
The Pragmatic Libertarian Case for a Basic Income Guarantee - rosser
http://www.cato-unbound.org/2014/08/04/matt-zwolinski/pragmatic-libertarian-case-basic-income-guarantee
======
mtanski
I've come around to generally agree with the basic income guarantee. Both in
premise of the problem and how it tackles the.

What I don't believe is that the problem is tenable in the United States. At
least, I can't see it happening today. For starters there is a whole portion
of the population that will see this as people free loading. This a sizable
part of the population that believes all "hand-outs" are bad even if it ends
up saving us money in the long run.

Second, the government being the largest employer (second largest I believe if
we elude the military.) I have a hard time seeing this happen due to political
pressure since a sizable number of jobs would be cut... since they are no
longer needed to administer these complex programs. That's not a winning
election proposition. Next, take into account local impact of places where
government is close to the only employer. Look how much people fight to
prevent military base closing in their district; doesn't matter where on the
political/fiscal ideology they stand. Finally, there's the impact to the
private sector which has cropped up to administer, provide or execute some of
these programs.

In a perfect world states would be better able to deal some of the local
welfare issues. That brings an interesting opportunity for the federal
government to vastly simplify welfare programs in something along the lines of
BIG (and it self in the process). And then leaving local issues to the states.
Poverty can look very different in NYC compared to Tennessee. Other types of
welfare issues only are a major concern in some states and not others. It's
could be a very... American solution to the problem.

The downside is that some states can't be counted on doing the right thing
(simple example: Civil Rights).

Side node: I am not a libertarian, or anything official for that matter.

~~~
baddox
> For starters there is a whole portion of the population that will see this
> as people free loading. This a sizable part of the population that believes
> all "hand-outs" are bad even if it ends up saving us money in the long run.

I suspect another problem is that a significant portion of welfare recipients
get _way_ more than a feasible basic income system would provide. I bet this
wouldn't get much traction for progressives or conservatives.

~~~
ghkbrew
That's almost by definition. If you take all the money currently being spent
by programs targeted at the poor/needy and redistribute it among the entire
population, the average amount that a poor person would receive will decrease.

Attempting to do that would be political suicide. "You're taking money from
the poor and giving it to the rich!" The only realistic way something like a
GBI would be implemented were if there were means testing involved.

~~~
baddox
> If you take all the money currently being spent by programs targeted at the
> poor/needy and redistribute it among the entire population, the average
> amount that a poor person would receive will decrease.

I think the assumption is that the money you save by reducing the complexity
of the welfare bureaucracy would be passed into the income itself. But I was
assuming that the basic income system would give the same amount of total
money to people currently receiving welfare benefits. My point was that _among
people currently receiving benefits_ , some portion of them would receive a
lot less on basic income, even though the money received would be the same on
average.

~~~
justizin
Obviously you would want to design this in such a way that you do not decrease
the average support to the poor, and while you would distribute it amongst the
entire population, those of us with comfy incomes would have it recovered via
taxes, by design.

I would also expect it's possible to design a system that doesn't
substantially reduce the income of existing welfare recipients. Most
government programs seem to exclude people from other programs and it's a very
complicated game to even know how to sign up for things.

In fact, this is why my mother became a social worker, because she found it so
difficult to get things like AFDC (replacement child support for families with
deadbeat parents) and food stamps, even though we had a lot of advantages over
other people who likely needed those things even more than we did.

And sure, those jobs will disappear but in fact the turnover in a lot of these
programs is very high, it's very tough to do this type of work for very long,
few people spend an entire life working for a social service program, and
those who do are often committing fraud - not to say there aren't certainly
_some_ who do who work very hard and are honest.

------
jetblackio
I like this idea, but one issue I see is that, while 95% of people could use
an extra 10k, the real cost of welfare comes from those few who have major
medical needs, and that 10k would do nothing for them, at least as currently
outlined here. There are always going to a portion of society who will need a
disproportionate amount of financial assistance, and this doesn't seem to take
that in to account. It seems likely that after problems arise, we would
implement some other form of welfare on top of this program, and wouldn't have
really gained anything.

That's my quick assumption anyway.

~~~
baddox
> the real cost of welfare comes from those few who have major medical needs

Are large per-person medical expenses a significant portion of total US
welfare spending? Do you have a link to that data?

~~~
devilshaircut
This isn't the metric you are looking for, but I believe the basis of this
argument hinges on the proposition that financial need for medical expenses
varies from demographic to demographic. I believe this is trivially
demonstrated (statistically and from a common-sense standpoint) by looking at
different age segments. Older people (baby boomers come to mind now) certainly
do need more healthcare than younger people as a product of aging. Citation
from 2008: [http://economix.blogs.nytimes.com/2008/12/05/why-does-us-
hea...](http://economix.blogs.nytimes.com/2008/12/05/why-does-us-health-care-
cost-so-much-part-iii-an-aging-population-isnt-the-reason/)

Does that mean they would deserve a greater financial allowance? That is for
the person designing the policy to decide; the article suggests no. I offer no
opinion on this.

My main question is ... having read the article, I don't actually see the
libertarian argument here at all. It seems to say it is simply "more
libertarian" than what we currently have (with supporting arguments like
"smaller government", "cheaper overhead", etc.) - but ultimately, the spirit
of this proposal doesn't seem to be in line with these values at all.

~~~
lutorm
_It seems to say it is simply "more libertarian" than what we currently have
..._

How is making something more libertarian not in line with libertarian values?
Basically half the article seemed dedicated to explaining why this is a change
in the direction libertarians would want.

~~~
devilshaircut
It really isn't with respect to libertarian values in particular; all I am
saying is that in a given scenario regardless of Ideology A, a watered down
form of Ideology B that is closer to Ideology A does not necessarily represent
the values of Ideology A - it is just closer on the spectrum.

------
carsongross
From a libertarian perspective, I've always thought that the best aspect of a
basic income guarantee is that it allows monetary expansion to occur broadly,
eliminating the banking sector's advantage as an early receiver of monetary
inflation.

That, by itself, is a huge step forward and a rare place where both
libertarians and keynesians can find common ground.

On the other hand, it goes right at the heart of both the banking system and
centralized political power. Which is why, sadly, it will never happen.

~~~
nickff
You are quite right that the basic income would help monetarists and Keynsians
increase the money supply more evenly, with less distributive problems, but I
would not say that this is good from a purely libertarian perspective. Many
libertarians believe that free banking is a much better system than our
current system, and they would criticize the points you make as being of
little benefit, and mostly being a distraction.

I think you make some good points, but I would have to think about this for a
while before I could come to a firm opinion (because this is the first time I
have heard your very interesting reasoning).

------
nickff
I have many objections to basic income proposals such as this, but I would be
very interested to see some states implement this sort of policy, so that we
might observe the result. Unfortunately, I cannot imagine the federal
government eliminating any of the existing Social Security or other wealth
transfer programs, and they would likely obscure the findings of the basic
income test program.

The best test I could imagine (to compare existing programs to the basic
income,) would be for the federal government to grant waivers for all social
welfare programs to some states, give them the equivalent amount of money, and
have them each implement their own basic income program (at a level they see
fit, with the state paying for any cost difference).

~~~
JimBarrows
40 some odd countries have, and it's working.

~~~
VLM
Yet as a counterexample socialized medicine works better than the USA system
in every country on the planet, but we're still stuck with the USA system
here.

Even if a B.I. is implemented in every country on the planet, we'll still be
the last holdout.

~~~
oldmanjay
When you get all hyperbolic and say stuff like "every country on the planet"
or the other favorite, "the rest of the world" you make it simple for people
who disagree to seize upon the lie and ignore your point.

------
kazinator
If one problem is that subsidized people have a disincentive to work more,
that can be solved by writing _everyone_ a check, regardless of their income
level. This way, even if you have the check, any amount of work you do will
supplement that check, rather than make you ineligible for part of all of the
check.

"From each according to his abilities, to each according to a simple flat per
capita rate"

~~~
baddox
> that can be solved by writing everyone a check, regardless of their income
> level.

I believe that is an explicit part of the definition of "basic income." One
proposal I've read is that it must be applied for or opted into somehow, so
wealthier people can simply refrain from accepting if they choose.

------
VLM
One problem: Corrupt financialization. The types that financialize everything
to make the poor poorer and rich richer will end up making contracts abusing
the downtrodden along the lines of "sign over rights to your B.I. for the rest
of your life and we'll give your child a kidney transplant, otherwise too bad
for your kid, or maybe we'll give you a subprime used car this one time or
maybe enough cash to pay off that legal bill"

It'll be quite a feeding frenzy for both the legal and illegal crooks for a
little while.

(edited to add I think you'll also on the other side need some level of
bankruptcy reform... lets say the cost to me of doing business while in
bankruptcy is less than $10K annually... so you'd have to be an idiot to give
me a mortgage loan because I could structure things quite carefully to get it
for free. Or if not normal expenses like that, the usual medical industrial
complex scam of huge bills for things not covered (entirely) by insurance.)

~~~
justizin
isn't it typical in bankruptcy where your debt is forgiven completely that you
can't hold onto any asset like a home?

this seems like something people could already do, and which is already
protected against.

------
harryh
Every discussion that doesn't confront the actual math of how it would work is
silly.

300M * 10k = 3 Trillion Dollars

This is greater than the total revenue of the Federal government in 2013.

------
ckluis
I could get behind a program like that. Especially, if coupled with a flat tax
on all income after the BIG.

~~~
lloyddobbler
This is the key. As the author describes eliminating things like the mortgage
deduction - but if you implement a BIG while still leaving legislators the
ability to levy taxes against certain constituents over others, we remain at
exactly the same place we are now.

The Fairtax proposal at [http://www.fairtax.org](http://www.fairtax.org) has
long advocated a lesser sort of BIG (called the 'prebate,' which would give
everyone a check for their standard deduction each month to avoid people
paying taxes on essential goods). After that, all would pay a flat sales tax
on goods. Prices of goods would only increase minimally, given the absence of
tax compliance costs for businesses. One could conceivably expand this type of
BIG and do away with the welfare programs altogether.

But without doing away with the IRS, the system remains corrupt.

Sadly, neither of these proposals will ever happen, because both would require
the federal government give up its ability to pick and choose to which
constituents and special interests they dole out favors.

------
ObligatoryRef
I like some of the arguments being made here. I would just have a few
questions:

If the program involves no strings attached grants, and it is meant to replace
existing welfare systems, what happens to people who blow their money on
nonessentials? Is there a secondary net for them, or are they allowed to
starve? What about bad parents who take the cash without providing for their
children?

I understand that these questions are just as valid with our current system,
but is there a way to address them within this new framework?

~~~
AndrewDucker
Personally, I'd pay it out on a regular basis, so people who blow one week can
still get it the next.

~~~
scarmig
Another key point is making loans offered on the basis of future basic income
allowances unenforceable.

~~~
aninhumer
I don't think you need to consider how the loans were offered at all, the
legal system should just not enforce debt collection of basic income.

~~~
seanflyon
I think this fits well in our existing bankruptcy system.

------
VLM
A lot of administrators and paper pushers are not going to be happy.

Maybe one way to fix it is daily direct deposit. That would keep the paper
shufflers quite busy and cut back on scams and foolishness.

I would be moderately amused at an idea of modification of the IRS tax code
WRT gifts and being able to delegate my income. I am doing really well
financially right now, so just give my $10K to my mom as a tax free gift. If
you don't make it tax free lets be realistic I'll just avoid tax codes anyway.
$10K would mean a heck of a lot more to her than to me. I suspect when my kids
enter college if the whole scam hasn't collapsed by then, they'd find my share
plus my wife's share plus maybe auntie's share to be quite handy. Currently
you could run into IRS issues WRT taxable income if many family members start
gifting one college student.

(edited to add, I just thought of one problem with delegation: What boils down
to extortion, and probably blackmail. You'll know everyone will be
vulnerable.)

------
mrfusion
He forgot to mention that ideally minimum wage should go away under a strong
BIG. Since people are getting a basic living wage from the BIG, there is no
need to force employers to pay one.

I think that would help make the idea compelling to libertarians. And it
should address some of the concerns of a big causing less employment.

------
k-mcgrady
Excellent article. One of the things that throws me off libertarianism is the
lack of social welfare. I come from the land of free health care and education
so minimal social welfare is a strange concept to me and, I say this without
exaggeration, seems almost evil. However a BIG is something I would definitely
go for. The reduced bureaucracy, better flexibility for people to use the
money as they wish, potential economical benefits etc. are all great. I still
think I'd take a reduced BIG in exchange for some sort of free health care (if
we got rid of that we'd just be shifting the bureaucracy from government to
insurance companies) but something where consumers have more choice and we
have a more competitive market.

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mikeash
It occurs to me that single-payer socialized medicine is basically a smaller,
more specific version of Basic Income. Instead of trying to figure out how to
get health care to people who can't afford it, just provide it to _everyone_ ,
problem solved. It seems to have worked well there, which implies good things
about Basic Income. Better, I'd say, since many of the problems people see
with socialized medicine, real or imagined, don't apply to a plain cash grant.

~~~
nickff
Single payer healthcare systems lack two critical aspects of the basic income:
freedom of choice, and customer feedback.

Freedom of choice allows consumers to select the services and packages which
would most benefit them, and single payer healthcare does not allow this.

Customer feedback (through selection of providers of goods and services) is
critical, as it allows bad firms to fail, and good ones to continue. The basic
income does not interfere with this type of signal, but the single payer
system completely destroys it.

~~~
guyzero
But on the positive side for single-payer healthcare, there's no upper bound
on how much you get to consume, subject to medical necessity.

The problem is that medical problems are financially bimodal: they tend to be
pretty cheap (take some antibiotics) or incredibly expensive (you need
dialysis or you have a brain tumour).

So unless you have some sort of useful insurance plan that covers people and
minor dependents for less than what you're getting in basic income you'll end
up with the problem of people who are unable to get serious medical conditions
treated. And making medical treatments universally accessible is part of the
point of most single-payer healthcare systems.

~~~
nickff
You are right that single payer has a number of theoretical advantages, and I
never meant to imply that single payer healthcare was prima facie 'bad'. I was
only attempting to point out some major differences between single payer
healthcare systems and the basic income.

------
oldmanjay
i'm in favor of something like a basic income, and my reasoning in part comes
down to something very much like that in the article - we are already
subsidizing people, and we're doing it badly with political overtones, so
let's just get rid of the crap and make the system work.

I'd like it to go hand-in-hand with other sanity measures, like eliminating
the gov't agency habit of foolishly spending their "leftover" money at the end
of the fiscal year to avoid budget reductions the next year. It's a clear
demonstration that the money isn't needed, and I'd rather see an ordinary
citizen get to decide how that money is spent, because the gov't is just
throwing it to well-heeled contractors who don't really need it.

------
aturek
I'm sorry if this is a dumb question, but what countries currently do some
sort of basic income? A quick search on Google/Wikipedia turns up no actual
implementations

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justizin
This is shockingly sane for a libertarian think tank.

