Rather than home in on health care, climate change, the fiscal deficit, the tariff war with China, gun control and other well-worn talking points among Democratic presidential candidates, Andrew Yang emphasized how automation is affecting the American workforce during a private fund-raising event Sunday night.
In what he says will be his last small fund-raising event before focusing on mass ones going forward, about 35 guests paid between $1,000 and $5,600 each to attend the gathering at the New York home of Yue-Sai Kan. Yang’s standing among his opponents is said to be between sixth and fourth. The tech-minded 44-year-old’s campaign raised $10 million in the latest quarter, with the bulk of that from donations of $200 or less, according to his campaign official.
Instead of hammering on policy issues, Yang offered a lengthy explanation about his upbringing and career. After college, he spent five months practicing law at Davis, Polk & Wardwell working in M&A and banking transactions, Yang exited to start what turned out to be “an ill-fated dot-com company [Stargiving] in the first bubble,” he said. “My company had its mini-rise and maximum fall. When the bubble burst, my company went down with it.”
After runs at various other start-ups, the Schenectady, N.Y.-born candidate became the head of an education company [Manhattan Prep] that “grew to be number one in the U.S. before being bought by a bigger company [Kaplan Inc.] in 2009.” On the heels of the financial crisis, Yang described that period as “a very tough time in a lot of the U.S.” Yang said one of the reasons was due to “so much of our talent from Exeter [Academy], Brown and Columbia [Universities] had gone to Wall Street to help create exotic financial instruments that had helped contribute to the financial crisis. I thought what this country needs is an army of entrepreneurs to create new jobs and businesses in place like Detroit, Cleveland, St. Louis, Birmingham, Baltimore — a bunch of cities that frankly I had never spent any time in,” he said.
Yang then quit his job to start the nonprofit Venture for America, donating $120,000 to get it seeded and “calling rich friends to ask, ‘Do you love America?’ The smarter ones said, ‘What does it mean if I say yes?'” At least $10,000 was his response. Over the next seven years, Yang raised a couple hundred of thousand dollars (by his estimates) and helped create several thousand jobs in 15 U.S. cities.
For Yang, Donald Trump’s 2016 election win “was an emblem of how bad things were going for a lot of Americans.” After digging into the numbers, Yang said “there was a straight line up from the adoption of industrial robots in a voting area and the move to Trump.” Acknowledging other factors — Russia, poor people, ignorance, racism, anger, Facebook, Hillary Clinton, e-mails — that were provided by attendees, Yang said “there was a suite of factors. But the numbers tell a very clear story in an area where we got rid of manufacturing, due to automation — blue went to red. We did that in Michigan, Ohio, Pennsylvania, Wisconsin, Missouri, Iowa — all of the swing states that Donald Trump needed to win and did win.
“We blasted away 5 million manufacturing jobs in the swing states — 80 percent, of which were due to automation. Now what we did to the manufacturing jobs we’re doing to the retail jobs, the call center jobs, the fast-food jobs, eventually the truck driving jobs and on-and-on through the economy. Experts are calling this the fourth industrial revolution and we are scapegoating immigrants for problems that immigrants have nothing to do with.”
To highlight this “giant, economical technological shift,” Yang wrote the book, “The War on Normal People: The Truth About America’s Disappearing Jobs and Why Universal Basic Income Is Our Future.” Fourteen minutes into his fireside talk, Yang said, “The reason I am running is because we have to help America understand what is happening to it and then we have to help it advance through this time. What Donald Trump represents unfortunately is not going to disappear with Donald Trump. Donald Trump represents an entire civilization, a society that is at a loss as to how it can respond to these changes. They’re turning to anyone with any explanation, even if the explanation is not right. Donald Trump’s explanation was scapegoating immigrants and his solutions were — we’re going to build a wall, we’re going to turn the clock back, we’re going to bring the old jobs back. Most Americans don’t even believe that’s going to work even if they voted for Donald Trump. But it was the only thing they were presented with.”
From Yang’s perspective, “there is an urban-rural divide that Democrats are succumbing to where they see their base as urban and they don’t seem to have a keen grasp of these economic issues plaguing the country. Hillary Clinton was quoted as saying after the race that she won every place in America that was growing economically. She used that in some ways as an explanation for her loss. But I don’t think she understands the impact of what she’s saying. If we divide politically along high-growth and low-growth, or urban and rural, then this country is going to stay divided indefinitely. And that is going to have disastrous effects over time. One of the political parties has to try to solve the problems of the entire country which includes the rural people — I feel they are being left behind — the places in the Midwest and the South that are being blasted by these technological changes.”
Yang said he recently asked 70 chief executive officers in New York how many of them were looking to replace their back office and clerical workers with AI and software and all 70 responded affirmatively. “The fact is you could fire that ceo, if they weren’t looking at replacing their workers with AI and software, because they’re responsible for the bottom line,” he said.
Speaking of the dearth of truck drivers, welders, plumbers, electricians, mechanics and other tradespeople, Yang said 6 percent of American high school students are in technical or vocational schools, compared to Germany where the rate is 59 percent. Yang said the automation of such industries has been exacerbated further by the need for workers. As president, he would team up with Mike Rowe of “Dirty Jobs” to try to destigmatize those jobs.
“What we’ve done is over-prescribed college to young people in this country and we’ve stigmatized the trades and manual work. The end result is a labor shortage in the trades and manual skill jobs. In addition, 59 percent of the people, who start college finish in six years. We’re sending people to college that probably never should have gone to college in the first place. Thirdly, there is $1.6 trillion in student loan debt — most of it from college,” he said. “All these families have said I need to send my kid to college for them to have any chance of a decent life. College has gotten two and a half times more expensive. Families felt they had no choice but to pay then the government gives them essentially unlimited access to student loans — not taking into account that the job they’re going to get after they graduate might not be there for them.”
Interestingly, Yang only spoke of his plans for the Freedom Dividend, a universal basic income of $1,000 per month for every American adult over the age of 18, during the Q&A session. “The data dividend is part of what fuels the $1,000 a month. If you look at other countries including China, Canada and Germany, most every other developed country has a value added tax already in effect, in part because it’s much more effective. You can’t game it and it helps create a system where the Amazons of the world aren’t paying zero in federal taxes, which is the case in the U.S. for Amazon, Netflix and other tech companies [that] pay very low taxes relative to their size….If we distribute to the cash-strapped American consumers, you build a trickle-up economy and have a virtuous cycle, where you know some of that money is going to float back up to Amazon and the gang but in the interim, it’s going to make our children and families stronger and healthier. Most of that money will sustain these communities — day-care expenses, car repairs, Little League sign-ups and create accessible jobs in places where people need them.”
Citing the record-levels of anxiety and depression among young people in particular that coincides with smartphone adoption and social media use, Yang noted that the people who are most vigilant about their kids not using screens are in Silicon Valley. Making the point that tech executives are driven by financial returns and maximum engagement, Yang said the more responsible techies have called for guardrails of some kind. “If you’re competing in AI and are part of a handful of firms that is trying to go as fast as possible, those are the wrong incentives. If technologists are actually saying, ‘Look our incentives are leading us toward disaster — to me that’s a giant red flag,” he said.
He also broached the issue of tariffs, when asked. He said he would reexamine tariffs immediately and try to find a way to address “the pressing issue of the U.S.-China relationship in way that does not penalize businesses and producers that have nothing to do with it.”
After posing for photos and signing copies of his book, Yang spoke with WWD about how Michael Bloomberg would change the presidential race. He said, “He’s going to do everything that money can buy very, very easily. He’s going to crowd out some of the other more middle-of-the-road candidates with middle-of-the-road appeal. I think it would impact Joe Biden’s campaign and Pete Buttigieg’s campaign most directly.”
Asked about his take on health care, Yang noted that health care is the number-one cause of bankruptcy for families in the U.S. and is “also really bad for businesses” in terms of increased costs of hiring. “If you look at the new jobs created in the U.S., 94 percent of them are gig temporary contract jobs that don’t include health-care benefits customarily. Right now employers and employees are in the worst of all worlds. We need to have a Medicare for all type system that gets the access up and the costs down, and gets rid of the negative incentives that employers have now. I would not get rid of private insurance. But we need to divorce health care from employment.”
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