by Andrew Yang
Similarly, many forms of capitalism are in service around the world right now. Singapore is the fourth-richest country in the world in terms of per capita GDP. It has had an unemployment rate of 2.2 percent or lower since 2009 and is regarded as one of the most free, open, pro-business economies in the world. Yet the government in Singapore regularly shapes investment policy, and government-linked firms dominate telecommunications, finance, and media in ways that would be unthinkable in the United States. Singapore’s system of capitalism is very different than Norway’s and Japan’s and Canada’s and ours. Many countries’ form of capitalism is steered not by an unseen hand, but by clear government policy.
Now imagine a new type of capitalist economy that is geared toward maximizing human well-being and fulfillment. These goals and GDP would sometimes go hand-in-hand. But there would be times when they wouldn’t be aligned. For example, an airline removing passengers who had already boarded a plane to maximize its profitability would be good for capital but bad for people. So would a drug company charging extortionate rates for a life-saving drug. Most Americans, I think, would agree that the airline should simply accept the lost revenue and the drug company should accept a moderate profit margin. What if this idea was repeated over and over again throughout the economy?
Call it Human-Centered Capitalism, or Human Capitalism for short.
Human Capitalism would have a few core tenets:
1. Humanity is more important than money.
2. The unit of an economy is each person, not each dollar.
3. Markets exist to serve our common goals and values.
There’s a saying in business that “what gets measured gets managed for.” We need to start measuring different things.
The concept of GDP and economic progress didn’t even exist until the Great Depression. It was invented so that the government could figure out how bad the economy was getting and how to make it better. The economist Simon Kuznets, upon introducing the concept of GDP to Congress in 1934, remarked that “economic welfare cannot be adequately measured unless the personal distribution of income is known. And no income measurement undertakes to estimate the reverse side of income, that is, the intensity and unpleasantness of effort going into the earning of income. The welfare of a nation can, therefore, scarcely be inferred from a measurement of national income as defined above.” It’s almost like he saw income inequality and bad jobs coming.
Our economic system must shift to focus on bettering the lot of the average person. Capitalism has to be made to serve human ends and goals, rather than have our humanity subverted to serve the marketplace. We shape the system. We own it, not the other way around.
In addition to GDP and job statistics, the government should adopt measurements such as:
• Median income and standard of living
• Levels of engagement with work and labor participation rate
• Health-adjusted life expectancy
• Childhood success rates
• Infant mortality
• Surveys of national well-being
• Average physical fitness and mental health
• Quality of infrastructure
• Proportion of elderly in quality care
• Human capital development and access to education
• Marriage rates and success
• Deaths of despair/despair index/substance abuse
• National optimism/mindset of abundance
• Community integrity and social capital
• Environmental quality
• Global temperature variance and sea levels
• Reacclimation of incarcerated individuals and rates of criminality
• Artistic and cultural vibrancy
• Design and aesthetics
• Information integrity/journalism
• Dynamism and mobility
• Social and economic equity
• Public safety
• Civic engagement
• Cybersecurity
• Economic competitiveness and growth
• Responsiveness and evolution of government
• Efficient use of resources
It would be straightforward to establish measurements for each of these and have them updated periodically, similar to what Steve Ballmer set up at USAFacts.org—a treasure trove of social metrics that pulls from many public and private sources. Everyone could then see how we’re doing and be galvanized around improvement.
This could be tied in to the Digital Social Credit system, where people who help move society in a particular direction are rewarded. For example, a journalist who uncovered a particular source of waste, an artist who beautified a city, or a hacker who strengthened our power grid could be rewarded with Social Credits. So could someone who helped another person recover from addiction or helped acclimate an ex-convict into the workforce. Even someone who maintained a high level of physical fitness and helped others do so could be rewarded and recognized.
The power of this new marketplace and currency cannot be overstated. Most of the technologists and young people I know would be beyond pumped to work on these problems. They’ve been chomping at the bit to do so. We can harness the country’s ingenuity and energy to improve millions of lives if we just create a way to monetize and measure these goals.
I’m no fan of big government. The larger an organization is, the more cumbersome and ridiculous it often gets. I have sat in Washington, DC, conference rooms and filled out forms and realize the limitations on what even well-intended public officials can do. I am, by nature, an entrepreneur who likes to operate close to the ground on the human level.
I’ve also spent time with people at the highest levels of government, and it’s striking how stuck most of them feel. One congressman said to me, “I’m just trying to get one big thing done here so I can go home.” He’d been in Congress for seven years at that point. Another joked that being in DC was like being in Rome, with the marble there to remind you that nothing will change. Government isn’t magic. Quite the opposite. The system has become bigger than the people.
That said, I’ve concluded that there is no other way to make these changes and manage through the loss of jobs than to have the federal government reformat and reorganize the economy, particularly using technology to serve human needs.
I’ve been around some of the richest individuals, philanthropies, and companies in the world. Even the richest and most ambitious of them either operates at the wrong scale or has multiple stakeholders that make big, long-term commitments difficult to sustain. Most all of them are kind of waiting for government to reinvent itself and get its act together. Even billionaires operate on a scale of $100,000 to $10 million most of the time. We’re staring at trillion-dollar problems, and we need commensurate solutions.
Grassroots efforts are admirable and inspiring. But the market to support most of them does not exist, and things are getting worse around them. No level of activism can compensate for the displacement of workers.
What is required is a new, invigorated government willing to build for the long term. We are in a slow-moving crisis that is about to speed up. It requires drastic intervention. Human Capitalism will reshape the way that we measure value and progress, and help us redefine why we do what we do.
TWENTY
THE STRONG STATE AND THE NEW CITIZENSHIP
LEADERS BEYOND MONEY
I was on the warm-up panel once for an event headlined by a duo of ex-presidents, Bill Clinton and George W. Bush. They were speaking to a room of wealthy clients of a financial institution. The event was very benign—the two didn’t exactly share state secrets. They told funny stories about their time in office and their take on current events. The two had clearly become very friendly. They each had a Secret Service detail who made the whole thing much more cinematic with their crewcuts and headsets. Afterward, the assembled clients got in line for a photo-op with the two smiling ex-presidents.
There was a time not
so long ago when this would have been unthinkable.
When Harry Truman left the office of the presidency in 1953, he was so poor that he moved into his mother-in-law’s house in Missouri. All he had to live on was his pension as a former army officer of $112 a month. He refused to trade on his celebrity, turning down lucrative consulting and business arrangements. “I could never lend myself to any transaction, however respectable, that would commercialize on the prestige and dignity of the office of the presidency,” he wrote. His only commercial gain from office was when he sold his memoirs to Life magazine.
For a long time, former presidents tended to recede from public and commercial life. This practice started changing with Gerald Ford joining the boards of American Express and 20th Century Fox after leaving office in 1977, and it has mushroomed ever since. Bill Clinton has amassed $105 million in speaking fees since leaving office. George W. Bush has collected a relatively modest $15 million. The going rate for one of the former presidents is $150,000 to $200,000 for a speaking engagement plus various expenses.
The irony is that back in 1958, President Eisenhower and Congress felt so bad for Harry Truman that they passed the Former Presidents Act, which authorized a lifetime pension that today pays former presidents $250,000 a year and gives them a budget for staff, health insurance, and the like. The money-making activities of former presidents surged after we started taking care of them.
Is it possible that even a president might go easy on various parties because he or she might be getting paid $200,000 or even $400,000 to speak to them a few years later? One of the reasons why we’ve lost our way as a society is that the market has overrun our leaders.
And it’s not just presidents. Elites in general have gotten too cozy. We all went to the same colleges, have children in the same prep schools, live in the same neighborhoods, attend the same conferences and social functions, and often get paid by the same companies. There’s a very powerful set of incentives to get along.
In order for humanity to trump capital, the state must represent the public interest above all. The goal should be to create a leadership class that can welcome the hatred of others with no fear of getting frozen out of opportunities afterward.
We should start at the top. We should give presidents a raise from their current $400,000 to $4 million tax-free per year plus 10 million Social Credits. But there would be one condition—they would not be able to accept speaking fees or any board positions for any personal gain after leaving office. This would keep them free and clear of any need to make powerful people happy. We should do the same for members of the Cabinet and the heads of all regulatory agencies.
It’s tough working in DC. Most of the public servants I know are motivated by the right things. You go in hoping to make a difference. But you quickly get jaded by the system. You become quite influential in your own way, yet you interact with people who are making much more money than you at every turn. Many of them are classmates of yours. Your time in government runs out. Then what? Most government employees make about $100,000. Private industry may offer you 4 to 10 times as much. Industry implicitly becomes one of your most appealing options.
I have friends who have experienced versions of this. Government service can easily make you feel like a chump four years later. It’s highly irrational for any regulator to come after industry too hard, because industry is waiting with the big paycheck afterward. At least one friend of mine swore up and down to me that he’d never become a lobbyist, only to become a lobbyist several years later. I don’t blame him one bit—he’d spent years building up relationships and currency that people wanted to pay him for. And his options outside of DC were uncertain.
Sheila Bair, a former head of the Federal Deposit Insurance Corporation, lived through this conflict herself. She now advocates a lifetime ban on regulators working for the institutions they regulated in return for an increased government salary to $400,000. “It would change the regulatory mindset,” said Bair, and it would remove the “upside down” incentives for regulators to keep companies happy to command high salaries afterward.
For Human Capitalism to take hold, we need leaders who can truly ignore the market. That’s the first step.
REAL ACCOUNTABILITY
The second step is to introduce a level of personal accountability for those who adopt practices that advantage capital over human interests. Recall the case of Purdue Pharma, the private company that was fined $635 million in 2007 by the Department of Justice for falsely promoting OxyContin as nonaddictive and tamper-proof. $635 million seems like a lot of money. But the company made $35 billion in revenue since releasing OxyContin in 1995, primarily from its signature product. The family that owns Purdue Pharma, the Sackler family, is now the 16th richest family in the country with a fortune of $14 billion—they have a museum at Harvard and a building at Yale named after them.
If you’re going to make $35 billion, paying $635 million—only about 2 percent—seems like a fine price to pay for success. Meanwhile, the rest of us will be dealing with hundreds of thousands of opioid addicts for years to come. They have given us a modern-day plague with no end in sight. Thousands of families, lives, and communities have been ruined and affected, arguably to enrich one family.
A similar dynamic played out during and after the financial crisis—most of the major banks issued and profited from mortgage-backed securities in the tens of billions over multiple years. Then the market discovered these securities were worthless, the financial crisis ensued, the economy went into a tailspin, and all of the major banks needed taxpayer-funded bailouts. The big banks eventually settled with the Department of Justice for billions of dollars—JPMorgan Chase agreed to pay $13 billion in 2013, and Bank of America agreed to pay $16.65 billion in 2014—but most everybody kept their jobs and senior executives escaped culpability, despite the havoc wreaked on the economy. Even the CEOs of the failed firms Lehman Brothers, Merrill Lynch, and Bear Stearns each walked away with hundreds of millions of dollars.
In the current system it pays financially for companies to be aggressive and abuse the public trust, make as much money as possible, and then pay some modest fines. Often, no criminal laws are broken, or if they are, violations are impossible to either prosecute or prove. It’s little wonder that our current version of institutional capitalism sits so poorly with young people who grew up during the recession. They were on the receiving end of a morality play that ended with the bad guys walking away with bags of cash and a lousy job market.
What could we do that would seriously mitigate this behavior and elevate the state and the public good above the interests of multibillion-dollar corporations?
Here’s an idea for a dramatic rule—for every $100 million a company is fined by the Department of Justice or bailed out by the federal government, both its CEO and its largest individual shareholder will spend one month in jail. Call the new law the Public Protection against Market Abuse Act. If it’s a foreign company, this would apply to the head of the U.S. operation and the largest American shareholder. There would be a legal tribunal and due process in each case. The president would have the ability to pardon, suspend, shorten, or otherwise modify the period or sentence. The president would also have the ability to claw back the assets of any such individual to repay the public.
Admittedly, this drastic approach would stretch the bounds of the powers of the state. But there’s a clear need for penalties with some teeth for executives and individuals who are being enriched by egregious behavior at public expense. If this rule had been in place during the financial crisis, we would have had the heads of the major banks all lined up for prison sentences. The Sacklers would have spent time behind bars. It would certainly set up a hierarchy where CEOs are not above the public good.
TECHNOLOGY ON OUR MINDS
Effectively regulating technological innovations like self-driving cars and artificial intelligence will require a much more activated and invigorated state. Elon Musk in 2017 called for proactive re
gulation of AI, calling it “a fundamental risk to the existence of civilization.” Techies don’t often call for regulation of their own industries, so you know it must be serious.
Another major technology issue that will require government intervention is the effect of smartphones on human minds, particularly those of young children. Recent research indicates that the increase in smartphone use by teenagers coincides with an unprecedented surge in depression, anxiety, reduced sociability, and even higher suicide rates. Tristan Harris, a former design ethicist at Google, has written compellingly about how apps are designed to function like slot machines, vying for our attention and giving us variable unpredictable rewards to keep us engaged. As individuals trying to moderate our own behavior and that of our children, we’re outgunned by billion-dollar companies. Tristan wrote, “Imagine hundreds of engineers whose job every day is to invent new ways to keep you hooked.” Another technologist lamented that “the best minds of my generation are thinking about how to make people click ads.” And they’re succeeding.
In a better world, one can imagine smartphones with settings like “maximum stimulation,” “moderate engagement,” and “serenity” and apps modifying their notifications and home screens accordingly. A government regulator—call it the Department of the Attention Economy—could dig into the guts of social media, gaming, and chat apps and allow for both user and parental visibility and control. Maybe there could even be notifications that flag excessive screen time; for example, “You are now entering hour 4 of continuous smartphone use. You may want to go outside or look at another human being now.”
