Tagged: Basic Income

Land ownership, is it so desirable?

PRIOR to 1994 “black persons” did not possess the vote. The majority were relegated to so-called independent homelands, most did not own land as such, and if they did, were largely dispossessed in one way or another by a labour system, which imposed a hut tax, drafted labourers onto the mines, and created a migrant population, which eroded both tribe and family, in the process shifting profit from the land, into the hands of the rand-lords and barons.

Some 87% of the land was thus owned by white persons and only 13% by black persons. There was no child-care grant to speak of, no disability grant, pensions were skewed in favour of the white folk.

Today we all possess the vote, the social wage comprising child care grant, pensions, disability and veterans grant is growing, more black people own houses and vehicles than ever before and there is unprecedented level of economic activity compared to similar periods under sanctions.

All this may one day change. Whether it is Julius Malema demanding land, or the land debate unleashed by the tipping incident, and online invective by Qwabe et al, then you may be forgiven for thinking we are still living under apartheid, and that when one arrives at white women versus the land and the dispossessed, it all comes down to real estate.

The facts behind this tragic reality are rather different.

For starters, the post-apartheid state currently owns 14% of the land in the country , only 79.2% is in private hands.

Between 57-84% of homes owned and fully paid off in the country (depending on tenure) measured over the past year, are black owned, mostly the result of mass state housing being available for purchase at low prices.*  This is not to say that the relative value of black-owned property versus white-owned property is something to be sneezed at, the value here is still undoubtedly skewed in favour of the white minority.

Likewise equity, when it comes to shares, 30% of the stock on the JSE is either in black hands, or in companies controlled by BEEE, with the rest either “white-owned” or under foreign control. An uneven and unequal state of affairs that certainly deserves correcting. Despite the enormous gap and Gini coefficient marking South Africa as one of the most unequal societies in the world, the Living Standards Measure (LSM) 10 has gone from 5% black in 2004 to 29% black in 2014.

In the face of extraordinary adversity, there has been unprecedented transformation, (arguably an incomplete, unfinished transformation), —  our country’s growth has however been a mixed blessing. Our population has grown from 20 million in 1960 to 52.98 million in 2013, which means we have more than doubled our population in 50 years. For every one job that would have been sufficient to provide an income and a house in 1960, three jobs must be created today.

To make matters worse, we have gone from a long boom powered by a resource market, to a resource meltdown, starting in 2009, at the same time that we are now heading into the fourth industrial revolution and a world without jobs, where increasing mechanisation and automation translates into unskilled labour becoming forever redundant.

Instead of the bipolar world which BRICS was meant to create or supplant, (the arrangement is essentially a Post-Bretton Woods solution for the 1950s), we have belatedly, and without much planning involved, entered the digital age, kicking and screaming.

South Africa has traditionally been a slow adopter of technology, we only turned on our tv screens twenty years after the West, and likewise, our broadband cable networks. The digital age, information filled and inevitable as it is, has been another mixed blessing, it has brought us all modernity, and in turn, unprecedented choices in online media, as well as the proverbial death of distance, in which there is no economic centre at all.

In the new digital world, in theory, all parts of the globe are able to compete with each other, equally. The result has been the dematerialisation of value, the rise of bitcoin, online shopping and netflix, pop-up factories, China-on-the-Desktop, the Internet of Things, all trends for which South Africans on the lower LSMs seem inadequately equipped, and for which unions, as well as employers, have failed to prepare workers.

It does not take a rocket scientist to see the massive disruptions which are occurring in nearly every economy on the globe, and more is yet to come. SA is not alone here. Uber is disrupting the taxi industry, Amazon is disrupting commerce, P2P is disrupting copyright, Bitcoin, as already mentioned, is disrupting banking.

Unless we seize these opportunities, and figure rapidly where our next economy is going to be placed, and yes, Operation Phakisa, the Oceans Economy is one such initiative, there is a danger that we will always be on the wrong side of the digital divide, and the tale-end of the economic food chain.

There is an urgent and drastic need for better internet access for the poor, food security in the form of food garden allotments, community tool-shops which replace DIY with Do-It-with-Others (DIWO), and for a raft of safety and social security measures, these I have already mentioned to some degree on Medialternatives before, they comprise an unconditional basic income grant, income equalisation, rent stabilisation and a free education grant.

Unconditional basic income grant – this is a payment once a month into your bank account, to all citizens of voting age, essentially outlawing poverty and preventing the worst excesses of the marketplace, such as the coercion of labour.

Income equalisation – in jobs that are seasonal, a central fund evens out the high and low periods, guaranteeing safety when there is no work, and creating savings when there is not.

Rent stabilisation – a form of rent control, sets maximum rates for annual rent increases and, as with rent control entitles tenants to receive required services from their landlords and to have their leases renewed.

Free education grant – a tertiary level grant to learners enabling access to higher education.

Unfortunately, ultra-leftists within the ranks of the ruling party and opposition groups as well as neo-conservatives, shun such proposals as too utopian, idealistic, or mere neoliberal tinkering. What they, the rag-tag left and conservative lobby, desire and want most of all, is to kill the private market economy which funds social security, by transplanting failed centralist and statist command economy proposals from the old Soviet Union and Cuba, a state of affairs which paradoxically also benefits the conservatives who are, at the end of the day, merely oligarchs.

Instead of social security we end up with business on welfare, endless bailouts, and junk status. It is South Africa’s dirigiste economy (the directed market), not the market economy which has failed. And it is the conservatives who have failed us most of all. One has only to look at SAA.

*Source: South Africa Survey 2016, SA Institute of Race Relations.

Economic disconnect caused by Technology and Welfare disconnect

SOUTH AFRICA’S YOUTH are experiencing an economic disconnect. A generation faced with a world without jobs, a massive debt burden, and an economy that has failed miserably to gear itself up for the third-wave technologies that Asia and the West have embraced decades previously.

While you were out striking, marching or simply shopping, the world evolved, from a bipolar economy, dependent upon China and the USA, to a multipolar universe — an economy without a centre. The rise of the Information Economy — based as it is on information freedom, has been coupled with successive innovations. The Third Industrial Revolution has produced a ‘post-scarcity economy’, where having a ‘China on ones Desktop’, a 3D printer capable of printing anything, is considered de rigeur.

Successive waves of innovation have seen — the virtualisation of the economy, the dematerialisation of assets and the Internet’s proverbial death-of-distance. Pop-up factories, makerspaces, friction-free digital copies and the ‘Internet of Things’ are all buzzwords and terms which the youth are invariably going to meet on their free education journey. In the future, your neighbour will hand you a copy of an open source motorcycle, just so the two of you can go for drive. When you return, you will recycle the vehicle into any number of other open source devices.

We are rapidly approaching an era in which robots self-assemble and produce the goods, which we buy with our wages, which are in turn given to us, via a more efficient means of production and redistribution of wealth. This is an alluring proposition. Holland for instance had moved to end labour in mining. Machines are replacing humans wherever they are found, and the full automation of society is only a matter of time.

Now, Let’s talk about the welfare disconnect

Although the country is one of the few nations on the continent to have implemented a social security programme, this programme is geared towards the elderly, disabled and child-care grants. Thus the youth of today, are born into social security — their parents are recipients of state welfare not because they are citizens, but because they have children.

Once a child is over the age of 18, this grant falls away. The double-whammy of unemployment and poverty kicks in. Some 25.5 percent of the population is unemployed and this figure is worse when the youth and first-time job-seekers are concerned, rising to 63%.

Today’s student unrest is a direct result of the situation where a pupil, having generated income for his or her family, simply by being a child, turns into a liability on becoming a young adult and tertiary student. In most cases, such a person is forced to fend for him or herself.

This is an enormous shock to both the youth and the family.

So far as social security in South Africa is concerned, we are a nation which has the cart before the horse. Instead of paying families to have children, we should be paying people to stop working.

South Africa’s youth can work and play, just about anywhere there is an Internet connection or icafe, but getting connected to the Net is not sufficient to enable jobs and free education. There are other necessities, common to first world economies which we lack as a nation, and without them, being merely connected, is simply not good enough. In fact, a job, as an end in itself, may not necessarily be all that desirable, the same way that owning anything in an economy based upon abundance, is not the alpha and omega.

Fixing the disconnect

Exactly how is the country to going pay for free education, and range of services? How are we all going to live in a world without jobs? These are the questions foremost on people’s minds, as the country sobers up to the events of the past weeks, which saw the unprecedented storming of parliament and storming of the Union Buildings.

South Africa as luck would have it, already has a ‘sovereign wealth fund’ with a massive R1.5 trillion rand invested, and certainly the youth need to be tackling finance minister Nhlanhla Nene and education minister, Blade Nzimande on why they are suffering in the face of so much wealth.

Instead of a Public Investment Corporation (PIC), benefiting one privileged generation who just happened to be in power during the 90s, let’s make the public investment more inclusive of all citizens, and all generations, and recommit the fund to its Public goals, since the ruling party appears to have lost the distinction between what is public and what is private, funding Nkandla, and government pensions for party insiders.

PIC should rather be redirected to funding a social wage for all citizens, one which includes free education, health insurance and a basic income grant. Instead of a party wage, we could have a social wage reducing the worst affects of poverty and mitigating the coercion inherent to the job market, even one that is Internet-enabled, while providing free education.

Moving South Africa from a coercive labour market to a voluntary labour market, could easily be achieved by removing the compulsion, violence and necessity to seek employment.

A job should not be a requirement in order to survive or be a South African citizen.

Labour should never be compulsory, or forced under the barrel of a gun. As Marikana has proven, people are willing to die for their freedom, and this message is now being taken up by students, who rightfully are demanding free education. The same generation will soon be demanding social security, a social wage for life.

Only the most productive labour and most capable persons would enter the wage economy. One has merely to look at social democracies in Europe to see what a social wage economy looks like:

The State disburses funds, seeing an immediate benefit to the fiscus, via the value added taxation system, which recoups the money spent, in a virtuous cycle.

Citizens with a social wage, are able to purchase the necessities of life and thus avoid the worst pitfalls of extreme poverty.

There are compelling reasons for embracing wealth redistribution in this way.

Alaska for example, pays its citizens to purchase services that would normally be gained from the state, from the private sector. In this way, the state avoids creating enormous bureaucracies which are costly and unsustainable by their very nature, and avoids the cost escalations that come from tenderpreneurs, and mega projects, whose only aim, is to keep people employed, in a world in which labour not leisure is the goal.

Societies with some form of social wage, whether social security or social welfare, produce more scientists, artists, musicians and thinkers. They are better equipped to innovate and create. They experience stability and longevity, both in terms of health extension and the extension of the period in which these societies exist, and remember.

[This is a condensed version of the previous five part series on the economy: Fix the Economy Stupid and Provide Free Education]

South Africa can afford a basic income

SWISS residents will soon vote on an initiative that would guarantee a basic monthly income of 2,500 Swiss franks ($2,800 pm or $33,6k/yr) for all working adults in the country to combat income inequality across the nation. The initiative collected the 100,000 signatures needed for a referendum on the proposal, and to mark this historic initiative, a truck in the city of Bern unloaded 8 million five-cent coins, on Friday to represent Switzerland’s 8 million citizens. The parliamentary vote has not yet been scheduled, but it could take place before the end of the year.

This proposal is reigniting South Africa’s own Basic Income Grant (BIG) proposals. If you remember, opposition parties and civil society groups called for a BIG in a campaign that appears to have been put on the back burner because of concerns over the tax burden. With elections coming up in 2014 and calls by far-left groups to end private ownership of property, the time for resurrecting the BIG is now. As a stop-gap measure, medialternatives has suggested an annual or bi-annual benefit based upon a co-ownership model in which citizens take ownership of the sovereign wealth of the country, receiving dividends like any normal shareholder.

South Africa can definitely afford to pay its citizens an annual benefit, since it has 80% of the world’s platinum supply and 50% of the gold reserves, more mineral wealth than is sitting in the bank vaults of Switzerland. A guaranteed monthly income is not out of the bounds of possibility and would not necessarily impact on the tax burden, since it could be drawn from direct investment in the economy.

South Africa’s Public Investment Corporation (PIC) is one of the largest investment managers in Africa today, managing assets of over R1.4 trillion. The nation’s sovereign wealth can be seen actively invested in a number of  Johannesburg Stock Exchange listed companies,

Instead of allowing wealth to flow out of the country or into the pockets of the politically connected, South Africans can act to force our government to take a more active role in seeing to the needs of its people. Co-ownership benefits and a BIG could be the impetus needed, since the country is confronted with a similar dilemma as any oil-rich nation facing potential ruin when the oil runs dry.

Industry pundits have placed the actual working life of the countries gold mines at no more than another 10-15 years — the cost of getting the ore out of the ground is becoming too expensive, as these reserves are depleted forcing miners to dig deeper.  Diversification of the development of our country for the benefit of future generations — growing the sovereign wealth of the country so that all may benefit — could be the solution.

The country  has a  window of opportunity to reap rewards from its global investments over the past decade and to repatriate these profits in the form of a BIG or a Citizen Co-ownership Benefit.  With the JSE becoming a hub of international commerce, public investments are already showing sign of a pay off as our mineral wealth is diversified into global commerce, time to remind the politicians that these investments are meant to benefit all citizens not simply politicians.

BIG: We want wealth redistribution now, not poverty alleviation sometime in the future!

OPPOSITION to a basic income grant (BIG) falls into two categories — there are the free marketeers who preach an extreme form of market fascism in which economic losers need to be punished in order for the system to sustain itself, along with the exploitation of labour for profit, and for whom welfare is anathema (since it would mean relief from the punishment “incentive” and dilution of the motive forces behind capitalist competition), then there are the market liberals like Sean Archer (Cape Times Oct 24) who puzzle themselves with theories that merely restate the problem of poverty in terms of pseudo-scientific empiricism.

How much will poverty alleviation cost? How many poor are there in South Africa, and how can we distinguish between the poorest of the poor and the not-so-poor? Questions like these trouble the minds of liberals who have never experienced poverty, or who fear that tackling this issue will erode their status and position in society, effectively overturning the apple-cart as it were. The definition of what it means to be poor, as Archer intimates, must inevitably be rewritten by a form of redistribution that tackles the harshest of economic cruelties and depredations.

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