3 votes

Scrap the Welfare State and Give People Free Money

Of course libertarians, who are in favor of less government spending, may be concerned that were a basic income to be implemented that it would cost more than the current welfare system. However, it is worth considering that, as Peter Ferrara pointed out in Forbes, the Census Bureau estimates that our total welfare spending is four times the amount that would be needed to lift all Americans currently living in poverty above the poverty line by giving them cash.

In 2008, Charles Murray wrote that a guaranteed income for all American adults over the age of 21 who are not in prison of $10,000 a year that would replace all current welfare programs as well as agricultural subsidies and corporate welfare would be cheaper than maintaining the current welfare system in the coming decades.

It is important to point out that under Murray’s proposal, which is outlined fully in his book In Our Hands: A Plan To Replace The Welfare State, after someone’s total annual income reached $25,000 a 20 percent surtax tax would be imposed on “incremental earned income,” capped at $5,000 once someone earns $50,000 a year. Murray’s plans also requires that $3,000 of the $10,000 grant be spent on health insurance.


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What a great plan

Not only does everybody get cash, but it also assures that things like a gallon of milk will be $25. I also like how mandated insurance is included in the plan. Actually I'm just kidding. It's a plan that socialists and communists the world over would love; I don't.

This is a facially valid argument

from an economic perspective. But it is a bad idea, and destroys wealth in the long run, because it ignores second order effects.

Good economics is not only about the unseen effects of a policy, but about the consequences of the policy over time.

While it is true it is more efficient to 'cut out the middle man' in the welfare state, which is all this proposal, like Friedman's negative income tax, is saying. But is important to be clear that any wealth transfer destroys net capital, and it's imo deceitful not to make that clear.

So the argument has an unstated premise which is not an economic one, but a moral one (although I consider it immoral because it's based on theft, and immoral from a utilitarian perspective because it harms the greater good) but the premise is: We are willing to diminish the wealth of society to help a few, who may need help because of no fault of their own, but it may be their fault. We also realize attempting to tell the difference doesn't work and actually reduces the benefit as a whole of the transfer.

So fine, we cut out the middle man and reduce some corruption from firms that profit from directing the welfare state funds into specific areas. Unions, grocery chains, welfare state bureaucrats, pretty much any market sector that can lobby to get their product paid for with EBT, etc.

Fine so you've reduced that corruption, but now you have an entirely concentrated force of corruption. The floor income receivers become a monolithic voting block, who will always vote to raise the floor. Over time this will lead to bad results.

That said, if I were a well meaning monarch, and was too weak of character to abdicate, but still well meaning, this is exactly the plan I would impose. Because I would not raise the floor unless I inflated, and I would not inflate, so the floor would never be raised.

But it doesn't work in a democracy.

And as a political matter it's a dead letter. Far too many capital interests profit from the current scheme.


I have read Karl Marx's Communist Manifesto.
I think Marx would tell you that this proposal transitions us from free markets to a collectivist dictatorship of the proletariat even more rapidly than he would have advocated.



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metalhed19's picture

I own this book, it's a solid

I own this book, it's a solid read. Basically what Murray is proposing, is radically reduce the government including but not limited to SS,Medicare and all forms of social welfare, and give all Americans 21 and over, who are not incarcerated, 10,00$, to be spent on whatever. The prudent and the ambitious would use this to buy reliable transportation or invest in a small business. One facet of the plan I find ingenious, is it's treatment of young males not in the labor market. Consider the case of a young man who has convinced his parents or girlfriend to let him hang out. "The Plan" goes into effect. Suddenly the parents or the girlfriend knows the their lodger has X number of $ deposited into their bank account every month. The whole economic situation is changed. Either they pitch in, or out in the street, and make your own way. It also applies to child support. Undoubtably some men would be more reluctant to get their girlfriends pregnant, and with all social welfare programs scrapped, young women would be more careful about choices made, when they see their friends spending all their money on children, rather than planning out correctly.

*Wisconsin Constitution* Article I, Section 25 "The people have the right to keep and bear arms for security,defense,hunting,recreation or any other law-abiding purpose"

Complete crap. It's

Complete crap. It's antithetical to human behavior.

This is an awesome idea!!!

Let's see if I understand it correctly.

Give people a salary make-up to get them to at least $25k/year. Sounds good so far. Everyone would have the money to live on and social programs would decrease in necessity.

So we should create a fund to give these people this money? Ok, but since the government is one of "We The People", then let's make this efficient and have the people create this fund.... DIRECTLY. Just get the government out of the middleman position. Ok?

Let's see... that means that if WE volunteer this fund, OUR perceptions on an INDIVIDUAL basis decide what we donate each. If the problem (as we perceive it) gets worse, we will likely increase it and if it goes away or gets abused, we will likely decrease it. I still don't see anything wrong with this from a Libertarian standpoint.

Do I have this correct?

All this would accomplish

All this would accomplish would be to make a bunch of people stop working until it collapsed with not enough workers. This is communist nonsense, simple as that.

"In reality, the Constitution itself is incapable of achieving what we would like in limiting government power, no matter how well written."

~ Ron Paul, End the Fed

It is actually a good idea.

Prove your yearly earnings and the government makes up the difference until it totals say ... $25000.

It has the added benefit of encouraging barter and black market earning.

Of course that number will go up over time with inflation and it really only has one end result.

Of course GS would be contracted to manage the system, which would defeat the purpose so we are back to square one.

But if it were allowed to occur, of course there would be a small amount of extremely lazy people that will do nothing to earn, but most people will get creative and begin to earn quite substantially if they are simply a safety net with no strings attached and then are able to concentrate on other things other than surviving day to day.

God Bless.

A "small" number would stop

A "small" number would stop working? There would be no reason for anyone to work, sir. It would be like the USPS or the DMV...but EVERYWHERE.

That explains alot.

Obviously you would be part of the small percentage of people that would be happy to simply exist as if you were an animal as opposed to an actual human.

People that think like that are simply regurgitating neocon talking points.

The reality is that if there is some fixed, very firm, safety net in place, eventually nobody would need it.

I wouldn't say most, but currently, a large portion of the population that is on the doll simply uses it as a supplement to their income. Income that is earned "CIF" (cash in fist). And it isn't all just drugs and prostitution. Some of it is earned by being useful like operating a day care service or a car pool service. Some do hair and nail. Some get free rent for maintaining the grounds.

You have no idea what you are talking about.

God Bless.

Who are you and what have you

Who are you and what have you done with the corpse of Rhino?

Hayek was friend of a

Hayek was friend of a universal basic income.


Hayek's position would be far

Hayek's position would be far more socialist than I can identify with.



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There is nothing "libertarian" about that proposal.

Murray is a communist if he thinks this is a good idea.

You don't get much more redistributive than that. (you can, but this is as far as you can go and not simply "take everything")

You are right and Murray didn't support it

(EDIT: Read comments before I read the silly article. I assumed 'Murray' referred to the real Murray, still his take is worth noting)

He thought if you had to have a dole it should be as inconvenient and shameful as practical to make it. Free money would carry no stigma once received.

I agree. IMO dole debit cards should not only be fluorescent red but have flashing LEDs and when used the reader should have a sexy computer voice that says in a mocking tone 'loser'.

Maybe they aren't a loser. Maybe they had legitimate bad and unforseen fortune. But pretending it is ok to live off your fellow man won't help them overcome their circumstance any time soon.

Are you okay with The Fed

Are you okay with The Fed giving the banks this money?

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I'm not okay with the EXISTENCE of the Fed.


In other words, move the bulk

In other words, move the bulk of your wealth into gold, silver and crypto-currencies before the IRS starts going door-to-door to take everything you have.

Wow I Was Just Reading About This Proposal In His Book

"What It Means To Be A Libertarian" (as in reading it within the last two hours).

Of course Rothbard said we don't want a streamlined, more efficient welfare state.

"Bipartisan: both parties acting in concert to put both of their hands in your pocket."-Rothbard

This of course would result in massive layoffs for government

employees and a loss of control for the central planners. Cutting corporate welfare would have a devastating effect on campaign donations and we all know that eliminating agricultural subsidies would cause all farming to abruptly end. Without central planning government employees, funded campaigns, and farming, the world would starve, terrorists would race across the boarders and Iran will develop atomic bombs. Is that the kind of world we want to live in?


:C) Totally enjoyed your humor, truxtonc. Had to read it twice, what can I say, I need more coffee!

Who cares if Iran has nukes?

Who cares if Iran has nukes? Not our concern.

The satire crept slowly on

The satire crept slowly on me. I was halfway through a rebuttal of "eliminating agricultural subsidies would cause all farming to abruptly end" before it dawned on me. Good show, old chap.



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I have said it to some sheep

I have said it to some sheep over the past couple of years.

If QE is supposed to be the answer, why not just give the people the 85B/month and let them spend it?

But, but, but it's trickle up theory!

If you give 85 million people each $1000/month, not all of them will spend it and some will put their money in the banks and the banks will get the support from the market!

Did I do that right??? lol

The Fed must help the banks

The Fed must help the banks and not the people

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