A three-year-long project documenting the impact of a small basic income trial in the United States is entering its final stages before release. Director Conrad Shaw said the goal of this project was not solely about what a permanent basic income system would look like, but more so a means to “explore what people do with extra unconditional cash.”
Aside from the financial struggles in the early stages, Shaw appreciates the series of events that occurred, which allowed the project to be illustrative of what a real basic income might look like in a crisis. Whether it be the hurricanes or the ongoing pandemic, a string of “scenarios” presented themselves and provided the perfect conditions to see where basic income can really make an impact during uncertain times.
“It’s just crazy how things lined up in the last several years, to give a lot of very poignant case studies,” he said.
The most dramatic changes Shaw’s team observed were the participant’s relationships and their psyche. Other than the day-to-day differences, the boost in self-confidence and change in their whole demeanor at the end of the trial held the most significance to Conrad.
“There’s an element of confidence that comes along with just being able to try what you want to try, to be able to take those shots,” Shaw said when asked to elaborate on the psychological effects the participants experienced. He said basic income allowed people to feel like they have always got a way to plan and move forward.
“People felt free to pursue the things that they wanted to for a very long time,” he said.
An important aspect of making the cash “unconditional” was to make sure the process was not something participants did not have to jump through hoops or constantly think about. They also wanted to make sure the recipients were not only using the money to pay for health care.
When asked about what he would do differently and what his future projects would be, Shaw said he wished there is more political movement on basic income going forward. He said he was disappointed that presidential candidate Andrew Yang was not able to take his basic income policy further in the Democratic primary.
While Shaw said the passage of basic income will be highly influenced by the political climate, he said he hopes that future work can evaluate the possible combined impact of universal health care and basic income when provided together.
Nonetheless, Shaw said he wanted to come at the project from a neutral academic view by choosing participants from a wide array of backgrounds across the United States. He said the project was a success in that it demonstrated the possibly life-changing effects of basic income for some recipients while leaving it up to the audience to interpret the results.
“The sort of the transition between before and during and after basic income was very dramatic; they were in a very different place after than when than one they started so you know, just objectively it seemed like a pretty significant potentially permanent sort of change,” Shaw said.
The news is written by Chen Xixi and modified by Furui cheng
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In the ‘International Basic Income Week’, we three sophomores in CUPL (China University of Political Science and Law) organized an online feature academic report about basic income with Furui Cheng, our academic tutor, on September 13, 2020. The participants included some juniors and seniors, and we are all from financial department of the Business School.
The seminar has two main agendas: the first is a presentation of one very good chapter about Social Dividend of Alaska ‘How Alaska helped Staunch be fouling by mismanaged oil wealth: a lesson for other oil rich nations’ in Jay Hammond’s autobiography by Yu Yang, Huang Xinyi, and Chen Xixi; the second is free comments and discussion of the social dividend governance mechanism. Here are the details of the seminar.
Chen Xixi:
Our report has mainly three aspects: the first part is the background, the second part is the operating mechanism, and the third part is some enlightenment for other countries.
Background 1: Alaska is a state rich in natural resources. In the beginning, oil producers mainly focused on some infrastructure projects, which had greatly expanded domestic spending and so caused inflation to soar and left a mountain of debt. So even though Alaska was rich in resources, the life of the poor did not improve at that time.
Background 2: Alaskan fishermen were dissatisfied with the monopoly that the Seattle tycoons actually enjoyed. When they used fishing gear, because this fishing monopoly benefited a few beneficiaries but sacrificed the interests of many people. Therefore, at that time, many fishermen had a very bad life and lacked services. So, there was a proposal to ban fishing nets, but it was overturned because of various unconstitutionality.
A report slide about several failed practices before the permanent fund
Background 3: The bumpy process of the permanent fund project. The first was that a tax system with the Bristol Bay Company as the main concept was proposed at that time. The main content of such a tax system was to deposit taxes in a relatively conservatively managed investment account, and then distributed a new dividend stock to residents every year. But in the end this tax system ended in failure.
Immediately after, two new regulations were proposed for use tax and the abolition of residential business tax. This was considered a transitional measure to compensate fishermen for their losses. Then such a new regulation was approved because it met the expectations of the people. Then, once again proposed to the legislature a tax system with the Bristol Bay Company as the main concept. But it still ended in failure.
And the country did not follow the concept of fair share distribution proposed by Bristol Bay Company to form a single investment portfolio, but formed companies in more than 200 villages and about 14 regions. Besides, the board of directors was composed of local leaders. This made many lawyers and people who made high salaries in the company happy. In the end, many companies were also on the verge of bankruptcy due to the lack of large capital investment, nepotism and rural policies. This model eventually collapsed. In fact, the failure of this model was mainly because his politics was not separated from the economy and so an independent financial operation system was not formed.
Then they further proposed a fair tax system. Its content was to first determine the state’s per capital property value, and then in this community, if there are some people whose revenue generated by the tax are less than they should be, the state will provide funds for the difference. Conversely, if the income generated by the resident’s 3% tax exceeds the excess income, the excess income will be owned by the state. According to such a fair tax system, all places would be levied the same tax, which meant that the impact on everyone is the same, whether it was the poor or the rich. However, such a fair taxation system eventually met with opposition.
Then, they passed the so-called Alaska permanent fund. It just cut the proposed 50% of the oil lease bonus, royalties and severance payment to 25%, and the severance payment, which accounted for about half of the oil wealth income, was canceled and flowed into the general fund instead. In this way, there was no way to form permanent financial assets. This was also the initial establishment of an Alaska permanent fund. Then they proposed dividend plan and annuity account. The main content of these two proposals was to pay dividends according to the length of residence of the residents. They were approved.
Finally, in 1980, the national government allocated funds to establish the Alaska State Permanent Fund. The bill also proposed that the board of directors is independently responsible for the operation of the permanent fund. In 1982, the Alaska State Legislature also passed a resource fund dividend plan, and then such a permanent fund was formally established.
Yu Yang:
Next, I will talk about the main ideas and governance mechanisms of the Alaska Permanent Fund.
Its main idea is to avoid excessive waste of resources by establishing a permanent fund. Extract a portion of the income from oil proceeds to the descendants of Alaskans, and convert some of the oil income into permanent and sustainable financial assets.
Then keep resource revenue away from politicians to prevent politicians from wasting resource revenue on government operations and investment projects.
Beginning in 1976, Alaska’s referendum decided to set up a permanent fund to allocate at least 25% of the state’s oil resources and related income to the permanent fund, stipulating that the legislative department has full power to dispose of the income of the permanent fund, but the capital of the permanent fund, the legal department must keep it intact.
Then, in 1978, the legislature decided to establish two corporate entities, the Alaska Enterprise Investment Corporation and the Alaska Permanent Fund Corporation. The Alaska Enterprise Investment Corporation mainly creates short-term benefits for Alaskan citizens and provides financing support for small and medium-sized production-oriented private enterprises and community development projects. Alaska permanent fund company has a large amount of income into the account, but the type of investment it can be given strict restrictions, that is, the prudent investment rules of the common law are used to guide investment. Then it was stipulated in the 1980 bill that 50% of the income from the leasing of mineral resources should be invested in the fund.
The establishment of a permanent constitutional amendment stipulates that at least 25% of the royalties from all natural resource income owned by the state shall be placed in the fund, and the fund shall only be used for investments that can bring asset returns. The implementation of the withdrawal rules means approximately 10% of oil revenue is placed in the fund, and other insignificant mineral revenues are also included. In addition to the royalty savings provided by the constitutional amendments, the size of the fund also increases with legal appropriations. The annual savings make up for the depreciation of the true value of the fund due to the effect of inflation.
Finally, the management of the fund belongs to an independent company, led by a carefully calculated board of directors, and is focused on maximizing the financial returns of the fund. The company’s operations are independent of state revenues and have not been involved in any disputes involving the optimal use of funds. The decision is controlled by the legislature.
The then Governor of Alaska, Jay Hammond, suggested that the annual income of the fund should be distributed according to the requirements of an Alaska Corporate Plan. Citizens of Alaska can enjoy the income of the fund every year. The distribution standard depends on the residence period of Alaska up to 25 years. Residents who live for one year can enjoy a share, and residents who live for two years can Get two shares, and so on. Half of the income of the Alaska Fund is equally distributed to each resident each year. In order to make the program sustainable, the Alaska permanent fund dividend is paid in the form of ordinary income rather than fund income. Citizens of Alaska can get a corresponding share from the permanent fund dividend distribution every year. This fund is composed of public oil revenues. As the fund appreciates, the scale of annual dividends also increases.
Huang Xinyi:
If other countries want to apply this model of Alaska, the government should consider the following three questions according to its own situation. One is whether the government has to decide whether to collect rents on privatized resources, and the second is whether the government has to decide whether to create a permanent fund. Third, the government has to decide whether to distribute dividends and what proportion of the proceeds will be used for dividends.
Next, I will take Iraq as an example to talk about how to extend the permanent fund to other countries. Historically, every revolution in Russia, China, France, and the United States was triggered by the gap between the rich and the poor. Take Iraq as an example Under Saddam’s rule, the upper-class lives are rich, the bottom lives are dirty, oil wealth makes a few people fat, but most people are still starving. Transferring part of the country’s oil wealth to citizens and reducing the gap between rich and poor may help prevent further chaos.
What should Iraq do? Alaska’s permanent fund has some major shortcomings, and Iraq should avoid repeating the same mistakes. For example, the dividend plan of Alaska failed to deposit all the state government income that Alaskans received from oil wealth into the people’s account, and did not use their income for other purposes than dividends. Instead, most of it went to the state government. When oil prices rose, the state government succumbed to the interim bill to abolish income taxes and squandered oil revenues. Therefore, the Alaska government today is facing a serious crisis and deficit gap. Iraq should handle this income more appropriately and deposit it in the people’s account or other purposes, instead of spending it lavishly by the government.
How should China learn from the Alaska permanent fund model? China’s resource-abundant regions can establish a distribution model similar to fund management to effectively manage resource returns, so that they can continue to increase in value. Fund income can be managed through investment companies for investment management, which can increase the value of the fund and turn the fund into a sustainable financial asset. The supervisory body of the fund can be supervised by another financial institution or such as the central bank. The account of fund income is open to residents of resource-based areas by investment companies on a regular basis.
The proceeds of this resource fund can be used for the following investments. The first is the investment in human capital, through fund income to increase the level of human capital investment, promote the accumulation of human capital, increase the investment in education funds in resource-based areas, and cultivate technical and professional talents. Increase the supply of human capital and attract and retain senior talents through preferential conditions. The second is investment in technological innovation. Resource-based regions have a single industrial structure, are highly dependent on resources, and have relatively weak technological innovation capabilities. Fund proceeds are used to support technological innovation in resource-based regions. The third is the investment in urban infrastructure, using fund proceeds to invest in infrastructure in resource-based areas, especially urban infrastructure. The last is to support the development of private enterprises. Fund proceeds are used for investment in private enterprises in resource-based areas, encourage and support the establishment of private enterprises, and implement preferential policies for private enterprises.
In fact, the Alaska dividend model has many applications in various countries. I think the social dividend practice in Alaska has a general enlightening significance for the management of public resources. In fact, Venezuela, Brazil, South Africa, Israel and New Mexico in the United States have all advocated the establishment of social dividend like Alaska. Europe has a stronger movement to promote social dividends, which they like to call “basic income.”. The British government has officially run the children’s trust fund in 2004 to establish a capital account for every child born after January 1, 2004. In fact, many rural areas in China have implemented the community stock cooperation system for many years, which is the “local social dividend” based on the value-added income of collective land. In fact, the system conditions for implementing social dividend in China are more favorable than those in many countries, because we have a large proportion of public assets, and we do not need to make many complicated tax designs like other countries.
Furui Cheng:
Alaska’s social dividend practice is very important, not only because it is so far the only real human social policy on the way, not just as an experiment, but has been implemented for almost 40 years! Its implication to future public policy and the use of public resources may have similar importance to land revolution.
Why establish a social dividend fund? And how? What is the difference between this kind of funds and others in the aspect of governance mechanism? How to ensure the sustainability of the funds? How to decide the priority between Dividend and public services? How to avoid the expropriation of the capital and its revenue by different interest groups? And so on. In the process of answering these questions, we are doing this work in the context of reforms in the political, economic, legal, social and cultural spheres.
As undergraduates, I hope you are aware of the frontier issues, reflect on the classics, and foster the ability to change the status quo.
Since I heard from a mutual friend at lunchtime today: ‘David is gone’, the shock I felt then seems to have reverberated around the world. One of the most curious of minds, finest of writers, kindest of hearts, most courageous and consistent callers of bull shit ever. Gone.
David and I met over a Twitter conversation about the appalling copy editing of the first edition of ‘Debt the 5000 years’. After swallowing the book whole when it came out in 2011, I complained on Twitter that it must not have had an editor, some of the sentences didn’t read as smoothly as most of the others, in fact were pretty confusing. David came back immediately that no, in fact it had too many, apparently nine before publication, but he was red-lining a copy for the paperback edition. I grumped in response that yes that’s it, no one had pulled a paper copy before, impossible to see all the faults on screen.
The last chapter of ‘Debt’ reintroduced me to the concept of basic income and sent me off round the internet to find out about it. UBI pulled together all the strands of my organising over the previous 30 years: housing, heath, welfare, work and women. Unlike monetary reform I could talk about it from my own experience, from the gut. I liked the fact that people either loved or hated the idea straight away, and it was fun to talk people round who immediately disliked the idea to at least consider it more seriously.
Later on in 2013 I invited David round for food with a friend, after feeling that if he had finally responded to Brad deLong’s obsessive trolling he must be lonely. He arrived in spatz, and was somehow nothing like the writer, or the Twitter warrior in his gentleness and kindness. I myself was at a low ebb: my job as a welfare rights advisor was getting ever bleaker with the reforms, and the propaganda campaign against claimants. His interest in the idea that shame about welfare is the flip-side of the shame about debt was encouraging, and he respected my experience even without a book to my name. We went on to be great buddies.
Since I’d lived in London and been politically active here since 1981, I knew the genealogies of most groups and people on the left. From David I got a better picture of what had been going on in the US in the aftermath of Occupy and in academia. We talked a lot about value, and care, politics of course – though we didn’t always agree – and personal travails, especially as Americans abroad.
By 2013 I was also trying to organise a movement for basic income here in the UK, but not making much of it. Over the next years David was consistently encouraging, getting me to speak about it at meetings, getting me a gig on the Keiser Report, doing an interview about it with me for Occupy London Youtube. I don’t know that I would have stuck with basic income without David. He helped me find my voice.
David refused to be pigeon-holed into writing about just one thing after he had a lot of pressure to carry on about debt after the success of ‘Debt’. He insisted that there was little point in being famous if he didn’t use it to write or talk about whatever interested him. We are all the richer for it, with considerations of bullying, democracy, bureaucracy, money, work, play, the future, care and many other subjects that defy expectation, challenge assumptions and expand our minds.
When David interviewed me about basic income for the final chapter of ‘Bullshit Jobs’ in 2018 I was worried about protecting the charity I worked for, so I didn’t want to be named. Also it seemed apt if everybody else was under a pseudonym that I should be too. He was sceptical, but respected it. And then made me two people for good measure.
David used the power he had as an academic, activist and a writer, and the money he earned by it, to pull many people and groups out of financial, academic, political holes. Others will talk in more detail about his role in saving the Syrian Kurds from Isis, but this is only the most famous of his interventions. He added his voice to defend Corbyn from the accusations of anti-semitism when Corbyn wasn’t defending himself. While a self-proclaimed anarchist, a practitioner and defender of direct action, an expert in consensus-building within groups, he was also a pragmatist about working with politicians, and did whatever he could to support working class demands.
David enjoyed what he had, and never forgot where he came from. He constantly acknowledged the fact that he got many of his ideas from conversations with other people, and insisted that the famous ‘We are the 99%’ was written by committee. He wrote and said publicly what so many of us thought or experienced silently, and in doing so changed our collective consciousness about it.
He always said, ‘The problem with privilege is that not everyone has it’. David lived his life working to spread what privilege he had as widely as he could, in whatever way came to hand. For that his life stands as an example of what to do with privilege, while owning one’s access to it.
That was the foundation of his support for basic income. For him it was a way to spread his privilege of having a secure, and sufficient income, while also having the freedom to pretty much do what he wanted. He wanted everyone to have that. ‘The imagination strikes back’, he said about it.
He was quite insistent that we start the negotiations high. ‘Oh I don’t know, about £30k? That’s good, isn’t it?’
I’m so grateful for what David wrote, and what he did, for our friendship and laughter over the years. But now there will always be that next other thing I won’t be able to discuss with him when it occurs.
The EU Commission has said from the 25th September 2020 signatures can be collected from EU residents in connection with a new European Citizens Initiative. If the European UBI family succeeds in gathering 1 000 000 signatures, divided among a minimum of seven countries, then ECI delegates will be able to present a proposal to the European Commission which, if approved, would hopefully convince EU governments to start paying Basic Incomes to all of their citizens.
Bulgaria suffers from a number of problems, and in particular population loss and economically active citizens leave the country for better opportunities elsewhere. Angel Petrov writes:
The population decline carries long-term economic costs. Over time, a shrinking workforce becomes unattractive to investors and unable to subsidise the pension and healthcare needs of an ageing population.
All government ‘aid’ described below is highly bureaucratised and full of conditions, and in addition the funds are often paid late due to the complicated and sluggish administrative processes citizens are subjected to. The aid consists of:
Cash payments of €192 only for families with 14 year old children for the duration of the state of emergency (2 or 3 months)
over 2 months the unemployment fund will pay 60% of the income of the employees from sectors most heavily influenced by the COVID-19 crisis for up to three months. In addition to employers in sectors where operations have been suspended as a result of the social distancing measures (tourism, sports, culture, etc.), any other employer that can prove a 20% y/y drop in revenue in March is also eligible for the 60% salary subsidy.
The measure has been extended until 30th of September 2020.
This is the main stimulus. However, the working population has doubts that the administrative process will be efficient enough (it is expected that most companies will receive the aid in October and November 2020). Furthermore, many small and medium businesses don’t have the means to pay 40% of the salaries. Some critics see this policy as supporting big companies which will absorb the unemployment caused by the lack of help for small and medium companies.
To date (1st August 2020) 129 million leva (64,5 million EUR) have been distributed to 8400 employers, that is 13% of the 1 billion leva (511 million EUR) allocated by the government. Close to 35% from these people have taken aid only for one month.
On the 10th of April the Bulgarian Central Bank enacted a moratorium on debt repayments. Overall the number of people who have debts in Bulgaria is almost 3 million. By the 10th of May, 102 000 have applied for temporary cancellation on payments (usually 6 months) towards their loans, and 80 300 have been approved. Changes in these numbers are expected.
The processes are not transparent, efficient and timely
The measures are conditional and selective and not universal
Most of the governments support is expressed in loans rather than direct payments
In conclusion the measures so far have the potential to create another wave of workforce immigration towards Western countries, weakening further the economic future of Bulgaria because:
The case for a UBI emergency pilot in Bulgaria
The unnecessary agony of the Bulgarian nature and people can be prevented, and UBI is a key step that can be collectively taken to compensate over three generations who have given their talents, energy and time towards creating shared wealth spreading beyond the country borders. It’s time for common dividends to be distributed to their rightful owners.
Bulgarian UBI advocates are working hard to unite the people around the idea that once social and economic stability is achieved through unconditional payments of around 1000lv (500 EUR) Bulgarians will have the time and capacity to build a new system that meets their needs and corresponds to a consensus based on democratic values. Due to the inflexibility of the national currency (it is tied to the euro), the dominant proposal on how to implement Basic Income in Bulgaria at the moment is by restructuring the tax system and national budget in a way that will pay the UBI bill with the collection of Value Added Taxes and Excise Taxes paid by the sellers. The idea is for every Bulgarian citizen with an active address registration to own a bank card issued by the Bulgarian Central Bank which will serve people as a payment method to be used to receive a Basic Income that would meet basic needs like rent, utility bills, food, clothes etc.
A UBI emergency pilot hosted in Bulgaria would not a utopia, and the EU could rescue its reputation by supporting it. It is an opportunity to trial universal basic income on a national level using the Bulgarian state financial infrastructure to distribute funds to the people.
The EU Commission would also have a vested interest in embracing the project, as the positive results would increase cohesion and trust, and would give hope to other states that the European experiment is not another way to practice concentration of power.
It’s time for evolution not only for Bulgaria but also for the EU. UBI is a win-win solution and will literally bring Bulgaria back to life. People outside long to return to their roots and work for the wellbeing of their parents and the next generations. The EU owes this to the people of Bulgaria and Bulgarians owe it to themselves, their ancestors, the children, and the European natural environment that happens to be surrounded by Bulgarian borders. We have too much to gain and nothing to lose.
It is undeniable that the new wave of engouement for UBI (universal basic income) that has shaken the US, the EU, India and so many other parts of the globe in the wake of COVID-19 has also reached Brazil. Everywhere, the simple idea of guaranteeing a regular income, duty-free, underwritten by the State, appears to be the way forward to mitigate the still unmeasurable consequences of the appalling disruptions brought about by the pandemic. UBI would swiftly reduce income insecurity, preventing poverty; it could also significantly contribute to accelerate the economic recovery in the post-COVID-19 era by stimulating aggregate demand.
The idea of a UBI was galvanized when governments promptly decided to extend the amount, coverage, and length of different sorts of monetary transfers to confront the gravity of the multiple crises created by the COVID-19 outbreak. Unemployment benefits, job allowances, one-time pay-checks, welfare benefits, or even special forms of credit line have spread out to inject liquidity in the economy. All of a sudden, we have a new opportunity for making the case for UBI.
Brazil was no exception. The comprehensive national social security system created in 1988 that provides free, universal health care (among many other rights) had been made vulnerable by years of underfinancing. But the system continues to be the most effective and democratic institution when it comes to guaranteeing social rights and wellbeing in Brazil. When the COVID crisis hit, the federal government and Congress could have reinforced social assistance, public healthcare, unemployment insurance, and other job allowances — all constitutive dimensions of the Brazilian social protection system. Instead, they united to favor ad hoc measures that, though sounding generous, are inevitably temporary.
The ultraliberal government of President Jair Bolsonaro backed a bill that Congress approved unanimously early April to adopt an “emergency basic income” program that would last the entire state of emergency declared on March 20, 2020. In principle, this program should expire on December 31, 2020, along with the state of emergency. In Brazil, a state of emergency allows extraordinary spending, suppressing the 2016 cap imposed by a constitutional amendment that impeded any real increase in social spending until 2036 regardless of economic growth or rise in tax revenues.
It bears reminding that Brazil is the only country in the world to have passed a law on Basic Income in 2004, hours prior to the adoption of the Bolsa Familia Program. Yet the law remained a dead letter and largely unknown to most Brazilians. To date, it remains unclear why the Workers’ Party started its mandate presenting a bill on UBI, which was approved without encountering any opposition, too soon after paying no heed to it. Today, despite the existence of a UBI Law, activists, progressive parties, and members of Congress chose the easiest way out, bypassing the already existing institutional framework. They chose a transitory and short-term program over existing law. This narrowed sighted strategy further debilitates Brazil’s social security system, because it deepens defunding. It also fails to bring greater comprehension of what a UBI is in the public opinion, thereby further diminishing the chances to make it a true, permanent, and unconditional right.
Today’s “emergency basic income program” provides a three time-payment – now extended to four months – of R$ 600.00, the equivalent of $120 USD per month. It is means-tested. Anyone over 18 years old (threshold waived for single mothers) living with a monthly per capita household income below half a minimum wage (R$ 552.00 / $110 USD) qualifies. The Minister of the Economy estimates that this benefit has reached 54 million people, encompassing the target-population previous recipients of Bolsa Familia, informal and precarious workers, and the unemployed who registered. Let’s not forget that Brazilian monthly median per capita household income, including labor income and all forms of social benefits, like pensions and welfare schemes, corresponds to R$ 862.00, equivalent to $172.00 USD. A monthly stipend of R$ 600.00 is therefore a very significant figure that amounts to 70 percent of the median per capita income and is three times higher than the Bolsa Familia cash transfer. It was the first time that Brazil set the bar so high with regard to compensatory benefits.
It is worth noting that indigenous and traditional black communities who were proportionally the most hardly hit by the pandemic have been denied the right to this temporary benefit, which is very telling about the challenges for universalizing rights in Brazil. The mortality rate among indigenous in the Legal Amazon is 150 percent higher than the national average. The deficiency of the specific care system for native peoples, the invasion of their lands by miners who can take the virus into their territories and communities, and continuous deforestation are pointed out as reasons that can explain such a high mortality rate and lethality. Faced with the threat posed by COVID-19 to indigenous communities, opposition parties passed a law in early July in Congress that provides for a set of 16 emergency measures to protect some 800,000 indigenous people. President Bolsonaro, however, immediately vetoed the most important ones, such as guaranteeing the supply of drinking water, food baskets, hygiene products and specific ICU beds for indigenous people infected with the virus, arguing that the Union could not afford mounting non-essential expenditures. Brazil remains a very unequal society and has not yet reckoned with its colonial structures of racialized discrimination.
The Brazilian Bureau of Census (IBGE) just published the first results regarding the impact of the Emergency Basic Income Program: 38.7 percent of all Brazilian households received the program, with the bottom 40 percent benefitting most. 45 percent of all Brazilians received the temporary emergency workers’ allowance and three-fourths of all monetary transfers benefitted the 50 percent at the bottom of the distribution scale. According to IPEA, this allowance has compensated 45 percent of outstanding earning losses due to the pandemic. It also increased by 2,000 times the average income of the poorest 10 percent. This is good news, especially because the recovery of the economic activity that has been noticed in early July significantly relies on the rebound of household consumption.
There is now strong evidence that providing monetary transfers at large scale and in substantial amounts that make a real difference in people’s lives is a powerful mechanism to boost economic activity, prevent destitution and humiliation, and help people cope with all sorts of hardships.
Did the crisis and the measures adopted increase the support for a true UBI? Are Brazilians really aware of the challenge and motivated to fight for it? In 2013, I carried out a national survey to assess how Brazilian society values social policies. There was a specific question on UBI. Back then, 51 percent disagreed, and one-third agreed with the idea of implementing a UBI. The current estimates are unknown since no survey asking the specific question has yet been re-conducted. But let us keep in mind that the current emergency workers’ allowance is no UBI.
The question is whether or not the evidence aforementioned would suffice to bolster the implementation of a true UBI in Brazil.
During the pandemic, doctors, health workers, and the many who support the universal public health care system (SUS) persevered in order to advance a temporary program, called ICU Beds for All. In Brazil, for every 5 ICU beds fully equipped in the private sector, we have only 1 in public hospitals. The problem is that only 25 percent of all Brazilians have subscribed to private health insurance, whereas 75 percent go public. Given that a significant and growing number of ICU beds were underutilized in the private sector, a campaign was launched to create a pool of ICU beds, coordinated by a public entity, to improve access and sort out the waiting list problem. But no agreement could be reached and today Brazil is second only to the United States, with 1,7 million confirmed cases, and 68,000 fatalities, both figures broadly underestimated given that testing is rather rare in Brazil. It is now obvious that the COVID-19 pandemic was insufficient to unite Brazilians, even when so many lives are lost.
This paradox raises two major concerns:
Is UBI the most urgent need for Brazilians? Will it be possible to couple a universal basic income at a relatively significant amount at least to eradicate abject poverty with other universal social policies that are urgently needed such as public healthcare, good public education, social housing, adequate sanitation? Is this affordable?
To what extent would endorsing UBI strengthen the social security system already threatened by austerity measures derived from the cap on public spending and by attempts of the Bolsonaro government to fully reshape it through tax reform and the merging of different social benefits restricting them to poverty relief programs?
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In regards to the first question, what would be the cost of a UBI in Brazil? Of course, the cost depends on the design of the program. To get a rough idea of the cost of a very basic program, let us consider a stipend that would be equivalent to the monthly benefit of Bolsa Familia today, which is R$ 200 per month ($40 USD). This amount should be acceptable by all parties and civil organizations across the political spectrum. The difference lies in the fact that it would apply to individuals (UBI) rather than households (Bolsa Familia Program).
Let us then imagine that when the law was approved in 2004 the Brazilian government decided to implement the program starting with children under 5. Given that it would be impossible to grant a stipend to all Brazilians, the idea is that we would launch a UBI by targeting the children to prevent intergenerational poverty. The new benefit will accompany the beneficiaries throughout their lifetime as an unconditional right. Focusing on children sounds appropriate because the pension system in Brazil provides a satisfactory income security to the elderly: 85 percent of all seniors over 65 receive a public pension, either contributory or non-contributory, whose monthly amount (floor) corresponds to no less than a minimum wage.
By providing a UBI of R$ 200.00 to children under 5 in 2004, today’s number of potential recipients under 20 years old totals 60,7 million people (IBGE, PNAD 2004 & PNADc 2020). This would cost R$ 323 billion, or 10 times the annual spending with the Bolsa Familia Program (R$ 32 billion or, 4.4 percent of GDP in 2019). The good news is that 57 percent of all stipends would go the bottom 40 percent of the distribution. The current Emergency Workers’ Allowance Program amounts to R$ 150 Billion, consequently less than half of the proposed UBI, reaching an almost equal number of recipients.
To grant $40 USD a month to 60 million people in 2019 is three times higher than the federal spending, with the public healthcare system (only R$ 117 billion or 1.64 percent of GDP). Such a program would also surpass by 11 percent of all benefits conveyed by the federal government (including higher education, housing, sanitation, labor, and agrarian initiatives), which accounts for R$ 289 billion (Lavinas 2020).
In 2019, outstanding federal social spending amounted to R$ 1.73 trillion. Paying a basic income of R$ 200.00, therefore at the level of the current anti-poverty Bolsa Familia program, would compromise 27.5 percent of all social spending. That same year federal social spending in kind corresponded to only 4.12 percent.
Monetary transfers remain the bulk of social spending, accounting for 68 percent. Should Brazil continue to expand cash transfers, to the detriment of providing running water, sanitation, housing, equal standards in education and healthcare? The most recent data from IBGE (2018) show that 31.1 million Brazilians (16 percent of the population) have no access to tap-water, whereas 72.4 million (37 percent of the population) lack proper sanitation. Not to mention decades of deep housing shortage affecting millions of poor and low-income families who end up living in slums, which makes them less immune to all sorts of diseases in times of pandemics.
The second question relates to the future of the Brazilian social protection system, which was underfinanced for quite a long time, and now risks being completely dismantled. The Minister of the Economy, an old member of the Chicago Boys who worked for the Pinochet Regime, intends to overhaul social security. He initiated a pension reform in 2019, making it harder for informal workers to get a full pension at retirement.
Now, that same ultraliberal minister proposes the creation of a “Brazil Income Program”, resulting from the merging of a large number of benefits, both contributory and non-contributory. Workers’ rights like job allowances, unemployment benefits, and other benefits alike will all be suppressed and replaced by an anti-poverty program to reach 57 million people, granting a monthly stipend of R$ 232 per month, 15 percent above the average payment of Bolsa Familia. They expect to spend R$ 52 billion per year with this new program, which is less than one percent of the 2019 Brazilian GDP. This means that the coverage against risks and poverty will be shortened and people’s autonomy and wellbeing consequently corroded.
In addition, the government intends to provide a voucher to pay for private daycare for two million children up to three years old, which will increase prices and fees and discriminate based on income. Lessons from Chile are well-known to envision that in Brazil things could be different. A voucher of R$ 250,00 corresponds to 10 percent of what middle-class families pay for private childcare in cities like Rio and São Paulo. The best daycare centers, however, charge double or triple. According to the government, churches could be interested in providing this service, an idea that breaks with the logic of secularism in the provision of public education.
Both concerns point to the ineluctable call for a joint perspective associating basic income and universal public provision to democratize access and opportunities by fully de-commodifying wellbeing. Otherwise, under financialized capitalism, a guaranteed income will just serve as collateral propelling citizenry to take out loans and go indebted in order to meet their financial obligations.
Early July, that same Congress that approved the Emergency Workers’ Allowance Program voted for the full privatization of water supply and sanitation, maybe having in mind that enlarging access to cash to those most affected by the pandemic would also make it easier to expand further a business model grounded in denying basic human rights and ensuring huge profits for pension and mutual funds that today drive investments in infrastructure in developing and emerging countries. After the longest and most severe recession Brazil has faced over a century since 2015 and given the growth projections ahead (-9.1 percent for 2020, according to the IMF), fiscal resources will dry up while competing and clashing issues will fill up antagonisms, stirring tensions. All the care may not be enough in designing social policies if the goal is eventually to forge a truly egalitarian society in the country.
The major differential of a UBI is to de-commodify labor. It is thus equally crucial to de-commodify the social reproduction of labor, by ensuring that education, daycare, healthcare, training, and other basic needs will also be fully de-commodified. Otherwise, UBI will perform as a powerful pro-market mechanism, upholding income-related and highly segmented private provision, mostly through the financial sector, and fueling rather than overcoming discrimination and inequality.
