The idea of a minimum income has been around for a long time. (Often
introduced with a funny kind of ad hominem, that Milton Friedman was a
proponent.)
At any point in time, the recipient is indifferent between a check which
has the words “minimum state-guaranteed income” printed on it and one
that says “dividend on capital.” To the recipient, there are two main
differences between the two. The first is that you can’t sell the
government’s promise to pay you the minimum income, but you can sell
capital assets. This leads to the idea that the minimum income is either
equivalent to, or could be replaced by, a “forced savings” regime in
which would-be indigents are not permitted to divest themselves of
capital below a certain level. Dividends accruing on that level are the
minimum income.
The other difference, though, between capital assets and a
state-guaranteed minimum income, is that shares in the nation’s
(world’s, whatever) capital assets don’t magically split every time
someone has a baby. The promise to pay everyone just for being alive,
does. I’m skipping some expository steps here because I doubt very many
people will read this, but the unavoidable conclusion is this: no
society can collectivize responsibility for the maintenance of a minimum
income while privatizing (keeping private) the decision to bear
children. It can’t be done, not in the long term anyway.
The minimum asset portfolio or “forced savings” scheme fails to achieve
its visible goals for the same reason: the people who need to be forced
to save are the same people who will have “too many” babies and dilute
their portfolios among their posterity, who will be poor again. Either
you start those babies out with a state-issued portfolio, which case
reduces back to a guaranteed minimum income program, or you don’t, which
case reduces to nothing at all.
One response to this, which I think ought not to be dismissed out of
hand, is: so what? Some people will be poor (“poor”) and some won’t.
Birthrates among the less productive will be lower than they are in a
welfare state but higher than they’d have to be to maintain some
arbitrarily acceptable level of consumption. To anyone who says it’s not fair
being born poor, the partial response would be to ask whether it was
better not being born at all. (There is the mathematical possibility of
a Malthusian trap in this scenario, which would force us into a
different response.)
Another response which I’ll deal with quickly is that “charity” could be
called upon to raise consumption levels among this population. This
doesn’t affect my point. Either the charity comes without
strings, which makes it, for the purpose of this discussion anyway, the
same as the state-guaranteed minimum income idea, or else it does come
with Victorian Era-type strings on it, which validates my point that
collective responsibility for consumption levels necessitates a
collective stake in the baby-making decision. (Which, if it is to have
any teeth, means denying compassionate charity to people who do certain
things like bear bastards or abuse drugs. The libertarian policy on this
point is usually to not discuss it.)
Another thing to do is acknowledge my conclusion from the other end:
collectivize the baby-making decision among the indigents. Make
sterility a condition for receiving minimum-income checks. This is
another idea that has been suggested many times before and shouldn’t
be rejected out of hand. We have very cheap, safe, effective technologies
for keeping women from getting pregnant for extended periods of time.
The thing I’m getting at here is that welfare payments are not simply
transfers from a static population of responsible productive people to a
static population of ¬responsible ∪ ¬productive people—and the effects
go far beyond the normally-discussed labor substitution effect of
taxation. There’s no way to effect those transfers without subsidizing
baby-making among the latter and literally taxing it among the
former. Hence, dynamic population effects.
The whole discussion should highlight an important general point: You
can’t do economics without thinking about sex and babies. The basic
Solow model includes population growth but only in a basic way:
population grows exogenously at a linear rate, and, of course, all babies are the same. As a simplifying mathematical device, this is acceptable; as a statement about the world, it’s idiotic.
The Solow model is a triumph, but like anything its limitations are as important as its
insights.
This post has direct implications for immigration. It also tells you something about the glorious progressive future: the cultural inertia that protects the relationship between parents and children and the freedom to reproduce won’t hold out forever, because mathematically it cannot. This is already happening.