Time for a guaranteed income? The pros and cons of a welfare idea championed by liberals and libertarians alike.

• Author: de Rugy, Veronique
• Position: Columns - Column

Switzerland will soon hold a nationwide referendum on granting a guaranteed and unconditional minimum monthly income of $2,800 for each Swiss adult. In America, where Lyndon Johnson's War on Poverty just celebrated its 50th anniversary of failing to achieve victory, liberals jumped on the Swiss news to reconsider the un-American-sounding idea of a universal basic income.

Surprisingly to some, they were joined by many libertarians. The list of intellectuals who have made cases for a guaranteed minimum income over the years includes such laissez-faire luminaries as Milton Friedman, Friedrich Hayek, and Charles Murray.

Friedman favored a negative income tax (NIT), in which taxpayers who earn less than the established minimum taxable income level would receive a subsidy equal to some fraction of that difference. (A watered-down version of this became the Earned Income Tax Credit.) Hayek defended a minimum income floor, in which the government provides a conditional income to each adult. Murray's 2006 book In Our Hands argued for an unconditional $10,000 annual cash payment to all adult Americans, coupled with a repeal of all other welfare transfer programs.

Their proposals aim to fully replace the current welfare state with a less-bad alternative. In a world where government already redistributes income, with all of the inefficiency that comes with overlapping bureaucracies, the idea of direct cash payments has an intuitive appeal because of its comparative simplicity and fairness.

Any alternative might seem preferable to the welfare system we currently have. Federal welfare in the U.S. today consists of a highly complex maze of 126 separate anti-poverty programs, many of which are redundant. (There are, for instance, seven different housing programs.) While the system benefits the many government employees who manage these duplicative programs, it is neither easy for poor Americans to navigate nor is it an effective way to deliver anti-poverty services.

According to Cato Institute analyst Michael Tanner, the federal government spends close to $1 trillion each year at the federal, state, and local levels on anti-poverty programs--everything from Medicaid to job training to food stamps. After adding in the bureaucracy that attends to applying for food stamps, rent subsidies, and everything else, it isn't hard to imagine how moving to a cash transfer system would make the entire process far less time-consuming and humiliating for the poor. In...