A BIG Paradigm Shift for Society: A Speculative Look at Some of the Implications of Introducing a BIG

Abstract

Austrian economists argue that the economy is a complex system too unpredictable to be controlled or managed by government. Indeed any interference from the state in production or prices has the potential to make things worse. If existing welfare state programs are replaced by a revenue-neutral BIG, the same level of “generosity” would produce a tiny fraction of the deadweight loss. It would also prevent negative consequences of market interventions that Austrians are concerned about, including the effect of subsidies upon prices. The welfare state would be disbanded, allowing for price flexibility in markets where the welfare state currently sets prices (see Weber, Chapter 4 ). Housing and food price bubbles could be avoided as the state would no longer be targeting those sectors with subsidies and preferential treatment. In general, the state would pull out from the market economy, unleashing the forces of the free market. The simple policy of a universal basic income guarantee (BIG) would achieve the same purposes as the welfare state, with none of the side effects Austrian economists have found in the current system.