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Discusses whether the Basic Income Guarantee could offer an alternative to both laissez-faire and existing welfare systems in developed countries - often criticized by both advocates and critics of laissez-faire - thus opening a constructive dialog in policy discussion.



Austrian Support for the BIG



This book has two primary goals, which together may bring two seemingly opposed schools of thought together around the policy of the Basic Income Guarantee (BIG). The first is the goal of reminding contemporary Austrian school economists the extent to which the founders and heroes of their school favored policies of this sort, and how well it fits within the Austrian school economic framework. The second is to expose market socialist thinkers, political philosophers, and all flavors of heterodox economist to the positive features of the Austrian school framework, including its insights regarding the features of markets that should be retained in any market socialist or interventionist proposal.
Guinevere Liberty Nell

Chapter 1. Welfare in the Austrian Marketplace: Bridging Austrian and Market Socialist Economics

Austrian economics is nearly synonymous with “free market” economics and politics—libertarianism—to almost anyone familiar with the label. It also defines the methodology of Menger, Mises, Hayek, and others; but an admiration for markets and criticism of government is almost universally expected of adherents. Of course, this was not always the case. As Hayek told Axel Leijonhufvud during his famous 1979 series of interviews conducted by other economists, “The meaning of the term has changed. At that time, we would use the term Austrian school quite irrespective of the political consequences which grew from it. It was the marginal utility analysis which to us was the Austrian school.”1
Guinevere Liberty Nell

Chapter 2. A Hayekian Case for a Basic Income

In The Constitution of Liberty Hayek’s central concern is to defend a political-economic system that promotes individual freedom by minimizing acts of arbitrary coercion in which some people are forced or manipulated to serve the interests of others. This liberal vision is best fulfilled, Hayek argues, by a market economy where the government has a monopoly on the legitimate exercise of coercion and where its actions are constrained by the rule of law. In the realm of welfare provision, he argues that this framework allows government to provide only a limited safety net. Though “[m]any scholars view The Constitution of Liberty to be F. A. Hayek’s greatest work” (Caldwell, 2011: xi), Hayek’s concept of coercion and its implications for the role of government are, when examined closely, more nuanced and equivocal than Hayek’s classical liberal defenders suppose. This chapter explores one such possibility, a universal BIG as a Hayekian method of reducing labor market coercion.
Theodore Burczak

Chapter 3. The BIG as a Helicopter Drop “with Austrian Characteristics”

Typically, a basic income guarantee (BIG) is defended either on the grounds that it decouples the ability to live a fulfilling life from the obligation to work (Van Parijs, 1991), or that it is a more palatable social safety net than traditional welfare programs (Handler and Babcock, 2006). These can be thought of as philosophical and microeconomic avenues of approach, respectively, and each is amply represented in this book. A somewhat less common framework for thinking about a BIG is to consider it as a macroeconomic policy. Examples of this approach include Mitchell and Watts (2004), who compare the macroeconomic consequences of a BIG to those of a job guarantee program, and Moutos and Scarth (2003), who consider the operation of a BIG in both an open and a closed economy. This chapter argues that the macroeconomic perspective is critical, given the dramatic and broadly distributed changes in household income resulting from a BIG, as well as its highly predictable structure. Most importantly for the purposes of this chapter, the fact that a BIG is a lump sum transfer guarantees that it has certain nondistortionary properties that are relevant for assessing its impact in an Austrian model of the macroeconomy.
Daniel Kuehn

Chapter 4. Taming Leviathan with a Basic Income

Anne Krueger in 1974s “The Political Economy of the Rent-Seeking Society” describes how incremental political interventions into the market eventually accumulate enough that they prevent the market from efficiently allocating society’s scarce resources. Arguably, the United States is at that point today. The United States is experiencing its worst period of prolonged underemployment since the foundation of the modern welfare state in the 1930s. Ted Burczak (2006: 139) calls this market malfunctioning, the welfare state “confront[ing] intractable Hayekian knowledge problems.” Robert Higgs describes “regime uncertainty,” which is the property rights uncertainty that results from changing and unpredictable policies.
Cameron Weber

Chapter 5. BIG and the Negative Income Tax: A Comparative Spontaneous Orders Approach

Libertarians would like to think redistributive welfare programs are controversial. Basic Income Guarantees (BIG), Negative Income Tax (NIT) proposals, and other redistributive welfare programs, however, are in fact quite popular in all developed countries (Iida and Matsubayashi, 2009), with BIG and NIT seriously considered by many classical liberal thinkers (Hayek, 1960; Friedman, 1962; Buchanan, 1997; Murray, 2006, 2008). The fact that at least limited redistributionist policies, particularly in the form of welfare programs, are relatively popular may suggest libertarians still have a lot of work to do; but insofar as most libertarians are libertarians because of their understanding of economics, it behooves them to at least come up with the least economically disruptive welfare program as a second-best proposal.
Troy Camplin

Issues and Complications


Chapter 6. Taking the “G” Out of BIG: A Comparative Political Economy Perspective on Basic Income

Libertarians are surprisingly comfortable with basic income guarantees and related proposals. The classic statement is Milton Friedman’s “negative income tax” proposal from Capitalism and Freedom (1962). In Friedman’s scheme, individuals earning an income beneath a certain threshold receive the difference between their income and that threshold rather than paying taxes. A basic income guarantee (BIG) differs only in that it pays an amount equal to that threshold to everyone regardless of income up front, balancing the outlay through taxes afterwards. Charles Murray (2006, 2008) has defended it as a potential compromise between libertarians and liberals as a measure replacing the welfare state. Hayek (1960: 376), while lambasting proposals to engineer the overall pattern of income distribution, defends the idea of a minimum income floor, one of the primary aims of basic income advocates. And libertarian economists have long argued that, given some redistribution, simple cash transfers are preferable to the bureaucratic machinery necessary for rationing specific goods.
Peter Boettke, Adam Martin

Chapter 7. A Little Less Than BIG: A Pragmatic Perspective on Remedying Injustice

Should a basic income be made available to all (if by “all” one means all citizens or possibly even all legal residents in a country)? And, if so, what sort of plan or program would best reflect such an idea? In particular, is the unconditional and universal Basic Income Guarantee (BIG) proposed by the US Basic Income Guarantee (USBIG) Network the optimal answer? This chapter is more concerned with the latter two questions than with the issue of the desirability of a basic income but that issue cannot be ignored. In searching for answers to these questions, I turn to several bodies of literature in economics and philosophy that either unreservedly accept or, at least, are prepared to give some weight to the tenets of classical liberalism—Austrian economics obviously fits that definition and is a constant point of reference throughout the rest of this chapter.
Laurent Dobuzinskis

Potential Solutions


Chapter 8. Who Owns the Land? Land as the Basis for Funding of a BIG

Classical liberals and early Austrian economists regarded unworked land as the property of the people. For Austrians at the extreme end like Rothbard, any tax is illegitimate (Feser, 2000); but, one tax that received support from early classical liberals and libertarians is a tax on land values. 1 The most famous advocate of land value taxation is Henry George, author of Progress and Poverty (George, 1879). George’s ideas do not differ greatly from those of the Austrian school. For George (1879: Chapter 41 ), as for Rothbard, civilizations “advance as they insure liberty to each person, bounded only by the equal liberty of every other person.”
Guinevere Liberty Nell

Chapter 9. A BIG Paradigm Shift for Society: A Speculative Look at Some of the Implications of Introducing a BIG

Austrian economists argue that the economy is a complex system too unpredictable to be controlled or managed by government. Indeed any interference from the state in production or prices has the potential to make things worse. If existing welfare state programs are replaced by a revenue-neutral BIG, the same level of “generosity” would produce a tiny fraction of the deadweight loss. It would also prevent negative consequences of market interventions that Austrians are concerned about, including the effect of subsidies upon prices. The welfare state would be disbanded, allowing for price flexibility in markets where the welfare state currently sets prices (see Weber, Chapter 4 ). Housing and food price bubbles could be avoided as the state would no longer be targeting those sectors with subsidies and preferential treatment. In general, the state would pull out from the market economy, unleashing the forces of the free market. The simple policy of a universal basic income guarantee (BIG) would achieve the same purposes as the welfare state, with none of the side effects Austrian economists have found in the current system.
Guinevere Liberty Nell, Daniel Richmond

Chapter 10. BIG in Free Cities

The typical intellectual debate around Basic Income Guarantees (BIGs) is premised on existing nation-state political debates which, at bottom, are zero-sum. Within the nation-state a BIG would be financed by means of tax revenues. Taxes are levied on some groups and the revenues are used for the BIG. In this context, the debate over BIGs is one manifestation of a debate over whether or not the state should be redistributing wealth, with partisans of social justice saying “yes” and libertarians and others usually saying “no.”
Michael Strong, Zachary Caceres


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