Matt Zwolinski, “BIG and BIGger – On the Feasibility of a Basic Income” Cato Unbound: The Basic Income and the Welfare State. September 2, 2014
The Basic Income and The Welfare State
Matt Zwolinski, “BIG and BIGger – On the Feasibility of a Basic Income” Cato Unbound: The Basic Income and the Welfare State. September 2, 2014
The Basic Income and The Welfare State
Matt:
I am impressed with your structured approach to making the libertarian case for uBIG, and I believe it has the potential for uniting factions within the movement which haven’t clearly understood the BIG dynamic. Such nuanced discussion may be valuable in ultimately reaching the one thing still missing from the BIG movement: a simple, clear and universally understandable BIG plan.
What disturbs me most in this discussion is that there is so much impassioned discussion by agents promoting their own factional objectives, and as yet no clear and specific determination of a unconditional Basic Income Guarantee (uBIG) plan. I think it is time we move on from arguments attempting to make uBIG seem like a politically feasible notion to a precise plan for implementing the program.
In your first paragraph, you asked the crucial question: “By what political process is the wholesale replacement of the welfare state with a BIG supposed to take place?” And you immediately point out two key requirements of such a process: -1- that it must be able to “make it unscathed through the sensationalism, log-rolling and rent-seeking of real world political processes”, and -2- that it must be able to endure without “being mutilated beyond recognition by the plastic-surgery-by-committee of ordinary politics”.
Unfortunately, to my ears at least, you spend most of the rest of the essay conceding that such ambitions are impossible, and suggesting that maybe we could patch together something with slightly better tendencies than the existing system.
I would like to assure you, Matt, that such a political process to replace the welfare state with a uBIG is possible and feasible, although it has yet to be widely recognized as such. And I believe that the prerequisite to recognizing this must be to realize that the half-way measures you fall back on are not worth our time and effort, no matter how effectively you can build a coalition to support them. What is needed is a real solution — a scientific solution, not compromise among competing factions, the political process so brilliantly engineered into the American experiment by Hamilton in order to give permanent advantage to the elite and the status quo.
But please don’t get me wrong. I do appreciate your willingness to take on the objections of the various factions to uBIG, and to meticulously spend your time answering them in their own terms. The problem is that the case for uBIG requires a reconception of the political-economic-social universe. It requires reasoning from different premises than the status quo, just as Copernicus was able to eliminate all the laborious, complex, and seemingly technical & profound calculations about planetary epicycles by introducing a new premise: the earth is not the center of the universe. So how long should we spend reasoning and arguing about the details of a universe where “work” is held to be central, when almost everyone today, in the 21st century, can see that work is peripheral at best in a world of automation?
I suggest that the moral arguments about BIG are just red herrings. It’s the old problem of trying to get someone to understand something that might jeopardize their income, status or security. They won’t do it. For all those working Americans whose paycheck comes from the government (one-third of the population of my state), and for all the beneficiaries of all the welfare programs, especially social security, a corrupt system with insufficient benefits must seem preferable to pie-in-the-sky alternatives. That is, until they can be convinced of a truly workable alternative.
So again, what is needed here is a clear plan as to how BIG can work, and so far, as far as I can see, there is not yet a workable specific plan out there. Instead we get this unconvincing and half-way suggestion that the existing — and failed — system can be improved somewhat by becoming a bit BIGer. [Sort of like the strategy our government is following in response to the economic collapse of 2008: since the banks which caused the collapse were too big to fail, the solution is to make them bigger.] In other words, the status quo will respond to crises with more of the same until we can get a new paradigm. BIG can be the new paradigm shift, but only if embraced as such, and not as an incremental — and ultimately insignificant — improvement.
This point is essential for dealing with the political pressures existing in our present system. It is a corrupt system, as is probably widely recognized by now, and its pressures seem inescapable to most people. And so we get all sorts of discussion about how to tweak things to make things a bit better. In other words, no change. BIG has the potential to revolutionize the political process that has calcified into gridlock. Why? Because money is at the heart of the corruption — again as everyone knows. Empower every citizen equally with an unconditional Basic Income Guarantee, and the power of corporations, the state, and even families to manipulate people economically is drastically reduced. We are talking about what will probably be the most radial liberation of individuals the world has ever known, and which will probably spread throughout the entire world, once a working model has been established in the United States of America. Or we are talking about a new tool to marginally improve the ability of governments and corporations to control the lives of citizens. It all depends on how we approach uBIG.
More specifically, let me offer a critique of Ed Dolan’s approach, which is to try to incorporate BIG within the existing (and corrupt) tax-system, simply because an argument can be made that BIG might be more efficient or marginally more fair. The problem with the tax-system is that it does not treat every citizen exactly the same, and consequently it gives the state the power to make decisions about who gets what. [This is entirely unnecessary today, at least since humanity reached a turning-point in 1970, according to Buckmister Fuller, of having sufficient technical know-how to use resources so efficiently as to end the era of human scarcity and open the possibility of unlimited human abundance.]
The solution is to implement a tax-system in which every citizen pays exactly the same tax-rate as every other citizen, but on their income alone, with no reporting to the government of how you spend your money, and no deductions possible. And with uBIG, every adult citizen receives the same exact uBIG amount each month (and pays the same flat-tax rate on that income as all citizens pay). Thus the tax-system is fair to all, for the government treats everyone the same. Corporations, on the other hand, must still report their financials to the government, showing how they get their net profit, which is also taxed at a flat-rate which all businesses pay equally, without possibility of deductions.
Notice that there can no longer be any objection to uBIG claiming that some are unfairly paying for others. Every citizen pays exactly the same flat tax-rate on their income as everyone else, and all adult citizens receive exactly the same uBIG as everyone else. The system is fair and provides economic security to every citizen, so the ability of Congress to spend tax-revenue on any corporate enterprise can be severely limited.
Finally, the concern about special cases might just be another red herring. Compassion for the disadvantaged is a noble sentiment, but surely not worth destroying a free nation by empowering government to decide who is and who is not worthy of “assistance”, and thereby opening the door to unstoppable corruption. Far better to demand that the government treat everyone equally — and at a high enough level to insure that the overwhelming majority of disadvantaged are sufficiently assisted, while leaving the extreme outliers to be assisted by voluntarism generated in the marketplace, or to retaining certain small, exceptional, and highly transparent and regulated government agencies.
My point is just this, that all of the objections to uBIG can easily be answered once we start from the premise of implementing a paradigm shift: the government should treat everyone the same, and a citizen’s unconditional Basic Income Guarantee makes this possible. How? Well, once again I must take issue with your opinion, Matt, when you say: “Even still, the wholesale replacement of the welfare state through constitutional amendment is unlikely to happen anytime soon.” The 28th amendment to the Constitution could be accomplished by 2016, IMHO, if a consensus can be reached on the specifics of the uBIG plan. After all, at the end of the 19th century, Americans almost turned the economic world on its head with the Free Silver, bimetalism campaign led by William Jennings Bryan, though it was defeated when the monied elites spent 5 times more on the campaign to elect President McKinley in 1896 than in any election before or since (in inflation adjusted dollars). The lesson is clear. The next populist attempt won’t make the mistake of trying to use the existing political procedures to adopt uBIG, but will need to take advantage of the clause in Article 5 of the Constitution that allows for a constitutional amendment to be passed outside of Congress, through a Constitutional Convention.
How can the government treat everyone the same when the government is made up of human beings? Do not different rules apply to the human beings that make up the government than apply to others? If government agents are subject to the same rules as everyone else, then what differentiates the government?
And if the government should treat everyone the same, where do the funds that make a “BIG” possible come from? Certainly not equally from all.
I should say that when I refer to government, I mean the government of the United States, as formed by the U.S. Constitution. I see this government as an organization empowered by the people to perform certain functions, such as maintaining law & order through a Justice Department, organizing the Military, establishing regulations for businesses, protecting the environment or commons, etc. While the government can hire people to perform the various tasks required to perform its functions, I don’t think it would be correct to say “the government is made up of human beings”, but that it is made up of agencies and programs implemented to carry out the mandates of the Constitution and Congress, which theoretically should represent the will of the people in our democracy. While the elected representatives are empowered to make the rules, and government employees hired to carry them out, I do believe that the rules should apply equally to all citizens, just as the law should apply equally to all. So under the law, a government agent is just a citizen, like other citizens.
The point of my argument is that our government has grown too large and hired far too many unnecessary agents to perform tasks that can be done more efficiently and less costly in the marketplace. Of course, not all government functions should be left to the market. Those mentioned above, Justice, Military, Regulation, Disaster preparedness, etc., require true civil servants not subject to the market’s drive for profits. But in my state, over 1/3 of full-time employees receive their checks from the government, which means they are paid from tax-revenues.
The case I’m trying to make is that our economy will work far better if tax-revenues are paid directly to every adult citizen in an unconditional Basic Income Guarantee (uBIG), set at a near median-level of income, and most of the government agencies currently employing so many citizens are dismantled, allowing those people to work in the marketplace, which is where jobs are created by the process of supply & demand.
You don’t seem to believe that uBIG can be paid for equally by all, but if we replace the existing tax-code with a single-bracket tax system in which everyone pays exactly the same tax-rate on their gross income (including uBIG), with no deductions possible, and no further reporting of how citizens spend their income, then clearly every citizen would contribute equally to the tax burden, and equally receive the benefit of uBIG. The role of Treasury would be to set the level of the tax-rate and the level of uBIG at the right levels to make sure all tax-revenues match total expenses, so this is not a deficit program.
It is important to note that businesses & corporations would pay a different tax-rate on their net profit, set by Treasury, but again with no tax-breaks possible, other than standard accounting adjustments to determine net profit.
In short, I’ve argued that the best way to end the corruption of special interests that has overtaken our government is to demand, with the 28th Amendment, that the government treat every citizen the same, as far as possible.
Stephen,
For an amusing example of a non-human government, I’d recommend reading a short story by science fiction writer Philip K. Dick called “Stand-By” in Vol.4 of his __Collected Short Stories__, where sometime in the future the United States government is run by the Unicephalon D-40 computer.