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| Milton Friedman |
Milton Friedman, who died in 2006 at the age of 94, was for decades
considered, a leading US economist, who garnered worldwide renown. Winner of
the 1976 Nobel Memorial Prize in Economics for his many achievements, Friedman
criticized traditional Keynesian economics as “naïve” and reinterpreted many of
the economic theories broadly accepted up to his era. He was an outspoken free
market capitalist who acted as an honored adviser to emblematically
ultra-conservative world leaders such as US President Ronald Reagan and British
Prime Minister Margaret Thatcher, and his theories on such key areas as
monetary policy, privatization and deregulation exercised a major influence on
the governing policies of many Western governments and multilateral
organizations in the 1980s and ‘90s.
Such a staunch conservative would seem like an unlikely academic to go
to in search of backing for the controversial idea of giving spending money
away to every person and family, no strings attached. But the fact is that one
could hardly have asked for a more vocal and enthusiastic supporter of
universal basic income (UBI) than Professor Friedman. Indeed, guaranteed income
was the topic of one of the essays collected in his 1962 book entitled Capitalism and Freedom in which he laid
out his stance on a variety of public policy principles.
Friedman wrote about UBI as a kind of “negative income tax”, but also
envisaged it, frankly and realistically, as what it would be: namely, free
money. He based his support on five fundamental tenets:
First and foremost, Friedman suggested that a single universal welfare
program would massively and effectively cut government red tape, and,
therefore, government spending. That is to say, Friedman’s theory was that it
would be dramatically cheaper for governments to simply give money away to
their citizens than to engage in complicated social welfare programs based on
establishing need before providing benefits and then having to supervise the
spending of that aid and to effect due diligence to decide whether benefits
should continue or be suspended depending on the changing circumstances of the
beneficiaries.
Specifically regarding his own country, Friedman’s advice was to replace
the morass of over 125 social welfare programs with a single free-money
distribution scheme, which would be vastly cheaper to maintain and much more
efficient in covering the population’s basic needs. In his own words, “We should replace the ragbag of specific
welfare programs with a single comprehensive program of income supplements in
cash — a negative income tax. It
would provide an assured minimum to all persons in need, regardless of the
reasons for their need.” He added
that, “A negative income tax provides comprehensive reform which would do more
efficiently and humanely what our present welfare system does so inefficiently
and inhumanely.”
Friedman’s second principle with regard to guaranteed income addresses
the idea that, in a free market system, citizens express themselves and their
confidence in the system and its players as much through their consumption as
they do through their vote, if not more so. But those with no money to spend in
a free market system are marginalized from the system—and therefore from
society—as such. And welfare programs that try to control how the charity money
the poor receive is spent further marginalize and stigmatize these
“beneficiaries”. On this, Friedman opined, “The proposal for a negative income tax is...to help poor people by
giving them money, which is what they need, rather than as now, by requiring
them to come before a government official to tally all their assets and
liabilities and be told that you may spend X dollars on rent, Y dollars on
food, etc.”
A third aspect that Friedman cites in backing guaranteed income is that
welfare, as it stands today, is a trap. The renowned economist writes: “The number of people on welfare has been
skyrocketing. Why? Because once they get on welfare, we make it almost
impossible for them to get off. In order for somebody who gets on to get off,
he or she has to be able to have a really good job, because to get off gradually,
to earn a little bit...doesn’t pay.”
In other words, those on welfare either have to give up the idea of
working entirely or they must have the skills to land a really good job. And
this, in our current world, is getting harder and harder to achieve, as more
and more job posts are being lost to robotics and artificial intelligence, while
the potential workforce is growing larger by the day.
Just getting work of any kind whatsoever solves nothing, Friedman points
out. On the contrary, a bad job often will provide welfare recipients with less
money than the amount of welfare benefits and those benefits will be taken away
as soon as the government discovers that a beneficiary has been placed on a
payroll. The idea of universal basic income is that it is unconditional in
nature. One gets it no matter what.
Perhaps less concrete but potentially plausible is Friedman’s fourth
tenet in favor of guaranteed income. He suggests that if the burden of having
to find a way to earn enough to cover basic needs were removed, people would be
able to take part in the unremunerated tasks that an effective society
requires, those involving volunteer work in a broad range of social and
environmental fields. According to Friedman, “One of the great virtues of the negative income tax, in my opinion, is
that by taking off the mass burden of income maintenance it would make it
possible for private charitable organizations to do [their work].”
Finally, although as a free-market capitalist Milton Friedman
prioritized reducing government bureaucracy over social inclusion, he
nevertheless echoed the humanitarian values of such major social leaders as the
late Reverend Martin Luther King, when it came to that aspect of universal
basic income. In a 1967 speech, Dr. King, for his part, famously suggested that
the US government “could and should” provide “all people and all families” with
“a guaranteed annual minimum income,” saying that this would go a long way
toward dealing with the social injustice and inequality faced not only by poor
African Americans, but also by poor Americans in general.
Similarly, Professor Friedman posited that a great virtue of guaranteed
income was that it would “treat
everyone the same way,” and help limit “unfortunate discrimination among
people.”
Whether the reason for championing the UBI
theory is conservative—a means of reducing government spending, cutting red
tape and more effectively allowing the erstwhile poor to become a positive factor
in consumption and thus in a healthy economy—or liberal (a reasonable and
economically practical solution to the burgeoning problem of joblessness and
social division), the fact that a conservative economist of Milton Friedman’s
stature ended up being one of its most vocal supporters shows clearly that
belief in the need for such measures stretches across the entire political
spectrum. We are facing a future sea-change in economic and social development,
and at some point universal income will indeed have to be weighed against the otherwise
probability of universal strife.
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