“The normal American did not graduate from college and doesn’t have an associate’s degree. He or she perhaps attended college for one year or graduated from high school. She or he has a net worth of approximately $36,000, about $6,000 excluding home and vehicle equity and lives paycheck to paycheck. She or he has less than $500 in flexible savings and minimal assets invested in the stock market. These are median statistics with 50% of Americans below these levels”
In this episode of Made You Think, Neil and Nat discuss The War On Normal People By Andrew Yang. This book is a balanced and optimistic view on Universal Basic Income, the economic impact of the automation of jobs and our options for the future.
“half of American households already rely on the government for direct income in some form.”
We cover a wide range of topics, including:
And much more. Please enjoy, and be sure to grab a copy of The War On Normal People By Andrew Yang.
01:42 – The book feels optimistic and fairly balanced and offers Universal Basic Income as a good solution to our current situation. Andrew sets the stage well with the magnitude of the problem.
03:04 – We have both come from a place of not thinking UBI was a good solution and our views have been changed several times on this, since reading Sovereign Individual and now this.
04:19 – It feels like this could the best of the option that we currently have if we want to maintain this current system and avoid social revolution.
05:10 – Yang starts the book off by emphasizing the scale of the problem using median statistics or labor participation rate, unemployment rate and number of disability claimants.
06:30 – There is a massive number of people who are working age but are no longer looking for work. This is not evident when viewing the unemployment rate as they are discounted. However the labor participation rate is 63% which is lower that all other industrialized economies.
06:58 – One in three people have left the job market entirely. They have self-selected to no longer participate in the search for work and are not counted as unemployed.
08:09 – “half of American households already rely on the government for direct income in some form.”. The majority of these are on disability for muscular tissue issues, mood disorders, anxiety or depression.
09:09 – There is a whole industry of lawyers who help people get onto disability who then take a cut of the back dated payments.
10:26 – Similarities between the level of disability payments and the proposition of UBI. However with disability payments, you are dis-incentivized from trying to find work as payments would stop. This causes a large number of people to stay on disability for longer and find untraceable ways of earning additional income.
11:10 – Yang says that 94% of all jobs created within the last 10 years were temporary contractor jobs with no benefits. People are not going to risk their $12,000 disability payment for a job at $7 per hour.
11:35 – Disability has less than 1% churn rate, very few people get off it. It’s like the anti-SaaS startup.
11:59 – Increases in disability payments correlate to the areas with the biggest job losses. Highest in the old manufacturing states. Does the government recognize that these payments are just another type of welfare for those that have lost their jobs?
12:31 – In Michigan of the 310,000 who left the workforce between 2003 and 2013 half went on to take disability payments. They don’t have any other options available.
13:29 – The Government doesn’t seem to actively fight benefit fraud with more people joining but few leaving. Missing of checks to see who is health is improving enough to move back into work.
14:29 – Inefficiencies of job retraining programs and the lack of transferable skills between old industries losing jobs and new (mostly technical) industries with jobs available.
“The test is not ‘Will there be new jobs we haven’t predicted yet that appear?’ Of course there will be. The real test is ‘Will there be millions of new jobs for middle-aged people with low skills and levels of education near the places they currently reside’. And the answer to that seems almost certainly no.”
15:44 – In previous industrial waves people have been able to adapt due to similarities of skill. Automation is now removing low skilled jobs entirely. Automation in car factories, Amazon warehouses.
18:30 – Automation isn’t solely for low skilled, Blue Collar jobs. Anything repetitive and routine can be automated. This will impact White Collar workers too.
“Routine jobs of all stripes are those most under threat from AI and Automation and in time more categories of jobs will be affected.”
19:21 – Automation in law, research and reduction in personnel. Repetition as a tool for learning. Loss of high-level expertise as no-one has the foundational knowledge that comes from early repetition.
20:42 – Tangent. A Science Fiction story to make you think! In a distant future, expertise on computers has been lost and no one knows how to resolve a computer bug. A future where humans are reliant on computers to retain the knowledge for them.
22:42 – Computers no longer needing humans. The Sims, the hive mind of the Internet. Memes, Russian hackers, and Wikipedia created by AI destroying humanity.
25:19 – Assumptions of UBI imply an increase of entrepreneurship. What happens when you pay people to not work? Current level of cash wealth for the average American is $500. The expense of Healthcare means that one ER visit can put people into long term financial difficulty. Defaulted medical bills are then just another form of welfare.
27:50 – Median salary in the US is $31,000. Cost of living in New York and San Francisco. Impact cost of living has on average job wages. Manhattan vs Brooklyn.
32:14 – The author criticizes the idea that those that lose their job can just start working remotely. Those in the US can’t compete due to cost of living with locations like the Philippines and Sri Lanka. Tech skills required are also a barrier to entry.
36:10 – Professional eSports players and the popularity of Twitch and the platform reinforcing the popular streamers causes them to be more popular. Extremistan vs Mediocristan.
39:11 – Lack of service jobs, the rise of the gig economy, dog walking apps. Robot dogs and cyborg owners.
42:39 – Hyper-concentration of money and talent in 6 cities: Boston, Chicago, Los Angeles, New York and Washington DC. Reinforcing loop effect. Venture Capital money and secondary cities that are on the rise. The effects of anchor companies in smaller cities.
50:01 – Potential to see an exodus of people moving away from high cost of living areas due to remote work. The increase of remote working technologies which helps team collaboration.
52:32 – Geography is destiny. Jobs disappear where society falls apart and the smartest leave first. Reduction in families relocating across state lines.
54:14 – The ‘useless’ class being subsidized by the 1%. Will this cause talent to leave on a international level? Yang says inertia, lower taxes, standard of Education keep people in the U.S.
55:40 – VAT, international transactions, selling to the UK from the US. Micro economies and city-states. China GDP. Impact of taxes in lower cost of living regions.
01:01:50 – Moving abroad, spending in different economies. Moving to Canada because of Trump. Tipping point for people leaving their state or country because of high tax levels.
01:05:41 – Tangent. Cryptocurrencies as an alternative to being taxed. Adoption of Bitcoin and untraceable payment systems. Exchange rates and paying freelancers. TransferWise, PayPal. UBI as being a better option than the status quo.
01:10:20 – Yang doesn’t present UBI as a perfect solution but it’s an option to divert us from the direction we are already headed in.
1:12:00 – If you want to hear Neil’s comments about Obama’s book, support us on Patreon and listen to the bonus material for this episode.
01:13:14 – The explosion in popularity of video games for unemployed men. The average playing time went from 3 hours per week to 8 hours per week in just a few years.
01:14:32 – E-sports, ad revenue, disposable income of an unemployed audience. Comparisons with NBA, NFL, tennis, golf and other sports. Sponsorships vs engagement of an audience.
01:16:35 – Power of in-app purchases, revenue making game mechanics. Popularity of Fortnite, going to $318MM in monthly revenue in just eight months. Comparisons with Call of Duty, game play and enjoyment.
01:18:55 – Harari’s comments on the ‘useless’ class moving to VR as a stimulus. Swapping religion for video games. Lack of creative outlets and sense of reward in modern life. People turning to games for the feeling of progress and adventure.
01:20:31 – Implications of having unemployed young men roam the streets are a recipe for disaster. Preventing social unrest of large group of unemployed people by videogames.
01:21:35 – Lack of stimulation causes unwanted behaviors. People don’t always direct their energy in productive ways. Social credit apps, psychology of spending millions in other currencies.
01:24:07 – UBI as an economic stimulus, makes new businesses more viable. Additional disposable income. Decreasing customers causes decreasing investment. Spending on subscriptions like Netflix causes income to flow back to those already rich cities.
01:26:55 – Trump’s tax plan, government waste. UBI puts money in the hands of the individual and reduces government control. Appealing to both political sides – as a safety net and as a way for individuals to have more control.
01:29:52 – Welfare increasing risk of totalitarianism. Government and citizens in harmony – taxes in exchange for infrastructure and protection. Does reducing taxes reduce how much the government listens to the people?
01:31:36 – Andrew Yang is a presidential candidate for 2020 against Trump. Danger of using UBI as a re-election tactic. An issue so powerful could lead to a potential dictatorship. The Great Depression, introduction of Social Security. Congress, altruistic presidents and Obamacare.
01:35:47 – If you want to hear more about some of our thoughts related to the book get the bonus material for this episode at Patreon. We got to say it a lot of times to make sure everyone remembers what it is. Patreon.com/madeyouthink
01:38:03 – You can also leave a review for this show on iTunes. That is probably one of the best ways to support the show, that helps us show up as a recommended podcast. It makes us feel good. It’ll make our mother’s proud of us.
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I’m @TheRealNeilS and I’m @NatEliason. See you guys next week.
