Andrew Yang, Clive Thomas, the poor, and free money

Oct 13, 2019 Countryman, News

---

By Dennis Nichols

Guyanese economist, Professor Clive Thomas, and his cash-transfer pitch, are in upbeat company; as upbeat as one can get in the circumstances where doubt is being cast as to the feasibility of such a move, and on Dr. Thomas’ sanity.
The ‘company’ is Mr. Andrew Yang, Asian-American entrepreneur, attorney, and long-shot Democratic presidential hopeful whose star seems to be rising. If he gets his way, first as the presidential nominee, then as No. 45, every American adult over the age of 18 will receive free dollars every month; $1000 to be exact, to do as she or he pleases. This is what is known as universal basic income (UBI) or what he calls a ‘freedom dividend’.
Economics is not my forte but Andrew Yang’s idea seems to be a good one, as does Dr. Thomas’s, at least on paper, and in the hearts of the poor and struggling masses in both countries. Having a distinctly socialist flavour though, they would certainly bother the more business-minded ‘capitalists’ here, and there. Then there are the question of exactly how they will be implemented; the logistics, and in Yang’s venture at least, its legality. But that’s the job of the government, lawyers, and economists.
As those authorities deal with the devil in the details, they will no doubt debate the advantages and/or disadvantages of free money for the masses. Although I think it’s a good idea, I do share a few of the reservations some have about it. For example, just how soon, in Guyana’s case, can this be implemented bearing in mind that the oil flow probably wouldn’t match the giveaway talk until five to ten years down the line when production surpasses one million barrels per day. I mean, a lot of senior-citizen hopefuls like myself may be gone by then. And circumstances can change rapidly; drastically.
Then of course there are the variables. A possible new government after next year March and fluctuating oil prices can throw a proverbial monkey wrench into the plans. Also, there’s the sheer volume of cash to be doled out. A fairly conservative estimate of 200,000 families at US$5000 each works out to a staggering US$ one billion annually. Can Guyana manage, and sustain that, even 10 years down the line? Well, who knows? ExxonMobil is not the only source of income for foreign dollars.
So, for Guyana, it’s oil money that will facilitate the cash transfer. In Andrew Yang’s proposal, the cost of his UBI will be offset in part by introducing a value added tax (The dreaded VAT for some) to fight tax avoidance by large corporations like Amazon, Google, Netflix, and Uber, some of the biggest tech companies around which pay little or no federal income tax. His plan is that every American adult should get a ‘tiny piece’ of their profit pie.
Yang has already started a test run on his key policy. He is giving out of his own pocket, 10 randomly-selected families $1000 per month, and plans to use campaign funds to give away $120,000 this year. (That’s where the legal-or-illegal aspect comes into play) Interestingly, Yang’s net worth is estimated by Forbes to be just about one million dollars while most of the other candidates count theirs in the multi-millions.
His critics fear Yang’s UBI would drive federal spending, raise taxes, and trigger inflation. At the social level, it may also give some people little incentive to work although Mr. Yang thinks it is actually pro-work, and will create at least two million more jobs in the economy because people will have more money to spend. It has been estimated by USA Today that the actual cost of the pay-out would be in the vicinity of US$2.8 trillion. Maybe that’s why his democratic co-runners either tend to dismiss or humour him, and why, so far, the media has largely ignored his vision.
But Yang has his backers and endorsers including billionaire tech entrepreneur Elon Musk, and a host of millennials, part of the ‘Yang Gang’ who enthusiastically support his platform. He also cites the late Dr. Martin Luther King Jnr. as one who advocated for UBI, and reveals that he is even ‘peeling off’ a sizeable number of former supporters of President Donald Trump. In fact, he seems to be waging a crusade against Trump, and has come up with his own ‘Trump-inspired’ slogan “Make America Think Harder’ (MATH) an acronym that plays on his fondness for number-crunching and on the Asian/Math stereotype.
In terms of the Guyana cash transfer, there is evident opposition to it. Many say that policies on things like public infrastructure, health, and education should be the focus. Fine, others say, but not at the expense of cash transfer. In any case, some local commentators and pundits seem to agree with Yang’s way of thinking, especially when it comes to empowering poor or marginalized citizens. And both of our major political parties are at least considering the feasibility of such a scheme. Others, like Dr. David Hinds, have come out in open support of it, which will no doubt give impetus to those considerations, even as it opens the eyes and ears of the populace.
In a Kaieteur News article last month, Dr. Hinds vehemently and emotionally defended the cash transfer proposal and the economics of Professor Clive Thomas as opposed to what he called economics grounded in social prejudice. He alluded that this was due to the reaction of ‘some members of the ruling class and others in the chattering classes’ who oppose it partly because ‘for them it is a combination of bad economics and bad practice to give poor people money’. I close with a quote from his argument. Make of it what you will.
“The contempt for poor people by even some ‘better-off poor people’ is alive and well in Guyana. This aspect of class prejudice arises partly out of the limited opportunities for social mobility that have been made available to poor people … To those who say it is bad economics, I say Clive Thomas read the same economics books which you read and maybe some more. I’d rather {his} economics than economics that is grounded in social prejudice. I also trust the judgment of the people on this policy.”

(The views expressed in this article are those of the author and do not necessarily reflect the opinions of this newspaper)

---

---