PBS recently aired a short segment on a policy proposal known as the Basic Income Guarantee (BIG). The idea behind BIG is that all citizens in a given country should be guaranteed a basic income whether they work or not. This idea has been embraced by people on both sides of the political spectrum, from left-wing academics such as David Graeber and Frances Fox Piven to right-wing free-market thinkers such as Milton Friedman and Charles Murray.

Although the two groups agree that the policy is desirable, they see it as a means to entirely different goals. For right-wingers the idea is to use BIG as the price for purchasing an entirely free-market-based society. The welfare state — everything from food stamps to public housing to public health care — would be eliminated, and BIG would allow people to take care of their own needs. For left-wingers BIG would free people from having to do jobs that do not give them any satisfaction and allow them to pursue creative goals that they would not otherwise pursue for lack of financial support.

While BIG is a good means to raise aggregate spending and income levels in an economy plagued with deficient demand, both positions gloss over some rather serious issues. The right-wingers seem to think that BIG can make public welfare institutions unnecessary. This is unlikely. These institutions provide services that the private sector is often bad at allocating.

It is well known, for example, that the costs of health care are lower for those who need it least and more expensive for those who need it most. It is also well known that the property market is prone to speculation and that this can price people at the bottom of the ladder out of the market; that includes young professionals starting families as well as the poorer members of society. The fact of the matter is that, as economists have recognized for decades, the private sector often fails to meet the needs of citizens because of its reliance on the profit motive, and so the government sector needs to intervene to make sure that outcomes in certain sectors are equitable.

Those on the left also gloss over some of the social complexities that the welfare state seeks to address. Imagine, for example, that a BIG office opened up in a drug-addled neighborhood. Any citizen could go to this office and receive an income of, say, $2,000 a month. Even though the monthly income is intended to free people to pursue their creative impulses, without added social support the money could end up funding drug habits instead. This, in turn, would have the twin effect of leading to poorer health outcomes for drug addicts and making the violent enterprise of drug dealing even more profitable than it already is. Many children who grow up in such an environment would also likely emulate their parents by simply collecting BIG payments and buying drugs with them. What is needed in such circumstances is a program that at once increases income and ensures that people do not remain idle because, as is well known among labor economists, it is idleness and unemployment above all else that lead to problems such as drug addiction.