Tagged: Social Welfare

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]

Advertisements

Co-ownership democracy – the path to a basic income grant

South Africa’s path to a welfare state has not been easy. For starters the problem of how to pay for social welfare in a country with too few taxpayers and not enough full-time employed citizens, has meant that social services have been rolled out first to those in most need — children, the disabled and the elderly. In recent months the ruling party announced the introduction of universal healthcare in the form of National Health Insurance and a number of pilot schemes in which the system would be phased in incrementally.

Although opposition parties and civil society groups have already called for a basic income grant for all citizens along with health care, South Africa has lacked both the political will and the means to achieve this goal. Both the Freedom Charter and our country’s Constitution enshrine the right of citizens to share in the wealth of the country but this promise has appeared out of reach, resulting in ongoing poverty for millions. The pressure on the state to deliver essential services while moving towards a technologically sophisticated industrial economy has resulted in political infighting with far left groups such as the Economic Freedom Front (EFF) demanding that private property be confiscated by the state in a plan that would essentially reduce the economy and the country to a communist dictatorship.

Such a path is not the inevitable outcome of South Africa’s democracy. According to social and economic rights activist Nicole Tin,”Communism tries to correct the imbalance between the poor and the rich through the idea of common ownership. The fault is the implementation of a centralized common ownership. All the wealth gets centralized into the hands of a few people in the government and wealth distribution becomes a problem. China and Russia have given up on this idea of a common centralized ownership.”

Democracy, she says “is attractive as every citizen has a vote to pick the government. However, beyond this vote, democracy has nothing tangible to offer to its citizens. Wealth and power are concentrated among the rich.”

In the new democratic order envisaged by post-Marxists like Tin the common ownership of property would exist side by side private ownership of property by individuals or organizations, as currently practiced in democratic countries. For example, land pieces sold by governments.

The most important difference is that the proceeds from the lease or sale of common properties are distributed directly to all citizens equally.

In current democracies, even communist ones, Tin says, “such proceeds are kept, confiscated, in the government treasury. Common properties include land, oil, minerals, water, air space, road space, electromagnetic wave bands, nature parks, fishery license, sovereign wealth fund, and anything else in the country that is not already owned by private individuals or organizations.”

“In current democracies, citizens get zero wealth from being a citizen. In a citizen-ownership or co-ownership democracy, citizens equally share the wealth realized when common properties are sold. Each citizen in a citizen co-ownership democracy has a right to vote and a right to an equal share of the country’s wealth.”

In South Africa where the dominant theme  of wealth sharing and resource allocation is known as ubuntu, this makes sense, since there are limitations to what can or cannot be shared, necessitating the creation of shares, stocks and bond certificates.

“The amount of citizen dividend per citizen depends on the country’s common wealth. The amount is expected to be very substantial in many countries. For example, in Alaska, the amount can be easily a few thousand dollars per resident. In Singapore, the amount is estimated at about $9000 per citizen. (The details are in the cases supplied by Tin below). The amount over a person’s lifetime is easily hundreds of thousand of dollars, or even a million dollars.

So how exactly are we going to pay for all of this wealth sharing? Welll, South Africa has mineral wealth, the reserves of which remain some of the world’s most valuable, with an estimated worth of R20.3-trillion ($2.5-trillion). Overall, the country is estimated to have the world’s fifth-largest mining sector in terms of GDP value.  Government investment in the economy is in the region of billions of rands and like Dubai plans are afoot to beneficiate mineral wealth and to move beyond this windfall to a modern information economy.

The transition from a democracy to a citizen co-ownership democracy needs no revolution says Tin,  It needs only a political party to champion this idea, win the citizens over and you institutionalize this idea. “In some countries such as Switzerland, citizens can initiate and vote for a new democracy. They do not have to wait for any political party.”

“Careful institutionalization of citizen co-ownership and citizen dividend is essential. Past examples, e.g., the Alaska Permanent Fund and Alberta Heritage Fund, have shown that  dividend funds without careful protection will be diverted by politicians to other “urgent” uses. A good protection is through Constitutional laws that require a high referendum to change. A normal law that can be easily changed by a simple Parliamentary majority is not much of a protection.

The path towards a Basic Income Grant in which citizens gain financial freedom from birth and where the state essentially pays each and every citizen a basic salary every month is a long one. We may not ever get there as a developing nation, but we can certainly redistribute the nation’s wealth on a per annum or quarterly basis. There is no reason why the annual windfall from the state on the basis of co-ownership could not benefit us all in the same way that below par taxpayers already receive annual benefits from SARS in the form of a tax return. If you earn under R99 056 pa you already get your employees IRP pay deductions back, but if you unlucky enough to be unemployed you receive nothing. This is the gap which opposition parties need to fill in order to stay relevant to the 25% -36% segment of South Africans who remain unemployed.

Continue reading

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.

Continue reading

WELFARE STATE: Give VAT back to those who deserve it most.

WE’RE not asking for bread, although this used to be a rallying cry for the poor, the world over. We’re not asking for government subsidies on milk, or delivery of food parcels to those in need. No, all we are asking for is for our VAT BACK!

Giving VAT BACK to the poor, will alleviate pressure on other social services while enabling us to take control of our lives. VAT is an example of the most direct form of taxation, yet for those who spend all their income on food, clothing and shelter, VAT is just another example of big government and its hidden hand in our pockets, what economists euphemistically call “indirect taxation”.

How much tax actually reaches the poor when we are most in need? The answer is nothing or very little. More often than not, our pennys are handed over to the state to be spent on big budget items, such as military frigates, luxury airliners for presidents, and state banquets for foreign politicians.

By demanding VAT BACK — welfare in the form of a tax rebate, a leg-up rather than a hand-down — citizens are merely asking for what is rightfully theirs: How can you be 100% sure that you will never be left without a job? Homeless or without food on the table? Desperate or in need of assistance? Often dire straits coincide with other unexpected problems in life: A death in the family, a new-born child, a situation out of ones control, even marriage, separation or divorce.

Currently the only citizens to receive any welfare grants are those who qualify for assistance as a result of old-age, mental or physical disability, and children up until age 14. Which means that unless you are aged, infirm, or the legal guardian of a child, you could be left walking the street at night, seeking shelter, begging for aid, coerced into red-light employment or worse.

THE SIMPLE SOLUTION: DEMAND YOUR VAT BACK!

DEMAND your VAT back. Believe it or not, the average South African will hand over the government *R33 600 spent entirely on food and given to the exchequer in the form of VAT. This is money out of your own pocket! What do we get in return for that expense? Very little. A parliament that does nothing but pass laws. A judiciary that does nothing except complicate the law-making process, and a president who spends most of the time outside of the country, fixing other country’s problems.

Where is the government when you suffer from unemployment? Who is their to look after you when you are ill? State Hospitals in spite of their elegant sounding names, do very little and still expect you to pay for services at the end of the day. Receiving your VAT BACK could be the start to a new life. Just imagine what the money could do. Suppose for argument sake that you considered VAT not as a tax paid over to the state but as an interest-free loan given to the fiscus on the understanding that it would eventually be given back, a loan instead of the forced hand-out to big government, red-tape and bureacracy that it really is.

Over the years your stake in the South African fiscus and the economy would be enormous, pure capital given away at zero percent and used to loan out to banks and other institutions at 8%. So why not ask for your VAT BACK now? Supposing a 30 year old male went on welfare payments today, “the dole” would take thirty years of paying back R500 a month directly into his account to pay off the initial “loan” granted to the fiscus, a loan given without much thought, just via the extraction of value-added capital through the course of ones lifetime.

HOW MUCH IS YOUR PERSONAL CONTRIBUTION TO SOCIAL WELFARE REALLY WORTH?

A FIFTY year old female citizen put on the dole today would never hope to receive all her money back, private money given to the fiscus through the course of ones lifetime, considered as a loan, and would probably die before reaching the ripe old age of 100.

Whichever way one looks at the figures, even if one reduces the amount spent, say on consumption for the first ten years of life, *see figures below, the Welfare State is affordible not only in principle but in reality. Of course R500 is only an estimate — some people spend less others more. There’s also clothing and shelter to consider. The repayment of VAT spent on food alone over the course of ones lifetime does not half compensate you for the initial loans made to big government.

Ask yourself the question: how much is my personal contribution to the state’s coffers worth, ie. what would social welfare cost not just through direct income tax but via indirect taxation of goods and services ie VAT?

An impossible problem since one is always taxed, even if you receive a welfare cheque, that cheque gets taxed the minute you spend it.

South Africans are one of the most taxed nations on this planet yet receive very little in the form of social support. Think about the needy, isn’t it time we eliminated some of the worst forms of poverty such as begging? Or restored peoples dignity with the knowledge that each and every citizen is looked after, without race and class distinction, all taken care of without exception?

By demanding a direct payment of welfare in your hour of need, you will not only destroy the lie that you don’t deserve such a payment, but the illusion that this kind of money does not exist. Call your MEC, phone your political party, campaign for a welfare state that meets the needs of all its people.

(* a simple guess-timate based upon an average life expectancy of 40 years, x est R6000 pa spent on food, ie R500 per month = R240 000 spent in total, that includes a startling R33 600 or 14 % VAT handed over to government in the form of indirect taxation.)

WHY DIDN’T I THINK OF THAT?
For more proposals for a better future, send a R100 cheque or money order and a self-addressed envelope to:

D R LEWIS
(Engineer of the Imagination)
PO Box 4398,
Cape Town 8000
South Africa

Or for a short pamphlet on overcoming the master-slave-worker state, R50 cheque or money order to the same address.