As the Democratic presidential candidates prepare to debate again Wednesday, Andrew Yang perhaps will be the most surprising entrant. Yang’s persistence has puzzled observers of the presidential race. Why hasn’t “random man” — the quirky candidate with no political experience and no obvious qualifications — simply faded away long before now? How is he regularly besting senators and governors in the polls?
Surely, some of this is the Trump effect — a novel, meme-based candidate whom disaffected voters are primed to take seriously. But a better way to understand Yang is through the intrinsic appeal of his signature idea: the “freedom dividend.” Gimmicky at first look, the concept of the freedom dividend has a long history in American politics on both the left and right. Its return during a time of political turbulence is unsurprising. In its essence, the freedom dividend is an idea whose time has come and gone and, with Yang’s rise, come again.
What is the freedom dividend? Yang describes it as $1,000 a month, provided to every American citizen, no strings attached. His website calls it “a foundation on which a stable, prosperous, and just society can be built.” In the second Democratic debate, he offered a pilot version of the program to 10 American families, setting off giggles and eye rolls from his rivals — but generating hundreds of thousands of entries on his website.
Yet while the name freedom dividend is new, the concept is old, with numerous versions around the world. Its most direct American antecedent is the negative income tax (NIT), the policy darling of liberals and conservatives alike in the 1960s. Like the freedom dividend, the NIT was designed to set a floor under U.S. workers. Instead of paying taxes, individuals and couples with income below a predetermined level would receive a cash payout from the Treasury. The amount would be reduced as income rose, eventually being phased out when an individual’s income rises to a certain level.
Among the NIT’s most famous supporters were libertarian economists Milton and Rose Friedman, who popularized the idea in their bestselling book “Capitalism and Freedom.” “If funds are to be used to help the poor, would they not be used more effectively by being given in cash rather than in kind?” the two economists asked. But NIT was far from a right-wing idea. Friedman first hit upon the concept in discussions with Gunnar Myrdal, a Swedish economist. In the 1960s, the NIT was widely supported by Great Society liberals as part of the War on Poverty.
The NIT was a radical break with established thinking about the poor. For centuries, American charities and government agencies alike had divided the poor into the categories of “deserving” and “undeserving.” The NIT proposed a different metric: the amount of income earned by an individual or family.
It was a stark and unemotional idea, based on numbers rather than moral judgment. It was not surprising that it was the libertarian Friedman, a devotee of individual freedom, who pushed this point the hardest. While debating the topic, Friedman charged that the then-welfare system involved an “intolerable degree of paternalism,” transforming social workers into “police officers and spies.” Friedman also went further than most in suggesting that the NIT could eventually supplant the established welfare state.
Other supporters of an NIT were driven by fears that machines were coming for U.S. jobs and would create mass unemployment. An NIT or other form of guaranteed income would be necessary for those who could not find work. “Because of the onslaught of automation, class boundaries are becoming more rigid,” worried one college student writing at the time. In many ways, these fears were well-founded. Automation, driven by wartime advances in manufacturing, rapidly hollowed out places such as Detroit. The NIT promised to support those left behind by the first wave of automation at a time when unemployment seemed to portend a powder keg. In 1967, Detroit’s unemployed sent the city up in flames during a three-day riot that had to be quelled by the National Guard.
The NIT gained national prominence by the late 1960s, and President Richard Nixon incorporated the concept into his Family Assistance Plan. The president envisioned a basic payment to poor families, along with a work requirement and a work incentive. “What I am proposing is that the federal government build a foundation under the income of every American family with dependent children that cannot care for itself — and wherever in America that family may live,” Nixon told the nation.
But the “no questions asked” intent of the original NIT had been lost. Nixon realized that for political reasons, he needed to link the grant to work. A radical thinker like Friedman believed that it simply wasn’t the government’s job to figure out who deserved what, and so the NIT was by design impersonal and universal.
Most of Friedman’s fellow Republicans, however, couldn’t swallow that logic. It wasn’t fair or moral, they argued, for someone to get something for nothing. The money would be “thrown away on liquor or the races,” one conservative opponent argued. And it could destroy the incentive to work, this newspaper said, creating “a gaggle of lazy bums.”
The FAP came up for vote in Congress twice during the early 1970s. Liberals, arguing that the benefit was too measly to help recipients, joined the conservative critics to kill it. Amid the stagflation and turmoil of the 1970s, welfare policy reverted to form.
One piece of the NIT did, however, make it through the congressional gauntlet: the work bonus. Originally conceived as a temporary measure to help stimulate the economy, the work bonus paid low-wage workers an income supplement. Renamed the Earned Income Tax Credit (EITC), it has become one of the government’s largest anti-poverty programs.
By most accounts, the EITC has been effective at lifting its recipients out of dire poverty — especially poor children. It also sliced neatly through the political coalition that had defeated the FAP. With its link to work, the EITC quieted the conservative worry about incentives. Administered by the IRS, it sidestepped the problem of bureaucratic growth while leaving established welfare agencies untouched.
What lessons does the history of the NIT, FAP and EITC hold for the freedom dividend?
First, while it’s exciting when ideas cross political boundaries, especially in our polarized times, they can also be a sign of trouble to come. In the beginning, such ideas have no enemies — but at the end, they have no friends. (The same might be said of outsider candidates.)
The freedom dividend is likely to sidestep that problem because it’s hard to imagine today’s Republican Party picking up the idea in the way that Nixon took to the NIT. That means it is likely to live and die by the Democratic Party. Ironically, perhaps the best thing that could happen for the freedom dividend is another Democratic defeat — creating the kind of soul-searching that opens space for the idea Hillary Clinton deemed “exciting but not realistic.”
Even in that scenario, however, the biggest challenge to the freedom dividend will remain the key factor that torpedoed the FAP: ingrained American opposition to others getting something for nothing. The most revolutionary aspect of a universal cash grant — breaking the link between work and reward — is also the most controversial. Yang has hammered away at this problem by linking the freedom dividend to big technology. He argues that if big tech is automating away jobs and raking in profits by selling data about our everyday lives — and paying minimal taxes along the way — the freedom dividend is the earned recompense for all the social disruption, now and to come.
He has even declared technology the 21st-century oil, because Alaska pays its residents a dividend thanks to oil revenue.
Admittedly, it’s a stretch to imagine this framing gaining broad support in the political class, or among voters. But it is true that Americans are just awakening to the peril and promise of big tech (whose luminaries, by the way, are some of Yang’s biggest funders). And even a year ago, it was difficult to imagine we’d be talking seriously about breaking up Facebook or Google — or about presidential candidate Andrew Yang. Americans have always been wary of the proverbial “handout.” But Yang is betting that free money is even more powerful — and this time, he could be right.
Jennifer Burns is an associate professor of history at Stanford University and a Research Fellow at the Hoover Institution. She wrote this article for the Washington Post.