Will the Swiss Get a Guaranteed Income?

In June, the Swiss will vote on a referendum that would set a guaranteed minimum income.

Although the details are not spelled out – which is rather strange considering it is an initiative to be voted on soon – the campaigners have generally been calling for an income of 2,500 Swiss francs per month for adults, and 625 Swiss francs per month for children.

The U.S. dollar is currently around par with the franc, so this would be about $2,500 and $625 respectively.  This would mean a guaranteed income of about $30,000 for a single individual without a family.  A family of four would be looking at $75,000 per year.

The first thing to note is that apparently socialists (or some variant) infect every livable corner of this entire planet.  If this can happen in Switzerland, it can happen anywhere.  We’ll see what happens with the actual vote, but just the fact that this is an initiative  that will be voted on is saying something.

And that leads to a second point.  You would think Switzerland would be the last place on earth to consider something like this.  Not only does the country have a long history of liberty (relatively speaking), it is also a very decentralized country.  This is probably one of the main reasons it has been able to maintain neutrality in foreign affairs and stay relatively free.  Decentralization tends to work in favor of liberty.

But what are the possibilities of such a program being enacted, not just in Switzerland, but also the United States?  There have not been any serious proposals in the U.S., such as pending legislation, but there have been suggestions about a guaranteed national income.

There may be, at least in one sense, some libertarians who would actually be sympathetic to the proposal.  To be sure, there probably aren’t many libertarians advocating it in Switzerland.

The one aspect that could be attractive to libertarians is the hope that it would do away with the rest of the welfare state.  If you are a family of four making $75,000, what justification is there for subsidized housing or food stamps?  Why would you need government healthcare, when you should be able to easily afford insurance at that point?  Of course, this is assuming minimal price inflation.

And what about the minimum wage?  If a single person is guaranteed $30,000 per year in the U.S., there is no need to have a minimum wage, even if it actually did “work”.  Someone could go out and make $5 per hour ($10,000 per year) and still have an income of $40,000 at that point.

Unfortunately, as libertarians, we also know that it wouldn’t work this way.  You can’t get rid of the lobbyists that easily.  You can’t get rid of the vote-buying that easily.  There will always be someone with a “need”.  There will always be inequality that constitutes an injustice to somebody.

The other factor, as mentioned above, is inflation.  How would the Swiss (or Americans) pay for such a scheme?  The tax money doesn’t magically appear out of thin air.

A family of four might get $75,000 per year, plus whatever regular income they make, but they also might find the average house price in the U.S. to be over a million dollars.  They might find gasoline going for $12 per gallon.  They might find a casual lunch out to cost $50.

And that is the key here.  We know that there is no magic.  Wealth is produced based on the savings and investment that go into production.  The most wealth is produced when we live in a society that upholds property rights and allows voluntary individuals to engage in peaceful economic activity.  If there is a magic formula, this is it.  You don’t get rich by shuffling around bank accounts and printing gobs of money on a computer screen.

Ultimately, I don’t think such a proposal would fly in the United States.  There are too many special interests who do not want a change to the current system that we have now.

For the sake of the Swiss, let’s hope this referendum fails overwhelmingly.  If for some reason it does pass, it would make for an interesting experiment.  Then again, Venezuela is an interesting experiment right now, which is translating into massive suffering for millions of people.

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