Freedom Dividend

Please consider the fiscal lunacy of the day: Presidential hopeful Andrew Yang is giving this New Hampshire mom $1,000 a month to show cash handouts work.

Presidential hopeful Andrew Yang, 43, is running for election on a campaign that centers around the idea of universal basic income, or free cash payments. Specifically, Yang promises that if elected, every American citizen between the ages of 18 and 64 will receive $1,000 a month.

To demonstrate the potential benefit of distributing cash, Yang is personally funding a pilot for cash payments, which he calls the Freedom Dividend.

Jodie Fassi and her family were selected from “dozens of nominations.” Charles Fassi, 49, his wife Jodie, 47, and their daughter Janelle, 20, received their first $1,000 check from Yang at a New Year’s Eve party in New York City. Technically, “the pilot is just for one person, Jodie,” Yang tells CNBC Make It.

Fiscal Lunacy

I have no doubt that $12,000 a year would improve the lives of many. But let's put this to the scale test.

US Population

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2017 US Population Range by Age

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The above chart from the Census Reporter which also lists the population for 2017 as 325,719,178.

Scaling Test

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Andrew Yang's proposal would cost in excess of $2.4 trillion a year.

Yang and countless more free money UBI proponents are economic illiterates.

None of these programs scale. Not a one.

Failed Tests

Without a doubt, you can give $1,000 a month to everyone in some some small town and watch that local economy grow. But that money has top come from somewhere.

Canada tried it one with much ballyhooed success. But everyone in the province had to pony up money for the benefits of residents in one town.

It was not a legitimate test, because it did not scale.

Hooray! Yang is giving Jodie Fassi $1,000 a month. I suggest he give everyone in the city $1,000 a month.

Inflation

Yang does not understand inflation. If the US gave away $2.4 trillion a year, guess what?

Unless you are a dim-witted UBI proponent, you know the answer. $12,000 a year would not go far. And pity those older than 64 who don't get a dime.

UBI is complete nonsense.

Mike "Mish" Shedlock

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