I have known Social Policy Initiative executive director Isobel Frye, a veteran campaigner for a universal basic income, for many years. We are preachers’ children, and her dad knew my father, who passed away in 2016.
For a long time I did not apply my mind to the universal basic income question. Later, as SA’s economic crisis intensified, I thought we would have to make a choice between it and a job guarantee, the two great causes within international progressive movements. I now believe we must do both.
The penny dropped when I read the outcomes of an ANC lekgotla after the 2019 elections. The party set a target to halve the rate of unemployment over the next five years. I ran the numbers and found that SA would have to create 7.5-million jobs. I called Frye and said: “I now realise that we need universal basic income. If the government does everything I say it must do, there will still be millions of unemployed people.”
Soon after the start of the pandemic I was in a workshop at the presidency where economists were discussing the appropriate response. While many countries decided that they would do “whatever it takes” to counter the effects of the lockdowns, our economists were making their proposals smaller because SA allegedly had no fiscal space. I decided this was the time to introduce universal basic income.
Since then I have worked with the Social Policy Initiative and participated in the campaign for universal basic income, which is without doubt the most researched economic policy since 1994. It did not take me long to conclude that universal basic income was “about the economy, stupid”, and was not a grant. It will stimulate the economy after 16 years of declining average living standards. I modelled the stimulus effects of a universal basic income phased in at the three national poverty lines for adults aged 18-59 and concluded that it was inadequate.
The Social Policy Initiative version of universal basic income is paid to adults and children. It will stimulate the economy and create millions of jobs, and the debt ratio will remain the same. About 96% of the money will come back to the government due to additional VAT receipts, a clawback from taxpayers and the effects of the stimulus on government revenues. Since the stimulus effect will gradually fade after the three-year implementation period, the government would have to put in place other measures to lock in the higher GDP growth rate.
Last year Dante Cardoso and others at the University of São Paulo published a seminal paper that measured the stimulus effects of social protection spending in 42 countries. There were high fiscal multipliers — the additional GDP growth generated by social protection spending — in countries such as Mexico (7.4), Pakistan (4.5) and Brazil (4.5). The Social Policy Initiative asked Cardoso to use his model to calculate a social protection multiplier for SA, and the finding was that it is higher than our assumptions.
Last week, the Social Policy Initiative had its last supper with trustees, donors, friends and family and will close its doors at the end of the year after 18 years at the forefront of advocating for comprehensive social security in Southern Africa. It was a bittersweet event because while the organisation will be no more, it has fought a successful campaign. How does one measure that South Africans from all walks of life — from President Cyril Ramaphosa to strangers who stop me in malls — have asked me how universal basic income will work?
Most South Africans support universal basic income and the Berlin Wall that is preventing implementation will soon fall because the minority who oppose it never provide alternatives to get SA out of its economic crisis. Every year the National Treasury tells us its structural reforms will not work. The latest medium-term budget policy statement said Operation Vulindlela would make no difference and forecast GDP growth of 1.5% a year from 2024 to 2026.
Universal basic income is the answer. To every question.
• Gqubule is research associate at the Social Policy Initiative. He writes in his personal capacity.
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