[ExI] Friedman and negative income tax

Damien Broderick thespike at satx.rr.com
Sun May 3 22:14:53 UTC 2009

While I still regard some form of GI as a 
plausible mechanism to ease the transition from a 
toil economy to one based on cheap or free matter 
compilers, etc, I'm also struck (as someone who 
was powerfully moved by Heinlein and Rand as a 
teen and young adult) with the stern, resolute 
Protestant Ethic of Rothbard in his assault on Friedman Sr.:


<...the supply of welfare clients is inversely 
proportion to another vitally important factor: 
the cultural or value disincentive of going on 
welfare. If this disincentive is strong, if, for 
example, an individual or group strongly believes 
that it is evil to go on welfare, they will not 
do it, period. If, on the other hand, they do not 
care about the stigma of welfare, or, worse yet, 
they regard welfare payments as their right – a 
right to exert a compulsory, looting claim upon 
production – then the number of people on welfare 
will increase astronomically, as has happened in recent years.

There are several recent examples of the "stigma 
effect." It has been shown that, given the same 
level of income, more people tend to go on 
welfare in urban than in rural areas, presumably 
as a function of the greater visibility of 
welfare clients and hence the greater stigma in 
the more sparsely populated region. More 
important, there is the glowing fact that certain 
religious groups, even when significantly poorer 
than the rest of the population, simply do not go 
on welfare because of their deeply held ethical 
beliefs. Thus, the Chinese-Americans, while 
largely poor, are almost never to be found on welfare. ...

Another example is the Mormon Church, very few of 
whose members are on public welfare. For the 
Mormons not only inculcate in their members the 
virtues of thrift, self-help, and independence, 
they also take care of their own needy through 
church charity programs which are grounded on the 
principle of helping people to help themselves, 
and thereby getting them off charity as quickly 
as possible. Thus, the Mormon Church counsels its 
members that "to seek and accept direct public 
relief all too often invites the curse of 
idleness and fosters the other evils of dole. It 
destroys one’s independence, industry, thrift, 
and self-respect." Hence, the Church’s highly 
successful private welfare program is based on 
the principles that the Church has encouraged its 
members to establish and maintain their economic 
independence: it has encouraged thrift and 
fostered the establishment of employment-creating 
industries; it has stood ready at all times to help needy faithful members.

Our primary purpose was to set up, in so far as 
it might be possible, a system under which the 
curse of idleness would be done away with, the 
evils of a dole abolished, and independence, 
industry, thrift, and self-respect be once more 
established among our people. The aim of the 
Church is to help the people help themselves. 
Work is to be re-enthroned as the ruling 
principles of the lives of our Church membership. 
. . . Faithful to this principle, welfare workers 
will earnestly teach and urge Church members to 
be selfsustaining to the full extent of their 
powers. No true latterday Saint will, while 
physically able, voluntarily shift from himself 
the burden of his own support. The Libertarian 
approach to the welfare problem, then, is to 
abolish all coercive, public welfare, and to 
substitute for it private charity based on the 
principle of encouraging self-help, bolstered 
also by inculcating the virtues of self-reliance 
and independence throughout society.

But the Friedman plan, on the contrary, moves in 
precisely the opposite direction, for it 
establishes welfare payments as an automatic 
right, an automatic, coercive claim upon the 
producers. It thereby removes the stigma effect 
altogether, disastrously discourages productive 
work by steep taxation, and by establishing a 
guaranteed income for not working, which 
encourages loafing. In addition, by establishing 
an income floor as a coercive "right," it 
encourages welfare clients to lobby for 
ever-higher floors, thus continually aggravating the entire problem. >

I haven't read much Rothbard in recent decades, 
so I find myself wondering: does he--and other 
libertarians who maintain this view--argue 
equally for the confiscation of inherited wealth? 
(Confiscation by whom? I realize this is a 
problem in even forming the question, since it 
seems so ineluctably... statist. Still.) After 
all, the offspring or other parasitical 
beneficaries of the dead wealthy are liable to 
immediate, continuing and soul-ablating ruin of 
the kind, as we have learned from Rothbard, that 
destroys the "the virtues of self-reliance and 
independence" in welfare recipients.

This is a serious question. The usual responses, 
in my experience, ignore that issue and fiercely 
defend the "right" of all wealthy humans to 
dispose of their (lawfully-acquired) legacies in 
whatever way they choose. But do we want to see 
wealthy wastrels wrecking their own lives and 
squandering wealth that might have been invested 
wisely by those instilled with the virtues of 
self-reliance and independence? (Or is this 
loafing subset of society--the 
ParisHiltonariat--too small to bother worrying about?)

Damien Broderick 

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