only deal? You'll get 7-only course that starts shipping an ad discount starts starting at $4-of $5-only offer? Get my ad-free version of the M&A course starting in-depth pricing starts starting in $4/month, and they'll get my second month, and I'll get a personalized course?
Transcript
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Andrew has been a CEO and co-founder and executive of several technology and education companies,
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and this year he announced his candidacy for the presidency of the United States in 2020.
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And the central plank to his platform is universal basic income.
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Now, many people have been asking that I do a podcast on this topic, and Andrew does a fantastic
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job representing it, and he is running for president.
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And he has a book titled The War on Normal People, which we talk about in this episode.
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We talk about what UBI is, the principal arguments against it, whether it would be difficult to
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implement or not, what its likely consequences would be.
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This is a good tour of the issue, and I don't think this issue is going away.
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So now, without further delay, I bring you Andrew Yang.
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So I will have properly introduced you in my intro here, but briefly, you have written
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a very interesting book titled The War on Normal People, which is your case for universal basic
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income, which we'll be talking about in this podcast.
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I've had many requests to cover this topic, and you cover it so well in your book and so
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So that, I'm sure, will be the topic of conversation.
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But you also happen to be running for the presidency of the United States in 2020, and that is an
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Before we get into UBI, how is it that you come to be running for the presidency?
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And how does one even think about making that decision?
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Because I think it must seem like an incredibly quixotic thing to attempt, even if someone
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already has a huge national platform, which I suspect you don't yet.
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Give us your background and how you come to find yourself in this position.
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I ran a national education company that helped people get into business school.
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And I personally taught the analyst classes at Goldman Sachs, McKinsey, JP Morgan.
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I saw all of these smart, energetic young people who hated their jobs and didn't know why they
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So then when my company was acquired by the Washington Post in 2009, I thought about the problems of the
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world. And the biggest problem to me at the time was that we had so much talent doing things that
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were not going to drive our society forward in meaningful ways.
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They were going to become investment bankers, management consultants, corporate lawyers like I was for five
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months. And that wasn't going to be what we needed.
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So I started a nonprofit called Venture for America to help create businesses around the country and channel
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our talented young people to environments like Detroit or Baltimore and New Orleans or St.
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I had never been to Detroit or Cleveland or St.
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Louis or these places before starting Venture for America.
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And our goal was to create American jobs, which we did.
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But I was in my role as founder and CEO of Venture for America for six and a half years.
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And the more I saw, the more I realized that our economy has changed for good, that we're
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So imagine, Sam, if it was your job to create jobs.
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And then you realize at a certain point that you were pouring water into a bathtub that had
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And so from there, I went on a quest to figure out what the heck you do about the hole in the
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bottom of the bathtub and then concluded that a universal basic income was the most realistic
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and efficient solution that one could implement in a reasonable time frame, essentially before
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the truck drivers get sent home, which is going to be a massive problem.
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And so then when you go to the drawing board and you say, hey, how am I going to get universal
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basic income across the finish line and make it a reality in the five to 10 years we have
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before the truckers' jobs get automated, then running for president becomes really the only
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logical thing to do if you're trying to solve a problem.
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And that's what I do as an entrepreneur is like, you see a problem, you try and solve for
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And how would you describe yourself politically?
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You know, I suspect you and I are kind of similar, that I've traditionally been very
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I consider myself something of an independent at this point, though I line up with Democrats
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I think economically, I'm like many entrepreneurs where I feel like there are a lot of things
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And I am concerned about the fact that the government is not excellent at a lot of things
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And you've written this incredibly urgent book about universal basic income, also known
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The case you make for the kind of economic emergency that is coming upon us is pretty dire.
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But what is, let's just define UBI for those who haven't heard of the concept.
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I wasn't aware that it was as old as you discuss it to be in the book.
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Well, universal basic income is a policy where every citizen of a country gets a certain amount
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of money from the government, no questions asked, every period, essentially every month.
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And as you say, Thomas Paine advocated for it way back in the day at the founding of the country.
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And it's been baked into our country's DNA for decades where Martin Luther King was for it,
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Milton Friedman was for it, Friedrich Hayek was for it, Richard Nixon was for it.
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It even passed the House of Representatives in 1971.
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And then stalled in the Senate because of Democrats that wanted a higher income threshold
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But a thousand economists signed a letter in the 60s saying this would be great for the economy and society.
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It's a policy where everyone gets a certain amount of money to meet basic needs every month.
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There's something you tackle early in the book.
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I want to just get into the ethics here because I think there's a very strong bias,
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But it's a bias that I seem to encounter everywhere against this idea of giving everyone
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And it's tied to this notion that there's some kind of work ethic that will be undermined here.
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But there's this, I guess what I would call the illusion of a meritocracy that you deal with
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And at one point you say, and this is a quote, the logic of meritocracy is driving us to ruin.
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And then you go on to talk about how it's leading to this assumption that if someone isn't succeeding
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So the blame is on the person who is still poor, given all the opportunity that is available.
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And it ignores the fact that some people are simply luckier than others across every variable
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that is open to difference that people aren't responsible for.
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You talk about how your academic success was almost entirely the result of you being smart
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And these are not qualities about you that you created in yourself.
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And I would, you know, I would argue, if you know anything about my views on free will,
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I would say that a person's capacity for hard work and their character is also not something
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That's the last trench in which the people for the meritocracy are fighting.
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But these dominoes, I think, should fall pretty quickly.
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How much can we blame someone who isn't as smart or happens to be bad at taking tests
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for not being able to fully capitulate the success you have found in your own life?
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And of course, as you discuss in the book, the differences don't end there.
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Some people and their families enjoy perfect health.
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Some just get absolutely devastated by the bad luck of illness and injury.
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We know that all of these stresses and the kinds of scarcity associated with them are
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They compete for cognitive bandwidth, as you describe at some length in the book.
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So let's talk about the ethics of the situation and the kinds of resistance you get to the idea
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based on a sense that it's just simply wrong to hand out money to people.
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Well, one of the points I make is that it's not as if the truck drivers are about to get
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It's just that their trucks are going to start driving themselves.
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You know, it has nothing to do with their character and work ethic.
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It doesn't matter if they're a good truck driver or a bad truck driver, particularly.
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It's just that we can save $168 billion if we automate their jobs and probably thousands
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of lives because that's how many people die every year.
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So it works on both sides of the dimensions, as you point out.
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I certainly attribute most of my success through my early years just to the fact I was really
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good at filling out bubbles on Scantron sheets.
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And the opposite is true for other people, where if you were not good at qualities that
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are academic system prizes, then you'll be increasingly marginalized and beaten down and told that you
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should think about a second-rate or third-tier way of life for yourself.
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So the logic of the meritocracy is about to – well, it's breaking down around us because
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But more than that, right now we rely upon the marketplace to assign and attribute certain
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And one of the references I made to a group I spoke to last week was that you can have
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a radiologist who spent a dozen years in education, hundreds of thousands of dollars worth of
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training, spent 10 years becoming excellent at detecting tumors on films.
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And then tomorrow, or literally right now, a computer is going to be a lot better at that than that
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radiologist because it can see shades of gray that the human eye can't detect, and it can reference
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millions of films instead of hundreds or thousands.
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So the crudeness of the market as an effective allocator of value to our time is about to be exposed to people.
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And so we have to evolve to the next form of capitalism as quickly as possible, or else we're going to find
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ourselves in almost unimaginable circumstances very, very soon.
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Yeah, so this market failure to value time is a huge problem.
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And I think at some point in the book, you list all of the things that are important to us, obviously
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important to us, that the market currently doesn't capture or capture well.
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And that includes things like the environment, includes teaching and childcare, it even includes
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And, you know, I would argue that it includes digital content almost in its entirety.
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I mean, just the way we have failed to fund quality online, and we're now beholden to this advertising
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model that is incentivizing all the wrong things and driving us mad on social media.
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And as you point out, we're not only talking about blue-collar jobs, we're talking about
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white-collar jobs and traditionally high-prestige jobs, you know, like, as you say, a radiologist
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I mean, we could argue that the profession of nursing is more secure than the profession
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of oncology with respect to coming advances in AI.
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So there's kind of this barbell picture of very low-end, low-prestige, low-compensation
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service jobs and super high-end creative jobs that will be most likely spared, certainly
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But in the middle, you basically have everything from many service jobs and basically any job
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that has a significantly repetitive routine characteristic.
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And I think at one point, I think it was McKinsey that said that 73% of food prep jobs can be
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automated, and the Federal Reserve categorized 44% of all jobs as routine and susceptible to
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This is kind of a coming apocalypse for jobs that is, again, it can happen very, very quickly.
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I mean, the radiology one is super poignant because it's just the next software update
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could achieve just the perfect cancellation of that kind of job.
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Yeah, and one of the most shocking things I uncovered in researching for the book was
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We're in the middle of it, and we're dealing with it in the worst way possible, which is
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by ignoring it and pretending it's not happening, where if you look at our labor force participation
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rate today, it's down to 62.7%, which is a multi-decade low, and the same levels as El Salvador
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Our life expectancy has declined for the last two years because middle-aged Americans are
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killing themselves in record numbers, where seven people die of opiates every hour.
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And the disability rate is climbing to a point where now there are more Americans on disability
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When I tried to find out what happened to the manufacturing workers that lost their jobs
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in the Midwest, it turns out that almost half of them just left the workforce entirely.
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And then of that group, about half went on disability.
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So I studied economics in college, and what classical economics says would happen is completely not
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happening if you actually dig into the numbers and the facts.
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So this is no longer something we can look ahead to and say, what are we going to do?
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The reason why Donald Trump is our president today is because of the spreading dysfunction.
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And right now, the country is locked in the struggle between functioning and dysfunction,
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reason and unreason, and scarcity and abundance.
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And that's what we have to reverse through universal basic income.
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So I want to talk more about just what this would mean and how it could be implemented
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But I want to deal with one objection up front, because there's this kind of free market fundamentalism
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that one runs into, and it seems especially in Silicon Valley at the moment, there's a lot
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of libertarians in Silicon Valley, and I actually, I was at lunch with some people, and one of
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these, one of the people included, a very successful entrepreneur and VC now, but we were talking
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about UBI, and I told him I was going to have you on the podcast.
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And then he sent me an email, an incredibly generous, detailed email, offering reasons to
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And, you know, many of them you will have heard before, but it was very comprehensive.
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And I won't read the whole email, but I just want to get at what was his central concerns
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here, because I've heard them many times, and no doubt you have.
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And I think it's, this is the kind of the first objection that you just have to figure out
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how to ram through if you're going to get people to take UBI seriously.
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And so it's this notion, which you've just expressed, that it really is different this time,
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because we have obviously lived in a world for at least 150 years or so, where we have noticed
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this effect of breakthroughs in technology where something comes online and it destroys jobs.
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We find new efficiencies in some labor process, and people can't envision what the replacement
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And what we're saying, what you're saying, certainly, is that this time is different.
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But some would argue here is that, one, this is a failure of imagination.
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I mean, you could have gotten into a time machine and stood with the Luddites and shared their
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delusion and not seen what jobs would come in the wake of all the jobs that were being destroyed.
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There's this conviction that there will always be things for people to do.
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There will be jobs as long as there's anything in this world that people want.
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You know, I find this line of reasoning just so lazy and ridiculous and frustrating, where
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otherwise educated people will actually cite the Industrial Revolution and say, but look,
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120 years ago, we went through something similar.
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But saying that there will always be jobs as long as there are needs fails to take into
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It's like if a factory disintegrates in Michigan, and then there are thousands of people out of
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work and don't have the money to somehow relocate to San Francisco or someplace where the region,
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and if they did, there'd be no way for them to actually manage the cost of living.
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I mean, like, I spent the last six and a half years walking the Midwest and the South and
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other places, and it's, yeah, just like that kind of ideological oversimplification just
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That was actually part of the picture he sketched here.
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He thinks the onus is really on the difficulty that people find moving to new centers of growth
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and the zoning restrictions that make it so costly to bring on new people in cities like
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He thinks that if we want to help people, we have to make it easier for them to move,
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but fundamentally not treat them as liabilities who have to be paid for, but to treat them as
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assets, because in his view, they will always, people will always be assets.
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And his counterpoint also does boil down to this, that if we weren't destroying jobs through
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breakthroughs in technology, that would be synonymous with the lack of material progress.
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I mean, this is like, this is always the process that has to be hoped for, destroying jobs.
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And if we're not destroying jobs in the medical sector, there is no way people will be able
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to afford medical care in the future because there's no way to bring the cost down.
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It is this kind of creative destruction picture of finding new efficiencies, but he thinks that
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the solution would be to just make it as easy as possible for people to relocate and find the
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And that's something I'm very much in favor of. And that was something that universal basic
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income would help a great deal with, where if you look at the current rate of interstate relocation
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in this country, it's also at a multi-decade low. Even as the opportunities are shifting,
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people are moving less and not more. They're hunkering down. And that's a massive problem.
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I mean, as president, I would pay for people to move, but giving them universal basic income
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actually does a lot of the same thing, where we need to make our labor market much more
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dynamic and mobile. It's, I will say though, that trying to say, essentially, the market will get
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it right. And we just need to push everyone to stay market mobile and market competitive
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will break down. I mean, it's already breaking down and imagining that it's going to be a constant
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because as you said, there's going to be massive job polarization, where if you look at the five
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most common job types in the country, retail and sales, clerical and administrative, food service and
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food prep, truck driving and transportation and manufacturing, they're all going to shrink
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immensely. And many of those people will not realistically be able to identify new opportunities.
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Those five categories I just named are about half of all American jobs. And most of those people have
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high school educations. The median truck driver is 49 years old, 94% male. The median retail worker is
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39, majority female, about 60%. So we're talking about people who are working at 12, 14, $15 an hour
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jobs, and then having those jobs disappear. It would help if they could magically move to another part of
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the country would help a great deal. But it's, it's a multifaceted problem that's very deep and human.
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So yeah, let's tackle this, the poster issue here of trucking, because he actually sent me an article,
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you might have seen this article in the Atlantic that offers a counterpoint to this fear. There have
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been many studies that suggest that, as you said, trucking will be one of the first jobs and one of
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the most consequential to be decimated by automation. But this Atlantic article, I think citing a study that
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was somewhat curiously funded by Uber, that doesn't automatically disqualify it, but I guess we should
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add a few grains of salt. It suggested that not only will trucking jobs not be hurt, but there in fact
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might be more people working in that industry, because the cost of freight will go down, and there'll be
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more demand. And for the longest time, it will be impossible to automate the final mile, so that
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you'll still need a person in a truck, you know, who will be better rested, and will be able to do many
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other things, but who will have to navigate that final mile into a crowded city. And many of the other
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effects that people worry about, like, you know, tiny towns being bypassed by, you know, now sleeping truck
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drivers, their economies will be affected. But what do you say to this notion that this fear is fundamentally
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incorrect, that no matter how much we automate trucking, there will still be other jobs, and even that the
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very same truckers would be doing, because we're just not actually picturing how much truckers do, apart from
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pushing the pedals and steering the wheel on a truck.
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Well, to me, the truth is in the numbers, where if you see the number of truck drivers, it's going to be the hell.
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