Scrapping The Welfare State, Giving Out Cash, & A New Future for Liberarianism

Man, that title sounds hella-pretentious, but it’s immediately what came to my mind reading this article by Matthew Feeney on Reason.com, Scrap the Welfare State and Give People Free Money. It is a fine argument for replacing our current welfare system with a form of basic income, which I have come around to over the past two years (roughly) living in Washington DC. After leading in with the recent news that Switzerland has created a basic income (on top of their preexisting welfare system, which is dumb) he gives this key passage (emphasis mine):

Without the Swiss proposal being attached to drastic welfare reforms the plan is, I think, unfeasible. However, that the particular proposal in Switzerland is not ideal does not mean that libertarians should shy away from proposing something similar. Being morally comfortable with some degree of government wealth redistribution might be contrary to anarchism, but it is not contrary to libertarianism, and were libertarians to argue for replacing the current welfare system with a basic national income we would be better positioned to not only highlight the fact that libertarianism is not the heartless and selfish philosophy it is commonly portrayed as, it would allow for a more humane and effective way to deliver welfare than the current system on offer.

I’m sure that will greatly offend the Rothbardians in the audience, but I really don’t care about those guys anymore.

Matthew also makes this other key point, which is that the welfare system actually hurts and dehumanizes people:

In discussions about welfare it is astonishing how often the current system is portrayed as humane, just, or charitable. However, one of the tragedies of the current welfare system is that it strips welfare recipients of their dignity while treating many of them like children, and functions on the underlying assumption that somehow being poor means you are incapable of making good decisions.

Many welfare recipients are required to undergo drug tests, despite the fact that many Americans take illegal drugs while still being good parents and holding down a job. If employed professionals are able to fulfil their duties at work while also maintaining a recreational drug habit, why should welfare recipients be treated differently? In fact, in the last year welfare recipients in Utah were found to test positive for illegal drugs at rates less than the national average, and in Arizona 87,000 screenings between 2009 and 2012 yielded one positive test result.

Perhaps the best example of the demeaning nature of the current welfare system is the SNAP program, otherwise known as food stamps, which works by giving recipients a card that can only be used to buy a selection of government-approved goods. Alcohol, tobacco, pet food, and vitamins are only some of the products that those on food stamps cannot buy because the powers that be have determined that they know what is the best lifestyle for food stamp recipients.

Since I moved to DC, and “enjoyed” it’s sky-high prices for rent, food, utilities, clothing–well, everything–I’ve started to abandon my old view that we shouldn’t have welfare, period. As much as I do not like the idea of welfare itself, or the idea of wealth redistribution whatsoever, I now realize a couple of things:

  1. The American public will never buy a political system completely lacking in wealth redistribution, period. You can call this stupidity, you can call this a decline in American virtues, you can call this the bandwagon fallacy, you can call it whatever you wish–but it is reality. No matter how much I would prefer a more Nozickian (or heck, more Randian) government, the majority of Americans will consistently vote against such an idea. Trying to push that view is just a waste of time, energy, and resources.
  2. As much as I would like  a more Nozickian state, and a completely free market economy, the current welfare system has so thoroughly ruined poor Americans there is no way to abruptly transition to a welfare free society. There are millions of Americans trapped in a cycle of poverty, a cycle partially perpetuated by the government (at all levels), and we’re going to be able to just switch and leave them behind. We have to light a path out of that and into the next stage. To us the words of philosophy professor Michael Munger, it’s not so much a libertarian destination as it is a libertarian direction–and I’m okay with that.

Considering that, the only real alternative available is a negative income tax. I’ve come to champion this proposal of Milton Friedman’s, for multiple reasons.

  1. It combines both welfare reform and tax reform in one package, making it more likely to get libertarians and conservatives onboard.
  2. It is more effective at helping the poor, so it should (in theory, anyways) be attractive to leftists.
  3. Unlike other universal basic income schemes, it is actually sustainable.
  4. It does not trap anyone in poverty, but instead lifts them out; poverty trap problems are neatly dealt with.
  5. I believe that it also avoids the problem of disincentivizing work; while those under the threshold do get money, they still have an opportunity to gain even more money past that threshold instead of receiving nothing. Also, many would appreciate a safety net to fall back on should their business attempts go awry, which may encourage them to go out and be more productive, rather than sit back and do nothing out of fear.

About a week ago, on Bleeding heart Libertarians, philosopher Fernando Teson laid out the basics of a philosophical school he called “sufficientarian liberalism.” I don’t want to quote the entire thing, because it’s brilliant, but it’s essentially where I have come to be. Teson notes that most libertarians readily acknowledge that free markets and (classically) liberal societies generate tremendous wealth and are the best tool for bringing people out of poverty. He then adds:

Here I take a different tack. Classical liberals should endorse a political system that includes a safety-net for the poor while simultaneously abolishing virtually all other barriers to market entry. This means no more subsidies, no more tariffs, no more licencing of professions, no more burdensome regulations, no more state-run education, no more barriers to immigration, no more unproductive public spending, and no more bloated bureaucracies (you can add an appropriate public-goods proviso.) Call this view sufficientarian liberalism. The view is sufficientarian, not egalitarian: it advocates state redistribution of resources only toward those who cannot provide for themselves.

Sufficientarian liberalism can be philosophically justified. In the Doctrine of Right Kant argues that to sustain the civil condition the state must provide means to those incapable of providing for themselves. But the state cannot legitimately redistribute resources beyond this, because doing so would encroach on people’s protected freedoms. The only legitimate reason for coercion is the establishment and maintenance of the civil condition. That is why the state can punish criminals: the state hinders the freedom of someone, the criminal, who has hindered the freedom of his victim. Now property-less persons cannot act autonomously because they are subject to the permissions and wishes of others. Therefore, the state must provide them with the material means of acting autonomously, as required by the civil condition. If you are charmed by this view, then you have a first-order, ideal justification of the sufficientarian liberal state.

But suppose that Robert Nozick is right and no redistribution, not even to the poor, is justified. In that case we can no longer justify sufficientarian liberalism on first-order principles. However,  we can still defend it as a second-bestnon-ideal political arrangement. If the Nozickian utopia is unattainable, then classical-liberals’ best strategy might well be to support institutions that frontally address the plight of the poor. Now imagine a society where the only redistributive job of the state was to help the poor. That society would be an immense improvement over the crony-capitalist systems we endure today. If we couple a safety-net with vast deregulation of markets, and we add the fact that freer markets help the poor more than known alternatives, then the classical-liberal has the upper hand, because the defender of the welfare state has lost her main argument for big government.  If the poor are provided for, all that remains of the welfare state are subsidies, privileges, rent-seeking, and various other inefficiencies. I doubt honest egalitarians can defend that.

Although the comments section is rife with diehard libertarians and anarcho-capitalists flinging barbs, nothing here sounds too controversial to mainstream Americans. I wrote earlier about “market democracy” being a true American centrism; that was a more abstract view of things, while this is a bit more concrete (though still not a specific policy platform.) People really don’t give that much of a damn about income inequality; they only care that there are people starving and want them to be not-starving. Even the poor, I think, don’t really care if they’re making less than a Wall Street banker, they just want enough to get by. (And if they have political power, that definition can be “Let’s get the government to get us plasma TVs and a Cadillac too. I still think that would be easily dealt with in a negative income tax system.) Teson also makes the necessary point that this system would have to be combined with a deregulation wave; I don’t think an NIT on its own, without a dramatically freer market, would really help people all that much. There are a great number of government actions–such as the Dairy Price Support Program making milk more expensive, to monetary idiocy at the Federal Reserve killing the buying power of the individual dollar bill, to various regulations propping up barriers to entry and killing the competition that brings prices down–that artificially raise prices and make things more expensive, especially for the poor. Unless those things are done away with–and thus, in the process, making there a lot less poor to go around–anything else will have a blunted impact on poverty. (And though it shouldn’t be mentioned, such a plan should also include reducing the military budget by half–at least–and enacting serious entitlement reform, which may actually end up being scrapped if such a system was implemented.)

That’s a pretty damn good view of centrism to me.

I think what Feeney is writing about here is actually the future of libertarianism. He’s right that this isn’t ipso facto against libertarianism, just anarchism, which I don’t think libertarianism really is (no matter how much undead Murray Rothbard stamps his feet about it.) And while I suspect both of us are going to get a lot of flack from more hardcore libertarians who will claim we are sanctioning state theft, that has been going on for well over a century in America and centuries elsewhere; we are advocating lessening it greatly, and ultimately such a thing is going to be seen as a cost of living in society. Should there be a cost? That’s a philosophical discussion for another day.

TL;DR: I think a basic income of sorts can be justified on broadly libertarian grounds; it is clear that such a system is superior to our current welfare state; and I think that libertarians should stop beating their heads against the immovable rock they’ve been killing themselves with for decades, adopt this plan, and actually move the ball down the field beyond our 30-yard line, because it is getting to be really, really ridiculous at this point.

And I’m very, very thankful it is beginning to get a wider audience.

  • levlafayette

    “no more licencing of professions”

    Licensing of professions provides consumer protection when there’s an inequality of professional knowledge.

    Snake oil, and all that.

    • jdkolassa

      If that truly was the case, then why are there still lawsuits covering medical malpractice? Still cases of lawyers being sued for legal malpractice? Why do we need Angie’s List for plumbers and electricians? They’re licensed, surely that’s all the customer protection we need.

      The best system for that is market forces, which channel knowledge–professional and not–to the customer by simple prices and success. Those who do a good job & don’t screw over their customers profit, those that don’t do that end up failing. The coordination problem and all.

      Frequently, licensing cartels end up hurting the poor most by artifically inflating the cost of services, mainly by artifically depressing supply–and in that regard also keep out people who might want to actually practice a profession. ( http://c4ss.org/content/12385 )

      Occupational licensing also prevents the poor from raising their standards by actually moving up the income ladder ( http://bleedingheartlibertarians.com/2013/08/sheldon-richman-on-how-to-help-fast-food-workers/ ).

      Really, don’t you want to help the poor? Then why bother with licensing schemes that are so often used merely as clubs to beat them over the head with?

      • levlafayette

        Of course there will still be lawsuits for various sorts of malpractise. A licensing scheme doesn’t guarantee consumer protections, it just improves the likelihood that consumers will be protected. It’s a form of insurance that reduces risk, but doesn’t absolutely prevent.

        As for “helping the poor”, which I am somewhat familiar with, there are numerous other ways to do this apart from abolishing standards for consumer protection.

        • jdkolassa

          Please. We both know it’s hardly “consumer protection” in this day and age. It’s snake oil of it’s own kind.

          • levlafayette

            Consumer protection, at least where I am, is still taken fairly seriously. Perhaps you have a different experience. Of course, I am also familiar with countries where such professional licenses are not required, and I’ve seen the results there as well. There’s a reason why drugs that are banned in our advanced economies are dumped in countries without such regulations.

            Note that in none of this am I disagreeing particularly with this notion of “sufficientarian liberalism”, even if my own perspective is far more generous and through different means. I just happen to think that “free markets” (rather than “freed markets”) also should tend towards perfect markets – which also means interventions in favour of addressing inequalities of decision-making power.