Report: Andrew Yang’s ‘Free Money’ Proposal Proves to Be a Bust

NEW YORK, NY - MAY 14: Supporters listen in the rain as Democratic presidential candidate
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Hannah Knudsen

Andrew Yang’s (D) aggressive pitch to offer a universal basic income of $1,000 monthly to U.S. adults has been attempted numerous times on a small scale, but the experiments have not necessarily produced the desired results.

The Washington Post details an experiment implemented by a nonprofit, which aimed to give “20 African American single mothers living in public housing $1,000 each month for a year” with no strings attached. The experiment began last November, and the women began receiving checks the following month. According to the Post, most of the women – 15 total – were working at the time. “Twelve had reported being so short on cash that they had used an emergency lender in the preceding six months,” the Post reported.

While the participants were able to purchase school supplies, fill up gas tanks, and refrain from seeking out emergency lenders, it does not sound like the extra cash assisted the women in making bold moves to get out of the cycle of poverty.

The Washington Post reported:

Some of the women talked about their gift-filled Christmases and sported new hairstyles. Some said they took a sick day for the first time. They began paying off overdue electricity bills and high-interest loans.

Kira Johnson, a social worker, asked how much money the women had saved.

“I blew all of it,” Gray recalled. “It only took a weekend.”

Most of the women said the same thing. In a month, nearly all of the money had vanished.

The Post, however, seemingly dismissed the participants’ ability to effectively utilize the extra money, attributing it to a lack of “experience” in handling discretionary income:

The situation exposed a truth about poverty. The women knew how to make minimum-wage paychecks stretch, Johnson said, but they had little experience with discretionary income.

“Then, they asked if we were going to hand them the next check,” Johnson said.

The discussion at the shop exposed another truth for the women: Receiving money would not be enough on its own to lift them out of poverty. If they were going to save anything, the women said they would need a little more guidance and support about how to do it. Johnson set them up with a financial adviser who taught them about savings accounts, interest rates and building credit.

While the Post tried to frame the experiment as somewhat of a positive, it admitted some of the major shortfalls:

Many women who were employed found better jobs. But, despite Yang’s prediction, the number of women who were in the workforce did not change. Similar results were reported from a guaranteed-income study that took place in Finland.

 The “free money” experiment has been tried elsewhere and has yielded similar results.

Ontario, Canada, canceled its three-year universal basic income pilot program last year after running it for just over a year. It gave 4,000 low-income individuals roughly $13,000 per year. Working residents, however, were required to give the government back half of their earnings. Nonetheless, the government halted the program earlier than expected due to the high cost.

“A similar program in the United States with a 50 percent marginal tax on earned income would cost about $250 billion per year if operating nationwide (assuming no adverse consequences of taxation). Get rid of the tax, and it would cost just shy of $1 trillion per year,” the Heritage Foundation assessed.

Finland also ended its universal basic income experiment last year.

As Breitbart News reported:

The limited trial which began in 2017 selected 2,000 unemployed Finns to receive a monthly payment of €560, regardless of whether they consequently found employment or not. Rather than expand the experiment to more jobseekers, the Finnish government has instead decided to let the trial expire at the end of 2018, signalling the end of the road in the Nordic nation for UBI.

The BBC reports the remarks of Finnish UBI designer Professor Olli Kangas, who said: “The eagerness of the government is evaporating. They rejected extra funding [for it]… I’m a little disappointed that the government decided not to expand it”.

The exact reasons why Finland decided not to extend the trial against the advice of Professor Kangas are not yet known and won’t be revealed until after the project is completed in 2019, but the news will be a disappointment to many who saw UBI as a new and enhanced way force increased taxation levels and redistribute wealth.

Finland’s experiment did little to nothing to assist people in finding jobs and did not ultimately change their life for the better or worse, it was revealed earlier this year.

“On the basis of an analysis of register data on an annual level, we can say that during the first year of the experiment the recipients of a basic income were no better or worse than the control group at finding employment in the open labor market,” Ohto Kanninen of the Labour Institute for Economic Research said, according to Bloomberg.

The universal basic income concept is still under experimentation in certain areas of the states, particularly in Stockton, California, where the Stockton Economic Empowerment Demonstration program is underway, giving participants $500 per month:

Stockton, once known as the foreclosure capital of the country and for one of the nation’s largest municipal bankruptcies, is a step ahead of both candidates. In February, the city launched the Stockton Economic Empowerment Demonstration, a pilot program spearheaded by a new mayor and financed in part by the nonprofit led by Facebook co-founder Chris Hughes. The city chose 125 people who earned at or below the city’s median household income of $46,033. They get the money on a debit card on the 15th of each month.

The general experiment has gained a bit of traction in recent months, thanks in part to presidential candidate Andrew Yang, who promised a monthly $1,000 baseline to U.S. citizen adults as a central part of his platform.

“Americans will work even harder when they get the resources in place to actually get ahead. This is the trickle-up economy from our people, families and communities up,” Yang told Face the Nation in August.

“It will create over two million new jobs in our communities because the money will go right into local mainstream businesses, to car repairs, daycare expenses, Little League sign-ups,” he continued:

Yang made a similar claim during the first presidential debate, arguing that his plan for a universal basic income would create “millions” of jobs and “generate over $800 billion in new revenue which combined with the money in our hands it would be the trickle-up economy.” That, however, has proven to be false.

Yang is not alone in his call for a universal basic income program. Former Texas Rep. Beto O’Rourke (D) said that it is “an idea worthy of conversation and debate,” and far-left “Squad” member Rep. Rashida Tlaib (D-MI) has openly pushed the Building Our Opportunities to Survive and Thrive (BOOST) Act, which “offers a guaranteed income – up to $6,000 per year – to families and individuals under certain financial thresholds via a ‘refundable tax credit that can be paid monthly,'” Breitbart News reported.

Silicon Valley executives have increasingly shown support for a universal basic income proposal as well, with both Facebook CEO Mark Zuckerberg and Tesla CEO Elon Musk expressing support for such a measure.

Sen. Bernie Sanders (I-VT) has notably dismissed Yang’s proposal, telling the Hill last month that a “jobs guarantee” is preferable because “people want to work.”

“We take a very different approach from Mr. Yang and that is I believe in a jobs guarantee,” Sanders explained:

Yang quickly responded to Sanders’ dismissal.

“Bernie ignores the facts that money in our hands would 1) create hundreds of thousands of local jobs and 2) recognize and reward the nurturing work being done in our homes and communities every day,” he wrote.

“He also assumes that everyone wants to work for the government which isn’t true,” he continued.

“It’s very strange – he seemed open and warm to the idea of a Universal Basic Income not too long ago. Now he seems irritated every time it comes up,” Yang mused:

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