Universal basic income: a libertarian ideal.

By late 2011 I’d spent roughly a decade lamenting the waning influence of Jefferson, rolling my eyes at the half-assed political circus and endlessly baffled by its effectiveness, but despite it all I still felt that our system was healthy at the core. Years earlier I had concluded that public sentiment swings between extremes on a two-decade pendulum, as each generation rejects its parents’ advice. So I stood up for what I felt was right, but I never felt the sky was falling if things went the other way.

Occupy Wall Street happened. The 1% and 99% memes entered the public mind, and pundits fell over each other to emphasize that the 1% have their own 1%. XKCD drove the point home with a visual aid, and that’s when my foundation came loose. Something very wrong had happened to America, and neither democracy nor market action had stopped it. I had always believed — and still do — that human nature tends toward generosity and cooperation. The exceptions are obvious enough, but also obviously exceptions; a nuisance, but the majority keeps them in check. Yet a paltry handful of those exceptions had set themselves up as apex predators. Ignore the rotten apple at your own peril.

Central to my ideology is the principle of negative liberty, succinctly summarized by Zechariah Chafee: “Your right to swing your arms ends just where the other man’s nose begins.” Part and parcel with this is the notion that the first (perhaps only) duty of government is to protect us from each other. The use of wealth and position to deny others the opportunity to pursue their own is in flagrant violation, and this realization changed my thinking on social welfare: failure through poor choices is one thing, but sabotage is quite another.

In the 2012 election cycle, the perennial flat tax proposal came from Herman Cain. The counterargument is obvious and overwhelming: flat taxes are cripplingly regressive. If you need 80% of your income for a roof and full belly, losing 25% kills you. This is frequently true for the poor, and never for the rich: fixed costs don’t scale with income. This time around, though, other points of inequality were still fresh in my mind, and one day they all crashed into each other.

Negative liberty demands that social policies effect equal treatment, but a government is not necessarily forbidden from doing anything it would forbid its members to do, only from doing things in a way that hinders some more than others. What if redistribution conformed to equal treatment? If a flat tax disproportionately burdens the poor, then a flat tax refund — a fixed percentage of total tax revenue — disproportionately benefits them! I ran some numbers, and saw astonishing potential. Here, I’ll do it again with 2012 data.

US GDP was 15.68 trillion. Tax one third of that, yielding ~5.23 trillion: roughly double the actual Federal receipt, so one half of this covers the current Federal budget. The other half, ~2.61 trillion, is distributed to the American populace, which in 2012 was 313.9 million people. That’s every man, woman and child in America — not just taxpayers! Using this figure, everyone gets $8325. A family of three is brushing against $25k, from a tax rate still quite competitive with other developed nations.

Even with flat taxation, this works out to be a progressive model because the distribution to low earners is proportionally much larger. It’s roughly equivalent to a negative income tax: with these numbers, if your household makes under $24,975 per member, you’re receiving more than you pay. (This can be rolled into the system, to avoid shuffling lump sums around unnecessarily.)

Nobody is unduly burdened, no individual’s opportunity is reduced relative to that enjoyed by others. With no tiers or qualifications beyond citizenship, there is no disincentive to work; no point where a dollar earned turns into two dollars lost because you no longer fall under an arbitrary benefit limit. The sky remains the limit for the highly ambitious. And hell, most of that money finds its way back up the funnel anyway.

I believe it’s essential that the distribution pool be pegged to GDP. In my example above I stated it relative to tax revenue, but to be robust, it should be thought of as explicitly (e.g.) 1/6 of GDP. This keeps it functioning as intended regardless of future fluctuations in tax rates, the Federal budget, the wealth divide, or inflation.

In recent months, I’ve started hearing the term “Universal Basic Income,” and clearly this is an example of that. I find myself siding with Democrats on a fiscal policy for the first time since I started using the word ‘fiscal,’ and I’m not complaining — I don’t own a necktie or a bible, so the other side of the aisle was never comfortable.

5 thoughts on “Universal basic income: a libertarian ideal.

  1. Tony says:

    At last, Ive been (idely) wondering if this would work for years. Bring it on.
    How to get from here to there ?

  2. alec j says:

    This works in the same world that progressives follow the Constitution…..which means not ours.

    Libertarians forget how the left takes ideas and twists them into evil for their own ends. Once you start cutting a check to people, it becomes an out right vote buying scheme with socialists and statists promising to raise the value of that check for those who fit its political needs. The class warfare becomes a rallying cry for some to get more than others…..from there it only goes down hill.

    For example, Libertarians like the idea of open borders, or free movement of people. The idea, in itself seems like more liberty and an obvious plus for everyone….BUT, the left has made it impossible to allow without bankrupting the nation and corrupting the political process because of the welfare state. Bankrupting the nation seems like a bad idea but politicians will do it without a second thought if it gains them more power and personal wealth.

    The Constitution was meant to protect us from these exact problems, but it was abandoned long ago. Until we repeal the 17th amendment (along with a few other returns to Constitutional govt), we will continue to be controlled by a bigger and bigger portion of the populace voting themselves more of other peoples wealth, until the whole system collapses…..like socialist economies always do, eventually.

    I guess my point it….we need to reattach the country to our founding documents before we consider new ways to fix the problems that detaching from them has caused. If you dont fix the hole in the boat before you start bailing the water out, you’re still going to sink.

    It definitely an interesting idea, though.

  3. Michael says:

    This idea really excites me! However, it does remind me of an old argument about how welfare was when I was growing up. It seemed in some states moms would get more money for every child they had. Now, it seemed like a ridiculously small amount at the time. But 8-9000 isn’t a small amount. How do you imagine dealing with the idea that some people will just have kids to make money?

    On the other hand, we do have a low birthdate right now and this might increase our replacement population, thus helping out elderly entitlements.

    What are your thoughts on this angle?

    • tejon says:

      D’oh… I’ve left this blog idle for so long that apparently Gmail isn’t even highlighting reply notifications as important anymore! Sorry for the two-month-late reply. Obviously the easy (and classically employed) answer is to create special rules for children, but I don’t think that’s desirable or necessary. This is one of the biggest practical objections I frequently see, and indeed I’ve given it a bit of thought. My response is two-pronged.

      First, $8000 isn’t negligible, but it’s not huge either compared to the cost of raising a child. Abusing this would only be an attractive option to a narrow subset of people: those who (a) are poor enough that $8k is worth the numerous tangible and intangible burdens involved in bearing and raising a child, and (b) are sociopathic to a degree that allows them to neglect that child’s welfare for personal gain. This demographic certainly exists, and unlike e.g. heroin addicts it’s hard to argue that UBI will actually help them contribute more than they take… but from a purely pragmatic perspective they’re a drop in the bucket, not a meaningful burden on the system (far less than addicts, I think). No reason to discard so much benefit to so many.

      But they do still exist; the outrage is real and justified. It just needs to be focused where it can do some good. Again, someone who would exploit a child that way is almost certainly sociopathic, or at least extremely misguided. Well, isn’t this the whole point of Child Protective Services? And yes, the foster system has a poor reputation, but I think a lot of that is a consequence of being poorly funded. It seems to me that this might be helped by, say, $8000 a year per child! That distribution doesn’t belong to the parents, it belongs to the child and is stewarded by whoever has guardianship. CPS is answerable to the public and well within the mandate of “protecting us from each other.” I have no problem with subsidizing them in this way.

  4. Clive Lord says:

    If alec j reads up about a Negative income tax/basic income he will find his assumptions not well founded. Although usually called a basic, citizens’ or guaranteed income, and coming from those who want less inequality, I have been advocating the idea for 42 years as a founder member of the UK Green Party. For me it has three purposes.
    1 To allow a recession (or a steady state economy) to be bearable for whole populations without hardship. Recessions have till now always been accidents due to overshooting some element. Resource shortages or pollution (climate change) will inhibit the economy anyway.
    2 In UK, though it will apply elsewhere in varying degrees, to remove the work disincentive of means tested benefits, described either as a Poverty Trap or a Scroungers’ Charter, depending on your mind set.
    3 To bring about a reconciliation between the old ‘right’ and ‘left’. This is where it links up with this article.

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