Zwolinski on A Guaranteed Minimum Income

My colleague at the University of San Diego, Matt Zwolinski, has done some great work on libertarianism. He is the founder of the Bleeding Heart Libertarian Blog and has been doing work on drawing out what might be termed left wing conclusions from liberarianism. Back in the day, when I used to work on libertarian theory, I was very interested in this side of things, often wondering whether unjust actions by the government might justify transfers to the poor.

Matt recently wrote a piece seeking to explore the justifications of a guaranteed minimum income, and now he has written a follow up that seeks to justify it based on a republican conception of liberty and on Hayek’s writings.

Matt explores Hayek’s idea of liberty and coercion. In Hayek’s view, your employer does not coerce by demanding certain terms of employment, even pretty intrusive terms, so long as you have alternative places of employment available to you.

Matt, however, doesn’t believe this argument will always work:

But even if market competition is often a good check against private dominance, there is no good economic reason to believe that it will always be sufficient. Can we really dismiss the possibility that hard economic times, combined with an excess supply of labor and a small number of employers, will leave some employers with considerable market power over their workers? Are we really willing to say that each and every one of the outrages documented by Bertram et al. [involving harsh condition on employees] is the product of workers’ free choice, rather than (what they appear to be) something imposed on workers against their will by those who wield power over them?

If libertarians are concerned to protect the freedom of all, and not just the freedom of most, we will want some mechanism that catches those who fall through the cracks left by imperfect market competition. We will want, too, some mechanism for protecting individuals whose economic vulnerability renders them vulnerable to domination outside the marketplace – the woman, for example, who stays with her abusive husband because she lacks the financial resources to support herself without him.

Cases such as these point the way to a freedom-based case for a Basic Income Guarantee, of the sort that Hayek might very well have had in mind. A basic income gives people an option – to exit the labor market, to relocate to a more competitive market, to invest in training, to take an entrepreneurial risk, and so on. And the existence of that option allows them to escape subjection to the will of others.

I have various concerns about this argument. First, I wonder how poor someone needs to be in order to be subject to such domination. For example, if they could find another job, but at a considerably lower wage, would that subject them to domination, even if that wage turned out to be greater than others in their society or greater than the average person living in Mexico? Person A may find intolerable a situation that person B lives in and finds acceptable.

My main concern, though, relates to the number of people who are in this situation of being dominated relative to the number of people who would receive the minimum income. My guess is that most jobs do not involve intrusive or unattractive conditions and that only a relatively small subset of them are the result of the absence of alternatives. Matt does not deny that this might very well be the case.

If there are very few in this situation, then is it proper to impose a tax on everyone to fund a program that will prevent coercion of very few? One might argue that it is improper, because the tax itself is a form of coercion and will be imposed on everyone. Still, I suppose that Matt might respond, as Hayek often did, that so long as the tax is a general one, its most harmful aspects as coercion will be neutralized.  But I am not sure that this is an adequate answer when so much of the fund goes to people who are not really subject to domination.

In the end, when one looks at a guaranteed minimum income, its most obvious and greatest effect is not to protect people from coercion of the sort Matt identifies, but instead to provide income to people who are in poverty. That is the dominant effect of the program and that is the main reason why I believe Hayek supported it.  It just seems like the tail wagging the dog to attempt to justify it as preventing the kind of coercion Matt discusses.