Libertarian Thursday: Is universal basic income a Libertarian idea?

Is it really a good idea to give free money for poor people?  How would a libertarian defend this idea? And was it seriously proposed by Ronald Reagan’s favorite economist, Milton Friedman?

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7 thoughts on “Libertarian Thursday: Is universal basic income a Libertarian idea?”

  1. First, Friedman is not strictly a libertarian. Second, the Earned Income Tax Credit (EITC) is the modified implementation of Friedman’s negative income tax. It was enacted in 1975. A careful listen to Friedman’s explanation of his proposal shows it is quite different from the UBI concept.

    Answering the question posed in the OP title, in short, no.

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  2. Just a calendar question: how is this Thursday?  In what universe is this Thursday?  If that’s where things are libertarian, I want to be there.  But do I need to sleep until next Thursday?

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  3. I sometimes try to give serious thought to this concept, particularly when I see too much of what I don’t like in the streets of the cities like Seattle. It would need to be paired with some serious confinement penalties for public vagrancy in high density areas along with provisions for low income occupancy. A society that provides UBI can certainly keep people from living in common public areas.

    And it would not be just for poor people, it must go to all and then be recovered from the productive, except this probably means no getting rid of the income tax approach to raising revenue  for governing.

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  4. John Walker:
    Just a calendar question: how is this Thursday?  In what universe is this Thursday?  If that’s where things are libertarian, I want to be there.  But do I need to sleep until next Thursday?

    The beauty of being a libertarian is that you can reject collectivist notions regarding the days of the week! And sleep whenever you want!

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  5. I think we can be reasonably confident that Friedman would not support UBI because it effectively sets a minimum wage, likely at a level comparable to the $15/hr value the Progs advocate. This strikes me as neither Friedmanesque nor libertarian.

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  6. As I understand Friedman’s rationale for a Negative Income Tax (NIT) was that it would dramatically reduce the friction, discretion, and ability to pay off constituencies which exist in current “safety net” programmes.  Everybody has to file an income tax return: if your income is less than x, then you get y, where y = max(0, μ − x), where μ is the threshold where the NIT cuts in.  In a stroke, this eliminates the whole superstructure and bureaucracy of enforcers of “means testing” for each individual programme and it places enforcement of fraud in the hands of the IRS, which is the most feared of the Feds.

    The problem is his assumption that the NIT would replace all existing welfare programmes.   This isn’t going to happen.  It’s the same with a value-added tax.  I think it would be wonderful if a value-added tax (VAT) replaced the income tax, and that’s what its proponents argue for.  But what will happen, in fact, is what happened in Europe and elsewhere: the VAT will be tacked on top of the income tax, and provide another way for the state to loot its subjects (in many European countries, the VAT is now between 20 and 25 percent, and that marks up just about everything you buy).

    The current advocates of Universal Basic Income don’t even, for the most part, even suggest it would replace existing welfare programmes.  It would be, then an addition on top of them.  It means taxing people who work to pay people who don’t.  If that is libertarian, then I am Marie of Roumaina.

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  7. John Walker:
    Everybody has to file an income tax return: if your income is less than x, then you get y, where y = max(0, μ − x), where μ is the threshold where the NIT cuts in.

    Not exactly. If your income is x, you get y = r*(μ − x) for x<μ, where r is an effective marginal (negative) tax rate. Friedman is specifically against the case of r=1 because it destroyed any incentive to work, as he explains to Buckley. He suggests r=0.5 as an example, which only somewhat reduces the incentive to work. The UBI is more like the r=1 case than it is like Friedman’s proposal. The EITC preserves the incentive-to-work feature of Frieman’s NIT.

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