It's not clear from this how large a guaranteed income he supported.
If he was thinking that the total amount paid out by the state would remain unchanged as existing welfare programs were replaced with a universal guaranteed income, then he was imagining an income so small as to be of very little use to anyone.
If he was imagining a universal guaranteed income large enough to fully pay for everyone's basic needs, then I wonder how much of the extra expense he imagined would be paid out of his own pocket.
I was wondering how this was different from regular income tax that we pay now and found that it's unclear because there are different models proposed by Friedman . However, the idea seems to have a
1. A base tax rate,
2. An income cutoff - with those above paying and those below paying)
3. A subsidy rate (the % at which those above the cutoff pay on the income above the cutoff and the % at which those below receive to the extent that their income falls below the cutoff)
I found this really helpful example on wikipedia:
The income tax rate is 50%.
The tax exemption is $30,000.
The subsidy rate is 50% and equal to the income tax rate.
Under this scheme:
A person earning $0 would receive $15,000 from the government.
A person earning $25,000 would receive $2,500 from the government.
A person earning $30,000 would neither receive any money nor pay any tax.
A person earning $50,000 would pay a tax of $10,000.
A person earning $100,000 would pay a tax of $35,000.
So it is sort of a basic income scheme, but it seems more workable than the ones commonly proposed. Although it seems like it would be very difficult to get governments on board this scheme because Friedman advocated this as an alternative to all welfare programs of any sort. This sort of basic distribution without the vast bureaucracy seems like something governments would perceive as a threat.
The idea of a negative income tax is one that is new to me, but very interesting. I'm curious as to how it works for those who don't have jobs, though, which is arguably what something like welfare benefits was designed to address. Do those without jobs receive money, or nothing at all?
As I understand it, NIT is designed to supplement the income of those earning below a certain level (perhaps falling prey to the "lack of incentive" argument that propertarians like to use), but can it supplement no income at all? And if not, doesn't NIT therefore serve a different purpose to the welfare benefit system?
It would be nice if someone could correct me on this; I tend to disagree with Friedman on most topics, but this seems like a rather good idea. I've read that it was proposed by the US Green Party, too.
Serious question: what would you replace the free market with?
Near as I can tell capitalism is not like Marism and friends in this respect: capitalism wasn't some guy's idea that then got forced on the rest of us by governments. No, capitalism appears to be an emergent phenomenon, emerging when people are given a high enough degree of freedom. If that's the case (and I think it clearly is), then what do capitalism's antagonists propose to do with the freedom whence it comes? You might reject the premise, in which case please explain. Or you might reject freedom, which is what capitalism's antagonists generally do when given the chance. What am I missing?
>capitalism wasn't some guy's idea that then got forced on the rest of us by governments
Marx has interesting words to say about that.[0]
>given a high enough degree of freedom
Except for the freedom from having to sell labour-power for a wage in order to receive means of sustenance at a rate below the value you create? Sure. You also get the freedom to choose between which capitalist you work for. Now that's what I call freedom. (I'm being facetious :))
>is not like Marism and friends in this respect
It's worth noting that Marx's own vision of Communism is not that of one that is forced, but rather one that comes naturally from history, it is a stage of development like any other. By the time capitalism has reached the end of its life, there will be no need for force, other than to overthrow those owners of capital, and to return that capital to the people who gave them value - the workers. That said, Marx and Engels did specify a governmental policy program for revolution, that is, to enact policy either by revolution or within the current state apparatus (bourgeois democracy), to the point where the state must wither away.
The free market has its origin in capitalism, or by extension the pre-capitalist class systems, and with the end of what capitalism requires (the class system, owners of property) so will end the need for the free market. The Hegelian Marxists use dialectical historical materialism to show that (though I don't know enough myself).
The freedom I talk about is much beyond what is available now, it is the freedom afforded only by Socialism, as Oscar Wilde noted, which many people do not have today. His words from the 19th century ring as true today as they did then.
"Now and then, in the course of the century, a great man of science, like Darwin; a great poet, like Keats; a fine critical spirit, like M. Renan; a supreme artist, like Flaubert, has been able to isolate himself, to keep himself out of reach of the clamorous claims of others, to stand ‘under the shelter of the wall,’ as Plato puts it, and so to realise the perfection of what was in him, to his own incomparable gain, and to the incomparable and lasting gain of the whole world. These, however, are exceptions. The majority of people spoil their lives by an unhealthy and exaggerated altruism – are forced, indeed, so to spoil them. They find themselves surrounded by hideous poverty, by hideous ugliness, by hideous starvation. It is inevitable that they should be strongly moved by all this."[1]
> Except for the freedom from having to sell labour-power for a wage in order to receive means of sustenance at a rate below the value you create? Sure. You also get the freedom to choose between which capitalist you work for. Now that's what I call freedom. (I'm being facetious :))
That's not freedom. Nowhere in nature do we see animals receive the minimum means of sustenance just like that, for nothing, out of thin air. You might argue that we can do better than other animals, and it's true, and look! we _have_ done better than other animals.
Redefining "freedom" does get you out of this bind, but only if your interlocutors don't catch that slight of hand.
As to Marxism not being forced, unlike communism, well, let's say marxists are right that true Marxism will arise naturally, without resort to force, from the ashes of capitalism. I'm willing to wait for that. Marxists have been waiting a long time (when they don't go forcing the matter). I've no problem with them (and all of us) waiting much, much, much longer for it.
One thing I haven't seen addressed regarding Guaranteed Income: what sort of assurance is there that, when everyone has a guaranteed amount of income coming in, the market for necessary items (rent, for example) won't inflate to account for this, in order to maximize revenue?
A similar corollary (not perfect, but should serve to illustrate) would seem to be student loans - with a federal guarantee, and no way to get out of them through bankruptcy, the cost of education has far exceeded normal inflation. I can imagine similar things happening with Guaranteed Income.
Great question. My take is that we already manage to supply basic needs for 99% of the population, so inflation doesn't seem likely. But also, the idea is that by eliminating the welfare trap more people will work to supplement that income, so we can expect more production and more demand in general -- any inflation for basic goods should tend to increase the pressure to work to supplement the basic income, which would be good.
That said, it almost certainly is the case that ever-increasing student loan guarantees caused the massive tertiary education inflation of the past three decades. Which is why yours is such a good question to ask here.
If he was thinking that the total amount paid out by the state would remain unchanged as existing welfare programs were replaced with a universal guaranteed income, then he was imagining an income so small as to be of very little use to anyone.
If he was imagining a universal guaranteed income large enough to fully pay for everyone's basic needs, then I wonder how much of the extra expense he imagined would be paid out of his own pocket.