Introduction
Andrew Yang's "The War on Normal People" is a thought-provoking and urgent call to action that addresses the looming crisis of mass unemployment in America. As the founder of Venture for America, a nonprofit organization focused on creating jobs and training entrepreneurs in struggling American cities, Yang has witnessed firsthand the challenges facing average Americans. His travels to cities like Baltimore, Detroit, Cleveland, and New Orleans revealed a stark contrast between the thriving communities of Silicon Valley and Manhattan and the economic struggles of middle America.
Yang argues that the United States is on the brink of a major economic shift, driven by unprecedented technological advances that threaten to eliminate millions of jobs. This impending crisis, which he calls the "Great Displacement," has the potential to devastate communities, families, and individuals across the country. However, Yang doesn't just paint a bleak picture of the future; he also offers a bold and innovative solution to address these challenges.
In this book, Yang explores the reality facing most Americans today and proposes a radical plan to create an economy that provides hope and opportunity for everyone. He introduces the concept of Universal Basic Income (UBI) as a cornerstone of his vision for a more equitable and sustainable future. Through a combination of historical analysis, economic insights, and personal anecdotes, Yang makes a compelling case for why UBI is not only necessary but also achievable.
The Great Displacement: Technology and Job Loss
Yang begins by highlighting the disconnect between the perception of the American economy and its reality for most citizens. While many in privileged socioeconomic groups may assume that a college education is the norm, the truth is that only a small percentage of Americans have completed higher education. This disparity sets the stage for the challenges that lie ahead.
The author argues that market-driven capitalism, while responsible for raising living standards and producing widely-enjoyed technologies like smartphones, fundamentally doesn't value human life. Instead, it prioritizes efficiency and cost-cutting measures that improve market performance. This focus on efficiency has driven unprecedented advances in technology, including artificial intelligence, automation, and robotics, which are now poised to eliminate millions of jobs.
Yang presents some sobering statistics to illustrate the scale of the problem:
95 million working-age Americans are currently not in the workforce, resulting in a labor force participation rate lower than almost every other industrialized economy.
A 2016 report from the Obama administration estimated that 83% of jobs paying less than $20 per hour could face automation or replacement.
Since 2000, automation has already eliminated an estimated 5 million American manufacturing jobs.
In the next 10 to 15 years, 2 to 3 million car, bus, and truck drivers are projected to lose their jobs due to self-driving vehicles.
Other at-risk jobs include factory workers, cashiers, customer service representatives, and fast-food chain employees.
Yang emphasizes that this wave of automation will not be limited to low-skill jobs. Even white-collar professions such as paralegals and wealth managers may face displacement. However, low-income earners without college degrees or specialized skills will be the most vulnerable and least able to find new work prospects.
The Ripple Effect: From Job Losses to Broken Communities
Yang challenges the notion that the current technological revolution will simply create new jobs, as happened during the Industrial Revolution. He argues that this comparison overlooks both the sophistication of new technologies and the significant social turbulence that accompanied the Industrial Revolution.
To illustrate the cascading effects of job loss, Yang focuses on the retail sector, where about one in ten American workers earn an average of $11 per hour. These jobs are increasingly at risk due to the rise of e-commerce giants like Amazon and the growing use of self-service checkout scanners. As major retailers close locations and declare bankruptcy, malls across the country are shutting down.
The closure of a single mall has far-reaching consequences:
Approximately 1,000 people lose their jobs, resulting in $22 million in lost annual wages for the local area.
The loss of sales tax revenue leads to cutbacks in municipal funding, including school budgets.
Empty malls can become crime havens, endangering local communities.
Former retail workers, often without college degrees, have limited alternative employment options.
Yang then expands this example to entire towns facing mass unemployment, using the case study of Youngstown, Ohio. Once a thriving industrial steel town, Youngstown's economy collapsed when its steel mills shut down in the late 1970s due to global competition. Despite government efforts to help ex-steelworkers retrain, the town experienced a cascade of negative effects, including:
- Increased bankruptcies and foreclosures
- Rising rates of child and spousal abuse
- Escalating drug addiction and alcoholism
- Higher crime rates
- More frequent psychological breakdowns
While Youngstown's story is extreme, Yang argues that a version of this scenario is already playing out on a national scale.
The Scarcity Mindset and the Rise of Disability Claims
Yang challenges the notion that low unemployment rates indicate a healthy job market. He points out that the unemployment rate doesn't account for people who have given up on finding work altogether. A 2012 Department of Labor survey found that 41% of workers displaced from manufacturing jobs since 2000 were either still unemployed or had dropped out of the labor market entirely.
The author explores two troubling trends that have emerged as a result of this job displacement:
Rising suicide and drug overdose rates, particularly in the context of the nationwide opioid crisis.
An increase in applications for Social Security Disability Insurance (SSDI).
Yang notes that in areas with high unemployment, there's a corresponding increase in disability benefit claims. The SSDI application process is relatively straightforward, with 40% of applicants approved on their first attempt or through appeal. As of 2017, there were more Americans on SSDI than working in construction jobs.
The author argues that it's difficult to blame individuals for "cheating" the welfare system when they have few other options. He cites studies on financial scarcity by Princeton psychologist Eldar Shafir and Harvard economist Sendhil Mullainathan, which found that poverty significantly impacts cognitive function and decision-making. Their research showed that:
Poor and wealthy individuals performed similarly on IQ tests under normal conditions.
When faced with a hypothetical financial challenge, poor individuals' performance on cognitive tests declined significantly.
Scarcity consumes intellectual bandwidth, reducing rational thinking and increasing impulsive behavior.
These findings help explain why desperate Americans might turn to disability benefits as a last resort, highlighting the need for a system that eliminates scarcity as a factor in people's futures.
The Widening Gap: Income Inequality and Political Instability
Yang observes that as normal Americans face marginalization and limited job prospects, wealth in the United States is becoming increasingly concentrated. He notes several concerning trends:
High-achieving graduates from top universities are clustering in a handful of cities like New York, Boston, San Francisco, and Washington, D.C.
This "brain drain" is pulling top talent away from other parts of the country, deepening income inequality between these hub cities and the rest of America.
Market-driven capitalism continues to exacerbate this wealth concentration.
The author warns that growing income inequality could lead to widespread upheaval and political instability. He presents a hypothetical scenario in which frustrated truckers and unionized Teamsters, facing mass layoffs due to self-driving vehicles, trigger nationwide protests and highway blockades. This could potentially escalate into violent conflict, with support from white nationalist groups and anti-government militias.
While this specific scenario is speculative, Yang cites historical precedents and expert opinions to support the possibility of such unrest:
Scientist Peter Turchin has compared the current state of America to pre-revolutionary France, predicting increasing turmoil and potential violent conflicts.
Some experts believe that underlying economic factors, including job loss, may have contributed to events like the 2015 Freddie Gray riots in Baltimore.
Yang also notes that with racial minorities projected to collectively form the majority of the US population by 2045, there's a risk that underprivileged white people might blame immigrants and people of color for their economic struggles, rather than recognizing the roles of automation and the capitalist system.
Universal Basic Income: A Time-Tested Solution
Despite the bleak outlook presented in earlier chapters, Yang remains optimistic about America's future, provided the federal government takes decisive action. His primary solution is the implementation of a Universal Basic Income (UBI), which he calls the "Freedom Dividend."
Key features of Yang's UBI proposal include:
An annual income of $12,000 for every American between the ages of 18 and 64, regardless of work status or income.
The dividend would be indexed to rise with inflation.
It would effectively raise Americans above the poverty line (which was $11,770 at the time of writing).
The UBI would replace most existing welfare programs.
Yang addresses the inevitable question of how to finance such a program, which would cost approximately $1.3 trillion annually. His proposed solution is a value-added tax (VAT) on goods and services. He argues that:
The United States is the only developed country without a VAT.
A VAT at half the average rate used by European countries (about 10%) would be sufficient to cover the costs of UBI for every working-age American.
While this would lead to a slight increase in prices, individuals would only lose money if they spent more than $12,000 on taxable goods and services per year.
To counter arguments that UBI is a radical or new idea, Yang provides historical context:
UBI has been proposed in various forms for centuries.
Proponents of UBI or similar concepts include Thomas Paine, Milton Friedman, Martin Luther King Jr., and Bill Gates.
President Richard Nixon proposed a guaranteed annual income called the Family Assistance Plan in the 1970s, which passed in the House of Representatives before stalling in the Senate.
The Benefits of Universal Basic Income
Yang tackles common criticisms of UBI, such as concerns that people will be irresponsible with the money or lose the incentive to work. He counters these arguments with real-world examples of guaranteed income programs:
The Mincome experiment in Dauphin, Manitoba (1974-1978):
- The Canadian government provided monthly checks to raise all residents above the poverty line.
- Analysis showed that only new mothers and teenagers worked less during the program.
- Positive outcomes included decreased birth rates for women under 25, increased high school graduation rates, and an 8.5% reduction in hospital visits.
The Alaska Permanent Fund (1982-present):
- Pays residents $1,000 to $2,000 annually from state oil revenue.
- Has effectively reduced poverty by 25%.
- Creates more than 7,000 jobs annually through increased economic activity.
- Many Alaskans report saving parts of this guaranteed income.
Yang cites a 2017 analysis by the Roosevelt Institute, which projected that a federal UBI of $12,000 per year could:
- Grow the economy by 12.56% to 13.10% per year by 2025.
- Bring 4.5 to 4.7 million people into the workforce.
The author explains that these economic benefits would occur because most Americans are so financially strained that they would spend their UBI locally on necessities like bills, food, and car repairs. This increased spending would bolster local industries and help maintain the consumer economy in the face of automation.
Reforming Healthcare: Aligning Incentives with Patient Outcomes
While Yang sees UBI as a crucial first step, he emphasizes that it's not a complete solution to America's economic challenges. He identifies healthcare as another critical area in need of reform, drawing on his experience working with a health software startup that digitized medical records.
Yang highlights several issues with the current US healthcare system:
By 2016, healthcare costs had risen to account for 17.8% of the economy.
The United States spends about twice as much per capita on healthcare as other industrialized countries.
Despite high spending, US healthcare ranks lower than other major industrialized nations in equity, efficiency, and health outcomes.
Unpredictable costs often result in high bills, creating financial burdens for patients when they're least equipped to handle them.
Jobs with full healthcare benefits are becoming increasingly rare.
To address these issues, Yang proposes a single-payer healthcare system for all Americans, with the government guaranteeing coverage at fixed prices. He suggests gradually lowering the eligibility age for Medicare as a potential approach to achieving this goal.
However, Yang recognizes that such a system would face resistance from high-paid doctors reluctant to accept lower incomes. To make it work, he argues that we need to transform how doctors are compensated. His proposed solution is to pay doctors flat salaries instead of wages that fluctuate based on their activities. He cites the success of this approach at the Cleveland Clinic in Ohio, where:
Doctors are paid a flat rate and are involved in hospital purchasing decisions.
Physicians can focus entirely on patient care rather than billing concerns.
The hospital consistently ranks as one of the top in the nation.
By aligning the incentives of healthcare providers with patient outcomes rather than profit, Yang believes we can create a more efficient and effective healthcare system for all Americans.
Human-Centered Capitalism: Valuing People Over Profits
Yang's vision for America's future extends beyond UBI and healthcare reform. He introduces the concept of "human capitalism," a system that values humanity and uses markets to serve common goals and values, rather than prioritizing financial gain above all else.
Key aspects of human capitalism include:
Holding companies accountable for market abuse that goes against humanity's interests.
Creating a Public Protection Against Market Abuse Act, which would require CEOs and major shareholders to face jail time for significant fines or bailout costs incurred by their companies.
Ensuring that people can live fulfilling lives in the face of long-term unemployment.
To illustrate the potential impact of such policies, Yang uses the example of the Sackler family and Purdue Pharma, which was fined $635 million in 2007 for misleading advertising about OxyContin's addictiveness. Under Yang's proposed system, the company's leaders would have faced jail time, potentially serving as a more effective deterrent against future abuses.
To help people find meaning and purpose in an era of increased automation, Yang suggests implementing a time banking system. This concept, pioneered by law professor Edgar Cahn in the 1980s, allows people to earn credits by offering time-based services like dog walking, cooking, or handiwork. These credits can then be used to "purchase" other time-based services within the network.
Yang provides an example of how time banking has already been successful in Brattleboro, Vermont, where a single mother named Amanda Whitman was able to receive help repairing her house while also contributing to her community in various ways, including playing music at a garden party with her children.
Final Thoughts: A Call to Action
In concluding "The War on Normal People," Andrew Yang paints a picture of an America at a crossroads. The advances in technology and automation that have driven economic growth are now threatening to displace millions of workers, potentially leading to widespread poverty, social unrest, and political instability. However, Yang remains optimistic that with bold action and innovative thinking, we can create a future that works for all Americans.
The author's proposed solutions, centered around Universal Basic Income and human-centered capitalism, offer a radical departure from traditional economic thinking. By prioritizing the well-being of all citizens and recognizing the inherent value of human life beyond mere economic productivity, Yang argues that we can build a more equitable, stable, and prosperous society.
Key takeaways from the book include:
The urgent need to address the looming crisis of mass unemployment due to automation and technological advances.
The potential for Universal Basic Income to alleviate poverty, stimulate local economies, and provide a safety net for all Americans.
The importance of reforming healthcare to align incentives with patient outcomes rather than profit.
The need to hold corporations accountable for actions that harm society and the environment.
The value of creating systems that allow people to find meaning and purpose outside of traditional employment.
Yang's vision for the future is both ambitious and pragmatic. By combining economic analysis with real-world examples and historical precedents, he makes a compelling case for why radical change is not only necessary but also achievable. "The War on Normal People" serves as both a warning and a call to action, challenging readers to reimagine what's possible and to work towards a future that values and supports all members of society.
As we face the challenges of the 21st century, Yang's ideas offer a fresh perspective on how we can harness the power of technology and markets to create a more just and sustainable world. Whether or not one agrees with all of his proposed solutions, the book succeeds in sparking important conversations about the future of work, the role of government, and the very nature of capitalism itself.
Ultimately, "The War on Normal People" is a thought-provoking and timely contribution to the ongoing debate about how to create an economy that works for everyone in an age of rapid technological change. It challenges us to think beyond traditional political and economic boundaries and to consider bold new approaches to the pressing issues of our time. As automation continues to reshape the job market and income inequality widens, Yang's call for a more human-centered approach to capitalism becomes increasingly relevant and urgent.