By: HEIN MARAIS.
See original post here.
We are at a point in SA where hardly anyone disputes the need for additional income support. Worsening destitution, the prospect of instability and a fear of insurrection are focusing minds on the need for fresh social protection.
The finance ministry seems open to a “jobseeker’s grant”, while the department of social development may be leaning towards a wider basic income transfer. The latter approach has drawn sympathy even from a former Goldman Sachs chief, and is being pushed by a growing alliance of civil society groupings.
It is important to recognise that the underlying reasons for our social crisis are entrenched.
We have an economy that is structured in ways that generate vast wealth, but without the paid labour of close to half the adult population. This is not a cyclical or temporary problem, it is structural: anchored in history and reinforced by our macroeconomic, trade and industrial policies.
The core problem is not unique to SA — economic historian David Harvey noted several years ago that globally, “labour is becoming less and less significant to how the economic engine of capitalism functions” — but it is obscenely obvious here. Worse, not only are jobs scarce but having one does not mean you will not be poor. About a third of people with paid work in SA do not earn enough to consistently afford basic living expenses, and close to a fifth of workers in the formal sector live in poverty.
Amid all this our economic and social policies remain wedded to a double fiction — that paid work will some day soon be available to those who seek it, and that the work will bring security and comfort. Neither current reality nor our history offers any empirical basis for that faith.
Many millions of South Africans are trapped between an economic and social order that insists they sell their labour to “earn” the chance of a relatively dignified life, and an economy that only needs the labour of a fraction of the population. All this while battling the Aids, tuberculosis and Covid-19 pandemics, contending with climate change-triggered droughts and floods, and being betrayed by ramshackle governance.
Little wonder that the demand for a basic income guarantee is gaining traction.
But quite different ideas circulate about the purpose, design and scope of such a scheme. Libertarians and others on the Right of the political spectrum favour a small cash payment that replaces most other forms of social protection. Mainstream supporters see it as stopgap security against destitution, while economic growth reboots and more jobs come online.
Progressives see it more expansively, as a component of an overhauled development strategy that can answer to the needs of society and help us punch through the upheavals that lie ahead. Such a universal basic income would be a regular (monthly) income that is paid unconditionally to all adults without means testing or work requirement. It would function alongside existing income support (such as the child-support grant, old-age pension and disability grant) and would complement other forms of social wage support for low-income earners.
The dozens of studies I have reviewed in my new book, In the Balance: The Case for a Universal Basic Income in South Africa and Beyond, show that a universal basic income, even if set at a low amount, would reduce poverty and household debt, improve health and education outcomes, and broaden the life choices of low-income households. We can expect it to support resilience at community level, which is vital in the face of climate change and as the economy shifts to a more sustainable footing.
Modelling shows that more income for poor households would increase demand for basic goods and services (low-income households spend a far bigger share of their income on necessities compared with well-off households), which should boost local production and jobs. The research evidence offers no basis for the claim that a basic income would encourage “idleness”. Instead, increased employment among recipients is a common outcome, while spending on so-called “temptation goods” (alcohol, narcotics, cigarettes) tends to drop.
A universal basic income avoids the typical inefficiencies and unfairness associated with targeted and/or means-tested transfers — including incomplete coverage, large exclusion errors, complex and expensive administration, and distorted resource allocation. In one recent study none of 42 targeted social protection schemes had exclusion errors of less than 40%.
Sadly, the Covid-19 social relief of distress grant followed that pattern. By drastically reducing administrative mediation a universal basic income offers fewer opportunities for corruption, delay and disarray. It also does not arbitrarily segment and stigmatise people with low or no income. The basic logistical needs are feasible: a centralised database (updated with birth and death registration, and immigration and emigration data) and disbursement facility (electronic transfers to individual savings accounts).
The scheme would be expensive; exactly how expensive will depend on the amount paid, how eligibility is defined and how the payment is phased in and ramped up. However, upfront claims about its “unaffordability” are disingenuous, and alarmism about personal income tax hikes and rising debt levels are misplaced. Costing estimates for different universal basic income scenarios in SA are being developed, along with financing options, many of which are desirable irrespective of whether a universal basic income is introduced. These should be refined, debated and improved.
Along with the many advantages of a universal basic income are unanswered questions and risks. But the likely benefits are so urgent and potentially far-reaching that we should be examining — with open minds — the promise and practicalities of a universal basic income.
The push for a full-fledged universal basic income recognises the profound nature of our crisis and the need for responses that go far beyond tweaking policies.
New economic and social arrangements are needed to boost community resilience and protect society in the face of onrushing economic, public health and climate-change-triggered calamities.
In a host of ways, some less obvious than others, a universal basic income can be a vital part of that process.
• Marais is author of “In the Balance: The Case for a Universal Basic Income in South Africa and Beyond”.