Thomas Paine Was A Red: Or a Primer on Libertarian Welfare Schemes


Libertarians sure are a contentious group; they love to quarrel. Did you know that Murray Rothbard wrote a one-act play satirizing Ayn Rand called “Mozart Was A Red”? Did you know that Robert Anton Wilson wrote an entire book satirizing Murray Rothbard’s natural rights approach entitled, “Natural Law: Or Don’t Put a Rubber On Your Willy”? Getting all of us to agree on anything has been likened to herding cats. That’s ok by me, I like the various factions and schisms since I am a Discordian Libertarian. I suppose it is a part of most every libertarian’s DNA to want to challenge the status quo. Heck I relish the act of blasphemy so much that not only am I an anarchist that advocates voting, but in this article I am going to actually present an argument for a libertarian welfare scheme, the “Mincome“.

Now you may disagree but I am in good company. After all, pirate and revolutionary Thomas Paine pushed for what he called the Citizen’s Dividend(CD), more recently Libertarian 5th Column badass Ed Snowden advocates a Basic Income Guarantee (BIG), and even libertarian stalwarts (and Nobel laureates) F. A. Hayek and Milton Friedman both supported the notion in different forms; Hayek liked the BIG while Friedman has his own version he dubbed the Negative Income Tax (NIT). Recently, academic libertarian Matt Zwolinski has argued for the Basic Income and stirred up a hornet’s nest of debate within the libertarian community about the welfare state.

Mincome comes in various flavors. While they may slightly vary in their details, they are ultimately methods by which some libertarians have tried to address the problem of poverty in our society. For the sake of clarity and brevity, here are some useful terms for further discussing libertarian welfare schemes:

  • Negative Income Tax (NIT)
  • Guaranteed Minimum Income (GMI)
  • Basic Income Guarantee (BIG)
  • Citizen’s Dividend (CD)

Milton Friedman’s NIT concept gives various amounts to tax filers that earn below a certain threshold. It is akin to our current “positive” progressive income tax except that it has a “negative” component that would give (in lieu of taking) based upon stated income (or lack thereof). It could work within the existing progressive income tax system and persuasive arguments have been made that the current Earned Income Tax Credit is basically a bastardized version of the NIT. This is personally my least favorite scheme.

Next up are the Guaranteed Minimum Income and Basic Income Guarantee concepts. There is a subtle, but big difference between a GMI scheme and a BIG; a GMI is a function of employment and eligibility whereas a BIG is paid regardless of employment to everyone, equally. So in this regard the NIT is actually a GMI system (not a BIG system) since the NIT requires means testing. This also means that the Fair Tax notion of a “Prebate” would be a form of GMI as well.

Thomas Paine’s Citizen Dividend concept, on the other hand, is a type of BIG. If you think of every citizen as an equal shareholder of the state, then the CD is just a dividend payment. Currently the state of Alaska has a form of CD called the Permanent Fund Dividend which has paid out as little as $331.29 (in 1984) and as much as $2,069 (in 2008) to every eligible Alaskan resident (including children).

All this theorizing is of course is a moot point since this current incarnation of the American experiment seems to be fast coming to an end. As an anarchist, such talk seems rather masturbatory as the whole shithouse is about to go up in flames of debt as we fiddle around on social media. So, after the impending debt default and collapse of the United States as we know it, how can those tasked with rebuilding “America” fund a scheme to help the less fortunate without violating the libertarian non-aggression principle (NAP)? How can these welfare schemes be called libertarian, especially when non-libertarians like Jesse Myerson at Rolling Stone and Krystal Ball (Sinn and Bedeutung anyone?) are advocating for the Mincome too!?

but Is It “Libertarian”? Was Thomas Paine a Red!?

In other words, is it only possible to fund welfare schemes by redistributing income? As one of my biggest libertarian heroes Thomas Szasz said:

“The battle for the world is the battle for definitions.”

Perhaps Zwolinski can reconcile his libertarianism with the idea of Mincome specifically because he isn’t a fan of the NAP. However, while not everyone defines their libertarianism in terms of the NAP (e.g., some proceed instead from the notion of self-ownershipnatural rightsconsequentialism, etc.), I would argue that most probably do. As such, the problem of coercion inherent in most income redistribution schemes is a problem worthy of consideration, especially for libertarians that pride themselves on their empathy for other human beings.

As I see it, many disagreements between libertarians are due in large part to different definitions of what “is” and “is not” property in their respective minds. The meanings of words are evolving and ever shifting, and so too the definition of property will likely never be settled. So unless your theory of property is somewhat congruent with the property systems of geolibertarianismThomas Paine, and other left libertarians you may not be able to reconcile libertarianism and welfare beyond that provided by mutual aid societies.

I can see how Hayek and Friedman liked the Mincome concepts but to be fair, there are common criticisms to Mincome. Zwolinski identified them as:

  1. Disincentive to work – Zwolinski points to studies that show that a NIT does seem to create a disincentive to work but I was surprised that he didn’t point to the Canadian Mincome experiment as a counter-point.
  2. Effects on Migration – Zwolinski points out that a Basic Income would create an incentive for the poor to immigrate here and as such would likely result in tighter immigration laws. This is a risk but this doesn’t seem to be a huge problem for the CD scheme in Alaska mentioned above (although their geography may be a barrier entry for most immigrants)
  3. Effects on Economic Growth – As Zwolinski says, “Even a modest slowdown of economic growth can have a dramatic effect when compounded over a period of decades. And so even if whatever marginal disincentives a Basic Income Guarantee would produce wouldn’t do much to hurt currently existing people, it might do a lot to hurt people who will be born at some point in the future.” I don’t know if this really warrants much concern as currently existing people need food and shelter now and I can’t really speak with any accuracy about the welfare of future people. Besides, one of the likely biggest “problems” of the future may be technological unemployment and as Robert Anton Wilson points out, a Mincome scheme is likely a solution for the future, not a problem.
  4.  Rent Seeking – I agree that this seems to be the most damning criticism. There is a very real risk that any Mincome scheme implemented will not be a replacement but a supplementary program, meaning more government. Fortunately, as the American Debt-to-GDP-Ratio recently hit 100% we can rest assured that the American Welfare State will disappear along with the rest of the American state soon. So perhaps when the rebuilding comes, a libertarian welfare scheme of some sort will be the choice du jour.

Personally, I think technology will eventually create a situation where such libertarian welfare schemes are ultimately unnecessary (this is what I’ve called “The Age of Slack”) and where effectively the cost of production of basic human necessities are so close to zero that free-riders are not only more numerous, but even more tolerated. Until then, perhaps we should consider a libertarian welfare scheme like Alaska’s Citizen Dividend?

Further reading:

The Economic Case for a Universal Basic Income by Ed Dolan

Libertarianism and the Basic Income by John Danaher

About Author

Jake Shannon

Jake Shannon (1973 - ) was born in Colorado and has worked in a hodgepodge of professions including "Quant" (i.e., financial mathematician), serial entrepreneur, Discordian Pope, radio talk show host, Chairman of the Libertarian Party of Utah, Luchador (i.e., mexican wrestler), and Comedy Hypnotist before settling upon pursuing an unwitting vow of poverty as an independent writer, practical magician (Chaos Magick) and more importantly, as a stay-at-home dad (his greatest accomplishment by far). He currently lives in Salt Lake City, Utah (which still surprises him) with his lovely wife, three bright children and three loyal dogs.

  • Kathi K.

    The Americans For Fair Taxation group’s FairTax plan is would reduce the size of government, especially by eliminating the IRS which is a MUST HAPPEN; removes the “income redistribution” argument since everyone would get the pre-bate; levels the playing field for all citizens and businesses alike meaning it’s fair to everyone; and removes the majority of reasons for lobbyists to exist since the “product” that was sold, i.e. loopholes, is eliminated. The FairTax (HR 25) is NOT a flat tax; it is a consumption tax. Income based taxation is inherently corruptible so a flat tax would not resolve the issues. The middle class has been losing economic group for decades – the middle class and poor get poorer while the rich keep getting richer proving that trickle-down economics doesn’t work and never will. Trickle-down economics means that the 99% get whatever the 1% deems appropriate which then means the country is ruled by the rich. IMHO, the best way to change this scenario is to enact HR 25 and implement The Fair Tax Plan.

  • dkw

    I favor the Fair Tax Plan