The Swiss Point Out What’s Good About the BIG

I have been struck by the global reaction to the Swiss referendum on giving a basic income guarantee (“BIG”) to every Swiss citizen. The proposal, which would guarantee the modes sum of about $2800 to every citizen, has generated a flurry of articles in the UK and US, most of them favorable. Interestingly, a lot of the positive reaction has come from conservative and libertarian groups.


As the NY Times recently noted:

The case from the right is one of expediency and efficacy. Let’s say that Congress decided to provide a basic income through the tax code or by expanding the Social Security program. Such a system might work better and be fairer than the current patchwork of programs, including welfare, food stamps and housing vouchers. A single father with two jobs and two children would no longer have to worry about the hassle of visiting a bunch of offices to receive benefits. And giving him a single lump sum might help him use his federal dollars better. Housing vouchers have to be spent on housing, food stamps on food. Those dollars would be more valuable — both to the recipient and the economy at large — if they were fungible.

Even better, conservatives think, such a program could significantly reduce the size of our federal bureaucracy. It could take the place of welfare, food stamps, housing vouchers and hundreds of other programs, all at once: Hello, basic income; goodbye, H.U.D. Charles Murray of the conservative American Enterprise Institute has proposed a minimum income for just that reason — feed the poor, and starve the beast. “Give the money to the people,” Murray wrote in his book “In Our Hands: A Plan to Replace the Welfare State.” He suggested guaranteeing $10,000 a year to anyone meeting the following conditions: be American, be over 21, stay out of jail and — as he once quipped — “have a pulse.”

Though this may seem like a new idea, it was actually tried in the U.S. back in the 1960’s. As noted in one of its pieces on BIG:

Libertarian and science fiction author Robert A. Heinlein, for example, outlined a world in which BIG was a fact of life in his first, unpublished novel, “For Us, the Living” in 1938, and advocated for its adoption (as a “social credit”) under President Franklin Delano Roosevelt.

Thirty years later, in the 1960s, proposals for institution of a Negative Income Tax (yet another name for BIG) began being seriously considered in Congress. From 1968 to 1979, municipalities in New Jersey and Pennsylvania, Iowa and North Carolina, Indiana, Washington state, and Colorado all set up pilot projects to test the idea (with the aforementioned results). In 1980, Alaska went whole hog with a version of the program, establishing the wildly popular Alaska Permanent Fund to share the state’s oil wealth with its citizens through annual dividend payments.

As someone who leans strongly in the libertarian direction on most topics, I also think this is an idea worth serious consideration and probably experimentation in a few states. The fact is that the myriad of aid programs today add complexity and waste that deters from their efficacy. Replacing them with a single payment, equivalent economists say to about $10,000/year, would probably be a net cost reduction to the federal government and a much simpler and effective method for helping people who need public assistance. Sure, the opportunity for abuse of a BIG system exists, but can anyone argue the current systems are not rife with cheating today?

In short, we should take BIG seriously and start to discuss not if but how to test this concept in the U.S.

Read more:

Carlos Alvarenga

Founder and CEO at KatalystNet and Adjunct Professor in the Logistics, Business and Public Policy Department at the University of Maryland’s Robert E. Smith School of Business.

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