Conservatives are losing their minds over economic reforms that already exist

When reforms like a universal basic income are proposed, the right claims they're crazy. Milton Friedman disagrees!

Topics: Economics, Media Criticism, Rolling Stone, land value tax, Capitalism, universal basic income, wealth fund, public banks,

Conservatives are losing their minds over economic reforms that <em>already exist</em>Milton Friedman (Credit: AP/Eddie Adams)
This post originally appeared on Demos.

Jesse Myerson has a piece at Rolling Stone detailing five economic reforms he believes millennials should be fighting for. His proposed reforms are a job guarantee, a universal basic income, a land value tax, a sovereign wealth fund and state banks. I do not generally care for framing that talks about what millennials should be fighting for because it does not really make any sense, but the five reforms he lists are basically doable and have been written about here and elsewhere before.

Nonetheless, a massive conservative backlash ensued on Twitter in response to the piece. On some level, this kind of reaction is to be expected. Conservatives prefer our institutions as they exist and the way they distribute power, income and wealth in society. But the conservative backlash did not center around how they just prefer another system. Instead, it was almost universally premised on the idea that these reforms are fundamentally impossible. This is a popular conservative rhetorical move because declaring impossible all of the things that are so much more appealing than what they have to offer is the only real way to advocate the terrible things they support.

Nonetheless, with the exception of Myerson’s call for a job guarantee, all of the other reforms he proposes — a universal basic income, a land value tax, a sovereign wealth fund and public banks — are clearly possible because they already exist in the world.

Universal Basic Income

The U.S. already has a basic income system called Social Security. Every month, a check is sent to every qualifying elderly person in the country. The program pulled 22 million people out of poverty last year and overwhelmingly accounts for the 71 percent reduction in elderly poverty we have seen in this country since 1960. It is the most successful anti-poverty cash transfer program in the history of the country. There is no reason why you cannot, at least on some scale, replicate this program in the country as a whole. Just as the federal government can send checks to elderly people each month, it can send checks to everyone else each month.



I think Myerson may overstate how far we can actually push such a program when he suggests we could construct it in a way that allows a lot of people to drop out of the formal labor force. Too big of a reduction in the size of the paid labor force would cause a UBI program to descend into a death spiral and unravel. But this is a quibble about how big to make the UBI, not with the UBI itself. At some UBI benefit level, the program is entirely doable. To avoid pushing it too far and causing a labor supply death spiral, I have advocated starting such a program at a relatively modest benefit level and then building it up from there.

Although the ignorant but deep bench of conservate Twitter users reacted to this proposal as if it is some sort of manifestly absurd impossibility, conservative superstars Charles Murray, Milton Friedman and F.A. Hayek have registered support for it in the past.

Land Value Tax

Land value taxes of one form or another already exist in this country as well. Pennsylvania seems especially fond of them. Most recently, the city of Altoona, Pa., switched over to a pure land value tax, replacing the more conventional property tax it used to levy. The proposal to levy a land value tax should be the most non-controversial on the list. Municipalities already tax land value to some degree because property taxes are levied against land value as well as the buildings that sit on top of the land. Obviously it is not absurdly impossible to change from assessing taxes on land plus buildings to assessing taxes on just land.

Implementing this tax has some normative appeal insofar as nobody makes land and so taxing its value does not run afoul of any notion that people should not be deprived of the product of their labor. But more than that, most arguments for the land tax center around its ability to encourage economic production and growth. Taxing land allows you to reduce taxes on things like the construction of buildings (subjected to property taxes), work (subjected to income taxes) and investment (subjected to capital gains taxes). If conservatives believe their own arguments about how devastating to growth such taxes are, switching to a land value tax should be a huge priority for them.

As with the UBI, this proposal has also scored substantial support from those on the right side of the political perspective. The person credited with coming up with and popularizing it, Henry George, was a libertarian.

Sovereign Wealth Fund

America is already home to a number of sovereign wealth funds as well. The purest sovereign wealth fund is the one Alaska runs called the Alaska Permanent Fund. It is like a big endowment for the state, and the returns from it are sent out each year to every Alaskan citizen in the form of a social dividend (which is itself a kind of basic income). But it is not just Alaska. Every single public employee pension fund in the country is a kind of sovereign wealth fund. The state manages a big fund of money and pays out benefits from it to public employees. In some places, states have failed to put enough money into the funds to match the benefits they have promised, but the funds themselves are generally well-managed and function just fine.

As with the prior two proposals, this is entirely doable. These things already exist in the world and do perfectly fine. There is nothing about them that makes them impossible.

Public Banks

This country is already home to a state-owned bank in North Dakota that has been in existence for nearly 80 years. According to the Public Banking Institute, 20 other states are considering starting public banks themselves. While I do not personally understand why some people get so excited about these things, you cannot say they are manifestly impossible. Once again, they already exist in the world.

* * *

As someone who has written about and advocated most of these things before, I find one of their great charms to be precisely how totally doable they are. There are some on the left who make hand-waving proposals that are hard to understand and do not seem like they would work. Then there are others who just refuse to make proposals at all, arguing that our mental horizons are too captured by capitalism for us to properly think about what we can and cannot do. But these proposals are nothing at all like that stuff. They are concrete proposals that are easy to understand and that you could successfully implement tomorrow if you really wanted to.

Conservatives who loudly claim that these reforms, which, to repeat, already exist in the world right now as we live in it, are total economic impossibilities are obviously wrong. But with any reforms as downright pleasant and awesome as these, denying that they are possible is the only option conservatives really have.

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