Basic Income 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. Free-market economist 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” back in 1944.
Libertarian support for Basic Income often comes through seeing it as the least 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 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.”
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, for example, 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 18-21 are left out.
Furthermore, Reason’s Veronique de Rugy is skeptical that it would be politically possible for Basic Income to fully replace the existing welfare state, stating that it would far more likely 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…”
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 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 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.