Get Off The Couch: The Participation Income

This month, Cato Unbound is hosting a discussion on the libertarian case for a basic income. As readers of this blo–oh, who am I kidding. Anyone who knows me knows I am a libertarian who supports a basic income as an alternative to the current welfare state morass – both on a pragmatic “it’s better than what we got now” stand and on a principled basis. (But then, I am slowly becoming disaffected with the term libertarian anyhow.)

One point that has come up repeatedly on discussions about the lead essays is that a basic income of any form would create a nation of layabouts. After all, the argument goes, if you collect a check just for being a citizen, who would actually work? I think that’s a problematic argument for many reasons, but I just wanted to toss out there one variant that does require some effort on the part of recipients: the Participation Income.

I think it was first proposed by A.B. Atkinson in 1996 – though I don’t really know, I was just Googling things. One such Google result [PDF] gave me the following:

A ‘Participation Income’ would be paid to any individual ‘participating’ in society. The list of ‘participations’ would include employment or self-employment, retirement, absence from work because of sickness or injury, inability to work because of disability, and approved forms of voluntary activity. Students, trainees, those caring for dependents (the young, the elderly, or disabled dependents), and those unemployed but available for work, would also be counted as ‘participating’.

So basically, you have to do something in order to get the basic income, but it doesn’t necessarily have to be paying work. Studying, taking care of the elderly or children, volunteering – these all count. (Dunno about the last one in the above quote, though.) I don’t know if this would meet critics’ standards, but at the very least it would require that something be put back into society, something productive happening, in order to receive benefits.

Personally, I can see issues with this. How do we determine who is “participating”? Who will determine and how will they determine what counts as eligible participation? It’s yet another battlefield ripe for political combat, with all the terribleness, shrill partisanship, and uncomfortable silences at the dinner table that come with it. It also seems to be pretty invasive, as I am sure people will demand more accountability than simply trusting the applicant that they have participated. But then again, we have W-2 forms, so something along those lines may suffice.

To be honest, though, I’m not terribly worried about a basic income (or my preferred form, a Negative Income Tax) turning America into a nation of layabouts. We sort of have that problem already, for starters (though it isn’t as bad as some conservatives may think), and furthermore, life without work is not at all pleasant. People need work to have meaning in their lives; without it, many grow unhappy and listless. (I know, I’ve been there.) People are constantly trying to do and make new things – sure, not everybody, but look at all the various projects on Kickstarter, or volunteering activities, or new code developments made when somebody was out of work. I think if people knew there was something like a basic income to catch them if they fell, they wouldn’t just stop doing things and collect a check – they might take some risks to develop a new product or company, knowing they have something there if they fail. How many of us want to do something like that, be an entrepreneuer, but are afraid that if we screw up our families will be living on the sidewalk?

In short, I don’t think everyone will stop working. One commentator, Martin Brock (no idea if that’s his real name, as it’s only Disqus), however, does make one comment that I thought was pretty insightful:

I don’t fear a nation of layabouts. I fear a nation of actors, musicians, painters, novelists, astronomers, photographers, videographers, philosophers, talk radio hosts and political opinion bloggers all producing vastly more drama, music, art and the rest than other people actually want to consume while trying to consume the dwindling supply of goods no longer produced by all of these actors, musicians and painters.

Some of these people might be wondrously “productive”, in the sense of laboring conscientiously to produce lots of wonderful stuff, but if this stuff has little market value, because so many people produce so much of it, the people are not so “productive” in the economic sense.

The world is full of starving artists without a UBI, so I can only imagine vastly more artists producing far less than the cost of their maintenance with a UBI.

Yeah, that actually might be a problem. I know I would happily go off into my room and write science fiction all the time if I had a basic income. The question is, how many Americans would do that? Seeing the multitude of posts on social media, I would be willing to bet a lot (though many would be painters, sculptors, audio remixers, etc.) who then wouldn’t be producing other things. This would probably put a lot more strain on the rest of the economy – i.e, on all the other people producing things – and it might even threaten the very same basic income because at some point we wouldn’t be able to fund it.

But not doing anything? Sure, there are some indolent Americans. Hell, there are maybe a lot of indolent Americans. But there aren’t that many who would stop doing anything except collect a check. More likely, they would take that check and go do something with it.

I also just want to say that I’m not ignoring the public choice considerations here. It’s very likely that any variation on a basic income plan to replace welfare and the minimum wage and reform the tax system that goes before Congress will be butchered and mutiliated horribly. It’s in the nature (and interests) of legislators to craft legislation benefitting their benefactors, and I am sure that one interest group or another will try to bust it or just add it on top of the current welfare morass. But just because that’s a possibility doesn’t mean we shouldn’t try to reform the system by proposing this. If such considerations were to stop policy proposals before they began, then libertarians could never work on public policy — and I find that a very silly position to take.

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-bestnonideal 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.