In recent years the idea of a guaranteed minimum income has been gaining steam in some libertarian circles. Just recently there has been a flurry of articles written about it: Scrap the Welfare State and Give People Free Money by Matthew Feeney at Reason, Libertarians for Better Welfare by Andrea Castillio at The Ümlaut, and The Libertarian Case for a Basic Income by Matt Zwolinski at Libertarianism.org.
Supporters of this position have offered a variety of arguments in favor of the guaranteed basic income, still I remain unconvinced to say the least. I’m of the opinion that a guaranteed income is misguided and ultimately inconsistent with libertarianism, and for good reason! In this post I’m going to critique some of the popular arguments in favor then go into a little detail explaining why I believe libertarians should stay away from it.
A Guaranteed Minimum Income Would Be Much Better Than The Current Welfare State
There is good reason to think that a minimum income or negative income tax in place of the existing welfare state would be much more efficient. It likely would cost taxpayers less allowing them to keep more of their money (of course the politicians might just spend the savings) and it would allow recipients to spend the money in the marketplace on things they value, rather than having the politicians make the decisions for them. This would most likely lift more people out of poverty. So there is definitely some merit to this argument, but are also problems as well.
Before discussing the problems, however, I want to make an observation. It seems to me that some people who make this argument likely support a guaranteed minimum income on straight philosophical grounds, but instead make the argument about efficiency since they think it will appeal more to libertarians. If so, they would do much better to just come out of the closet. Obviously, the fact that a guaranteed minimum income may be more efficient than current policy doesn’t imply that income redistribution is consistent with a free society or is a desirable long term initiative. If you believe it is, just come out and give us your best shot. Don’t make roundabout arguments.
With that said, there are serious problems with the efficiency arguments. Rather than make the case myself, I will outsource this argument to Tyler Cowen:
Maybe this isn’t the biggest problem, but it’s been my worry as of late. Must a guaranteed income truly be unconditional? Might there be circumstances when we would want to pay some individuals more than others? Many critics for instance worry that a guaranteed income would excessively reduce the incentive to work. So it might be proposed that the payment be somewhat higher if low income individuals go get a job. That also will make the system more financially sustainable. But wait — that’s the Earned Income Tax Credit, albeit with modifications.
Might we also wish to pay more to some individuals with disabilities, perhaps say to help them afford expensive wheelchairs? Maybe so. But wait — that’s called disability insurance (modified, again) and it is run through the Social Security Administration.
As long as we are moving toward more cash transfers, why don’t we substitute cash transfers for some or all of Medicare and Medicaid health insurance coverage benefits, especially for lower-value ailments? But then we are paying more cash to the sick individuals. That doesn’t have to be a mistake, but it does mean that an initially simple, “dogmatic” payment scheme now has multiplied into a rather complex form of social welfare assistance, contingent on just about every relevant factor one might care to cite.
You can see the issue. Whether on grounds of justice, practicality, or just public choice considerations (“you can keep your current welfare payments if you like them”), we should not expect everyone to be paid the same under a guaranteed annual income. And with enough tweaks, this version of the guaranteed income suddenly starts resembling…the welfare state, albeit the welfare state plus. Unemployment insurance benefits wouldn’t end. More people could get on disability, and without those pesky judges asking so many questions.
The potential problem is that we inherit and in some ways magnify the problems with the current welfare state, rather than doing away with those problems.
Or we could be truly dogmatic about it, and simply pay each person the same amount of money no matter what. But then do we take away the various forms of in-kind aid which are already in place? And what about all those former EITC recipients, whose incentive to work is now lower than ever?
Part of the original appeal of the guaranteed income idea, especially as expressed by Milton Friedman, is that it would substitute for welfare programs and bureaucracies, not all of which work well. On first hearing, the guaranteed income proposal sounds quite “clean.” In reality, that is unlikely to be the case.
And once we recognize the proposal may be “the current welfare state plus some extra and longer-term payments,” one has to ask whether this is really what we had in mind in the first place.
That’s pretty damning to the efficiency argument. I’d like to add one more point as well. If we conclude that a guaranteed minimum income is not consistent with libertarianism, establishing one, even on efficiency grounds, would likely make it significantly harder to repeal later on. Once people get used to the idea that they have a “right” to an income paid for by others, it will be next to impossible to take it away.
A Guaranteed Income Can Serve As Reparations For The Government Distorted Distribution Of Wealth
There is a very real sense that the existing distribution of wealth is unjust. Government policies typically benefit the few at the expense of the many. The system is rigged to benefit the politically connected through an intricate network of subsidies, bailouts, money printing, patents, competition reducing regulations, and grants of monopoly privilege. Matt Zwolinski is certainly correct to condemn the Libertarianism…Staring Now! mentality. If we are to build a libertarian society, justice would seem to require that we correct for past wrongs. To fail to do so would be to codify and sanction the existing government-skewed distribution of wealth. How much should be taken and from whom isn’t going to be easy to figure out, but it seems we still should try to get it right.
But correcting for past injustices need not take the form anything more than a one-time wealth transfer. It doesn’t seem to me that an ongoing program of income redistribution can be justified by the “principle of rectification”. Imagine an otherwise libertarian society with a guaranteed minimum income that has flourished for the last three hundred years. In such a situation, does anyone really think income redistribution could be justified based on injustices that took place in the 20th century? Certainly not. If a minimum guaranteed income is to be justified, it isn’t going to happen on grounds of compensatory justice.
Milton Friedman and F.A. Hayek Endorsed A Basic Income
While I have great respect for the both of them, name dropping isn’t a substitute for sound argument. While I haven’t read everything they’ve written on the subject, the passages in their writings I am familiar with were far from convincing. Again, I would like to see present day supporters of the guaranteed minimum income make their best case rather than basing it largely on appeals to authority.
I think the meatier arguments are the ones I listed above, even though they aren’t that good. The remainder is a mix of philosophical arguments that just aren’t that compelling:
- An impartial institutional designer, standing behind the veil, would chose policies that benefit society’s worst off within limits.
- Property rights can only be justified insofar as they are coupled with an institutional arrangement that provides the conditions that allow individuals to successfully pursue the projects that give their lives meaning.
- Some form of positive obligations exist that require people to help the poor, etc.
I’m sure there are other arguments I’m leaving out and other people have made solid attempts at refuting these arguments, probably better than I can. But from my perspective all of them seem extremely weak in the context of providing a justification for coercing peaceful people.
The Problems With A Guaranteed Minimum Income
So what we have evaluated up to this point are a number of arguments in favor a guaranteed minimum income that are rather weak and just not that compelling, especially from a libertarian perspective. What follows are a few arguments against a guaranteed income that, at least in my opinion, are much more compelling than the arguments in favor.
1) Coercion is Wrong. There are quite a few philosophical arguments that people use to justify libertarianism. Common among all of them is the belief that coercion is a serious prima facie moral wrong. Libertarians may disagree on if, how, and when coercion is justified, but no libertarian believes that coercion is trivial. One of my favorite thought experiments that helps illustrate this point runs like this:
A brilliant transplant surgeon has five patients, each in need of a different organ, each of whom will die without that organ. Unfortunately, there are no organs available to perform any of these five transplant operations. A healthy young traveler, just passing through the city the doctor works in, comes in for a routine checkup. In the course of doing the checkup, the doctor discovers that his organs are compatible with all five of his dying patients. Would it be morally permissible for the doctor to murder the traveler and use his organs to save the other five patients?
All libertarians (and nearly all non-libertarians) believe that it would not be morally permissible to murder the traveler. The moral dilemma becomes much more apparent, however, if we increase the number of people that could potentially be saved. Could you justified killing one person to save 10 people? 1,000? 1 Million? 1 Billion? The entire human race?
I don’t have an answer to this question, but if killing an innocent person could be justified by saving a lot of people then surely the number has to be very high. That is because there is a strong presumption against killing people. Coercion is rightfully treated same way. While I don’t pretend to speak for all libertarians, I suspect that almost all would agree that there is a strong presumption against coercion as well. If that presumption is to be overridden, in similar fashion one would need to conclusively demonstrate overwhelming benefits.
Now let’s turn back to the guaranteed minimum income. Supporters have not demonstrated the overwhelming benefits such a policy would have versus the outcomes that would exist in the free market. There is very good reason to believe that the combination of strong economic growth coupled with much higher levels of charitable giving would be all that is needed to insulate people from economic insecurity. No evidence has been presented that would suggest this would not not be the case or that people would starve without a social safety net. This seems to be little more than a hunch on the part of advocates of the guaranteed income.
Again, if our criteria for justifying coercion is that one must conclusively demonstrate overwhelming benefits, they have not conclusively demonstrated that any benefits exist, let alone overwhelming benefits. Given the stark absence of this criteria, libertarians shouldn’t be so quick to jump on the guaranteed income bandwagon.
I have a suspicion that people advocate a guaranteed income because of perceived certainty of a government program compared to the perceived uncertainty of private charity. But I think the certainty is largely an illusion. Just because the government uses the term “guaranteed” doesn’t mean it’s so. Consider how the government already runs a minimum income program for seniors ― social security. Yet, it is far from a guarantee that people in my generation will receive any money from the program when we retire. More likely, the program will be bankrupt. It would be grave tragedy to crowd out private charity only to make people worse off due to government incompetence.
2) There Are Major Public Choice Concerns With A Guaranteed Income
I have previously written about how I am extremely skeptical that government can be limited to even the protection of person and property. The public choice school in economics makes a very compelling case that the incentive structure faced by politicians, bureaucrats, and voters, in monocentric legal institutions leads to centralization of power and greater government control over society.
I am even more skeptical that such an institution could be given the authority to confiscate and redistribute without running amok. Let us for a moment accept the notion that justice requires a guaranteed minimum income. Would these libertarians still support it if it could be demonstrated that the pursuit of such a policy would lead to the economic mess that we have today? Even if you believe that justice requires a guaranteed minimum income, I don’t see how you can support it if it means the poor would ultimately end up worse off than they would be without it. In my opinion, the idea of government that has the authority to confiscate and redistribute but doesn’t not partake in all the other public outrages typically associated with government seems utopian and unattainable.
3) There’s a Strong Economic Case Against The Guaranteed Income
In his article, Matt Zwolinkski does a great job of highlighting the economic problems with a guaranteed income. First, it will likely create a strong disincentive to work. If you don’t take a job, you still get paid no matter what. Economist Noah Smith summarized some great research on this subject:
While I’m sure there were many reasons basic income lost its luster, one big factor was the results of a series of experimental implementations of the idea. Between 1968 and 1982, the government sponsored four separate randomized trials, providing $63 million in basic income to more than ten thousand individuals. These studies concluded that a basic income set at the current poverty rate significantly reduced the average amount of time worked by recipients by the equivalent of 2-4 weeks of full time employment, as compared to the existing welfare system. The experiments also seemed to suggest that providing a basic income increased the likelihood of family breakup.
Second, the deadweight loss due to taxation coupled with the disincentive to work will undoubtedly slow the economic growth rate. Even small reductions in the rate of growth will result in huge differences between what people will earn in the future compared to what they otherwise would have earned. After enough time, the poor will ultimately suffer from lower incomes than they would have if the guaranteed income had never been enacted.
Finally, you have to consider the impact a guaranteed income would have on immigration policy. If immigration is not significantly curtailed, existing Americans will be forced to pay for everyone who immigrates here and is given free money. If immigration policy is restricted, then you (ironically) eliminate one of the major avenues by which the world’s poor can lift themselves out of poverty.
Let us also remember that many of the problems faced by today’s poor are the unintended byproducts of attempts by people to use the apparatus of government to … help the poor. It seems likely that the guaranteed minimum income would ultimately make things worse, not better.
So to conclude, the case in favor of a guaranteed minimum income, it turns out, is extremely weak, while both the philosophical and economic cases against it are much stronger. There is a reason libertarians have historically shunned the guaranteed income. My hope is that the young libertarians in the movement don’t fall for the sirens’ song and continue to oppose it for all the reasons mentioned here.