The Basic Income Guarantee (BIG): Or, How to Make Government Bigger

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The Basic Income Guarantee (BIG), also known as Universal Basic Income (UBI), is the latest fool’s gold of “libertarian” thought. John Cochrane devotes too much time and blog space to the criticism and tweaking of the idea. David Henderson cuts to the chase by pointing out that even a “modest” BIG — $10,000 per adult American per year — would result in “a huge increase in federal spending, a huge increase in tax rates, and a huge increase in the deadweight loss from taxes.”

Aside from the fact that BIG would be a taxpayer-funded welfare program — to which I generally object — it would necessarily add to the already heavy burden on taxpayers, even though it is touted as a substitute for many (all?) extant welfare programs. The problem is that the various programs are aimed at specific recipients (e.g., women with dependent children, families with earned incomes below a certain level). As soon as a specific but “modest” proposal is seriously floated in Congress, various welfare constituencies will find that proposal wanting because their “entitlements” would shrink. A BIG bill would pass muster only if it allowed certain welfare programs to continue, in addition to BIG, or if the value of BIG were raised to a level that such that no welfare constituency would be a “loser.”

In sum, regardless of the aims of its proponents — who, ironically, tend to call themselves libertarians — BIG would lead to higher welfare spending and more enrollees in the welfare state.

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2 thoughts on “The Basic Income Guarantee (BIG): Or, How to Make Government Bigger

  1. People often arrive at government and forced collective action to address their problems. (I knew someone who wanted government to ban pantyhose because she didn’t want to be required to wear it at work.)

    Few people seem to think of addressing restrictions that obstruct bottom-up solutions from solving their problems. Related to the issue of basic income guarantee, I often ask if there’s anything that can be done to decrease cost-of-living and, if so, what stands in the way of that happening. For instance, wouldn’t it be better if those who are less ambitious, financially-strapped, or want to retire early could acquire alternative, cheaper forms of permanent housing? http://thinkfuture.com/2016/05/31/let-tiny-houses-run-free/

    (On a personal note, I want to let you know that I’m currently reading those articles.)

    Like

    • The article about tiny houses points to a major cause of high costs and low incomes: regulation. It stifles job growth and makes things costlier. The hidden cost of regulation — not the cost of compliance but the value of forgone output — is about $2 trillion per year.

      Liked by 1 person

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