Welcome back to another episode of Liberty Revealed, the show dedicated to revealing personal liberty to all who listen. I am your host, Mike Mahony, and today I want to talk to you about universal basic income.

Universal basic income is so much better than our current system of welfare. If such a program were to be implemented in the United States, the details become extremely important. The main pout is that universal basic income would replace welfare.

Current federal social welfare programs in the United States are an expensive, complicated mess. According to Michael Tanner, the federal government spent more than $668 billion on over one hundred and twenty-six anti-poverty programs in 2012. When you add in the $284 billion spent by state and local governments, that amounts to $20,610 for every poor person in America.

Wouldn’t it be better just to write the poor a check?

Each one of those anti-poverty programs comes with its own bureaucracy and its own Byzantine set of rules. If you want to shrink the size and scope of government, eliminating those departments and replacing them with a program so simple it could virtually be administered by a computer seems like a good place to start. Eliminating bloated bureaucracies means more money in the hands of the poor and lower costs to the taxpayer. That’s what’s known as a Win/Win.

Universal basic income would also be considerably less paternalistic than the current welfare state, which is the bastard child of “conservative judgment and progressive condescension” toward the poor, in Andrea Castillo’s choice words. Conservatives want to help the poor, but only if they can demonstrate that they deserve it by jumping through a series of hoops meant to demonstrate their willingness to work, to stay off drugs, and preferably to settle down into a nice, stable, bourgeois family life. And while progressives generally reject this attempt to impose traditional values on the poor, they have almost always preferred in-kind grants to cash precisely as a way of making sure the poor get the help they “really” need. Shouldn’t we trust poor people to know what they need better than the federal government?

Both Milton Friedman and Friedrich Hayek advocated for something like universal basic income as a proper function of government, though on somewhat different grounds. Friedman’s argument comes in chapter 9 of his Capitalism and Freedom, and is based on the idea that private attempts at relieving poverty involve what he called “neighborhood effects” or positive externalities. Such externalities, Friedman argues, mean that private charity will be undersupplied by voluntary action.

“[W]e might all of us be willing to contribute to the relief of poverty, provided everyone else did. We might not be willing to contribute the same amount without such assurance.”

And so, Friedman concludes, some “governmental action to alleviate poverty” is justified. Specifically, government is justified in setting “a floor under the standard of life of every person in the community,” a floor that takes the form of his famous “Negative Income Tax” proposal.

Friedrich Hayek’s argument, appearing 17 years later in volume 3 of his Law, Legislation, and Liberty, is even more powerful. Here’s the crucial passage:

“The assurance of a certain minimum income for everyone, or a sort of floor below which nobody need fall even when he is unable to provide for himself, appears not only to be wholly legitimate protection against a risk common to all, but a necessary part of the Great Society in which the individual no longer has specific claims on the members of the particular small group into which he was born.”

To those who know of Hayek only through second-hand caricatures of his argument from The Road to Serfdom, his claim here will no doubt be surprising. Hayek was not opposed to the welfare state as such (not even in the Road to Serfdom). At the very least, he regarded certain aspects of the welfare state as permissible options that states might pursue. But the passage above suggests that he may have had an even stronger idea in mind - that a basic income is not merely a permissible option but a mandatory requirement of democratic legitimacy - a policy that must be instituted in order to justify the coercive power that even a Hayekian state would exercise over its citizens.

Before I close, I want to say at least a little about the different policy options. But there are a lot of different options, and a lot of details to each. So bear in mind that what follows is only a sketch.

Universal basic income involves something like an unconditional grant of income to every citizen. So, on most proposals, everybody gets a check each month. “Unconditional” here means mostly that the check is not conditional on one’s wealth or poverty or willingness to work. But some proposals, like Charles Murray’s, would go only to adult citizens. And almost all proposals are given only to citizens. Most proposals specify that income earned on top of the grant is subject to taxation at progressive rates, but the grant itself is not.

A Negative Income Tax involves issuing a credit to those who fall below the threshold of tax liability, based on how far below the threshold they fall. So the amount of money one receives (the “negative income tax”) decreases as ones earnings push one up to the threshold of tax liability, until it reaches zero, and then as one earns more money one begins to pay the government money (the “positive income tax”).

The Earned Income Tax Credit is the policy we actually have in place currently in the United States. It was inspired by Friedman’s Negative Income Tax proposal, but falls short in that it applies only to persons who are actually working.

The US Basic Income Guarantee Network has a nice and significantly more detailed overview of some of the different policies. You can watch Milton Friedman explain his Negative Income Tax proposal with characteristic clarity to William F. Buckley here. And for an extended and carefully thought out defense of one particular Universal basic income proposal from a libertarian perspective, I highly recommend Charles Murray’s short book, In Our Hands: A Plan to Replace the Welfare State.

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