The term “basic income grant” (BIG) represents a number of different proposals that have in common the idea that everyone in a given political community should, on a regular basis, receive an income as a matter of right. Every recipient is entitled to an identical amount, regardless of their living environment, how many people in their household, the means they have at their disposal and whether or not they are employed. The grant is paid in cash (as opposed to food stamps or vouchers) and there is ideally no restriction on how the money is spent or saved.
Turning on its head the fundamentally capitalist ideal that we should earn our money, at the heart of the BIG proposal is the view that a basic sum of money should be something to which everyone is entitled.
Most economists investigating the possibility of a BIG in South Africa have suggested adjustments to the tax structure and many have sketched out inexpensive and feasible proposals to finance the grant. There are different suggestions as to how the grant ought to be funded, though, and each depends on the socioeconomic and political contexts in which it is proposed.
In Indonesia, for instance, an income top-up scheme has recently been introduced using funds that the government has decided to pull from fuel subsidies. I won’t go into specifics regarding implementation here; the thing to keep in mind is that the BIG can take on many different forms with many different scopes of application.
Turning on its head the fundamentally capitalist ideal that we should earn our money, at the heart of the BIG proposal is the view that a basic sum of money should be something to which everyone is entitled. Despite appearing quite unorthodox to some, the idea has legitimacy in the eyes of both left- and right-leaning economists, philosophers and public intellectuals.
If you are a lefty, then you are probably interested in reducing poverty and inequality. So you might like Erik Olin Wright’s approach, focusing on the way the BIG would effectively redistribute money while at the same time weaken the force of class fragmentation. On a similar line, Philippe van Parijs talks about the way in which the BIG would make people truly free in society.
In contrast, if you lean more to the right, then you might be interested in the way the BIG would contribute to the market; the grant reduces poverty in a way that assigns recipients financial responsibility and provides more people with the means to participate in the economy. As Steve Randy Waldman puts it: “It is among the most neoliberal, market-oriented, social welfare policies imaginable.”
The basic argument for BIG is particularly persuasive because we know that the poor have far more to gain from some extra cash than the rich stand to lose from forgoing that same amount. However, what makes it so elegant is that it has the potential to influence an intentional and meaningful transformation. An unrestricted free market does not have the capacity to pursue things like justice and equality, simply because business operations always have to favour profit maximisation.
The state, however, has the potential (and so, I reckon, the duty) to direct its interests towards building social structures that address peoples’ vulnerabilities and improve situations of inequality, class division and economic instability. Despite the (deservedly) praised Constitution of South Africa’s commitment to progressively realise everyone’s right to social security, the pervasiveness of poverty and inequality continues to threaten its actualisation. Our government needs to discuss urgent and meaningful steps towards realising its commitments, and I think there are many reasons for the BIG to be at the forefront of this discussion
1. Poverty relief
As we know from the booming microcredit industry, poor people can change their lives with the availability of small amounts of money. In South Africa, we currently have eight social welfare grants, all of which are conditional on some or other state of affairs relevant to the specific grant; most of them also require a means test.
Unlike these grants, BIG recipients would not have to provide proof of their eligibility for the grant by producing a humiliating payslip. The BIG, in its really unique unconditionality, has the potential to relieve poverty, while avoiding degrading bureaucratic processes that force people to identify as members of a class low enough to receive a state grant.
2. Work incentive
Opponents of social welfare proposals often claim that giving people the money they need, rather than money they’ve earned, will reduce the incentive to work. Whether or not that claim is founded is up to economists to decide. However, there are certainly economists like Ed Dolan who have shown that on a theoretical level, the BIG would comprehensively increase the rate of employment at a far greater rate than other means-tested welfare. The difference between the BIG and other grants is that the BIG is reliable even if one’s employment circumstances change. With a BIG, there is no need to trade off additional work and additional earned income.
3. A robust equality between labour and capital
In any essentially capitalist economy, the lives of labourers are dependent on their ability to sell human power. This is because the economy demands human power to thrive. The problem with this dynamic is that workers will regularly do work that they’d prefer not to do. In fact, labourers will accept most working conditions, no matter how bad they are.
As long as the demand for capital outweighs the demand for labour, the employer’s bargaining power will force workers and unemployed people into a disempowered position in which they are exploited and alienated. This kind of class structure would lose force, however, if the workers had the freedom to resist exploitation. The idea is that the BIG would give workers a viable exit option from bad employment relations. Money buys time to look for more suitable working conditions and so it places pressure on employers to improve working conditions for their workers.
Further, in the same way that the BIG increases the bargaining power of the individual worker, it naturally increases the collective strength of workers. This means that labour unions will have a more meaningful role to play in protecting their members.
4. Cross-class mobilisation
The idea is that if the vulnerabilities of people in lower-income groups are protected by the same institution that protects those in the middle class, it is likely that such an institution would be better financed (it serves the interests of the better-off, whom as a result would be less resistant to taxation) as well as better administered (the system will be more resilient to corruption and mismanagement if there is cross-class mobilisation) than other targeted forms of redistribution.
Whether or not theory would easily translate into empirical success is, of course, a separate question. But it is an important one. As far as I know, there has only been one pilot study of the introduction of a BIG in a developing country. Despite some really positive findings, the transition from means-tested welfare into a universal welfare institution on a larger scale would be both lengthy and risky.
While I certainly am under no illusion that the BIG idea is a flawless one, I maintain that at the very least, we should consider the challenge it poses to the insidious misconception that our socio-economic position in society is something other than mere luck.