No, it isn’t time for a guaranteed income

In the Mar. 2014 issue of Reason magazine, Veronique de Rugy, a senior research fellow at the Mercatus Center at George Mason University, published an article titled “Time for a Guaranteed Income?” Well, there shouldn’t be much debate and there certainly is no need for a 1,200-word piece because the simply answer is: no.

It has been widely reported that Switzerland is debating the idea of giving every single citizen a guaranteed monthly income of $2,800. It’s guaranteed money for just being alive. It hasn’t even been passed or implemented but it is already a failed premise, one that shouldn’t even be taken seriously.

Unfortunately, the concept is being taken seriously and discourse has ensued. We reported in November how some American pundits think it’s a terrific proposal, while other economists are laying out the pros and cons – there are no pros whatsoever! If a policymaker thinks dropping off a bag of money to each house is an innovative economic policy then we are indeed on the verge of societal collapse.

Indeed, there have been a number of renowned libertarian economists that have purported similar economic systems: Milton Friedman endorsed the idea of a negative income tax, though he did concede that it wasn’t his preferred model and somewhat of a less-bad scheme. Friedrich Hayek supported a minimum income floor for each adult.

The author goes on to list the negatives behind a guaranteed basic income, but not on the grounds of force or a violation of private property. Instead, her conclusion is that it wouldn’t be implemented very well, which is certainly true – the government’s can’t allocate $1 trillion in welfare a year, how could they dole out basic income payments?

“But my main objection to a guaranteed minimum income is rooted in the wisdom of public choice: The poor structure of government incentives ensures that good intentions and elegant theories rarely equal expected results in public policy,” wrote de Rugy. “The biggest risk in implementing a guaranteed income is that it won’t completely-or even partly-replace existing welfare programs, but instead simply add a new layer of spending on top of the old.”

Another conclusion she made is that more research needs to be conducted: “We could use a new series of voluntary, dispersed trials aimed at finding ways to avoid work disincentives while delivering payouts more efficiently and tying the hands of special interests and politicians.”

Here are simple questions: why? How will it be funded? Who will be conducting these studies? Why should we give credence to a doggerel, doomed and thoughtless policy that only a politician could love?

Let’s forget about it and leave the people alone to earn their own incomes. That’s a marvel policy these days.

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  1. A good suppy-side argument is presented with allusions to a Labour Therory of Value, social insurance, unemployment insurance, harming the economy, enlarging government and claims against an egalitarian mindset. Murray Rothbard presents a very good argument which can be heard on youtube.

    Turn it around to a demand-side argument presented with allusions to Carl Menger’s Imputation Theory, producer insurance, consumer insurance, claims for individual self-interest (if one loses their job long-term), smoothing out the boom/bust cycle, limiting government by reducing bureaucracy and a different picture emerges.

    Indexing Basic Income (BI) to an economic indicator like GDP is the less-often stated argument in BI’s favour as a pay-as-you-go system, reminiscent of Robert Shiller’s discussion on Social Security Trill indexing (youtube). Friedman supported NIT as a replacement for the welfare system as noted by Murray Rothbard.. Hayek supported government supplementing the efforts of civil society only if it was, indeed, insurable in the Road to Serfdom. He unconditionally supported limited government support for food and shelter with no reference to ability to pay. Milton Friedman may have followed that same line of thought and not have consciously noted such a needed requirement.

    Another important point in favour of BI is that it lessens the need for using a lender of last resort to bail out the economy during a contraction to fight deflation and boost consumption. That notion has a wide spectrum of support that reaches even to the most devout anarcho-capitalist. No one particularly cares for seigniorage :) Seignorage is a form of wealth redistribution.

    I’m not sure of how many of the 100M of 315M folks of working age who are not working (Zerohedge) would agree how marvelous the job market is recently.

  2. Let me guess Andy Moron, your a old white man?

  3. So let them starve in the streets?

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