Let’s start with some assertions, all of which can be supported. Everybody knows that quality jobs are better than social grants. We also know that fast, job-creating economic growth is required.
The problem is, it is elusive and looks set to remain so. The government’s existing anti-poverty policies cannot work quickly enough to save the poor. The basic income grant (BIG) is affordable, even if some growth has to be sacrificed.
It would make a huge difference to income poverty levels, especially among the chronically poor. It would change the nature of the dependency relationships, in which the poor are now ensnared, for the better (many of them are utterly dependent now and many would still be with a BIG, but in less damaging ways).
Compared with other anti-poverty policies the state is attempting to implement, BIG’s poverty alleviating characteristics are superior.
The grant would be relatively easy to put into place, and unlike other elements of the social wage (or the black economic empowerment policy) it would have a major positive impact on inequality.
Whether BIG could be introduced is not so much an economic question, it is primarily political. Given political will, BIG could be approved tomorrow.
Institutional structures for delivery could be in place in two or three years (the time wasted since the Taylor committee recommended its phased introduction). So why has it not been introduced?
In an essay, entitled An Act of Will: Manuel and the Politics of Growth, Steven Friedman cites a banking analyst who asked: ”Why does your minister insist on such tight deficit targets? We all know you have a massive poverty problem.”
”This,” says Friedman, ”raises interesting questions about the degree to which constraints the government imposes on itself to attract investment are based on an accurate reading of what is needed to attract investors.”
A clear implication of the Friedman piece is that growth, employment and redistribution (Gear) — a structural adjustment programme that was always going to damage the poor — was more rigorous than it needed to be.
This is unfortunate, given the porosity of South Africa’s social security system. Is the Gear approach to policymaking about to be repeated with BIG?
Politics is about power. The powerful in South Africa, possibly mindful of the fact that poverty and inequality levels are unbearable, have shown a preparedness, however grudging, to tolerate a fair amount of redistribution. They may not like it much, but seem to accept it as the price for social stability. Are they prepared to pay for a social grant that promises to do more (because it will redistribute more) than all other anti-poverty policy initiatives put together? How do they select among the mixed messages they are currently fed?
Cut to John Perlman’s After 8 morning phone-in programme on SAfm on Tuesday. The topic was about BIG, and one of the panel members was Nico Czypionka, a private-sector economist opposed to the grant. His performance was an object lesson in pandering to those displeased by the prospect of further redistribution.
Bristling with platitudes, and referring to the BIG as a ”handout” (as do several African National Congress luminaries), he made great play of the likely irresponsible spending of a ”scattergun-distributed” social grant.
When pressed, he admitted that his information on the subject comprised mostly anecdotes about consumption in shebeens.
Czypionka is not some isolated conservative — his views are representative of those of a powerful group, one driven by self-serving prejudice to the point where it appears to feel no need to apply its mind in any other manner than the most desultory to the facts of the matter.
Sadly, a failure to apply the mind is not restricted to the privileged — some of our most eminent politicians do likewise (albeit for different reasons). They don’t say all the things about BIG that Czypionka did, but some of the things they do say are almost as silly — like two of the remarks reportedly made by President Thabo Mbeki in his recent fulmination at the South African Council of Churches Conference.
This is not the first time. After the July 2003 Cabinet lekgotla, Mbeki is reported to have said: ”We discussed BIG some time ago and we have said our approach should evolve through a comprehensive social system that includes old-age pensions, disability grants and a free public health system.
”If you give everybody R100 a month [sic] it will not make a difference. The notion that one single intervention will help is wrong. To introduce a system that indiscriminately gives R100 to a millionaire and a pensioner does not work (Mail & Guardian, August 1 2003)”. If correctly reported, Mbeki managed, within the compass of about 70 words, to make five errors. Let’s focus on the worst of them — the claim that ”R100 a month will not make a difference”.
In 2002 there were probably seven million to 12-million people living on sporadic incomes of R104 or less a month (depending on the extent to which expenditure levels were under-reported).
Maximum potential daily expenditure among these people therefore amounted to about R3,40 each, roughly the cost of a can of fizzy drink. Average expenditure would have been lower.
My estimates of the income impact of the social wage suggest that if every intended beneficiary received their full entitlement (a generous assumption), consumption levels could possibly have been raised by about R2 a person a day. Again being generous, this could have raised daily expenditure to R6. A grant of R100 a month in 2002 would have added about R3,30 to the daily total.
Why does a (steady) 55% increase in daily expenditure make no difference to a poor person?
It is possible to go through each argument against BIG (its alleged creation of dependence; the preference for a public works programme to social grants for addressing the unemployment problem; the extent of reduction in inequality already achieved, and so on) and show it to be either weak or false.
Applying the mind is hard work. It entails digging deep into research. It means looking critically at the current crop of anti-poverty policies, which are not equal to the job.
It requires the government to cast a critical eye on its unwillingness to ask the well-off to make the sacrifices required to ease the suffering of the poor. The government has admitted that social grants alleviate poverty more effectively than public works. It has stressed repeatedly that we are in for the long haul.
The poor should not have to wait the many years that must pass for the government’s efforts at stimulating job creation to take effect — they need to eat today. A basic income grant will at least put food on the table.
If congealed prejudices against social grants that currently substitute for reason were abandoned, and the courage to raise tax levels in one of the most unequal countries in the world were mustered, BIG could be introduced.
Charles Meth is a research fellow at the School of Development Studies at the University of KwaZulu-Natal and was a member of the UIF Task Team, the Maternity Benefits Task Team and the BIG Coalition Economists Panel