[Debatte-Grundeinkommen] INTERVIEW: Universal Basic Income Would Combat Inequality

[Markus Schallhas]

Universelles Grundeinkommen würde weltweite Ungleichheit bekämpfen.

In Argentinien, Chile, Costa Rica und Uruguay und sogar Brasilien schon
einführbar.

Interview mit Martín Hopenhayn von der Social
Development Division der Economic Commission for Latin America
and the Caribbean (ECLAC).

lG,
Markus




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Universal Basic Income Would Combat Inequality

Darío Montero interviews MARTÍN HOPENHAYN, head of ECLAC's Social
Development Division

SAN DIEGO, California, Dec 7 (IPS) - Argentina, Chile, Costa
Rica,
Uruguay and even Brazil are close to being able to provide a
universal
basic income to all citizens, which is the way to make cash
transfers an
effective tool in fighting inequality, according to Martín
Hopenhayn.

"The premise is that citizens, as such, are entitled to a minimum
level of subsistence," said Hopenhayn, the director of the Social
Development Division of the Economic Commission for Latin America
and
the Caribbean (ECLAC).

But in order to sustain such payments, in-depth reforms of tax
systems
in the region are needed, Hopenhayn told IPS in an interview
during a
late November seminar organised by ECLAC in San Diego, California
to
disseminate and highlight the results of its five-year
Experiences in
Social Innovation contest.

The conditions that would make it possible to provide a basic
income to
citizens appear to be coming together in some countries of the
region,
as poverty has declined in nearly all countries despite the
international economic crisis that is still plaguing much of the
world
economy, according to the Social Panorama of Latin America 2010
report
released by ECLAC in November.

Q: How would you evaluate the social situation in the region
after a five-
year boom, which was interrupted by the global crisis of 2008?

A: Compared to the 1980s and 1990s, social indicators have
clearly
improved. Since 2002, the poverty rate has fallen from 44 percent
of
the population in the region to 32 percent. The creation of jobs
and
increase in family incomes, by means of wages or social
programmes,
has broken with decades of stagnation or decline.

Although it seems incredible in view of the tremendous crisis we
have
suffered, there has also been a general decline in poverty and
indigence, albeit small, in 2009 and this year. Unlike in the
past,
governments have adopted countercyclical measures in the face of
the
crisis: they have spent money to protect the jobs and incomes of
the
poorest households.

The other positive aspect in this time of change is that for the
first
time in many years, there has been an improvement in the
distribution of
wealth, although Latin America is still the world's most unequal
region.
But the GINI index (which measures inequality) has improved in
nearly
every country, especially Brazil and Venezuela.

Q: Why has inequality been the hardest nut to crack, despite the
election of leftist governments that specifically include the
fight
against inequality in their government programmes?

A: The biggest problem is that it is very difficult to reduce
wage
gaps, partly because of the weight of the informal sector of the
economy where, despite advances made, half of the urban
population
still works.

Furthermore, much of the productive apparatus is still backwards,
lacking access to markets and with a low level of specialisation.

Q: Growth is also based on raw materials, which do not generate
much
employment…

A: That presents a major dilemma. The significant rise in the
international prices of farm exports and natural resources has
been a
big ally in the growth of many countries, such as Argentina,
Brazil,
Chile and Uruguay, but the problem is that these are areas of the
economy that generate few jobs and tend to concentrate wealth.

The big challenge for the region is to diversify the production
of wealth.

Q: In addition, the rise in farm prices leads to a similar effect
in the
domestic market.

A: That is a big problem. In the period we're talking about,
extreme
poverty would have been reduced even more if not for the
inflation
in food prices, because the extreme poor spend nearly all their
income on food.

There are exceptional cases, like Argentina, where the government
took
measures to keep domestic prices from being pulled up by
international
prices for what is a basic part of the diet in that country,
beef.

Q: But that policy (a ban on beef exports, and later export
quotas) drew
a great deal of criticism both within and outside of Argentina.

A: It is a dilemma. But I must say that Argentina did not suffer
much of
a negative impact on its exports as a result of that measure,
which
did on the other hand improve things on the domestic market.

A: What does ECLAC recommend governments do to combat inequality,
now
that a new boom period is predicted?

Q: The first recommendation is what we call the fiscal pact.
Latin
America has an average tax burden of around 17 percent of GDP,
which
is very low. In Mexico, for example, it is only 12 percent.

Worse yet, the structure of the taxes -- which, unlike in Europe,
are
indirect -- is very unfair, because everyone pays the same, rich
and
poor. They are taxes on consumption. Meanwhile, income taxes and
taxes
on business profits are very low, and there are many exemptions
as well.

So a reform of the tax system is essential. The combination of
economic
growth and a heavier, more redistributive tax burden translates
into an
increase in resources for social policies. To make serious cash
transfers, for social purposes.

Q: You're taking about an increase in social spending?

A: Currently transfers to the poor, through plans like Brazil's
Bolsa
Familia (family grant) system or Mexico's Oportunidades, amount
to
just 0.5 or 0.6 percent of GDP. That is still very low, although
efforts have been made.

What would happen if we could transfer resources to all families
with
some degree of social vulnerability, in order to push them above
the
poverty line? That would make healthy child development possible
and
would improve educational performance and reduce malnutrition.

In other words, it would put countries on a path towards breaking
down
the intergenerational reproduction of poverty, exclusion and
inequality.

Q: The alternative would be a basic income for families without
the
conditions required today (such as school attendance, vaccination
and
regular health checkups)?

A: There is major debate in the region with respect to whether or
not we
will make the shift from conditional cash transfer programmes to
a
citizen income. So far the programmes have set conditions, and
the
transfers have involved very small amounts.

There is a certain logic to setting conditions. You kill two
birds with
one stone: the families have more income and, in exchange, the
children
stay in school. However, the example of Brazil once again shows
us that
while the Bolsa Familia programme has boosted incomes, it has not
had
much of an impact on school enrolment and attendance, since
primary
school coverage is already nearly universal.

We have to see which economies in this region are in a position
to move
towards a guaranteed basic income. The premise is that citizens,
as
such, are entitled to a minimum level of subsistence.

Q: Which countries would be in a position to do so?

A: At least four variables have to come together: per capita
income
based on a country's productive capacity, the tax burden, social
security coverage, and the average educational level. In that
regard,
the countries that would appear to be closest are Chile,
Argentina,
Uruguay and Costa Rica, although Brazil is not far off.
*****
+ ECLAC (http://www.cepal.cl)


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