Since the Swiss referendum proposal for the state to provide every adult with a flat, universal monthly payment of up to CHF 2,500 (roughly a little over $A 3,000) became a reality, the ‘basic income’ concept, and varieties thereof, has received growing interest amongst academics, in the media and within policy circles.
Much of the recent discussion about basic income has been driven by socialists of varied hues. In various ways, they describe how a basic income, paid by general taxpayers without reference to individual circumstances, would equip every individual with a given level of income that would somehow end poverty, and enable people to live in ‘dignity,’ however defined.
In the past, the Australian Greens Party have supported a ‘guaranteed adequate income scheme’ or ‘universal minimum income’ Its 2007 federal election policy platform, for example, stated that ‘a socially just, democratic and sustainable society rests on the provision of a guaranteed adequate income for all its citizens.’
It may come as a surprise to some readers, however, to discover that several important figures in twentieth century classical liberalism also supported variants of the basic income idea.
Milton Friedman advocated a ‘negative income tax’ providing subsidies for individuals below a certain income threshold. Friedrich Hayek occasionally argued for a guaranteed minimum income floor, whereas James Buchanan insisted that a equal per capita ‘demogrant’ subsidy (with a proportional or flat income tax) was necessary to ensure generality in fiscal treatment by the government.
Recently, several people from amongst the group of liberals and libertarians labelling themselves as ‘bleeding heart libertarians,’ or at least those with BHL sympathies, have expressed support for the basic income.
As one example, up‑and‑coming Irish libertarian Sam Bowman refers to the basic income as an ‘ideal welfare system.’ Encapsulating the key argument behind support by prominent liberals for a basic income regime, Bowman states:
A basic income system … would be at least as clear as the PAYE income tax system is, and substantially clearer than the current benefits system. The dog’s breakfast of welfare schemes that currently exist – all to address the symptoms of poverty, rather than the root – would be abolished, and with it the jumble of unanticipated and often undiscernable interactions between schemes that lead to perverse outcomes.
Anyone who follows up on my writings and statements appreciates I am certainly not a friend of the governmental welfare state, and of those many vested interests dedicated to its expansion. But is the basic income the appropriate response to the many problems posed by the redistributive state, such as disincentives for labour supply and entrepreneurship, the emaciation of charitable and philanthrophic conduct, and impediments to discovering new ways to care for the vulnerable?
In today’s edition of Online Opinion, I have a piece contending that basic income is unlikely to represent a robust solution to the admittedly many problems posed by the existing welfare system. A few choice paragraphs are in order:
Over a century of experience across the Western world consistently illustrates that the fiscal size and scope of the welfare state has grown enormously, as rival politicians seek to outbid each other for votes by partitioning the general electorate into new constituencies.
This process, coupled by the incessant demands of interest groups for policy favouritism, has inevitably led to a proliferation of different welfare programs for different groups, such as the unemployed, families, people with disabilities, war widows, and so on.
Introducing a basic income would not quell or override these practical, yet endemic, features of modern political life.
It is unlikely that the concentrated beneficiaries of existing welfare subsidies would support the abolition of their favoured programs, and even if a basic income scheme was successfully implemented the interest groups would quickly seek to undermine the generic application of the basic income.
For example, there would be immense pressure placed upon politicians to apply differential subsidy loadings on top of the basic income level, assisting those groups deemed to be needier than others.
Those interested in delving further into this line of argument, inspired by the emerging ‘robust political economy’ literature, are encouraged to read an excellent paper by Peter Boettke and Adam Martin, which appeared in the Basic Income Studies journal of 2012 (gated; abstract here).
The Boettke‑Martin paper deals with several potential vulnerabilities of the basic income system more comprehensively than I could do in a mere 870‑odd word piece. Nevertheless, the questions raised by these researchers should be taken seriously, and addressed, before one would even seriously contemplate advocating an extension in the governmental welfare state, in the guise of a basic income model.