A professor of philosophy at the University of San Diego, Zwolinski was the creator of the “Bleeding Heart Libertarians” blog, active from 2011 to 2020. Fleischer, also a libertarian, is professor of finance at the university’s School of Law. As Zwolinski wrote on the blog, bleeding-heart libertarians “believe that addressing the needs of the economically vulnerable by remedying injustice, engaging in benevolence, fostering mutual aid, and encouraging the flourishing of free markets is both practically and morally important.” The blog’s motto, “Free markets and social justice,” suggested “a new and distinct vision of libertarianism.” Not a small thing!

In its ideal form, UBI would be an unconditional and equal cash transfer given monthly (or semi-monthly) by the government to all individuals or families. The idea goes by other names, such as “basic guaranteed income.” A “negative income tax” is one of its different forms. Zwolinski and Fleischer note that people of many political persuasions agree with the idea, including many who describe themselves as classical liberals or libertarians.

No-brainer? / Replacing the inefficient patchwork of current welfare-state programs (more than 100 at the federal level alone) with a UBI seems like a no-brainer. The stand-by protection it would provide against poverty could make politically palatable the abolition of many economic regulations, including those that harm the poor, such as occupational licensure, minimum wages, trade union privileges, and protective tariffs.

Another argument for a UBI is that the same assistance could be offered at lower taxpayer cost or, alternatively, provide more assistance to the poor at a given cost because “cash transfers allow individuals to make their own decisions about what they need most.… There is good reason to think we’ll make a bigger improvement in people’s lives by giving them cash rather than goods and services.” For anybody who is not a paternalist, cash assistance appears to be more efficient, although there could be a question as to whether some people who cannot support themselves can be presumed to be efficient at managing a budget. If the UBI replaced all existing assistance programs, pure administrative costs (determining eligibility, sending checks, monitoring fraud, and such) would likely go down, too.

Moreover, the economic cost of assistance would decrease because of the disincentive effect of many government programs. For example, if beneficiaries know they will lose Medicaid by earning a bit more, their incentive is to limit their production and earnings to remain on assistance. Zwolinski and Fleischer note a Congressional Budget Office estimate that, for households around the poverty line, the implicit marginal tax rate when getting off assistance programs is 34 percent on average, meaning the household loses $34 in assistance for every $100 its occupants earn on the market.

These efficiency arguments led some classical liberals to support a UBI. Milton Friedman’s proposed approach was the negative income tax, which uses the tax system to establish an income floor below which nobody can fall. A negative income tax works like a subsidy when one’s earned income is lower than one’s “allowance” (one’s standard deduction or personal exemptions in the calculation of one’s income tax). If one’s earned income is zero, the negative income tax would pay the exact amount of what would be a UBI equivalent. As earned income increases over that guaranteed minimum, the subsidy (negative income tax) gradually phases out by a percentage equivalent to the tax rate. A negative income tax and the part of the allowance it guarantees is arithmetically and fiscally equivalent to a UBI.

The equivalence between a UBI and a negative income tax allows us to see how, despite being given to all citizens (or residents) of a country, a UBI will be recaptured in income tax from taxpayers who have earned income. Zwolinski and Fleischer explain all this with numerical examples.

To help maintain the classical liberal society where markets largely replace reliance on family and other traditional support groups, Friedrich Hayek also agreed with the establishment of a minimum income floor, but only for those who could not provide for themselves. Sometimes, conservatives have also lent a hand to the UBI project, if only to bribe voters. In 1969, President Richard Nixon proposed a watered-down UBI, the Family Assistance Plan, but it ultimately failed in Congress. However, progressives (“liberals” in the American sense) remain the main UBI promoters.

Not so fast / On more careful inspection, however, a UBI is not that much of a no-brainer. For one thing, consider its cost. Giving each person (including children via their parents) $1,000 a month would, according to Zwolinski and Fleischer’s estimates, cost about $4 trillion a year, which corresponds (in fiscal year 2023) to nearly two-thirds of federal expenditures and about 90 percent of all federal revenues. But it would still leave a non-working single person slightly below the federally determined poverty line (about $14,000 a year). A more realistic payment of $500 a month per person would leave even a family of two parents and two children below the family poverty line ($28,000). In most cases, though, the UBI would substantially reduce deep poverty (defined as household income that is half the poverty threshold). These back-of-the-envelope calculations suggest that a UBI is either unaffordable or else it does not lift everybody out of poverty.

Obviously, at least some of the existing welfare programs would have to be partly or totally replaced by the UBI, if only to reduce the net cost. The question is which ones. What happens to people who would be poorer after the establishment of a UBI—say, because they were heavy users of Medicaid? Would the UBI replace school subsidies? Food stamps? Social Security? The answers would of course be political, which does not bode well for the integrity, cost, or efficiency of the project.

In any event, Zwolinski and Fleischer opine, it is difficult to imagine how a UBI could add less than $1 trillion to federal expenditures. Financing could require a value-added tax of about 10 percent, or an income surtax in the 7–9 percent range. Even a modest $500 UBI would bring the ratio of government expenditures close to European levels.

A pure UBI, which is unconditional, may have little effect on the incentives to work at the bottom of the income scale. Higher income earners, however, would pay more taxes, which would affect their incentives and likely reduce total national income (the sum of all incomes) compared to what it would otherwise have been.

Libertarian justifications? / There are other issues besides taxpayers’ cost and economic incentives. For many people, providing some sort of safety net is a matter of ethics, and the UBI’s relative efficiency would make it preferable to other welfare programs. But it is not a simple matter. Zwolinski and Fleischer believe that “society has (at minimum) a duty to provide a basic safety net to all and that a UBI is the best means of doing so.” But who is “society”? Where do these duties come from? Vague claims of “social justice” won’t do.

Zwolinski and Fleischer invoke some moral arguments that are often endorsed by libertarians and may support a UBI. One argument goes back to John Locke’s proviso that land can be privately appropriated only if there is “enough and as good left” for others. This is not literally possible because the best land will be appropriated first. This line of thought justifies Henry George’s Single Tax on the value of unimproved land and the redistribution of its proceeds to landless individuals. The redistribution could be done via a UBI. “Still,” Zwolinski and Fleischer note, “most libertarians remain skeptical of a UBI,” which may be an understatement. The Lockean–Georgist argument, though, carries some weight.

Zwolinski and Fleischer rapidly evoke James Buchanan’s idea of “income insurance,” which could also take the form of a UBI. This argument may be the strongest defense of their thesis from a political philosophy viewpoint. With his co-author Gordon Tullock, Buchanan argued that rational participants in a social contract might recognize income insurance as a legitimate function of the state. Uncertain of his economic future, including the danger of being exploited by winning coalitions, the virtual adherent to the social contract may want a regime of income insurance. In his later work, Buchanan even left open the possibility that the social contract could include side payments (bribes) to win the consent of individuals who think they would be more efficient in a Hobbesian war than in a peaceful liberal society. The bribes could take the form of a future UBI. We’ll pay them to keep the peace, as it were.

The authors of Universal Basic Income do cite a still-later article in which Buchanan argues that equal-per-head “demogrants”—in other words, a UBI—“financed by a flat rate of tax on all incomes” could promote the general welfare. The general welfare can only mean the welfare of everybody according to nondiscriminatory rules. I think our authors’ plea would have been more convincing if they had emphasized this line of thought. They would, however, have had to deal with the problem that, in our societies, the income tax is not proportional but progressive, a feature that, along with “social justice,” does not appear consistent with Buchanan’s nondiscriminatory requirements.

Problems and questions / Where does that leave us? With many problems and questions. I think it is far from sure that a realistic UBI would lead to less pressure for governments’ interference in markets. Many non-libertarian promoters see the project as just another dirigiste measure, if not the key to open the gate wider to the socialist paradise. Other measures will be demanded to solve the problems remaining after a UBI is implemented.

I also think libertarian promoters overestimate the capacity of politics to deliver the sort of UBI they want. As we saw, it is not a panacea to abolish poverty. And how long would the UBI remain an equal cash transfer? Peter Boettke and Adam Martin have quite persuasively argued that what we know about political institutions, processes, and incentives seriously suggests that a real-world UBI would be very different from its ideal version.

The UBI comes to the political table with a lot of baggage. That Andrew Yang made the idea a central part of his 2020 presidential campaign is one indication among many. Zwolinski and Fleischer point out that many UBI supporters see it as a requirement of “social justice.” Social justice apparently includes what “we as a society” (an expression the authors use twice) owe to those—presumably also part of the “we”—who have suffered injustices committed by the rest of “we.” The logic of this conceptualization is not airtight.

Besides the many flaws in the concept of social justice, Zwolinski and Fleischer, like most analysts, accept a bit too uncritically the conventional wisdom that inequality is large and growing in the United States—despite, paradoxically, half a century of expanding the welfare state. Phil Gramm, Robert Ekelund, and John Early’s 2022 book The Myth of American Inequality convincingly argues that, correctly measured with published but neglected government statistics, (real) income inequality after transfers and taxes has decreased over the past half-century. (See “Is Inequality Bad, Large, and Increasing?” Winter 2023–2024.) They also show that the increased inequality in market income (before transfers and taxes) reflects some real incomes increasing faster than others, often because of personal choices, regarding education or marriage for example. Some rethinking is required on this front.

The moral belief that one should support oneself (and one’s family) if physically able to is not vacuous. A UBI, especially a generous one, would send the opposite signal, that an able-bodied person can live off an abstract and benevolent government in a free Garden of Eden. In the typical European country and some others such as Canada, even in the absence of a formal UBI, an able-bodied individual can typically live off the state, and the results have not been heavenly. In what appears to be the dawn of a new age of populism and irrationality, perverse effects would likely multiply.

Temptations and realities / Can we hope that more potential leisure would allow individuals to spend more time reflecting and forming informed opinions on philosophy, economics, and public affairs? Perhaps this would happen in some ideal society, but hic et nunc individuals relieved from the responsibility of self-reliance are arguably more likely to become supporters of tyrants or else become idle and bored nihilists open to violent adventures.

Zwolinski and Fleischer approach their topic intelligently and offer some good arguments. In my view, though, they underestimate the bad consequences of a UBI in our social and political climate allergic to individual liberty. We are not starting from an innocuous state in a society imbued with classical liberal ideas. We can probably turn against Friedman’s espousal of a form of UBI something else that he wrote in Capitalism and Freedom:

If, for example, existing government intervention is minor, we shall attach a smaller weight to the negative effects of additional government intervention. This is an important reason why many earlier liberals, like Henry Simons, writing at the time when government was small by today’s standards, were willing to have government undertake activities that today’s liberals would not accept now that government has become so overgrown.

In short, UBI is an idea for another world. Hayek’s idea of an income floor for those physically unable to support themselves or their families looks better adapted to our world. Such a conditional “BI” is not far from the current system, which could still be improved by reducing its disincentives to work. Perhaps this sort of conditional income floor can even be reconciled with Buchanan’s original idea of income insurance?

Moreover, the problem of those who are prevented by law from supporting themselves—by occupational licensure, minimum wages, union privileges, tariffs, and many other regulations—suggests a big freedom reform in which it may be more promising to invest effort. As I mentioned, it is far from sure that a UBI would facilitate such a reform. Instead of attacking the windmills of often illusory injustices, we should stop the glaring ones currently committed by governments themselves.

An any rate, an ideal UBI raises so many questions that the best guidance probably consists in applying the first principle that Anthony de Jasay proposed for government intervention in a liberal society: “In case of doubt, abstain.”

Readings

• Boettke, Peter, and Adam Martin, 2011, “Taking the ‘G’ Out of BIG: A Comparative Political Economy Perspective on Basic Income,” Basic Income Studies 6(2): 1–18.
• Buchanan, James M., 1997, “Can Democracy Promote the General Welfare,” Social Philosophy and Policy 14(2): 165–179.
• Buchanan, James M., 2011, The Limits of Liberty: Between Anarchy and Leviathan, University of Chicago Press.
• De Jasay, Anthony, 1997, Against Politics: On Government, Anarchy, and Order, Routledge.
• Friedman, Milton, 1962, Capitalism and Freedom, University of Chicago Press.
• Munger, Michael, 2015, “One and One-Half Cheers for a Basic-Income Guarantee,” Independent Review 19(4): 503–512.