Way back in 2013, I wrote a post about Switzerland’s petition for a referendum on a monthly basic income. It was titled: “Why Switzerland Should Pay People For Being Alive“, and that referendum is now scheduled to take place on Sunday June 5th.

The concept of a universal basic income is not a new one. The essential idea is that people should receive a monthly subsistence stipend from the State, in cash, with no obligations or strings. It may be surprising that this is more than just a Socialist ideal: the concept of a guaranteed minimum income is one that has support on both sides of the ideological aisle. Fredrick Hayek, one of the great Austrian School economists of the 20th Century (although admittedly, not quite the anarcho-capitalist that equally-famous-Austrian-Schooler Murray Rothbard was), wrote this:

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.

Also this:

“We shall again take for granted the availability of a system of public relief which provides a uniform minimum for all instances of proved need, so that no member of the community need be in want of food or shelter.”

Then there’s Milton Friedman:

We should replace the ragbag of specific welfare programs with a single comprehensive program of income supplements in cash — a negative income tax. It would provide an assured minimum to all persons in need, regardless of the reasons for their need, while doing as little harm as possible to their character, their independence, or their incentives to better their own conditions.

A negative income tax provides comprehensive reform which would do more efficiently and humanely what our present welfare system does so inefficiently and inhumanely.

And more recently, there have been calls for a minimum basic income from the ultra-free-marketeers of Silicon Valley, who are worried that the coming robot revolution will leave them with all the productive efficiency but none of the demand, now that their consumers have been replaced by machines and no longer have disposable incomes to purchase all that efficiently-produced product.

Of course, there is still the socialistic angle, which goes all the way back to the 1500s and Thomas More’s “Utopia”, in which there’s this conversation narrated by a Portuguese traveller:

“I once happened to be dining with the Cardinal when a certain English lawyer was there. I forgot how the subject came up, but he was speaking with great enthusiasm about the stern measures that were then being taken against thieves. ‘We’re hanging them all over the place’, he said. ‘I’ve seen as many as twenty on a single gallows. And that’s what I find so odd. Considering how few of them get away with it, how come we are still plagued with so many robbers?’ ‘What’s odd about it?’, I asked – for I never hesitated to speak freely in front of the Cardinal. ‘This method of dealing with thieves is both unjust and undesirable. As a punishment, it’s too severe, and as a deterrent, it’s quite ineffective. Petty larceny isn’t bad enough to deserve the death penalty. And no penalty on earth will stop people from stealing, if it’s their only way of getting food. In this respect, you English, like most other nations, remind me of these incompetent schoolmasters, who prefer caning their pupils to teaching them. Instead of inflicting these horrible punishments, it would be far more to the point to provide everyone with some means of livelihood, so that nobody’s under the frightful necessity of becoming, first a thief, and then a corpse.”

If you want a really long summary of all the Important People who like the idea, then check out this timeline: “A Brief History of Basic Income Ideas“. Although, spoiler alert: it’s not that brief.

To go back to my initial post, here are the general arguments for and against it:

The Argument Against Unconditional Basic Income

• People on welfare are lazy and free-load.
• They must get enough to survive, but not enough to live, and it must not be easy to get it.
• If you just give people money, you give them a really good reason not to work.
• So rather create requirements and programs for very specific welfare benefits (like “assisted housing”, “food stamps”, and “government hospitals”).
• Also, it would be very expensive to do too much of it.

The Argument in Favour of Unconditional Basic Income

• It’s a really broad generalisation to say that most people on welfare want to be on welfare. You’re more likely to find that most welfare recipients would choose to work if they could – and are better placed to make decisions as to how they can escape their welfare trap than the government officials that make the decisions for them.
• And actually, a lot of money is wasted by government departments that attempt to administrate the myriad of welfare programs.
• So why not just give the cash directly, and let the market itself manage the process?

To be honest, at this point, it seems that the bigger argument is more one of: “Should the Basic Income replace all other Social Welfare programs, or simply add to them?”

If you want a really nice long-form piece of this particular topic, then check out this article from Andy Flowers on fivethirtyeight.com: What Would Happen If We Just Gave People Money?

And if you want something shorter, try this youtube clip on curing poverty from Vox.

 

Rolling Alpha posts about finance, economics, and sometimes stuff that is only quite loosely related. Follow me on Twitter @RollingAlpha, or like my page on Facebook at www.facebook.com/rollingalpha. Or both.