This leads to an interesting digression...

My hacker's mind sees society the same way it sees ie software layers, kernels, APIs, libraries, etc. And from that POV, current society practices seem very inefficient and disorganized, and could be improved readily with a dollop of hacker values (eg lazy but smart) and cold hard logic.

One example: I am becoming more and more in favor of a minimum guaranteed income provided by society. Here are some good arguments in favor of that: http://www.xamuel.com/ten-reasons-for-guaranteed-minimum-inc...

Of course a MGI is heresy in today's society because we are still in a mindset where it's crucial that everyone pull their own weight lest other people suffer - a lingering meme from the days when 90% of the population was occupied with food production.

This of course ignores the notions that 1) society is insanely productive thanks to automation and it requires very little labor to pay for the true necessities of life (see for instance http://www.earlyretirementextreme.com - he lives on $7k a year) 2) many jobs today are marginally useful at best - think paper-shuffling mid-management 3) most of our income goes toward consumerist escapism which fails at making us truly fulfilled 4) much of the economy just exists to satisfy society's need for a status stratification mechanism (eg one is considered middle-class because one has such-and-such job title and education - if this classification went away then there would be general status confusion).

Then again, trying to fix society the same way one re-factors code may be hubris on my part...

Yes, I've long supported the so-called "negative income tax" -- the name is confusing; what it means is that below a certain income level, the IRS gives you money instead of you having to pay it, with the amount you receive being a monotonically increasing function of your income that is zero at the same income at which your tax reaches zero.

Personally I've long been inclined to the view that we should replace our existing welfare, unemployment, and Social Security systems with the NIT. Although SS has been sold as a retirement savings system, it is really a transfer payment system, a reality that is starting to become inescapable. It's just not right, I believe, for a transfer payment system not to involve means-testing -- there's no way to justify taking money from young middle-class workers, many with families, to support retirees who are well off anyway.

For some very interesting arguments against the NIT, backed by some experimental data, see: http://www.econlib.org/library/Enc1/NegativeIncomeTax.html

I actually think the problems could probably be solved, but I have to grant that they are nontrivial.

In order to afford such a plan, governments would have to impose really high taxes. That would be a much bigger disincentive to production than the safety net itself.

The government (at least in Sweden) already imposes really high taxes. And people here are still generally wealthy as fuck (relative to most of the world) and able to use a large chunk of their income for beer, trendy clothes, smartphones, restaurants, travel, etc (ie nice-to-have luxury goods).

It's all a matter of perspective IMHO.

Of course, I'm generally leary of "solutions" that come out of the gov't but that's another story...

Sweden's wealth is made possible by the relative abundance of natural resources for its size and population: it's population (~9 million) is just a bit larger than that of the San Francisco Bay Area, but it has a GDP of $443.718 billion (i.e., higher per capita than most American states, including California).

People tend to ignore the fact that both Milton Friedman, and Friedrich Hayek both supported a negative income tax/basic income guarantee.

Did they support it relative to all alternatives (i.e., relative to pure capitalism)?

I've certainly read statements by Friedman supporting basic income/negative income tax as a more efficient alternative to the existing welfare state. But do you have a citation for Friedman/Hayek supporting it in general?

Yes, you're correct. I should have worded that as supported over our current system.

No he doesn't, because there isn't one, and your interpretation is correct.

Income tax and payroll tax seem to me to effectively be the same layer. Yes, there will be a psychological difference when people see how much is taken out of their paychecks, but that's about it.