The Foundation for Economic Education has had no sympathy towards a Universal Basic Income (UBI). Their latest piece by Brittany Hunter mainly criticizes Hayek’s reasoning for advocating it, along with name dropping Milton Friedman, Mark Zuckerberg, and Bill Gates.

Hayek is quoted saying

It will be well to contrast at the outset the two kinds of security: the limited one, which can be achieved for all, and which is therefore no privilege but a legitimate object of desire; and absolute security, which in a free society cannot be achieved for all and which ought not to be given as a privilege—except in a few special instances such as that of the judges, where complete independence is of paramount importance

Hayek believed that there were two kinds of security, a limited and an absolute one. The latter is incompatible with free society because it would be a complete surrender of our liberty for arbitrary privilege.

Accordingly, a basic income falls into this limited security, however, Hunter believes that any kind of security is incompatible with a free society for two reasons:

First, as discussed in previous liveblog entries, Hayek has already made the case that it is hard to restrain governments once it is given a little power. So this is a very slippery slope to descend.

It also neglects the very real fact that in order to supply individuals with their basic needs, money is required. And that money has to come from somewhere. Since the government itself provides no good or service that brings in profit, the money to fund such a program would have to come at the expense of the taxpayers. In other words, it involves theft at the hand of the government

Hunter implies an endorsement of anarchism. The state, even when confined to the simplest powers, will lead us down the road to serfdom. And even if this weren’t true, its entire functions are funded by taxation which is theft.

This is not a problem if she actually is anarcho-capitalist but that’s not the topic of this article. But she makes this outrageous claim that a UBI “advocate[s] institutionalized theft.”

Considering the fact she is affiliated with the Mises Institute and judging her by these comments, I’m gonna assume she’s part of the Cult of Rothbard. The reality is, humans are not an atomists species that will hire private defense companies to watch over their plot of land.

Humans are social people who create collective institutions which gave rise to the concept of the state. This is not to say we can’t do better than the state, in fact, I think that future is near, but the institutions of government such as taxation, police powers, etc. are institutions humans naturally accept. Bottom line: the state isn’t wholly illegitimate.

She also cites the Roosevelt Institute to argue that a UBI wouldn’t solve anything, specifically, she quotes:

When paying for the policy by increasing taxes on households rather than paying for the policy with debt, the policy is not expansionary. In effect, it is giving to households with one hand what it is taking away with the other. There is no net effect.

(Emphasis Mine)

Note that it says specifically when taxes on household income is increased. A lot of libertarians, like Fred Foldvary, support a UBI that can be funded through ground rent or a value tax on land and natural resources and Hayek was very sympathetic to this Georgist paradigm.

Secondly, the Roosevelt Institute thinks of the size of the UBI as the grant amount multiplied by the population size. However, Dr. Karl Widerquist explains how a UBI should really be considered:

UBI is–and must be understood as–a negative tax. When you pay the government, that’s a tax. When the government pays you (without you having sold something to the government), that’s a negative tax. It doesn’t cost you anything for the government to give and take a dollar from you at the same time. If you want to know someone’s total tax burden, you need to subtract the negative taxes they receive from the positive taxes they pay.

Furthermore, in his own study he found that:

A UBI large enough to eliminate poverty costs on $539 billion per year–less than 16% of its often-mentioned but not-very-meaningful gross cost ($3.415 trillion), less than 25% of the cost of current U.S. entitlement spending, less than 15% of overall federal spending, and about 2.95% of Gross Domestic Product (GDP).

Technological Displacement

Hunter goes on to criticize the technology argument that a UBI is good for those people who are out of a job because new machinery has put them out of their job.

It is undeniable that automation will inevitably put some individuals out of work just as machines put laborers out of work during the industrial revolution. If automation proves itself to be more efficient and less expensive than human workers, it would be foolish for companies not to move towards this system.

But by creating a UBI as a safety net, the state is essentially incentivizing individuals to stay stagnant and abandon the endeavor of learning new skills that may help them create value in the workforce. 

The only way this last paragraph could be true is if the basic income was large enough to fully provide everyone’s wants and needs without having to work.

Economists Djavad Salehi-Isfahani and Mohammad H. Mostafavi-Dehzooeifrom for the Economic Research Forum published a study on the 2011 Iranian UBI which “guaranteed citizens cash payments of 29 percent of the nation’s median income, which amounts to about $1.50 every day (about $16,000 per year in the U.S.).” The key results were that:

The report found no evidence for the idea that people will work less under a universal income, and found that in some cases, like in the service industry, people worked more, expanding their businesses or pursuing more satisfying lines of work. The researchers did find that young people — specifically people in their twenties — worked less, but noted that Iran never had a high level of employment among young people, and that they were likely enrolling in school with the added income.

People can quickly adopt new skills and find a new job with ease, especially if you’re a low skilled worker in today’s world where all the new jobs require secondary education. This frustration in the job market can be seen with coal miners in Kentucky, who supported Trump in hopes that his protectionist policies and deregulation would revive the industry.

A basic income could definitely appease these populist temptations. The Finnish basic income reports that the unemployed have lower stress and greater incentive to work.

The economic and moral arguments against a UBI are very weak. Ample evidence suggests that it would be more cost-effective than our current entitlement and welfare schemes, and be a net gain on the wellbeing and productivity of its citizens.

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Posted by Manu Belmonte

Senior Editor at The Credible Hulk Magazine and writer at my personal blog learninghayek.wordpress.com

25 Comments

  1. https://www.merriam-webster.com/dictionary/theft
    https://www.merriam-webster.com/dictionary/tax
    The word imposing or imposed in the definition of taxes is a fancy word for force which is the key element in theft. Ergo taxation=theft. I win.

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    1. I hope you’re not seriously arguing from semantics but in any case, I use the term in the way Dictationary.com defines it.

      “To lay on or set as something to be borne, endured, obeyed, fulfilled, paid, etc.: ‘to impose taxes'”

      http://www.dictionary.com/browse/impose

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      1. And what happens when you refuse to pay your taxes? I know men with guns show up at your door and kidnap you. So yeah theft.

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      2. Theft is a legal term, it is an unlawful taking of someone’s property. It is defined and enforced by the state, it is impossible to distort legal terminology against the institutions that define them. Therefore taxation isn’t theft because the state says so. That’s why you can’t say arrest and kidnap are the same either, both are legally defined terms by the government who determine it’s lawfulness.

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      3. No theft is a moral term. If theft is a legal term then so are slavery and genocide. So just as you could say that I can’t call taxation theft because the state says it isn’t a slave owner from the 1800s could say, “You can’t call what I do slavery because the government says it isn’t.” Or Hitler could say, “I am the law. I define what is genocide. Throwing Jewish babies into furnaces isn’t genocide because I say so.”
        That is how ludicrous your suggestion is. And the same goes with murder. If a cop shoots an unarmed black man it can’t possibly be murder because murder is a “legal term”. No these are all moral terms period.

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      4. Morality is dead and has been for a century. There is no universal code of ethics that is “proven” rationally or empirically. In fact the very concept of it is impossible since it’s wholly untestable. When humans leave the state of nature, they don’t “discover” any moral imperative but organize and conquer. They establish their sovereignty over others. “Morality” is defined by those in powers, those that have sovereignty to determine the rules of order of society

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      5. False. Morality is defined by reason or, if you are religious, God. The fact that most people agree that things like murder, rape, theft, fraud, etc. are immoral is proof of an inherent objective moral value. If morality is determined by the state then there is no reason to oppose anything the state does. Why oppose slavery? It’s legal. Why oppose the Holocaust? It’s legal. Why oppose female genital mutilation (mostly in Islamic States)? It’s legal. Why oppose torture? It’s legal. And so on and so forth. Government and society in general are historically bad arbiters of morality. We used to burn witches at the stake. Was that moral? If morality is subject to government decree then there’s no reason to be a moral person. If the only reason for not murdering is “I don’t want to go to prison” then, well, that is the attitude of a Sociopath.

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      6. There’s an inherent subjectiveness in your view of morality. Either morality is from reason or from God, you cant pick what you like without accepting moral subjectiveness. Regardless, God is not a reason for morality since He is wholly unknowable (in the sense that by his very nature, you cannot test His existence). Rationality is the product of our mental faculties however it’s limited by our own subjective values. For some it’s rationally moral to steal to save a billion lives, for others it’s not. Reason just isn’t universal. The state determines what is law, there is no morality besides what you make of it. The state just enforces it’s own moral code as law. You’re philosophical ignorance is very apparent. Moral nihilism (the view there is no morality) makes value-neutral statements. I never said the holocaust or slavery is good or bad, or that we should support or oppose it; only that it’s legality is contingent on sovereignty of the state. And yes there is no reason to be a moral person (welcome to existentialism).

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      7. Ad hominem. Wait until you enter college and see how many of your philosophy professors are “sociopaths”

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      8. Actually it is true. “It’s against the law” or “my mom and dad told me not to” are exactly the reason Sociopaths give for not murdering people. They don’t care about morality or law or their victims. They lack empathy. Their “concern” for society is actually concern for their own neck. That is why you are a Sociopath. Also Ad hominem is “you’re wrong because you’re stupid”. What I said is more of “you’re stupid because you’re wrong”. Not the same thing. Therefore not ad hominem.

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      9. “They don’t care for morality.” I said there is no morality, you can’t disregard something that’s nonexistent. My statements are metaphysical not psychological. You’re saying “you’re wrong because I don’t like what you say and I find it dumb and a characteristic of a sociopath.” Thats very much an ad hominem

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      10. Nihilism is a psychotic ideology.

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      11. Plus if everyone agrees on those things you just said, where did the concept of the state come from? How is it that no civilization found taxation to be theft or arrest to be kidnapping when these things are universally known

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      12. Because Sociopaths conquered society and retrained everybody “to go along”. It has been bred out of us to apply the same moral standards we do to private citizens that we do to the government.

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      13. Thats not a very scientific hypothesis. I dont think you’ll find many psychologists supporting it either. Every historian and anthropoligist will disagree will you. Humans were tribalistic, they cared and fought for their people. They put the needs of their society over others which lead to conflict of interest with other tribes. Therefore we organized and fought and defended ourselves over land and resources.

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      14. And those tribal leaders are psychotic.

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      15. And coincidentally this happened to be the phenomena in every instance lol

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      16. “It’s all psychotic”

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      17. Also the desire to rule over your fellow man is inherently psychotic. That isn’t to say that all political leaders are sociopaths or psychopaths. Many of them merely want to serve their fellow citizens however those who become involved in politics because they want to rule are inherently psychotic.

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      18. You’re gonna have to show me some peer reviewed psychology study on the tribalistic nature of man that backs what you’re saying. Right now you’re saying something with 0 evidence. But wait you can’t find it because it is all pseudo-intellectual claims. I should have known better, we’re both better off if you return to your Cult of Rothbard in your echo chamber, anarcho-capitalist forumn.

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      19. Actually I am pragmatically an minarchist. I don’t believe that in modern society anarcho-capitalism is feasible however it is the moral ideal of society. We can’t realistically expect to accomplish it so instead we should vote to make the State as small as humanly possible.

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      20. It is what you want and what you believe in. Don’t waste your breath telling me about what you see pragmatically

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      21. Just because I find it ideal doesn’t mean I’m going to crusade for it. In absence of the potentiality for such a society minarchism becomes the next best thing. This has always been my grievance against Ancaps: their refusal to vote. Either voting works in which case it constitutes self-defense or it doesn’t in which case it’s a meaningless gesture. Either way you should vote out of pragmatism.

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