Gary Johnson recently told me he is “open” to the Universal Basic Income (UBI). Based on some of the comments on the story (calling me slanderous and Johnson a statist), you might think he just endorsed a socialist takeover of the government.
Understandably, there is hostility among many libertarians toward the idea of the Universal Basic Income. The UBI is not just a pragmatic step to eliminate government bureaucracy. In fact, it is a desirable policy outcome because it will likely help usher in a new era of free markets and civil society.
Much has been said on the pragmatic libertarian case for replacing the current social safety net with a UBI. Primarily, it eliminates government paternalism and enhances the efficiency of welfare delivery.
Moreover, a Universal Basic Income removes the poverty trap created by the loss of welfare benefits as individuals move out of poverty. This incentivizes recipients to remain in poverty to retain these benefits. A UBI has no such incentive and allows recipients to choose the course of action that actually provides the greatest real benefit.
Through the basic income, recipients are also fully in control with how to spend the money, eliminating welfare’s distortions on the marketplace.
Most libertarian UBI advocates take Milton Friedman’s view of the basic income, approving of it as a substitute given that government welfare already exists (and is unlikely to go away). Instead, libertarians should consider wholeheartedly endorsing the UBI as a way to expand free markets.
The last century has shown us that free markets and free trade have been the greatest source for prosperity and peace the world has ever seen. However, the free market consensus seems to be eroding at a frightening pace, even in the Western world.
Free market’s savior? The basic income.
If libertarians are being honest, free markets are the best source for lowering poverty, but they alone are not sufficient. For example, Hong Kong has the freest economy in the world, but also a good amount of debilitating poverty. While visiting McDonalds throughout Hong Kong, it was hard not to notice the McRefugees (as they are called in local media) that were sleeping at tables.
Socialism is not the answer to the poor’s woes, as we saw with devastating consequences in the human trials of socialism in the Soviet Union, Mao’s China and still today in North Korea and Venezuela.
Instead, the answer is to open up the free market to everyone through the basic income.
Pilot programs have shown that the basic income increased entrepreneurial and market activity (among other positive social benefits, such as improved health). Individuals previously locked out of the free market can now be active participants. The understandable worry that people would stop working is not only overblown, but the opposite was actually shown to be true in Namibia, as business activity dramatically picked up.
The largest meta-analysis of cash-transfers ever further illustrated that the risk of reduced work is nil and in fact it has the potential to increase work hours and intensity. Some parents reduced work hours to care for their children, but this likely brings a positive long-term outcome to society.
Work brings dignity and the basic income does not eliminate the basic desire to contribute to society. When polled, most Americans say they would still work even with a financial windfall.
Basic income gives recipients free choice, unlocking the market’s full potential. People do remarkable things when given freedom and opportunity.
Additionally, poverty is one of the biggest factors when determining a child’s likelihood to succeed in education. Just giving parents money substantially improved their child’s educational outcomes and behavior. The same was shown under the basic income.
The basic income is not a pragmatic giveaway to socialists. It is precisely the opposite: it is the essential element for sustaining the durability and expansion of free markets.
Beyond opening up the market to new participants, it is likely that a basic income would allow society to reevaluate the necessity of a whole host of government policies.
Human beings are born with a natural inclination to be empathetic toward others. And there are individuals that are also inclined (perhaps hardwired) toward government solutions for society’s ills. No matter how effectively free markets lower poverty, there will always be calls for a government backstop.
As libertarians know, these calls for government “solutions” often do more harm than good and end up impeding the very forces that allow the free market to lift individuals out of poverty (e.g. the minimum wage).
As jobs are increasingly automated, it is especially crucial that libertarians guide political discourse toward a light-touch approach to resolve the disruption robots will cause in the marketplace. There needs to be a permanent method to alleviate the fears of the market place, rather than relying on the eternal vigilance of Congress to do the right thing.
A robust basic income would mute many of the calls for government intervention because it gives employees greater freedom to choose their employment situation, rather than being forced into employment by the threat of poverty.
The fears felt by those inclined toward government intervention would be lowered and libertarians would have a far more persuasive case to make for allowing individuals to shape the market instead of the government. Indeed, it would allow libertarians to push for removing many of the excesses of government intervention.
The Universal Basic Income is not just a pragmatic compromise to lower welfare bureaucracy. It is the essential prerequisite to usher in a new era of free markets. And libertarians would be well suited to be at the forefront of this movement.