Libertarian Perspectives on Basic Income

Basic Income – or Guaranteed Income, or Minimum Income, or what have you – is a policy that would provide a uniform minimum income to all citizens of a nation.  It is not a new idea, neither globally nor with libertarians specifically.  Milton Friedman supported a “Negative Income Tax,” which eventually became expressed in an extremely watered-down way through the earned income tax credit (EITC).  And FA Hayek called for a “uniform minimum” way back in 1944.

Libertarian support for Basic Income often comes through seeing it as a less bad way of dealing with poverty than the current web of programs collectively referred to as the welfare state.  Veronique de Rugy of George Mason University’s Mercatus Center does of a good job of explaining this logic on Reason:

Welfare programs are demeaning by design, because they dictate to poor people what they must spend on food, housing, or health care, rather than letting them make those trade-offs themselves. The government even dictates what food poor people may or may not buy with food stamps. The libertarian interest in a guaranteed income scheme proceeds not simply – or even mostly – from the desire to make government smaller and more cost-efficient. It stems from a belief that all individuals have the capacity to promote their own interests, and in fact are better able to make decisions about their lives than anyone else.

We ourselves here at Unfettered Equality have argued points along similar lines, such as in Sebastian’s critique of the SNAP program.  The current welfare state shoulders poor people with burdens of control and humiliation to go along with their financial hardships.  Additionally, it is horribly inefficient.  A Brookings Institution study found that the SNAP program spends 15.8 cents on administrative costs for every dollar issued through food stamps – compared with 1.5 cents per dollar issued by the Friedmanite earned income tax credit.

But of course the big question concerning Basic Income is cost.  Charles Murray, author of the book-length call for Basic Income In Our Hands, claims that a uniform minimum income of $10,000 per year could be provided to each adult US citizen 21 years of age and older for the same cost as the present welfare state.  Additionally, he states that Basic Income would be far more immune to demographic shifts than our current system, noting that by 2028, his $10k-a-year option would end up costing a trillion dollars less.

But $10,000 a year is significantly below the current poverty line of $11,670.  It is also bizarre – though mathematically convenient – that adults ages 18-21 are left out.

Veronique de Rugy continues with a more realistic plan – and with a less optimistic analysis:

Consider a plan to provide a $12,000 annual subsidy to every adult above 18.

Giving $12,000 a year to the 237 million adults in the U.S. above the age of 18 would cost $2.8 trillion a year. If we add this amount to the other big-ticket budget items, such as the $550 billion we spend on the Pentagon and the $200 billion devoted to misguided corporate welfare and other wasteful programs, this plan would break even with the current system, if and only if we get rid of all other anti-poverty programs and tax breaks, unemployment insurance, Obamacare subsidies, Social Security, Medicare, Medicaid, and so on.

But she is skeptical that it would be politically possible for Basic Income to fully replace the existing welfare state, stating that it is far more likely to coexist alongside the existing tangled web of assistance programs, as “a new layer of spending on top of the old.”

And this speaks to the heart of the challenge for Basic Income:  for it to improve society, it would need to be accompanied by other societal changes as well.  Certainly, for the reasons mentioned above, it should replace rather than supplement the existing welfare state.  But more is required.  FA Hayek put it well in 1944 in his Road to Serfdom:

Let a uniform minimum be secured to everybody by all means, but let us admit at the same time that with this assurance of a basic minimum all claims for a privileged security of particular classes must lapse, that all excuses disappear for allowing groups to exclude newcomers from sharing their relative prosperity in order to maintain a special standard of their own.

Hayek attacks here the corporate welfare state – the subsidies, privileges, and barriers to entry that Charles W. Johnson calls the “Invisible Fist” of state-sponsored poverty.  For basic income to truly work, we would need to create a truly even playing field.  Along with a “uniform minimum,” we must also demand uniform justice.

It was Hayek himself, however, who stated in The Fatal Conceit that “Evolution cannot be just,” meaning – in marked opposition to some of the recent appropriators of his legacy (eg. the “poor people deserve it” camp) — that the wild growth of a free economy will never result in a distribution of wealth that is morally acceptable.  There will always be winners and losers.  There will always be those who are left in the cold through no fault of their own.  Structural poverty.  Structural unemployment.  And, if we add cultural forces to our estimation – structural racism.

The debate surrounding minimum income has here folded in on itself, as we have arrived at progressive talking points through a discussion of Friedrich Hayek.  It’s time that libertarians get comfortable with acknowledging and discussing structural inequality – and Basic Income gives us a way to do so without voicing support for a paternalistic welfare state.  Progressives and libertarians should be able to see each other from across this narrowing divide, and my hope is that this policy debate becomes a turning point in the relationship between the two political camps.