Libertarian economist, and Nobel Laureate F. A. Hayek endorsed a guaranteed minimum income—but didn’t say why. In this essay, Matt Zwolinski attempts reconstruct Hayek’s argument.
Matt Zwolinski, “Why Did Hayek Support a Basic Income?” Libertarianism.org, December 23, 2013.
Thanks for a great article, Matt! I especially love your conclusion:
“The point of a basic income isn’t to give everyone the same amount of wealth. It is to ensure that everyone has enough access to material wealth to render them immune to the coercive power of others.”
But I am having some difficulty with the logic that gets you there. You start with Hayek’s premise that freedom can be defined very simply as one thing: “…political freedom means freedom from coercion by the arbitrary will of others.” This seems right to me, and clearly implies, as you say, that “When others threaten to harm our vital interests unless we act as they wish, or are in a position to do so at their whim, our freedom is threatened … [and] in such cases, our actions are guided by the will of the coercer, not our own.”
But then comes the the problematic statement: “This is why Hayek saw a powerful regulatory state as a threat to individual freedom. The state’s regulations are always implicitly or explicitly backed by threats — ‘Do this or else!’ … “.
Can you tell me what, from a libertarian’s point of view, will prevent “others” from using coercion? It seems to me self-evident that only the state can do this, and that is the primary reason why we — the people of a democracy — empower the government: to insure that all citizens will be free from both internal and external coercion by those that would deprive us of personal liberty. But it makes no sense to include the government in the term “others”, since our guarantee of freedom is precisely that our government will coerce anyone who would deprive us of that freedom and make them refrain from doing so. Moreover, the coercive power of the government is not “arbitrary”. It is specifically determined by whatever constitution we use to empower the government, and if our constitution is sound, it will include a way to limit that coercive power and subject it to remedies for correcting governmental error or abuse of its coercive powers, so that the state can be said to act only “with the consent of the governed”.
You go on to show how property rights provide a domain where individuals can be free from coercion by “others”, and how a free market allows free exchange of those property rights without need for external coercion. But again, such rights and exchanges can only be protected if the state retains the power to coerce those who would violate those rights, and so again it would be illogical to include the state among those “others”. How else can market players, as in your employer examples, be prevented from using coercion, unless the state has a specific mandate — whatever the laws are — to intervene.
Thus it seems to me that it is not the coercive power of the state that threatens freedom, but the specific mandate which the state is given, i.e., the constitution and the laws, that determines the degree of freedom possible. And this is where the universal unconditional Basic Income Guarantee (uuBIG) proves to be such a powerful force for freedom, for it requires the state to treat every citizen the same (with the same flat tax-rate and the same uuBIG for all), rather than delegating to legislators the power to coerce in an arbitrary — factional and discriminatory — fashion in economic matters.
For a suggestion for a 28th amendment to the US Constitution to implement uuBIG, please see the final 3 minutes of my video:
http://www.youtube.com/watch?v=teQLrGB4ol8
Francis L. Goodwins
oloren1@fastmail.fm
Hi Francis,
Thanks for the comment! Let me respond, briefly, on the issue of coercion and government.
First, while it is true that the government has the power to prevent coercion, it seems wrong to say that it is the only entity capable of doing so. After all, we have private security firms, and these firms sometimes prevent individuals from coercing each other by interfering with potential coercers. And empowering institutions – such as competitive markets – can prevent coercion by giving people options so that they don’t have to do what potential coercers command them to do. In other words, we can prevent coercion by making potential coercers weaker, or by making potential victims stronger. And government isn’t the only entity that can do this, nor is it the only entity that has, as a matter of historical fact, served this function.
Second, even if the government is capable of preventing coercion, it is also capable of exercising coercion. Sometimes, that coercion is unobjectionable, as when it enforces laws against robbery and assault by punishing criminals. But many times, it is quite objectionable – as when it uses its military power to impose its will on the governments of other countries, or when it uses its taxing and regulatory powers to benefit special interests at the expense of the public good.
Does the government have the power to arbitrarily impose its will upon others? I would argue that it does. It’s true that there are checks on the powers of government – judicial review, democratic elections, the separation of powers, etc. The question is how effective these checks are. And I would argue that in many cases that they are not very effective at all. Government power is too often used for the benefit of the government and its cronies, at the expense of the public. Cases like the recent Chris Christie scandal are only the most recent and obvious examples.
Thanks for your thoughtful response, Matt.
On the question of whether there are other ways to prevent coercion than through the state, I might have to disagree, if I understand you correctly. The example of private security forces seems to me to be an example of the state delegating its power to coerce, but retaining the right, through legal channels, to coerce these delegated coercers if they step out of bounds (real cops trump rent-a-cops). The state remains the source of all legitimate coercion. But I insist on this only to suggest that it is unlikely that Hayek’s support of a basic income derives from a challenge to the right of the state to coerce. Rather, I think his support can be found in what follows from accepting that right: determining in which cases the state can legitimately use its coercion.
I submit to you that our problems today are that we have not got this step of the argument right. But you have pointed this out yourself: “Government power is too often used for the benefit of the government and its cronies, at the expense of the public.” But why should we tolerate this? The constitution of our state gives us — the citizens of a democracy — a way to change how government power is used, so why don’t we fix it? What if we give the government a new mandate in the 28th amendment: the government must treat every citizen exactly the same, and must provide economic security to every citizen equally. As corollaries, -1- the government must be prevented from spending any taxpayer money (which includes tax-breaks) on corporate entities (except as they are contracted for essential government functions), and -2- all non-essential government bureaucracies must be dismantled (with government employment, other than crucial functions, becoming anathema). After nullifying the existing tax-code (and setting up a congressional committee to manage a 3 to 5 year transition to the new code), the Treasury sets up a one-bracket tax system in which every citizen pays exactly the same tax-rate, and receives exactly the same universal, unconditional Basic Income Guarantee (uuBIG), set near the median income level. [Note that the uuBIG is counted as income for everyone, and taxed at the flat tax-rate which all pay equally.]
By setting the level of the uuBIG and the flat-tax rate based on as-real-time-as-possible data from the businesses in the market economy, and using a scientifically sound algorithm to set the uuBIG as close to a median level as possible, while keeping the tax-rate as low as possible, the Treasury will be able to fulfill its only other mandate regarding the economy: to maintain stable prices. This can be done by scientific methods (cf. Frederick Soddy & Irving Fisher) easily, especially because full-employment is no longer a concern, since all citizens have economic security from uuBIG. Moreover, in setting the rates, the Treasury has two levers on the money supply, and so can increase or decrease that money as required to maintain the price level, and without resorting to deficit spending. Thus the 28th amendment could include a balance budget requirement.
Also, for the Treasury to be able to maintain constant prices and forever avoid boom & bust cycles, no other market players can be allowed to create new money as is currently done through bank credit. This would means the Fed becomes a desk in the Treasury for relations with banks, and loses all ability to manipulate the economy by setting interest rates, etc., as these will find their natural level by market forces. And most crucialy, all banks must maintain 100% deposit backing for any loans they make: an end to fractional reserve banking [see Michael Kumhof’s “Chicago Plan Revisited”].
Sorry to be so long winded here, but I believe such a plan answers your question in the last paragraph:
“It’s true that there are checks on the powers of government – judicial review, democratic elections, the separation of powers, etc. The question is how effective these checks are.”
The answer is that they have proven themselves to completely ineffective, to the point that we now stand on the brink of planetary disaster, with our democracy abrogated and everyone subject to the tyranny of a secret shadow government apparently hell-bent on ending life on this planet as rapidly as possible. Secret programs of geo-engineering such as weather alteration through chemtrails, for example, are well-documented on the internet, as are the devastating global effects of the nuclear accidents at Fukushima & Chernobyl, and now beyond democratic control. The key to bringing them under control is to give every citizen involved in carrying out these insane programs the economic security to allow them to say “NO!” This is what uuBIG can accomplish, and not simply ameliorate the suffering for the most disadvantaged (which becomes a collateral benefit of saving the planet).
So I guess I’m arguing, Matt, that this would have been what Hayek saw as the benefit of the basic income: its ability to free individuals from coercion, both from other players in the market (individual or corporate) and from the corruption and collusion of government.