Vinod Chandrashekar: Founder & CEO of 6figr.com sat down with Andrew Yang: 2020 U.S Presidential candidate to discuss AI Automation & Universal Basic Income(UBI). And the projected impact of his campaigned policies on America’s economy.
Before we begin many thanks to Esther Wojcicki for making the introduction!
Vinod Chandrashekar:
Thanks, Andrew.. thanks for the heads-up about what the UBI is and the campaign which you are running for. It’s very interesting, that at a place where there’s the future of education at 42. You know, you’re talking about like the future of work. And one of the reasons they got me on the panel is because I’m part of a start-up (6figr.com) which focuses on Future of Work.
So the first time, when I heard about you was — when you had mentioned about how GDP is a very bad metric. That is the first time I heard about you, and you said median income is what we should be looking at. Those are the two aspects which we also cover.
So when we talk about the universal basic income, Andrew could you just tell us about — like was this tested before in history? If it has been tested before, why did not work then and what’s new now?
Andrew Yang:
Sure! So, universal basic income a lot of people associate it with futurists and technologists but if you look at it Thomas Paine was for it — our founding father of the country. And then in the 60s Martin Luther King was for it, Milton Friedman was for it. And it passed the House of Representatives in 1971 under Richard Nixon. I shit you not, you can look it up, like they actually made it, so like a minimum income for all families. It passed the House of Representatives twice but it failed in the Senate because Senate Democrats, wanted a higher income floor. And one of them told me later that. That was the biggest mistake they ever made they should is like taking that deal.
And then, shortly thereafter Alaska implemented it. Where every adult now gets between one and two thousand dollars a year from oil money. And that was a Republican governor who said to the people of Alaska, who would you rather get the money from the government or you? Then the people of Alaska were like us! And he was like, yeah! I thought so.
So you asked about where this has been rolled out it’s been rolled out successfully in Alaska for 36 years.
And now everyone loves it. It has created thousands of jobs. Has improved children’s health. It has decreased income inequality. And it’s wildly popular in a deeply conservative Republican State.
So think about that one for a second, they love it so much that a majority of Alaskans would accept higher taxes if it meant keeping their dividend or raising their dividend.
So if you look at the implementation it has happened for 36 years here.
And there have been studies now all over the world.
I summarised them in my book, where if you put money into people’s hands’ nutrition goes up, graduation rates go up, mental health goes up, domestic violence goes down, relationships improve, hospital visits go down. Just generally life gets a little bit better and a little bit less shitty, if you put $1,000 a month into people’s hands.
Vinod Chandrashekar:
So building on that, when you said about Alaska and the oil economy… Before coming here, I was working for Amazon in the Middle East.
And the Middle Eastern countries also have this kind of a basic (income), the governments give out free money.
One of the downsides of it is people become very lethargic, and you know the work ethic kind of goes down.
So what would your counter (argument be)? How do you kind of plan to solve this?
Andrew Yang:
One of the distinctions is that in some of the oil-rich companies in the Middle East their cash stipend is pretty significant relative to work.
So everyone here if I already give you $1,000 a month none of you would think like oh I’m gonna retire on that you know what I mean cuz like that’s below the poverty line I mean the poverty line in the U.S. is twelve thousand seven hundred seventy dollars a year a thousand dollars a month is an equivalent of getting paid like six bucks an hour and like no one’s like oh I’m gonna sit pretty on that amount of money.
So even if you’re let’s say a server in a restaurant who’s getting paid $24,000 a year are you gonna quit your job if I give you a thousand bucks a month no cuz I’d be a 50% pay cut all of a sudden you can’t pay your bills but if you keep your job and you get another 12 then maybe you cut back on one shift you save a little money you take your kid out you for dinner one night a week and like life improves but it’s not going to be a work replacement because no one’s going to think that they can prosper on a thousand bucks a month
And so the data shows that only two groups work less in this situation new mothers who spend more time with their children and teenagers who graduated higher levels and I think those are outcomes we’d all be pretty excited about.
Vinod Chandrashekar:
So giving like a thousand dollars you know one of the main critiques has been like even if you consider the homelessness problem in San Francisco. The people who, out of necessity they kind of steal laptops or whatever they (might) — the money which they make out of it they don’t spend that into like very constructive ways of building a new business or anything but they spend it on drugs and you know just as an escape from reality.
So what do you think like this thousand dollars is it going to make people more towards that?
Andrew Yang:
You know in a way you just summarised the issue which is like people will get desperate and do various things like get a hold of money like so even if you put money in their hands and the odds of them becoming functional let’s say not stealing would certainly go up. But the other thing is that it would make it so that everyone’s worth something!
So that let’s say I’m an entrepreneur and there’s like a homeless person on the street right now like right now there’s no monetary reward for my trying to like get that person to become functional again you know I mean but like if I know that that person’s entitled to a thousand dollars a month if I can get them on their feet and like like plug them in like Citibank will actually like pay me to help get this person like integrated into society.
Then like all of a sudden you like change the incentives because the problem right now is that the marketplace does not value humans intrinsically like it values us for our ability to contribute economically but right now AI is gonna make it so that fewer and fewer people are going to be able to succeed in that marketplace and you can see it right now it’s like eroding people’s value and then their people are looking at each other and struggling
So what we have to do is we have to start valuing people like as human beings. Regardless of whether or not the market thinks that they can code or you know or whatever. It is when we can create incentives say even entrepreneurs to want to help restore some degree of functionality, to even people, that right now are completely dysfunctional addicted to drugs on the street, etc.
Vinod Chandrashekar:
People always wondered if like thousand dollars has been given then they might just resort to playing video games and drugs and all that stuff so that’s where I was kind of coming from the question
So, Andrew just tell us about like if you’ve done on the math. Of like giving everyone a thousand dollars. What is the total fund is gonna be? And where is it gonna come from?
Andrew Yang:
All right, so a thousand dollars a month for 18 to 64-year-old Americans ends up with a headline cost of about two and a half-trillion dollars per year give or take. For context, the economy is 19 trillion and the federal budgets 4 trillion. So if I say to you two and a half trillion, you think wow! that’s like a lot in context. But, after you break it down. It becomes actually very very affordable. So, the first thing is that we currently spend about 800 billion on existing welfare programs which ends up reducing the headline cost. Because if someone’s currently getting benefits then you end up just like swapping dollar for dollar so that brings the cost down to like a little less than two trillion.
Now the big move we have to make the big change we have to make and I’m going to ask you all who are going to be the big winners from artificial intelligence self-driving cars and trucks big data etc like who wins sorry which corporations?
so it’s like the really really big tech companies are like the trillion-dollar companies now the trap we’re in right now as a country is that those companies and AI are gonna soak up more and more work and value but the public is not going to see any new
tax revenue as a result, because these companies are great at not paying a whole lot of tax amazon, says didn’t make any profits this quarter no taxes Google says it all went through Ireland no taxes here in the US
And I don’t begrudge them this because it’s their job to make as much money as they can and so they just like you know move things around but this is a really really precarious situation for us to be in as a society because if these guys end up soaking up more and more like retail jobs and truck driving jobs etc and then the public looks around is like we don’t have any resources so the big change we have to make is we have to do what every other advanced economy in the world has already done which is implement a value-added tax
And with a value-added tax then the public would get a sliver of every robot truck mile driven 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 average European level would generate almost a trillion dollars in new revenue and that money would end up going into people’s hands and then strengthening the consumer economy.
So at this point down you’re down to like a little less than a trillion you’re looking for and then the last two steps you guys are gonna love the most!
Right now, 57% of Americans can’t afford an unexpected $500 bill. Think about that for a sec. So if you put $1,000 a month into their hands what’s gonna happen to that thousand dollars? They’re gonna spend it in the economy it’s gonna go into businesses it’s gonna grow the consumer economy by about two trillion dollars and then we get back 500 billion of that a new tax revenue because that’s the ratio of new economic activity to tax revenue.
So now you’re down to like about 400 billion that you’re looking for to make this deficit-neutral and the last four hundred billion you get because of the fact you’re spending less on incarceration homelessness services health care emergency room health care cuz like people like don’t just show up in the emergency room as much anymore and you invest it in your human capital you have higher graduation rates better physical health better mental health.
There’s one estimate that showed if you were to alleviate gross poverty you
would increase GDP by 700 billion. Just on the basis of having a more healthy and productive workforce. So, in those ways, you get back the last four hundred billion or so and then it’s deficit-neutral. But I will suggest that money is something of a social construct and that if the majority of citizens of democracy declared themselves a dividend there’s absolutely nothing stopping us from doing it. So, there’s not like necessarily like this entire like Oh light you know I mean we can make it happen. But you can’t this thing will pay for itself in many ways even if you’re conservative about it as long as you implement some way to harness the gains from AI and new technologies.
Vinod Chandrashekar:
So when you talk about like the value-added taxes (VAT) if people are not gonna have jobs who are you gonna tax, are you gonna tax the robots?
Andrew Yang:
So, oh yeah! I mean that that’s the whole point but part of it too is that right now the consumer economy is faltering in part. Because people don’t have money to spend. So, I just spoke to a group of CEOs with the same case. And they’re like, it’s enlightened self-interest to put money into my consumer’s hands. Because like if they don’t have money then you know who am I gonna sell to?
Vinod Chandrashekar:
Could you talk more about taxing these robots because even Bill Gates was mentioning about this? The value-added tax (VAT) is going to come out of it right, so is it going to be like the productivity of it or how do you determine what is the net throughput of a robot?
Andrew Yang:
Yeah! that’s exactly right. So one of the issues like someone suggested like a robot tax or an AI tax. But the issue is that it’s really really hard to measure a lot of that stuff. And if you go into like a CVS and see like an iPad replace a cashier is that like taxable? Like you know you end up having like a very difficult set of issues. Whereas a VAT and I’ve talked to various technologists and leaders on this and they prefer a VAT. Because it’s more like benign, and distributed than if you were to try and single out like AI or robots individually. Which is harder to measure harder to implement and then you’d have to have a much higher tax rate and you might genuinely discourage some of that stuff.
Whereas like a VAT that’s pretty gentle ends up accomplishing a lot of the same goals without singling out like a particular company or industry so this VAT is primarily on the companies or if it’s gonna also be on people what would be the net effective amount over the thousand dollars a thousand dollars minus whatever. Yeah so so it would end up the VAT ends up reducing the impact of the thousand dollars slightly but like the vast majority of Americans would be able to retain like 80 to 90 percent of the purchasing power and it would increase the economic purchasing power of the bottom ninety percent of Americans it’s only if you’re like making a ton and like buying yachts and stuff that the VAT would actually be more than like a thousand dollars a month in essence.
Vinod Chandrashekar:
So, Andrew, there’s this strong argument which is often made. Say you go to watch a rock show or something and if one person starts standing on his toes right… then everyone else starts standing on their toes and effectively the view which you get is still the same. So is Universal Basic Income like something of standing on the toes in which the guy now has to put like extra effort to get the same view.
Andrew Yang:
Yeah! you know it’s incredible the impact that thousand dollars a month would have on the day-to-day circumstances the tens of millions of Americans and if you have been around the country the way I have. You see the circumstances many many Americans are living in and like it would be really really impactful. So there are some people that say like hey with the suggestion you just made which is like hey give everyone a thousand dollars it’ll just like somehow like get inflate it away or balanced out.
Like that the numbers really just don’t show that and there have been tons of studies where people have gotten $1,000 and again you see them spend it on themselves their families like things just get healthier and better and there’s no reason that would change if you gave money to a lot of different people it would just mean that more people would be able to take better care of themselves on their families.
Vinod Chandrashekar:
So in your book: The War on Normal People you said about why universal basic income is one of the best ways to go about because one of the things the government does very well is to distribute the money directly.. you know so that it goes to the people… Can you talk a little bit more about that?
Andrew Yang:
Yeah, so one of the problems is that our politicians pretend we can do things we can’t do you know like if a politician stands up and says we need to educate Americans on the jobs of the future it’s like that would be great but we can’t really do that because we anytime we try we suck at it.
So one of my friends Andy Stern said something that really stuck with me and I think you might agree with this he said the government is terrible at many many things but it is excellent at sending large numbers of checks to large numbers of people so we have to lean into one of the few things our government could actually do in real life that would help people you know and they’d like to get money into your hands and then you would do great things with it just like they did in Alaska like go over this last number of decades like we can do throughout the country.
And I would suggest to you all Alaska did it with oil money what is the oil of the 21st century?
Data, AI like you know like so we can take what Alaska did with oil and do the same thing with big data and AI.
Vinod Chandrashekar:
If universal basic income one of the solutions which you’re kind of saying about because what is inevitable is the AI automation right… Is there something that could be solved at the cause level itself? Instead of going to the effects and then looking at an income?
Andrew Yang:
Yeah, so I mentioned before the manufacturing workers in the Midwest how many of you all studied economics in college? I did.. few of you. So the economics textbook said that if you were to get rid of lots of jobs then those workers would get retrained and get new jobs and the economy would grow.. those of you who didn’t take economics that’s what it says…
So, then when you dig into what actually happened to the four million manufacturing workers who lost their jobs in Michigan, Indiana, Ohio. That didn’t really happen you know like about half of them left the workforce it never worked again and then about a half of the ones that left to workforce filed for disability so when you talk about trying to prevent this stuff from happening we’re already in the middle of it like you know we got rid of manufacturing workers are getting rid of retail workers.
By the time I guess the truck driver is then it’s gonna be like chaos and madness and violence so to me we don’t really have that many great choices but certainly one terrible choice would be to somehow like outlaw self-driving trucks or something like that like cuz that’s really just shooting yourself in the foot where you’re literally just like making yourself less efficient to try and just give people stuff to do.
And four thousand Americans died in accidents with truck drivers right now so you’re literally saying like I’d rather you know what I mean like like there are moral arguments for trying to automate truck driving and in an alternate reality we’re all celebrating with the truck drivers it’s like great news you want to drive a truck anymore you know it’s like cuz sitting in a truck for 11 hours a day like it’s really bad for your health.
It’s really rough on you. But of course, right now, the problem is that those truck drivers get paid $46,000 a year. And they’re high
school graduates and their opportunity after truck driving is going to be? Does anyone want to say what the next opportunity’s gonna be… Nobody fucking knows what their next opportunity!
You’re looking at me like Oh what is the job for like three and a half million fifty-year-old men. Like no one knows so like we have to try and again move the clock forwards or else we’re gonna wind up in that sort of disastrous situation where politicians are saying you can’t do this you can’t do that because they’re trying to protect jobs we have to try and protect people, not jobs if you know what I mean.
Vinod Chandrashekar:
One other argument Andrew – This incentivizing people just for you know giving like a Universal basic income. Is it kind of a very Anti-Darwinian?
In which if they’re not able to adapt those should eventually you know that’s how the evolution moves forward?
Andrew Yang:
That’s new, I haven’t heard that..that’s interesting! I got cut off its Trump…
No no I’m back. Alright so I mean, you guys had hope you get this sense. I’m a serial entrepreneur. I love capitalism and I’m going to convey something that Eric Weinstein, you guys may have heard of. He’s like Peter Thiel’s chief economist. He lives here in the Bay Area…
Vinod Chandrashekar:
He runs Thiel Capital as well as a Managing Director
Andrew Yang:
Yeah, yeah… So he said two things that really stuck with me & I’d speak to this question number. One he said we did not realize that capitalism was gonna get eaten by its son – technology. And two he said we need to become both radically capitalist in some respects and radically socialist in others.
It just depends upon the area. So to me like the sort of Darwinian survival of the fittest stuff, it’s like just an oversimplification. Like that you know there’s no such thing as a pure unfettered system and to me. It would be ridiculous to suggest that like if someone fails to adapt in this circumstance. Because like AI doesn’t distinguish. Like if someone was a brilliant radiologist and spent a decade deciphering radiology films and they were world-class. They’re still gonna lose because AI can see shades of grey that human eyes cannot. It can reference millions of films instead of thousands.
So you can’t go to that radiologist and be like hey you know you weren’t adaptable. I mean like that person was like the top of their field. And like you know like went through like the absolute best. So it would be ridiculous to say one of the things. I say it’s like it’s not like the truck drivers got dumb and lazy overnight. It’s just that the trucks are driving themselves. So it’s not a relationship between like character choices or morality. It’s just the fact that technology is getting very very powerful.
Vinod Chandrashekar:
Interesting, because you say about radiologists and that’s one of the things which we often cover. About like they’re paid $500K, practiced for 10 years and there’s not gonna be any jobs right. So and the AI automation is going to come after the jobs that are very highly paid. So do you think like fundamentally the schools and the curriculum should be changing? or you know, do it like more like the 42 way you learn by building…
Andrew Yang:
Hell yes, I mean 42 Holy cow! Like this thing is genius. And I love, I mean and it’s free like those like the best of all worlds.
So I think that what’s going on has been really immoral. In terms of the education industrial complex and many parts of the economy. You know, like why has college gotten two-and-a-half times more expensive? Since even I went.. Has it gotten two-and-a-half times better?
So when you dig into the numbers you guys probably know why? it’s not
professors, it’s not even facilities… its bureaucrats and administrators. The number of non-academic administrators has gone up to 250 percent as tuitions have gone up to 50 percent. And so what they did is they got really expensive. And then they go with our families and be like hey you gotta pay more. Then families feel like they have no choice. So they borrow more and the government’s like here’s the money. And then you end up with 1.5 trillion in school loans. A default rate that’s up to like 12% and 38k average debt.
And it’s immoral like it’s totally jacked up in immoral. But there’s like no accountability and so I completely think that this sort of a structure is the future. The fact that it’s free or low-cost. The fact that it’s peer-driven the fact that it’s based around like what opportunities there are. I mean that’s incredible, I mean there’s so few like teachers and staffers here. It’s like the reverse of this administrative creep that I’m describing what has taken place and in most schools
Vinod Chandrashekar:
So Andrew, we just got like three minutes left. Are there any closing thoughts which you want to leave for the audience?
Andrew Yang:
All right guys this so much fun!
So if I’m you. All I’m thinking like wow this guy’s sort of interesting. Like can he actually become President of the United States? like unknown that’s probably what I’m thinking all right…
So check it out I’m a serial entrepreneur and operator. I’m like you know figuring out, like what the key levers are. So our political system in the US is like a giant set of pipes that are clogged full of money. And nothing gets through. But just like in a good movie or like you know the story if you climb through the porthole. There’s like a vulnerability you know it’s like a Death Star. So I figured out what the vulnerability is and you climb through that porthole and you wind up in Iowa.
Those are you don’t know how the democratic system works. Like Iowa is the first state to vote so there are 3.1 million. I’ve been in Iowa five times and I’m going back to the sixth next week. So you go to Iowa they’re 3.1 million Iowans. Guess how many Iowans participated in the Democratic caucus in 2016 either percent or absolute number? Just guess a percent what percentage of Iowans participate in the Democratic caucus the last cycle? 17, 20, 85…
The real answer is 5.6 percent. 170,000 Iowans participated all right. So let’s say interest goes up in 200,000 participated in 2020. Now if you’re keeping track of this at all. They’re gonna be like 20-plus Democratic candidates right. It’s gonna be a freaking madhouse everyone’s running. So I get to Iowa and I’m like okay they’re 200,000 Iowans are gonna participate in this thing. How many Iowans do I need to finish first? If the field is like twenty candidates between thirty and forty thousand. Because in a crowded field like you get forty thousand you probably won the whole thing.
So I’ve been to Iowa and I go to them and I say. Hey guys, have you noticed stores closing where you live? They’re all like yes! Is that Amazon? Yeah, that’s right. Is that gonna get better or worse? it’s gonna get much worse! Yeah, that’s right. What are you gonna do about it? And they’re like what can we do about it? We’re just fucking Iowans and then I’m like I can tell you what you’re gonna do about it. You’re gonna make me President, I’m gonna get a thousand dollars into each of your hands. That’s right now getting sucked up over to Seattle.
You’re gonna be able to build your community in your economy, back from your families up like a trickle-up economy. And give your kids a reason to stay here. What do you think about that? and then they freaking go apeshit. And then they start like applauding and loving it and then putting their names down. I can get 40,000 Iowans on board with the idea that them getting $1,000 a month is a good idea. And so if I do that I’m telling you guys the crystal ball. January 2020 world headlines are gonna be the Asian man who wanted to give everyone money wins Iowa. This face front-page news and then the whole thing like takes on historic proportions because things can reverse like this.
Again, I’m an entrepreneur and I know how this stuff works… Like you go from being the moonshot. It’s like that people are like that’s interesting but not gonna happen. To all of a sudden like the greatest story that everyone wants to jump onto. And you know make history with so that’s exactly how it’s gonna go down guys.
One of the things that we’re gonna announce next week. Sam Altman of Y Combinator is endorsing me and coming out for the campaign. I’m getting the techies. I’m getting the Asians cuz I am the first Asian American man to run for president as a Democrat. And all you, just want to say to Asian Americans 5.8% of the country. In a crowded field that’s significant right all right. I’m getting young people like yourselves…
And I’m getting this group that’s it called like loosely the intellectual dark web. Which, I also call the tribe of reason. Because people that like facts and like data like me. Because I’m just trying to fix the problems. So that’s what I want to end on and say. The guys that it may seem like a long shot I can see the path very very clearly.
And if you would like to join me in this journey. Please do go to yang2020.com. Just put like your name down like Venmo us a dollar. Just like, stick a pin in me in this campaign. Because I want you to share in this journey it’s gonna be so much fun! And then we’re gonna round up again January 2020. When this headline I’m telling you about is going to be the front-page news around the world. So thank you all very very much!
Vinod Chandrashekar:
Thanks, Andrew… Thanks for coming over and we wish you all the best!
Everybody loves Andrew Yang! and we do too — He addresses the biggest threat the labor economy is facing & brings in an optimistic solution in addressing it. It’s 100% true when he says nobody knows what the truck drivers’ next job gonna be.
While UBI is an utmost necessity & required on an urgent basis.
We at 6figr.com are hoping to do our bit — to help individuals navigate AI Automation (wherever possible) by recommending career transitions based on evidence-driven data of real career moves made by people & at the same time pays as much or better.
Not as a fear-mongering of AI but to help you move to a safe zone & remain employed — Because, in the long run, people find meaning & purpose only by being able to contribute to the society.
ps: post the interview, I asked Andrew what drives him? He said something that stuck with me for a long time and till date.
Look, VC — As entrepreneurs, if we see something broken, we go all-in & fix it! And we couldn’t agree more…
With Gratitude,
Vinod Chandrashekar (VC)
Founder, 6figr.com
