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

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.