Berlin: A petition supported by several basic income groups in Germany, and signed by over 176,000 people, was debated by the Petitions Committee in the Bundestag on Monday 26 October. The petition called for a basic income of €1000 a month to be paid to all Germans to mitigate the effects of the corona crisis. This would be paid for at least six months but ‘should last as long as necessary’.
The petition was initiated by Susanne Wiest from Mensch in Germany, and supported by the OMNIBUS für Direkte Demokratie, Mein Grundeinkommen, and Expedition Grundeinkommen after the crisis hit Germany in March. It declared, “We have to ensure that no one falls through bureaucratic cracks and into poverty that threatens their existence.” The petition was initiated at the start of the crisis, and quickly got the signatures needed to bring it to the Bundestag for consideration. Combined with similar petitions put forward on Change.org and openPetition, nearly a million people in Germany put their names to the idea of an Emergency Basic Income to support people through the corona crisis.
Economist Bernhard Neumärker from Freiburg University and Freiburg Institute for Basic Income Studies (FRIBIS), presented a model calculation at the meeting that he said could be implemented immediately. It provided for a net basic income of €550 per person per month by combining existing social programmes. “You don’t have to change the social system, you just have to shift payments.” He proposed suspending all payments on mortgage principal and interest, lease and rent during the so-called ‘net basic income’. After the crisis these payments would be added to the net basic income and transform it into a permanent unconditional basic income of 1200 to 1500 Euros.
Politicians, even some who otherwise support basic income, were sceptical. There were the usual doubts about not targeting money ‘to those who really need it’ from the CDU and SPD. Timmon Grimmels from the SDP said that the party, while sceptical of basic income, doesn’t entirely dissapprove. Katja Kipling, leader of Die Linke (the Left Party) and a long-time supporter of basic income, was sympathetic but felt that the money for the Neumärker proposal took too much from middle class and poor people and not enough from top earners. Neumärker replied that it is the other way round, with his model capital incomes will share in the loss of labour incomes during lockdown and social benefits for needy people are not touched.’
A vote was not taken during this meeting but will happen in the next few weeks. Lisa Ecke, writing for Neues Deutschland, felt that the proposal was likely to be rejected.
Supporters of the petition say however that they will be increasing pressure on the government before the vote. “A basic income not only counteracts existential fear during the crisis, but also helps us progress in areas such as equality and trust in democracy,“ Susanne Wiest said in the hearing.
Michael Bohmeyer, founder of Mein Grundeinkommen, said in a statement after the debate, “[Basic Income is necessary] in order to adapt to the challenges of our time: master the digital economy, overcome the divisions in society and develop potential that is still lying idle today due to our culture of mistrust.”
Goa Foundation and the Goenchi Mati Movement advocate for a fair mining and intergenerational equity model defining it as commons, which you can read in this article and the other resources. They develop a vision of maintaining the wealth coming from selling inherited minerals to serve the broader community and not just the privileged few. One of their proposals is citizens’ dividend, which, they argue, will “create a strong bond between the citizen and their commons“. According to the calculation mentioned by the Research Director of Goa Foundation, Rahul Basu, every citizen in Goa would receive a commons dividend of thousand rupees a month if the fund were managed according to their proposals. I outline how this proposal may be enhanced by deepening the commons as a philosophy and governance model, which is already incorporated in their blueprint. Instead of focusing on just giving cash transfers, I would ask how the money can create sustainability. This is a big issue in the context of environmental disruption by short-term thinking. Wealth distribution can liberate from the incentives that poverty produces. You have the chance of posing and giving space to these important questions.
The answer may need a long time and a lot of expertise but the results may be not only aligned with but strengthen the basic tenets of intergenerational justice. This reflection is relevant to the broader debate on a UBI, citizen’s dividend, and accountability.
I develop in my writing a broader vision of UBI going beyond just cash transfers. I believe that the reform needs complementing measures to be added to create a real alternative to the current system. As part of this vision, I want to inspire creating organizational structures that will enable people to access high-quality basic services and be an alternative to the monopoly of the current market system which has many disruptive externalities. You can see examples of such an organization of work in my articles.
I propose to focus on building sustainability to maintain the health of the community and yield long term advantages for future generations.
Agriculture and correcting market food supply
It is difficult to free farmers from the vicious cycle of the past mistakes and the short-term planning that living in poverty imposes. Therefore, the best way to use resources is through giving subsidies and knowledge transfer to enable advanced low-tech agricultural methods such as permaculture, wild agriculture, or agro-forestry. The abundance in the food supply, which such a change of direction promises, can benefit various forms of organizing food distribution. This can have both forms of targeting farmers in particular as their practices pollute the environment around them as well as the broader community to enable the poor to produce their food in community gardens. One can think of a hybrid solution such as the one described in the case of a small farmer who invites consumers to participate in food production. Such methods require a long-term commitment and the resources to invest in developing soil but with time they will produce abundance that can be redistributed among citizens. It will also contribute to sustaining the natural resources in the region. With this kind of approach, you not only redistribute wealth (nutritional wealth) but multiply it.
The influences that have destroyed agriculture all over the world are taking a toll on India. A recent initiative by the government wants to foster organic agriculture but the project resembles the commercial, export-oriented type of intervention, which may not benefit the poor directly. How can you protect the soil from land grabbing and the interests of monopolies like fertilizer producers and other branches of the agricultural industry? The answer needs to mobilize various actors, also consumers.
While in India, I talked to a 19-year old woman who studies sociology and has all this critical thinking and discourse pouring out of her. At the same time, she eats at McDonald’s and thinks it is cool. Industrially processed food is particularly dangerous for India due to ineffective recycling and waste management. Cash transfers may add freedom but the one promised by the interests of the multinational companies at the cost of sustainable health and agriculture.
Collective rather than individual approach
While I understand the argument against taxing citizens by transferring real income from the Permanent Fund to the government instead of giving individual dividends, this type of redistribution may also be as short-sighted as the extractive industry is. We can imagine a different approach, which is neither former nor the latter option but something in between. Definitely, the government has shown limits in governing resources, which calls for other than tax solutions. By building up robust structures and practices that will sustain collaboration capacities of the population, you are enabling the population to multiply rather than only consume resources. And this is something that benefits the entire population so the dividend has a universal effect in the long run.
Nowadays, there are many instances of technologies that create abundance, for example, solar energy; think of community solar stove in neighborhoods. Think of all sorts of circular economies that could change the mindset about how resources are used and produced. There is this magic thing about nature that once you work with (and not against) nature, including human nature, you can create abundance.
Instead of atomizing the resources, I propose to give them at collective disposal so that people can make collective investments to share resources: building collective kitchens, gardens, and other commons. Giving money into collective hands as opposed to just individual transfers, which you don’t know how people will end up spending and whether their spending will actually be good for the community and for their health, will produce cumulative results.
The problem with cash transfers is that if you just give money but there is no consciousness, no awareness of how to spend money in a sustainable way then the money will be just spent on things that actually contribute to the damage of the region and the future generations. Cash transfers are intermediated by mentality and culture. Therefore, it is important to build this intermediating fabric in the community. For example, how could you enable creating public spaces where self-organization happens, where connection happens, where people are brought back to responsible and sustainable consumption?
Culture and community
Another building block of creating sustainability is preserving culture and community. It is important to ask what organizations, what projects, what knowledge could preserve the indigenous and original Indian culture to protect it from erosion? The dying out of traditional cultures will lead to spreading addiction and other social dysfunctions. The question is how to prevent Western style of capitalism and cultural and relational poverty from imbuing your region. Investing in protecting the community is a form of creating a commons, which foster public health outside of the pharmacological approach and dependency on extractive industries.
If we look at the intergenerational equity in structural and cultural context, giving out cash transfers appears as delivering the region to the tyranny of near-sighted vision and forgoing a deep social change. Cash may enable and encourage consumption that fits well into the interests of hegemonic actors and ideologies. Before enabling consumption, we need to transform the underpinning culture and underpinning patterns which brought obesity and other health problems in the West.
Rahul Basu’s comment
We wholeheartedly agree that fostering communities is necessary. Our structure has been designed to deal with the serious issues that arise from the misgovernance of mineral extraction. One aspect particularly important for India is the large number of power hierarchies – class, caste & gender being just a few – and which permeate even traditionally self-governing villages. This enables politicians to develop winning coalitions using a divide and conquer strategy. The Citizen’s Dividend is essential to connect people to their mineral inheritance and the equality of the dividend prevents the division of the people.
While it is desirable that this income be pooled in ways that foster communities, we believe that this should be left open to the recipients of the dividend. Indeed, in the SEWA pilot of UBI in India, one group pooled their dividends and jointly took up fish cultivation. If on the other hand, this money is mandated for community creation through the legally recognized legal structures like villages / cities, we will neither have a community nor will we have resolved the misgovernance of the mineral inheritance.
Innovations for Poverty Action has published a research paper, ‘Effects of a Universal Basic Income During the Pandemic’.
We examine some effects of Universal Basic Income (UBI) during the COVID-19 pandemic using a large-scale experiment in rural Kenya. Transfers significantly improved well-being on common measures such as hunger, sickness and depression in spite of the pandemic, but with modest effect sizes. They may have had public health benefits, as they reduced hospital visits and decreased social (but not commercial) interactions that influence contagion rates. During the pandemic (and contemporaneous agricultural lean season) recipients lost the income gains from starting new non-agricultural enterprises that they had initially obtained, but also suffered smaller increases in hunger. This pattern is consistent with the idea that UBI induced recipients to take on more income risk in part by mitigating the most harmful consequences of adverse shocks.
Luca Michele Cigna has written a master’s degree thesis about trade unions’ positions on Basic income: Looking for a North Star? Trade unions’ positions in the Universal Basic Income debate
First, unions’ propensity to support a UBI depends on the degrees of socio-economic insecurity. In contexts characterised by high levels of poverty, unemployment and precariousness, UBI proposals look more attractive in the eyes of union leaders. Secondly, welfare regime generosity is a strong explanans of trade unions’ support. Less encompassing welfare systems encourage trade unionists to regard UBI as a legitimate policy alternative. Third, trade unions’ attachment to the work ethic and the insurance principle affects their preferences for unconditionality and universality in policy settings. Fourth, their role in the industrial landscape, and their degree of organisational inclusivity, have a strong influence on UBI support.
Mongolia is an East Asian country located between the two giant powers of the world: China in the South, and Russia in the north. As a classic example of a mineral-rich developing country, Mongolia has an export-driven economy in which 90% of the exports come from its minerals[1].
The country’s quick and vigorous action on preventing the spread of COVID-19 resulted in a notable success in fighting the pandemic so far. The country has relatively few cases with 310 confirmed cases and still no deaths in the middle of September 2020. But this success has come at a price.
According to the UN, in the first quarter of 2020, Mongolia’s economy contracted by 10.7 per cent, and government revenue fell by 8.6 per cent year on year, whilst expenditure went up 19.3 per cent[2]. On the other hand, the country struggles to boost its export-driven economy that is tightly tied to China. Asian Development Bank (ADB) estimates show that Mongolia will suffer significant investment and consumption shocks in addition to negative global demand spillovers in 2020. In addition to that, there is mounting international debt[3].
However, Mongolia is an interesting country that the world can learn some lessons from regarding the role of states in the ongoing health crisis of COVID-19. The country perhaps was the first developing country that introduced a resources-to-cash scheme[4], and with the COVID crisis this scheme is back on the agenda.
With the outbreak of COVID-19 during the winter of 2019-2020, Mongolian citizens were promised a cheque of up to 96,480 tugrugs (USD 34), but this promise was not a usual handout like in other countries. Mongolians who were born before April 11th 2014 are shareholders of a company called Erdenes Tavan Tolgoi (ETT) that manages a massive coal deposit on the state’s behalf; do these cash payments are dividends distributed by the company to its shareholders[5].
In 2019, the company made USD 1 billion and 30 million from its sales. For this reason, the dividend per share was calculated to be MNT 90, which results in MNT 96 thousand being given to each individual’s 1,072 shares. Minister D.Sumiyabazar said that the amount of the dividend will be raised further if the company’s revenue goes up[6].
As mentioned above, this resource-to-cash payment was not a new experience for Mongolians. In 2004, the government started to experiment with universal resource-financed payments for children. In 2010, the child-oriented payments were replaced with the new Human Development Fund (HDF) that was financed from mining dividends to provide a universal basic income that was paid monthly to every citizen. Mongolians monthly received MNT 21 thousand between 2010 and 2012 through the HDF. This experience provided a unique perspective on public ownership and revenue sharing in the mineral sector as citizens got a direct and equal share of their country’s wealth as co-owners of their country[7].
However, these payments were based on election promises and resulted in a vast deficit in the HDF as the expenditures were exceeding the actual mineral revenues[8]. In 2012, HDF was stopped and child-oriented payments were brought back.
On the other hand, in 2011, through a new scheme, every citizen received 1,072 shares in the ETT. Mongolians could use these shares for different purposes including tuition fees for students, health insurance coverage, or cash through a stock repurchase program by the government. Around 1.08 million Mongolians have kept all their shares and are entitled to a full dividend payout of MNT 96,480 (USD 34)[9].
Although these cash transfers have reduced poverty and inequality, and increased the transparency of the company’s actions and performance, the experience has taught the important lesson that it is not enough just to give cash payouts if the scheme is poorly designed and implemented[10]. As mentioned above, these cash payments have been used as tools to win elections, and this has resulted in an increased debt and an increase in inflation. In this regard, in 2019 the country passed an Election Law that prohibited the political parties from using the promise of cash transfers for elections.
Although the cash payments that were promised a few months ago are different from the previous cash transfers, as “The board (of ETT) has approved for the first time to distribute dividends to shareholders according to the Company Law. In the past, the state used its preferential rights to buy stakes from some people in cash. This time, it’s not a cash payout but a legal dividend distribution”, Minister D.Sumiyabazar said[11], we can still see something of the old tendency: a connection between elections and cash transfers.
On May 1, it was announced by the Minister of Mining and Heavy Industry that 100 thousand MNT was going to be distributed, but one month later there was still no payment. Erdenes Tavan Tolgoi company had already transferred 60 billion MNT to Mongolian Central Securities Depository but it is obvious that the government was holding it up due to the parliamentary election[12].
As we can see, the Mongolia experiment contains very important lessons in regard to the resource-to-cash payments. This experience underlines the importance of independent institutions from governments being tasked with the distribution of basic income type payments. If we understand these experiences and learn from them, it could provide a new perspective for governments in their fight with COVID-19.
Despite all kind of criticism regarding the government’s approach on resource-to-cash payments; people are losing their jobs, hopes, and voices all over the world, and this kind of resource-to-cash scheme gives a sense of certainty and security to people (without the burden of stigmatization), especially in such uncertain and volatile times.
COVID-19 doesn’t distinguish between rich or poor, and neither can we. More than ever we need schemes that don’t differentiate between people, because in these unprecedented times no-one knows if they will be the next one who is going to be affected by this crisis one way or another.
