The Case Against Andrew Yang’s Freedom Dividend

Will an extra $1,000 per month really make you more free?

By Grace Johnson

The 2020 Democratic presidential primary has been a testing ground for the boldest ideas of the American left. Medicare For All and tuition-free college are just two examples of the more popular policies being presented to the public, and have in some form been adopted by multiple Democratic candidates. But presidential hopeful Andrew Yang has moved beyond these policies, and is campaigning a unique yet controversial plan that he says would boost the American economy and reduce financial strain for those in the lower and middle classes. Yang has proposed implementing a “Freedom Dividend:” a universal basic income of $1,000 a month for every American citizen over the age of 18. The Freedom Dividend is modeled after a policy introduced in Alaska in 1976. Every adult citizen receives a dividend as long as they have lived there for at least one calendar year and plan on staying indefinitely. 

As attractive as the idea of an extra $1,000 a month may be, the Freedom Dividend is a wasteful and inefficient policy. Yang’s desire to help every American with an extra $1,000 per month could potentially change the lives of millions of Americans who live in poverty, but with the side effect of tens of billions of wasted dollars. This monthly check would be given to every American citizen, regardless of income. The government would give the same amount each month to a single mother in Mississippi, who works two jobs to feed her children, as it would give to a Fortune 500 CEO. The income disparity between these two is significant, so why would they receive the same amount of money from the government? The level of wasted welfare this program would create can be best demonstrated by the infamous “Top 1%”. 

The Top 1% refers to the more than one million households in the United States that make at least $415,000 per year. Though these households have 40% of the country’s wealth, Yang’s proposed Freedom Dividend would give these households the same amount each month as the other 99% of households without taking into account the income disparity between the two. With a policy like the Freedom Dividend, the government would be paying these already wealthy households tens of billions of dollars each year. This extra $12,000 per year would likely go unnoticed by the top 1%, but that extra cash would double the yearly income of an individual living on the poverty line in the contiguous 48 states. An income boost like that could drastically change the lives of Americans living in poverty, and it could make more of an impact if income disparity was taken into account. 

While the intent behind the “Freedom Dividend” is commendable, the policy lacks the nuance of America’s other welfare programs. Instead of implementing a Universal Basic Income for every adult, I would suggest a welfare program that provides a monthly stipend to adults making less than the median earnings, which were about $40,000 in 2018. This type of policy would be more effective in redistributing wealth and providing economic relief to Americans who need it.