When the Basic Income Guarantee Meets the Political Process

Matt Zwolinski presents a thoughtful essay in favor of a Basic Income Guarantee (BIG) that reminds me strongly of the lawyer’s proverbial “in the alternative” argument about a dog biting a neighbor: “Your honor, my client doesn’t own a dog; even if he did own a dog, then it could not have bitten this man; and even if he did own a dog that bit this man, then it must have been provoked.” 

At the highest level, Zwolinski argues that a BIG is consistent with libertarian theory. And in the alternative, argues that in the real world of practical politics a welfare system of some kind will be with us for a long time, and a BIG is better than the dog’s breakfast of social welfare programs that we have today. Nested within this is another narrower argument in the alternative. He claims that social science evidence indicates that it not clear that a BIG would result in a reduction in work effort. But he argues that even if it did, this would not necessarily be a bad thing.

I’ll begin with a perspective on the narrower argument, and then proceed up to the broader and more philosophical topics.

It is fairly extraordinary to claim that the government could guarantee every adult in America an income even if they did zero work of any kind, and that somehow this would not reduce work effort. Zwolinksi should be able to provide strong evidence for such a claim. But we have scientific gold standard evidence that runs exactly the other way. A series of randomized experiments offered a version of Zwolinski’s proposal between 1968 and 1980. These tested a wide variety of program variants among the urban and rural poor, in better and worse macroeconomic periods, and in geographies from New Jersey to Seattle. They consistently found that the tested programs reduce the number of hours worked versus the existing welfare system, and the tested levels of progressivity of implicit tax rates did not get around this problem by encouraging work, as Zwolinski’s theoretical argument asserts they should.

There was a further series of more than 30 randomized experiments conducted around the time of the welfare debates of the 1990s. These tested many ideas for improving welfare. What emerged from them was a clear picture: work requirements, and only work requirements, could be shown experimentally to get people off welfare and into jobs in a humane fashion. These experiments were an important input into the decision to make work requirements a central tenet of the new welfare regime when the welfare system was converted from AFDC to TANF in 1996.

The paper that Zwolinski cites raises three objections to popular interpretations of the first round of experiments, all of which center around the point that we can never know with certainty the impacts any experimental program would have when scaled up. But there is no serious debate that in the dozens of occasions in which it has been put to the test, changing work requirements changes work effort, just as common sense says it should. Zwolinski’s proposal would reduce work requirements down two steps from the current policy – from current TANF-level requirements, down through the prior AFDC-level requirements, down to no requirements at all – when each of these steps has been shown to reduce work effort. Human society is complex, but as much as we can make almost any non-trivial prediction of social welfare policy, we can state with confidence that Zwolinski’s proposal would lead to fewer work hours in America.

Zwolinski’s argument in the alternative – So what, why is this necessarily a bad thing? – is subjective and highly values-laden. Ultimately there is no absolute answer to this question. I will simply note that the moral intuitions of the American electorate appear to be very negative about a BIG. A major driver of welfare reform over decades has been political resistance to work disincentives. As a practical matter, creating a political collation built around the idea of free money for life for every citizen with no strings attached seems extremely unlikely.

This turns out to be highly relevant to considering Zwolinski’s broader argument.

Zwolinksi’s argues that as a practical matter we will have a welfare system for the foreseeable future, and that compared to the current welfare system a BIG would be less bureaucratic, cheaper, reduce rent-seeking, and be less paternalistic. The benefits Zwolinski describes derive primarily from the purity of his proposal. But in that case, the real comparison is not between a theoretical BIG and a theoretical means-tested welfare system; it is between an academic idea that has not yet been subjected to lobbying and legislation, on the one hand, and real laws that are the product of a democratic process, on the other. There is nothing inherent about a BIG that will prevent Congress from creating thousands of pages of special rules, exemptions, tax expenditures, and so on, that are collectively just as convoluted as the current welfare system. After all, “tax each person a given fraction of income” is a pretty simple idea too, but look at the 2013 federal income tax code.

And the likely maintenance or reemergence of the functional equivalents of many of these programs isn’t just the result of cynicism, but of healthy intuitions of natural justice that are essential to maintaining a well-functioning political order. As one example, if part of the motivation for giving adults income is that they spend it supporting their children, would we really allow parents receiving taxpayer money to spend it any way they want with no requirements for child welfare beyond child abuse laws? And as another, a huge and growing portion of the cost of the welfare state is health care. Suppose we gave every adult in America an annual grant of $10,000, and some person who did not buy health insurance with it got sick with an acute, easily treatable condition. Would we really bar them from any urgent medical care and just say “Tough luck, but it’s time to die”? Even if you think this would be a desirable public policy, it’s not plausible that the existence of a BIG would somehow change the political calculus enough to make it substantially more of a reality than it is today.

This points to what I think is the most serious flaw in Zwolinski’s argument: He assumes that the ideal of no government welfare is politically unobtainable, but simultaneously assumes that we could successfully pass and enforce a constitutional amendment enshrining a BIG and nothing but a BIG as forever the law of the land, when there is excellent evidence that such a concept has been politically unviable for more than 200 years of American history and has been getting more unpopular over the past several decades. This is wishing for a magic wand to make democratic politics go away. Why not just assume you can pass a constitutional amendment banning any welfare spending?  Oh, and while we are at it, in order to make a BIG anything other than vastly more expensive than the current welfare system, we are also going to eliminate the mortgage interest credit, 401Ks, and student loans, without any countervailing political deals or economic costs. Zwolinski presents no evidence that there is any prospect that such a set of changes would be politically feasible in our lifetimes.

Let me end with a note of agreement on Zwolinski’s highest-level point. I agree that a social welfare system is consistent with libertarian thought, broadly considered. One of the many, many ways to sub-divide libertarian ideology is that one strand takes liberty to be a (or in extreme cases, the) fundamental human good in and of itself; the other takes liberty to be a means to the end of discovery of methods of social organization that create other benefits. I’ve called the first “liberty-as-goal” libertarianism and the second “liberty-as-means” libertarianism.

Both are real parts of the libertarian intellectual legacy. Hayek, for example, cannot reasonably be construed as supporting an unconditional income for all citizens. Yet central to his thinking was the belief that a society must be adaptable and willing to experiment with new approaches. Trial-and-error learning is far more central to this strand of libertarianism than is trying to divine what Murray Rothbard (or F. A. Hayek) said on a given subject. The problem for proponents of a BIG is that this implies actually accepting the verdict of trials, which thus far have shown every tested variant of a BIG to have pernicious effects.

 

 

 

Also from This Issue

Lead Essay

  • The Pragmatic Libertarian Case for a Basic Income Guarantee by Matt Zwolinski

    Matt Zwolinski argues that a basic income guarantee (BIG) could very easily do better than our current welfare state by many different criteria. It would be far more efficient. It would be less subject to rent-seeking. It would be easily accessible by the poor, and its benefits would flow to them rather than to the middle class. Although there are many libertarian objections to a BIG, Zwolinski nonetheless argues that when faced with a choice between a BIG and the status quo, libertarians should be open to making the change.

Response Essays

  • Is a Basic Income Permissible? by Michael Huemer

    Michael Huemer argues that while a basic income guarantee might be better than the status quo, this amounts to some rather faint praise. A basic income guarantee would necessarily violate some people’s rights, while a fully legitimate government must never violate anyone’s rights. The problem of political authority will likely remain a barrier to all similar proposals, even if we may happen to find this problem’s full implications troubling.

  • Let’s Try a Basic Income and Public Work by Robert H. Frank

    Robert H. Frank agrees with Matt Zwolinski that a basic income guarantee would achieve the welfare state’s goals more effectively than our current patchwork of programs. But he argues that a basic income guarantee sufficient to end poverty would spawn massive taxpayer resentment. Incentives to work would be undermined both for recipients and for those whose tax dollars funded them. Frank recommends a combination program that would include a significantly smaller cash grant and a standing offer of public employment for any who desired it. Frank defends taxation against libertarian objections and offers several additional taxes that he believes should be implemented. He argues that these should help pay for the expensive programs here being considered.

The Conversation

Letters to the Editor

  • The Basic Income Guarantee: Simplicity, but at What Cost? by Michael D. Tanner

    The Cato Institute’s Michael D. Tanner examines the Basic Income Guarantee and finds that its simplicity wouldn’t survive the political process. Difficulties abound, arising both from practical politics and from the realities of our current welfare expenditures. Tanner recommends consolidating our welfare system and simplifying it, but he does not endorse a Basic Income Guarantee.

  • Libertarianism and the Pragmatic Case for a Universal Basic Income by Ed Dolan

    Economist Ed Dolan shares some of his findings on the Basic Income Guarantee. He finds that work disincentives will indeed exist under a BIG, and yet these may be smaller than the work disincentives we already experience owing to the welfare state as it now exists. Libertarians should not be tempted by the so-called “gospel of work,” he says; libertarianism, rather, is about the gospel of freedom of choice.