February 20, 2014

Time for a Guaranteed Income?

Veronique de Rugy

George Gibbs Chair in Political Economy
Summary

Switzerland will soon hold a nationwide referendum on granting a guaranteed and unconditional minimum monthly income of $2,800 for each Swiss adult. In America, where Lyndon Johnson's War on Poverty just celebrated its 50th anniversary of failing to achieve victory, liberals jumped on the Swiss news to reconsider the un-American-sounding idea of a universal basic income.

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This article appears in the January edition of Reason Magazine

Switzerland will soon hold a nationwide referendum on granting a guaranteed and unconditional minimum monthly income of $2,800 for each Swiss adult. In America, where Lyndon Johnson's War on Poverty just celebrated its 50th anniversary of failing to achieve victory, liberals jumped on the Swiss news to reconsider the un-American-sounding idea of a universal basic income.

Surprisingly to some, they were joined by many libertarians. The list of intellectuals who have made cases for a guaranteed minimum income over the years includes such laissez-faire luminaries as Milton Friedman, Friedrich Hayek, and Charles Murray.

Friedman favored a negative income tax (NIT), in which taxpayers who earn less than the established minimum taxable income level would receive a subsidy equal to some fraction of that difference. (A watered-down version of this became the Earned Income Tax Credit.) Hayek defended a minimum income floor, in which the government provides a conditional income to each adult. Murray's 2006 book In Our Hands argued for an unconditional $10,000 annual cash payment to all adult Americans, coupled with a repeal of all other welfare transfer programs.

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