The Libertarian Case for a Basic Income
libertarianism.org
libertarianism.org
In theory I support the elimination of taxation and a purely volitional society, but I recognize that such a thing is likely a very long way away. What we have now is not even close, and trying to shoehorn it into that vision prematurely will not work. That kind of moral futurism should not blind us to chances to radically improve human life here and now while working pragmatically within the bounds of the political realities we have.
One also must ask the question: given that the abolition of force and fraud is a moral long term goal, what sort of society would we want to build that would be likely to evolve in that direction? I don't think crony capitalism with fascist tendencies and no social safety net seems like what you'd want. Seems like that would be more likely to regress back to feudalism... which is exactly the historical path that we seem to be on. Regression to feudalism takes us further -- much further -- from that goal.
Seems to me that the precursors to a volitional libertarian state are radical reductions in violence both within and between nations, a highly educated and healthy populace that is capable of taking care of itself, and the abolition of caste systems (e.g. sexism, racism, classism, guild systems, etc.). A basic income is a step in that direction.
Your third paragraph is interesting, because you appear (to me at least), to endorse liberty, yet without believing in it.
>"given that the abolition of force and fraud is a moral long term goal, what sort of society would we want to build that would be likely to evolve in that direction"
My answer to your question, (as quoted above,) is that I believe liberty would allow for people to prosper, and all the fascist, feudal, and that regressive tendencies we see are a product of coercion. I do not understand your answer to the question, as it seems to open the door for any type of coercive means with the stated intent (but not necessarily with the result) of improving the welfare of the populace.
The ends which you describe in the last paragraph are all interesting, and nice goals, but do not (in themselves) justify the use of coercive means; especially since the coercion presents many discrimination problems due to the discretionary powers granted to those who would 'solve' the problems.
You seem to be using a strange definition of "usually" -- every OECD country has "some degree of public healthcare" (what the grandparent post suggested support for), and yet most of them have some degree of a private system.
In what area of healthcare has a government in the OECD reduced its 'participation'?
If the answer is 'a few' or 'not many', then I would say we are experiencing the destruction of private health care right now.
1. Public health care usually leads to destroying private health care, and 2. "Destroying" private health care means the government not decreasing the public role in health care.
My point is that many OECD states are (greatly) increasing the portion of the healthcare market controlled by the government, and few if any are decreasing it substantially (or at all). I define 'destroying' the private market in healthcare as the government taking over previously private activities, in effect nationalizing the industry.
It wouldn't change the basic problem; you first started with the claim that public health care usuually means destroying private health care and have progressed to define "destroying" private health care as government either not decreasing (your penultimate post) or increasing (your last post) its role in health care.
Which means that, stripped of the peculiar definition of destruction, your claims is that public health care means the government either not decreasing or increasing its role in health care. Which is trivially true, of course, but absolutely vacuous.
If you take the statement that 'increasing government control destroys private markets' alone, it is tautological; but extracting that phrase from the argument of which it was only a part, then criticizing the statement is a pointless set of activities.
Its both, and "circular" is another word for tautological.
> But you seem to be forgetting that the proposition was part of a larger argument, where I was criticizing a previous post which claimed to support liberty, but was also supporting government healthcare programs.
No, I'm not. Your argument in support of government healthcare plans being inconsistent with liberty was that they destroyed private healthcare, a claims which, when questioned, required redefining "destroy private healthcare" to just mean that government remains involved in healthcare at the same or greater level.
So, the whole line of argument was superfluous abuse of language to cover up a bare assertion that government action in any domain is, in and of itself, inconsistent with liberty.
There isn't even an argument in any meaningul sense being made.
wikipedia>"Circular reasoning differs from tautologies in that the premise is restated as the conclusion in an argument, instead of deriving the conclusion from the premise with arguments, while tautologies states the same thing twice."
dragonwriter>Your argument in support of government healthcare plans being inconsistent with liberty was that they destroyed private healthcare, a claims which, when questioned, required redefining "destroy private healthcare" to just mean that government remains involved in healthcare at the same or greater level.
Earlier on, you stated : dragonwriter> You seem to be using a strange definition of "usually" -- every OECD country has "some degree of public healthcare" (what the grandparent post suggested support for), and yet most of them have some degree of a private system.
I have been trying to argue (with no apparent success) that the "some degree of private system" is gradually becoming little private or no private system, through a ratcheting up of government intervention, hence the statement that all have increased or kept constant their levels of participation in the healthcare system, and they rarely (if ever) decrease it. If the amount of state participation only ever increases or stays the same, and it increases often, then the government is 'taking over' healthcare.
Does the libertarian within you believe that the State will accomplish this goal, without worse repercussions? Why remove the state at all if you think it can engineer society for the better in this way?
There's also a massive blind spot in most conventional libertarian thought with regard to soft power and indirect coercion. Eliminating direct coercion but leaving caste systems in place only frees those who are rich or powerful enough to evade those caste systems. The rest are consigned to poverty and oppression through manipulation instead of force.
So yes, I do think the state can play some role at this time in history at uplifting the human condition and empowering the general population in ways that could -- given a lot of time -- eventually lead to a future that is better and freer in multiple ways. Or it could not. The state can't be trusted, but I also don't think we can dispense with it (yet).
Simple reductio ad absurdium: imagine actually dispensing with the US Federal Government. Most US states in the interior would establish theocratic feudal totalitarianism along Christian Reconstructionist / Dominionist lines, and the coasts and anywhere resource-rich would probably be invaded.
> Does the libertarian within you believe that the State will accomplish this goal, without worse repercussions?
The libertarian in my worries that a state would either abuse a system for the benefit of a small elite, or purposefully skew results in favor for their brand of narrative (didn't work, too expensive, just not possible, abolishing labour laws because it needs to be done!, etc...).
Personally it depends on the policy details to me. If this leads to the abolishment of all other forms of social assistance, and can reduce the amount of government employees who simply decided who got them in our older models, then sign me up. A system would also have to not discriminate, neither down nor up in regards to income.
That said if our choices are current social assistance, negative income tax based minimum income, or minimum income for all without deductions, then both NIT-MI and MI work for me.
Immigration is probably the most important issue of our time. If we have a BI, we can't have immigration in any form remotely resembling what we have today, let alone some ideal situation where we have drastically more immigration. It's as simple as that. The cost of a BI (and the welfare state in general, really) is that millions of people are stuck in Haiti, India, Afghanistan and other desperately poor locales.
http://econfaculty.gmu.edu/bcaplan/pdfs/whyimmigration.pdf http://dipeco.uniroma3.it/public/WP%20163%20Liberati%202012....
I'm not an open borders activist. Most of the countries I mentioned are desperately poor due primarily to the people living there - any immigration policy needs to turn Haitians and Sudanese into Americans rather than turning the US into Haiti. But at the same time we need to recognize the tremendous humanitarian benefits of immigration.
If we prevent a Haitian person from selling his full time labor to an American employer for $7.25/hour, we are cutting his income by 90% (Haiti has a GDP/capita of $1300, cost of living adjusted). I can't see any benefits from a BI that would remotely justify doing this to millions more people. In fact, near as I can tell, virtually any policy which requires further restricting immigration is almost certainly a nonstarter for this reason.
A much better policy is the Basic Job, which is like Basic Income but you need to work for it (see FDR's CCC, jobs are things like improving public parks, planting trees, etc). This also has no disincentive effects and you get some productive labor out of the people who choose to make use of it.
This would create an underclass of immigrants & refugees, and create incentives for voters & politicians to make getting citizenship even harder than it is today.
This is definitely not a good situation, but it is better than forcing people to stay in Haiti or Sudan.
http://cis.org/immigrant-welfare-use-2011
Don't get me wrong - I'd love to do what you propose, though I think a BJ is a better policy than BI regardless of immigration. But I'm not aware of any western society that actually manages to do it.
I suspect programs like Head Start and the school reduced/free lunch program account for a significant portion of the reported welfare use. Do you think that a poor immigrant family with working parents that uses these programs is a "net drain" on society?
Given that Head Start doesn't even have any measurable benefits, I definitely think those consuming it are a drain (if they pay less in taxes than Head Start costs).
Given that Head Start doesn't have any measurable benefits, we should conclude that Head Start is a net drain. It doesn't follow that those consuming it are. Head Start is probably an insignificant portion of the costs society invests in these people, and taxes are probably an insignificant portion of the benefit these people provide.
http://en.wikipedia.org/wiki/Head_Start_Program#Effectivenes...
http://www.acf.hhs.gov/sites/default/files/opre/executive_su...
(See also this comic if you want to point to a few blue and yellow cells in their charts. http://xkcd.com/882/ )
No. There are countries that have comprehensive social security and have immigration resembling what we have today - e.g. these countries have immigration that they already have.
Sweden is a pretty terrible example to cite. Go read the blog of Tino Sanandaji (an Iraqi immigrant to Sweden) - he does a great job showing why it's a failed policy and prevents some of the best arguments against immigration that I've read.
More seriously, suppose we had no BI or other welfare state - what is the harm of allowing an Indian to show up in NY with no money or job? The only cost I see is that he might annoy 30-100 potential employers before he finds someone to pay him $7.25/hour to wash dishes, making him richer than 95% of his countrymen. He might sleep on the street for a little while.
Now, there are real worries - he might eventually become a citizen and vote for Indian-style governance (see, e.g., the voting behavior of Mexican Americans), contribute to a corruption-tolerant culture, or other such things. But those are second order worries.
Don't import them and provide them with a basic income? I was just saying that while we'd actually have to review some other policies that would be affected, many of our policies are sub par at best, so I fail to see how either limiting immigration to X amount of people a year or simply paying them X a year is a fail for basic income.
> What is the harm of allowing an Indian to show up in NY with no money or job?
I'd rather look at MI as an actual citizen's benefit. Maybe a year wait from immigration? If our current policy is to bring people over who have no means of funds or help or work, and who require assistance, then IMO that's a bad policy.
Also, what would be the largest difference between our current system and one where everyone who's lived in our country for a year, and is currently living in our country, gets X amount yearly? If you ask me, the risk for this person remains the same, and our obligations only begin once the person has established themselves within society at large by way of working or find assistance from family or friends or loans.
Once you adjust for NYC's cost of living, he'd probably be poorer than his countrymen. Even a large percentage of Americans couldn't afford to rent an NYC apartment.
If we find that BI has problems, we roll it back. If we find that the only problem with BI is immigration related, we can encourage other countries to implement it too - possibly coupled with aid, if they need it.
I'd want to take a closer look before doing it, but it doesn't seem as crazy as common wisdom would suggest.
Objection (2) - it reduces the incentives of immigration with the intent of collecting welfare, thereby reducing the objections to immigration.
Objection (3) - due to the fact that it has no disincentives for work, and the economic cost will be far less than a BI ( I did some back of the envelope calculations here http://www.chrisstucchio.com/blog/2013/basic_income_vs_basic... ), it's far less likely to reduce growth than a BI.
That's the problem, isn't it? It still creates a disincentive for "real" work. You get people who take and stay in the basic job instead of finding a "real" job because the basic job is no harder to do and much easier to get, which reduces economic productivity because the basic job is less economically useful than a bona fide mutually beneficial transaction between private parties. And someone who spends all day working the basic job in order to not starve doesn't then have as much time to earn a degree, practice making art or music, volunteer at the local community center, write open source software or any of a variety of other things that are more personally rewarding and socially valuable than digging holes and filling them back in.
> Objection (2) - it reduces the incentives of immigration with the intent of collecting welfare, thereby reducing the objections to immigration.
So you don't give immigrants the basic income right away.
> Objection (3) - due to the fact that it has no disincentives for work, and the economic cost will be far less than a BI ( I did some back of the envelope calculations here http://www.chrisstucchio.com/blog/2013/basic_income_vs_basic.... ), it's far less likely to reduce growth than a BI.
What happens when you account for the preference of those making minimum wage to take the basic job over a job that requires much seeking and interviewing to get but pays the same amount, and the cost of paying people to do unnecessary things when they could be doing productive things like working to improve their marketability for higher paying jobs?
Do you consider the work of FDR's CCC (e.g., forestry, national parks) to be worthless? Do you believe that the CCC destroyed jobs via the mechanism you described here? All I'm proposing is replacing welfare with the New Deal. I take it you were opposed to the New Deal?
Also, you seem to be under the impression that people who would hypothetical receive the BJ cannot find a job. Most are not looking for one.
It's labor chosen by the government for arbitrarily many individuals with an unspecified skill level. The government is not suited to finding economically productive work for arbitrary individuals. The market would find far more productive work for these people at a wage that corresponds to the value of their work if there were no minimum wage, but then they wouldn't be making enough money to live. The government could provide for these people by paying the difference between the price the market values their labor and the minimum wage, except that all existing minimum wage jobs would then begin paying $0.01/hour knowing that their employees would have the rest made up by the government. The way to fix that is to pay the minimum wage unconditionally and then let people have whatever their private sector employers pay them on top of that, but that's just a basic income.
Step back for a minute and separate the two programs from each other. Suppose the government has work for these people at a value of $3/hour, and it a) provides a basic income, then b) offers to pay them the $3/hour their labor is actually worth on top of that if they do the basic job. The only reason they have to turn down the basic job is if they can find something more valuable than $3/hour to do somewhere else -- some other job, or some personally rewarding activity which is more valuable than being paid $3/hour. Why is that a problem? Why is it bad that a person has found some activity that they value at a higher amount than anyone is willing to pay for their labor in the market?
> Do you consider the work of FDR's CCC (e.g., forestry, national parks) to be worthless?
There aren't enough jobs like that for everyone who needs one, and not everyone who needs a job is qualified to do the productive work the government needs to be done. Also, those jobs today pay more than the minimum wage, so are you proposing to reduce their compensation?
> I take it you were opposed to the New Deal?
FDR would have been better off implementing a basic income than the New Deal, yes.
> Also, you seem to be under the impression that people who would hypothetical receive the BJ cannot find a job. Most are not looking for one.
You're assuming the people who take the basic job will almost entirely be people who are currently unemployed, rather than people who have horrible low paying jobs, or who lose their jobs and find it easier to take the basic job than find a different private sector job.
That might be true if minimum wage were $1/day (PPP adjusted). If you don't believe me, just read up on any of the countries I mentioned in my other posts on this thread.
Just out of curiosity, what is the motivation behind nonsensical claims like this? I ask simply because I've heard lots of people make the exact claim you did, and I wish I knew where this nonsense comes from.
Suppose the government has work for these people at a value of $3/hour, and it a) provides a basic income, then b) offers to pay them the $3/hour their labor is actually worth on top of that if they do the basic job. The only reason they have to turn down the basic job is if they can find something more valuable than $3/hour to do somewhere else -- some other job, or some personally rewarding activity which is more valuable than being paid $3/hour. Why is that a problem?
Ignoring the potentially bad incentives this creates for employers, I would generally have no issue with a program that allows the basic jobs to be performed in the private sector with government subsidizing them.
I do, however, object to paying people to play Call of Duty, which is what a Basic Income is.
You're assuming the people who take the basic job will almost entirely be people who are currently unemployed,
No, I'm assuming most of the people on the BJ will be the people who are currently not in the labor force.
It's strange how low skill workers are so lazy that they will all switch from McJobs to Basic Jobs just to avoid interviewing, while simultaneously so industrious that if you pay them to play Call of Duty they will instead go get a McJob. What kind of utility function causes this to happen?
PPP adjusting $1/day from the third world countries in which people live on it is approximately the minimum wage. If you live in the poorest parts of the world, you may have no money, but there is open land. You can construct some kind of hovel to live in. You live an agricultural or hunter-gatherer lifestyle. You buy poor quality food from unregulated sellers. It isn't fun, but it's cheap.
You can't do that in an American city. There is no land where it is legal for you to build a shelter, so you rent. There is no land for you to grow food or hunt game, so you buy food from a store. The store is not allowed to sell you unregulated food for a discount. That is certainly much easier than the way it is in the third world, but it is also much more expensive. You can't live on $1/day in New York City, no way no how. Depending on charity or welfare doesn't count -- that isn't living on $1/day, it's just sending the bill to someone else.
There is also the matter that there is more to being alive than not starving or freezing to death. "Living wage" doesn't mean the minimum amount you need to carry on breathing for another day:
http://en.wikipedia.org/wiki/Living_wage
> Ignoring the potentially bad incentives this creates for employers, I would generally have no issue with a program that allows the basic jobs to be performed in the private sector with government subsidizing them.
> I do, however, object to paying people to play Call of Duty, which is what a Basic Income is.
I think you're in trouble then. Because if you allow private sector employers to choose what jobs they hire people taking the basic job subsidy to do without the employer having to pay any minimum amount of money, you're inviting someone like me to pay someone who takes the basic job subsidy a trivial amount of money to play Call of Duty with me. And then the government is still paying people to play Call of Duty.
What you're fundamentally up against is the fact that enjoyable jobs (like "play Call of Duty with me") command less in the way of wages than less enjoyable jobs (like "flip these burgers"), because the "employee" prefers to take the enjoyable job and the employer can therefore pay commensurately lower wages. That means in a free market that some people will choose to spend their time doing things you think are frivolous.
Ask yourself this: Why is it so unreasonable that some number of poor people take the basic income and live extremely frugally so that they don't need any other job and can spend their time as they please, but there is no objection when some rich guy who inherited his wealth is permitted to do exactly the same thing and do as he pleases instead of working? Aren't we risking that society become too prosperous and then implode as everyone retires to video games and declines to do any productive work? Isn't this even more problematic in the case of people who earn their wealth, who are demonstrably capable of creating significant economic value but are then allowed to remove themselves from the workforce? If people choosing to play video games instead of working is a real problem then we need to implement Communism at once so that we can extract "from each according to his abilities," right? I want you to understand that you're challenging the efficiency of the market. There is no labor they can perform that anyone is willing to pay more to get them to do than the value they place on playing video games. In that situation, allowing them to play video games is what is supposed to happen, and that's fine because that situation is rare.
> No, I'm assuming most of the people on the BJ will be the people who are currently not in the labor force.
But why do you assume that? What stops people currently in the labor force from choosing the basic job instead of their existing job because they find it preferable in some way or another?
> It's strange how low skill workers are so lazy that they will all switch from McJobs to Basic Jobs just to avoid interviewing, while simultaneously so industrious that if you pay them to play Call of Duty they will instead go get a McJob. What kind of utility function causes this to happen?
1) Someone gets laid off, immediately takes the basic job to continue having income, now they spend 40 hours doing the basic job and have that much less time and substantially reduced incentive to seek out a real job.
2) You aren't paying them to play Call of Duty. You're just paying them. They don't have to play Call of Duty. They don't have to do anything, it's unconditional. Which means they only reason they have to play Call of Duty to the exclusion of all else is if they find nothing superior in life whatsoever, permanently. People soon find that they want more out of life: They want to go outside. They want to own a car so they don't have to schlep everywhere they go on foot. They want to take a vacation to another country, or buy a big screen TV, or live in a bigger apartment, or send their kids to college. But you can't afford those things on just the basic income, so if you want them then you have to go out and find a way to earn more money.
A person can have quite a simple utility function and prefer the basic job to a real job but also prefer a real job to playing Call of Duty all day, because the two are unrelated. If you want more from life than you can buy with the basic income (which is to say anything much more than food and shelter), you have to engage in some kind of activity that produces additional income. Which makes it easy for taking a real job and having spending money to be preferable to playing video games and remaining perpetually poor. Meanwhile you can see how taking the basic job would be preferable to taking a real job, because they're substantially similar (you do something you don't like in exchange for money) and the basic job has the further advantage that you don't need to do any work to get it. It may also have other advantages depending on what the real job would be: It may be that the real job requires you to buy something to do it which comes out of your wages (e.g. gas for a sales job that requires travel), or requires doing something you hate (e.g. putting up with unreasonable customers or bosses), or any of the long list of things that can make a job suck. People with low paying jobs of that nature can easily prefer the basic job to the even crapper private sector job, while still preferring both to the prospect of having less income.
If the work they are doing has little value — which seems like it would have to be the case, since otherwise we'd already be paying all these people $7.25 an hour to do it — I don't see how it's substantially different from idleness. It seems like you're basically replacing "Do whatever you want and we'll pay you a basic income" with "Do a meaningless ritual as half-heartedly as possible and we'll pay you a basic income."
In fact, I'd say a Basic Job program might disincentivize meaningful work more than a Basic Income. Somebody could start a business using their Basic Income, but a Basic Job would not provide the same opportunity.
With a BJ, you have only two options - productive work or less productive work. Some of the people who would (given the option) choose Halo 3 will now choose productive work. That will be a net gain for society.
Further, we will get some value out of the Basic Jobs. We might pay $7.25/hour for the DMV to be $3.00 cleaner, for a net loss of only $4.25 rather than $7.25. We tried this scheme once already and got a national park system for our trouble: http://en.wikipedia.org/wiki/Civilian_Conservation_Corps
It's also vastly cheaper than a BI because most people will choose not to use the BJ. Rather than giving $7.25 to 300 million Americans you only give it to 30-40 million.
Since BJ labour generally provides less value per hour of work to taxpayers than it costs them to pay for the programme, taxpayers will still want the programme to be as small as possible, which means it's still going to be politically unfeasible to get much closer to open borders.
A Basic Job means the government gives you a job if you can't find one. You show up, tell them you are unemployed, and they give you a job cleaning the DMV, filling in potholes, picking up trash at the park or whatever. At the end of the day they give you 8 hours x $7.25/hour. If you find a McJob paying $8.00/hour you quit the Basic Job and go take the McJob.
One topic not addressed (but important) is what we do when someone spends the entirety of their basic income and has nothing left for food or shelter. Do we just let them starve to death in the street? Or do we create a "secondary" safety net that prevents this? If so, don't we just end up with the same sort of inefficiencies and problems that plague our current system?
He proposes dispensing the funds weekly. You can't starve yourself in a week and drinking fountains + free cups of water at restaurants ensure that you won't go thirsty. Exposure could be a problem in certain cities, but under the new system I'm sure low-cost housing would adjust to the needs of the tenants since there's a profit motive for doing so. You might have to bus to the edge of the city to get low-rent food and housing, but the option would be there (and administered by a competitive private market).
I like this idea more than "bread queues" because it forces recipients to take responsibility for their spending without using so much force that the damage it allows to happen is greater than the value of the sense of responsibility it aims to instill (which I believe to be the case in the present system). Also, it leverages the free market to optimize its administrative specifics. Massive influx of poor people due to economic downturn? More low-cost establishments get built/converted. Massive outflux of poor people due to economic upturn? Low-cost establishments get sold or converted into high-cost establishments. No need to wait for next year's appropriations bill.
For example, a halfway house could collect BI funds on behalf of its residents. it uses these funds, plus monies from other sources like donations or grants, to provide in-kind aid (food, shelter, security, medical care). as a resident requires fewer services, you can progressively phase out the in-kind aid and pass the BI cash through directly.
obviously this would require oversight to ensure that the charity is a responsible steward of the residents BI. we do this with the foster care system already.
I imagine private charity would pick up some of the slack at this point. I feel that, if someone is given enough to live on but uses it irresponsibly, the state no longer has any obligation to provide for them (they already have.) It would fall to individuals to decide whether they personally have an obligation to assist them.
If you want to help, voluntarily, that is, of course, your choice. But if no one chooses to help them, well... the idea of individual responsibility for the outcome of your choices exists for a reason. By what possible argument can I claim that I should be able to blow all of my income on anything I want, except food and shelter, and then demand that someone else provide me food and shelter?
You can abolish all other forms of social assistance -but only if you can adequately justify the elimination of the bureaucratic government jobs associated with them. For an all inclusive basic income, no bureaucracy would be needed.
You could tax the wealthy heavily -in effect making the basic income a negative income tax policy. This also seems like a worthy policy worth investigating.
You could borrow the money by way of government securities. The only problem with this scheme however is that already you have people like myself, who are extremely skeptical of the long term health of the current world financial make-up of West versus Rest, which is already changing quickly.
Personally I dismiss all arguments regarding a basic income harming poor people in the form of "inflation". We're currently in a deflationary crisis according to the big banks, and the social and political benefits to these policy changes would make it extremely hard to simply get rid of due to "bubbles and pops" as we have that plenty as it is.
Can someone try to explain why something like this isn't possible? What if we increased taxes in the top most income bracket, abolished all forms of current social assistance, and took on more debt, hoping this can pay for itself (or to simply continue down the trajectory of more debt every year).
Can someone try to explain why something like this could be more simple than I'm guessing?
If you wish to tax them out of moral need, you hold a normative belief which is unlikely to falter, so I will not challenge it.
There is no financial reason why a 'progressive' income tax is better than a flat tax, as the 'progressive' system encourages evasion, and makes it easier, as well as greatly increasing the scope of government, requiring regulation of marriage and more.
Economically, the 'progressive' income tax is completely unjustifiable, as the wealthy invest disproportionately in economic (and job) growth, while lower income people spend more on consumption goods.
Your idea of borrowing money by way of government securities is not a long term solution, because interest gradually becomes an increasingly large part of the budget. In the long term, interest will either gradually take over the entire government budget, or an interest rate increase will force the government to default; in either case, borrowing to finance regular spending will eventually fail as a policy.
The 'inflation argument' against welfare policies is flawed as you point out, because it has never been demonstrated that wage increases cause inflation (so called "demand-pull inflation"). Whether or not some type of government welfare program should exist is an interesting question, and your answer seems to presuppose that the counter-factual is that there would be no social assistance program at all, whereas I would think that private charities would do a better job than the government, while avoiding coercion. If you require a government welfare program, I agree with you that a negative income tax is probably the least harmful, as it does not encourage unemployment.
I don't agree with your statement about a progressive income tax being economically unjustifiable, especially in the economy that we find ourselves in at the moment (and, if secular stagnation proponents like Larry Summers and Paul Krugman are right, may be the structural norm these days). The current economy is strongly demand constrained, with plenty of money available for investment (corporate profits and cash holdings at record highs), but inadequate consumer demand to justify investments. From this perspective, a progressive transfer of wealth down the income scale makes a lot of sense economically because the poor are much more likely to actually spend that money than the rich are. There's also not much good evidence that high end tax rates affect macroeconomic growth as much as people claim - just in the US we've had tax rates all over the map over the past 100 years, and there's not much correlation with economic growth. We certainly haven't seen any miracles of economic growth for the economy as a whole since 1980 with the long running supply side, deregulation, and low tax experiment. If taxing the rich really has such a strong effect on economic growth and job creation, it's hard to see that in the data...
Finally, interest on government debt only becomes a long-term problem if the rate is higher than the rate of growth. It's not clear to me that that has to be the case, but that's another discussion ;)
You say "the poor are much more likely to actually spend that money than the rich are", but there is no evidence for the idea that poor people are less likely to hoard wealth than the rich. Rich individuals allocate their wealth to longer-term investments, whereas poorer people spend their money on consumption goods; both of these allocation systems allow the money to circulate in the economy. The notable difference is that the long-term investments create jobs in the long term, in exchange for forgoing consumption in the short term.
I don't think that these are valid assumptions. You're basically making a "trickle down" argument (if the rich do better, their heroic efforts will create so much economic growth that everyone benefits), and I would argue that our economic experience since 1980 argues pretty convincingly against that. In fact, studies on this topic (see http://www.fas.org/sgp/crs/misc/R42111.pdf) find virtually no correlation between top tax rates and overall economic growth, contrary to the belief of proponents of supply side macroeconomics.
I think the burden is really on you (or the supply side proponents) to demonstrate the truth of these long term economic growth claims, rather than just asserting them. In the absence of such proof, I would argue that concerns of economic equality and reduced suffering on the truly poor in our society far outweigh any of these nebulous assertions of promised future economic growth.
Finally, this doesn't have to be limited to a "welfare" vs. "investment" question. Government taking in money doesn't have to just give it out to people in welfare programs; it is perfectly capable of making investments too (infrastructure, basic scientific research, correcting market failures, etc.). There's no reason that a dollar invested by the government in infrastructure creates less growth than a dollar invested by a wealthy individual; in fact, given the propensity for wealthy individuals to park money in investments of questionable social value (see much of Wall Street's activities), I'd argue that the former is actually MORE beneficial to overall macroeconomic growth.
This is why I made the comparison between what happens with the money if you have a progressive tax vs. flat tax.
I think that's a difficult statement to back up in the best of times, although it's certainly a difficult thing to prove either way (moving this question beyond the level of anecdotes is really hard). However, when we've got a persistent demand shortage like we have right now, it's much less of a tricky question because of the multiplier effects of consumer spending.
You can't seriously believe that? This is the most out of touch "let them eat cake" statement I've seen in a while. Poor people don't have any wealth to hoard; that's what poor means.
> Rich individuals allocate their wealth to longer-term investments
Because they have excess that can be invested after meeting their basic necessities.
> whereas poorer people spend their money on consumption goods
Yea, because they're poor and basic necessities eat up all of their money.
This is a very strong claim that's difficult to justify by the data. Consumer demand is the largest driver of economic growth. Demand is what ultimately creates jobs. Capital cannot be applied to investment or growth if there is no demand to generate a return.
That's bass-ackwards. All the money in the world can be available to fund companies; if there's no money to realize demand, it'll sit around unused. If there is demand for goods and services, people can borrow money to provide it, to be paid back out of the revenue stream. That's healthy. What we've been doing lately (and more especially pre-crash) is borrowing to consume instead, and as you say, "borrowing to finance regular spending will eventually fail as a policy" - as partly evidenced by the crash.
One argument I've seen is from marginal utility. To a person with few dollars, one more is quite useful. To a person with a million, one more (or less) is noise. J. S. Mill originally opposed progressive taxation, but may have changed some of his thinking on this subject later in life.
At what % do we draw the line on taxing the wealthy? 35% 40% 50%? These numbers would be outraging to any other section of the populace.
> dismiss all arguments regarding a basic income harming poor people in the form of "inflation"
Scare quotes on inflation? Lower and middle classes feel inflation the most when it affects the costs of basic needs: bread, milk, etc. Those are the very items a basic income intend to give ubiquitous access to. Practically by definition a basic income would raise the prices of those items.
> and took on more debt, hoping this can pay for itself
This is the critical assumption here. There is an ongoing debate whether or not college degrees can even pay for themselves in many areas of study. This is a heavy handed gamble, and one i would be unwilling to risk our fiscal futures on.
Suppose there is a sudden massive increase in demand for basic staples after implementing basic income, isn't that an indicator that our current system + safety net is seriously inadequate? And that people were going hungry?
Really, I think there would be a small increase in demand sized to the backfill of the gap between basic income coverage and our current safety net. Maybe it would give us more leverage to remove some agricultural subsidies.
We saw this in the housing market. Between 2002-2007, a huge amount of cash went into the housing market in the form of housing subsidies, government-backed loans, interest-only mortgages, tax deductions, and other incentives to encourage an "ownership society". The result was that the home ownership rate increased from 63% to 65%, but the average price of a home basically doubled. And then it all came crashing down when the mortgage bubble popped and people couldn't afford the payments on these inflated prices.
http://en.wikipedia.org/wiki/Income_tax_in_the_United_States...
It basically suggests that: a)top tax rates have historically had virtually no significant effects on overall economic growth
b)we are well below the optimal tax rate for maximizing revenues
The authors of the paper on which this summary article is based on go on to suggest an optimal top effective rate of 68.7% as the revenue maximizing point (basically the optimal trade-off between revenue and dampening effects and/or evasion)
I find this work pretty convincing...
Further, I don't really see how a high top income tax bracket would affect much. It doesn't look to me like it affects businesses (its not a corporate tax) - only the pay of people at the top of the chain. Are those people going to revoke their citizenship and move elsewhere to avoid the taxes?
The higher the tax rates go, the more fortune 500's will move their cash to places where it is not being taxed as heavily.
I'd prefer if we didn't at all TBH, but something that would pass would most likely only be modest.
> Scare quotes on inflation?
More like skepticism. The FED wants inflation[1]. I may not agree with them but I'm not the central planner with a printing press. I doubt we would see prices go higher, as some people would quit the workforce and live poorly living exclusively through MI. Some would stop working full-time (myself included) and figure out the best way to work less for the same amount of money. And most would simply use the money to combat their debt they've collected over the last 15+ years. It helps everyone, including the markets, due to velocity. I'd love to compete against a company who would dare raise prices. Press Releases condemning them, highlighting my lower prices, etc, etc.
> This is a heavy handed gamble, and one i would be unwilling to risk our fiscal futures on.
Well how about we test it before dismissing it[2]?
[1]: http://www.bloomberg.com/news/2013-11-12/fed-s-lockhart-want... [2]: http://en.wikipedia.org/wiki/Mincome
These numbers are normal in Nordic social democracies.
That's just one solution to one problem in a sea of them, but I think it's a representative example.
I agree and hope that bureaucracy can be reduced, though.
Inflation seems like the biggest risk to basic income, but I don't think anyone can say how big of a problem it will be in practice. I think people have already put up potential ways to remedy it as well.
This is wrong. Libertarianism is about pragmatism, and a basic income would simply drive up costs of all basic things needed to survive especially if any of those are scarce. This would likely hurt those just above that poverty barrier the most as they would no longer be able to afford basic shelter even though they are gainfully employed. Because of this, those people will find it better to move out to land no one cares about and just 'do nothing' as decreasing costs is the only way for them to live decently. These people will not provide value to society, resulting in net loss of value (read: happiness, whatever you want to call it) for all.
Sure, you'd expect some price increase -- anytime a group of people get more income, the maket-clearing price of things they have a non-zero propensity to consume can be expected to increase by basic supply-demand analysis. At the same time, except with completely inelastic demand, the increase in price will not be so much that the amount they are able to afford decreases, by the same analysis.
> would likely hurt those just above that poverty barrier the most as they would no longer be able to afford basic shelter even though they are gainfully employed.
I'd really like to see an argument for this. Since the people "just above the poverty barrier" are going to see the same increase in income as everyone else (basic income goes to everyone in equal amounts -- it isn't a minimum guarantee that is reduced 1:1 with outside income), what is the basis for concluding that the real purchasing power of those just above the poverty line would decline?
The poverty line has been suggested as a break-even point in some BI proposals, but certainly not all.
I haven't seen any proposals that have explicitly targetted a particular break-even point -- most BI proposals I've seen have targetted near-poverty-line levels of BI, which suggests a substantially higher break-even point.
(I've seen a few discussions of targetting a no-nominal-income-effect point considering BI and any necessary revenue measures, typically around the median pre-BI income, but that's not exactly the same as targetting a break-even point as you've described it, as break even is no real income effect, after considering inflation effects.)
What libertarianism is about has been a subject of debate between libertarians for decades. There are others who see it as an idealistic belief.
At it's core, libertarianism makes no statement about outcomes, but simply demands that people be free to make their own choices without being subject to force or fraud, and are then responsible for the outcome of their actions. Nobody is making any Pollyanna'ish guarantee that such a system will result in the most possible desirable outcome for everybody involved. The claim is that it's just the right thing to do, that most people will be better off (economically) than under other systems, and that you accept that every system - this one included - has its pathologies. You can't get much less naive than that.
There it is, that is the idealistic part.
But, again, none of this is really the point. Every system is flawed in its own ways, and the libertarian approach simply acknowledges that, rather than trying to distort reality and pretend that a "perfect" system is even theoretically possible.
Redistributing income can be expected to cause market-specific price increases in goods that the people benefiting from the redistribution have a greater propensity to purchase than those from whom income is redistributed. (And decreases in other goods.)
Adopting Basic Income is pretty clearly going to affect a redistribution of income.
So, the increase in prices for basic goods conclusion is sound (the idea that this will end up harming those just above the poverty line by giving them less purchasing power seems, however, far less sound.)
Its not like marginal propensity to consume of people in different income levels is a completely opaque mystery about which we have no information.
Not to determine short-term demand effects of redistribution of income there isn't.
> And I'm not sure if this degree of raise in income practically changes marginal propensity to consume that much.
Probably not, but since marginal propensity to consume is the amount of the next dollar of income that will go to consumption, that means that the consumption effects are fairly straightforward if you have an idea of marginal propensity to consume.
However attractive libertarianism might be in theory,
“Libertarianism…Starting Now!” has the ring of special
pleading, especially when it comes from the mouths of people
who have by and large emerged at the top of the bloody and
murderous mess that is our collective history.
---
That was more interesting and enlightening than I expected, to be quite honest. My initial thought was that there would be no way to reconcile a "basic income" with the NIF principle, unless said basic income is paid entirely voluntarily. But the historical rectification argument strikes me, at first blush anyway, as having some credence.
That said, I'm a long way from fully onboard with this as long as it's rooted in our present system of taxation which is fundamentally based on coercion / force, or threat of same.
But the words matter, which is why I don't like calling it a negative income tax. Because if you call it that, people start asking questions like why should someone making up to $50,000 be getting the "subsidy"? And then people want to do something silly like make the negative income tax be something like 60% up to $25,000, then 0% to $50,000 and 30% thereafter, which is obviously very stupid if you stop to do the math on who gets screwed by that and what incentives to work it creates at the bottom: It's equivalent to a $15,000 basic income with the same tax brackets, and it makes no damn sense whatsoever for someone making $25,000/year to be paying a 60% marginal tax rate. But calling it "negative income tax" encourages people to think that way and expect high marginal rates on the poor to be Good when they are really quite Bad.
Which leaves us with two main lines of argument against some more traditional form of welfare state. It's "paternalistic", but so are employers when they impose conditions upon people that expect to receive money or expenses from them, and I so don't see anyone making the case that expecting minimum standards of behaviour from people in return for giving them money is in general a bad thing. Secondly, it's expensive to administer, but potentially not as expensive and wasteful as the adverse consequences of an overly-generous basic income (or as deadly as an insufficient basic income). On the whole, better to have lots of subtly wrong things than one big politically-sensitive number that can make or break your economy.
Once you've conceded the case that centralised large-scale distribution is inherently justifiable and worthwhile, saying no to "big government" starts to look more like a slogan than an argument...
This is not by chance either. The idea of fiscal freedoms comes at the cost of fiscal safety nets. Where you draw that line is a sliding scale of course, but i still fair to see how this article is speaking a libertarian mindset.
I disagree. As a libertarian-socialist, I think we can take care of ourselves while pursuing freedom in regards to economics.
In our current system, we judge people based on their employment, history, and need, and then select people to give benefits to. There are problems with this. Bureaucracy, favouritism, politicking, etc.
With a basic income, we can reduce spending by abolishing all social assistance, reduce the amount of government employees by firing the bureaucrats who used to deny/approve people for benefits, and simply guarantee everyone a minimum amount of support. This has the benefits of reducing bureaucracy, favouritism, and politicking.
I would love to see the numbers that show a no-questions-asked basic income would be cheaper than the present social assistance monies.
There are a lot of logistics here. How do we prove you did not already get your check? What about those without mailing addresses. Or ID's? Is the basic income adjusted for families of 1 vs 7?
This idea of a minimalist ruleset for financial assistance seems like it is great at first, but will inevitably just get more and more bloated (and costly) as you actually implement it.
Most Nordic social democracies already know the answers to those questions. Basic income could be used to reduce spending. I advocate a basic income model which doesn't reduce countries to these countries, though.
http://en.wikipedia.org/wiki/Mincome
From the article: "She found that only new mothers and teenagers worked substantially less. Mothers with newborns stopped working because they wanted to stay at home longer with their babies, and teenagers worked less because they weren't under as much pressure to support their families".
To me that sounds like more adults would work, while those who have other obligations (childbearing) or goals (study, creative, startups) can focus on that.
I'm not saying it would be cheaper, but providing a guaranteed minimum to all adults, would remove the need for the other programs, saving THAT money. It would not pay for it completely. Removing the government jobs that oversee most of the selection and verification (fact checking if the person is pursuing offers) could be eliminated. This could also save money. Again not enough, but enough to help sigificantly.
> There are a lot of logistics here.
Absolutely. We need to take risks for rewards though, and there must be a way to test this without hurting the whole economy, but we need to all agree to take that risk before we work on the next step.
> How do we prove you did not already get your check?
Great question. My guess would be you only provide one per person per period. Any duplications would be search for via software, then again by a human. Any proven duplication will be deducted. Rinse and repeat, minimal bureaucracy. The government always pays me/requires me to pay them every year, but even though its not perfect, it works for the most part.
> Is the basic income adjusted for families of 1 vs 7?
In my mind it would be a set amount per adult. The argument that we need to provide more for larger families creates odd and sad circumstances of child farms and generational welfare homes. People need to start becoming responsible for their families. We'd still have child services. Besides, this shouldn't be comfortable for a single mother living alone who isn't working. These people can get family or charity to help them, not taxes. It SHOULD be comfortable for a single mother working 15 hours a week though, which would help a lot of people out there.
> This idea of a minimalist ruleset for financial assistance seems like it is great at first, but will inevitably just get more and more bloated (and costly) as you actually implement it.
Well, you could argue are current system will only get more bloated and costly as well (which is has). A major reform is necessary eventually, and this is an innovative and modern potential solution we should SERIOUSLY investigate past talking and move towards researching through small implementations.
Here's a simple case of a prima facie case for economic reparations in the form of unemployment benefit: the government actively manages economic policy to ensure unemployment doesn't fall so low as to stimulate wage inflation. That's not speculation or conspiracy theory; it's explicitly stated as the objective of effective monetary policy in the economic literature. People are unemployed as a direct result of a policy aimed at ensuring macroeconomic stability. Therefore, some form of unemployment insurance is justified (as, for that matter, is expecting the beneficiaries of said economic stability to subsidise it)
NB. I realise that some libertarians would prefer a "gold standard". But the logical consequence is the same: an arbitrary decision of the government to restrict the currency supply[1] in the interests of preventing inflation causes people to be unable to find work for a period of time. Ceteris Paribus, many _more_ people since credit would be a lot more expensive under a gold standard
[1]in this case to "the quantity of gold held in the Fed", which actually sounds a lot less "free market" than the status quo of to "the amount of credit private banks are willing to supply given the Fed's interest rate"
There is an actual philosophy which defends individual freedom from aggression. Objectivism. About 5% of the whole philosophy deals with these kinds of issues.
The Fed has a dual mandate of low inflation and maximal employment, and as a result, is currently printing money indefinitely. The ECB only has a mandate of low inflation, and has had an excellent track record. However, the Eurozone is currently having an unemployment crisis. The BI (potentially with abolition of the minimum wage) would then mitigate the impacts of unemployment. With basic income, couldn't the Fed become more like the ECB, and drop the employment mandate? Then, we could potentially greatly curtail our money printing.
Also, what are the effects on macroeconomics? Couldn't BI attenuate the boom-bust cycle? Deflation would even be constructive: the real value of the BI is increased without raising the nominal value. The Fed can then take its time, during recession, in deciding when to start the printing presses again.