The world's biggest basic income experiment

From Vox

Residents of a Kenyan village learn they will receive UBI payments from GiveDirectly. Oliver Ochanda/Vox

Large sections of my brain that could contain useful knowledge are instead filled up with dumb tweets I saw years ago. One of my absolute favorites was someone identifying himself only as “Side Hustle King,” who would ask his followers, “Would you rather get paid $1,000,000 right now or $50 every month for the rest of your life? I’ll take Option B. That’s what passive income is.”

To save you some arithmetic: Unless you plan to live at least another 1,667 years (which is what it would take to make $1 million in $50 monthly increments) and do not care about inflation, Side Hustle King is mistaken. Option A is far better. It’s a case in point that, sometimes, you should take the lump sum, not regular payments.

GiveDirectly, a charitable nonprofit that sends cash directly to low-income households, has identified another such case, one where the answer was a little less obvious. For years now, GiveDirectly has been conducting the world’s largest test of basic income: It is giving around 6,000 people in rural Kenya a little more than $20 a month, every month, starting in 2016 and going until 2028. Tens of thousands more people are getting shorter-term or differently structured payments.

One of the big questions GiveDirectly is trying to answer is how to direct cash to low-income households. “Just give cash” is a fun thing to say, but it elides some important operational details. It matters whether someone gets $20 a month for two years or $480 all at once. Those add up to the same amount of money; this isn’t a Side Hustle King situation. But how you get the money still matters. A certain $20 every month can help you budget and take care of regular expenses, while $480 all at once can give you enough capital to start a business or another big project.

The latest research on the GiveDirectly pilot, done by MIT economists Tavneet Suri and Nobel Prize winner Abhijit Banerjee, compares three groups: short-term basic income recipients (who got the $20 payments for two years), long-term basic income recipients (who get the money for the full 12 years), and lump sum recipients, who got $500 all at once, or roughly the same amount as the short-term basic income group. Suri and Banerjee shared some results on a call with reporters this week.

By almost every financial metric, the lump sum group did better than the monthly payment group. Suri and Banerjee found that the lump sum group earned more, started more businesses, and spent more on education than the monthly group. “You end up seeing a doubling of net revenues” — or profits from small businesses — in the lump sum group, Suri said. The effects were about half that for the short-term $20-a-month group.

The explanation they arrived at was that the big $500 all at once provided valuable startup capital for new businesses and farms, which the $20 a month group would need to very conscientiously save over time to replicate. “The lump sum group doesn’t have to save,” Suri explains. “They just have the money upfront and can invest it.”

Intriguingly, the results for the long-term monthly group, which will receive about $20 a month for 12 years rather than two, had results that looked more like the lump sum group. The reason, Suri and Banerjee find, is that they used rotating savings and credit associations (ROSCAs). These are institutions that sprout up in small communities, especially in the developing world, where members pay small amounts regularly into a common fund in exchange for the right to withdraw a larger amount every so often.

“It converts the small streams into lump sums,” Suri summarizes. “We see that the long-term arm is actually using ROSCAs. A lot of their UBI is going into ROSCAs to generate these lump sums they can use to invest.”

I visited one of the villages receiving the 12-year UBI back in October 2016, and even then I observed people putting together ROSCAs and making plans to accumulate cash to invest. Edwine Odongo Anyango, a father of two and handyman who was 29 at the time, told me he had formed a ROSCA with 10 friends. “The monthly thing is not bad, but I think a lump sum payment would be better,” he told me. “That way you can do a big project at once.”As you might expect, given how entrepreneurially minded the recipients are, the researchers found no evidence that any of the payments discouraged work or increased purchases of alcohol — two common criticisms of direct cash giving. In fact, so many people who used to work for wages instead started businesses that there was less competition for wage work, and overall wages in villages rose as a result.

And they found one major advantage for monthly payments over lump sum ones, despite the big benefits of lump sum payments for business formation. People who got monthly checks were generally happier and reported better mental health than lump sum recipients. “The lump sum group gets a huge amount of money and has to invest it, and this might cause them some stress,” Suri speculates. In any case, the long-term monthly recipients are happiest of all, and “some of that is because they know it’s going to be there for 12 years ... It provides mental health benefits in a stability sense.”

I think this points to the takeaway from this research not being “just give people a lump sum no matter what.” Ideally, you could ask specific people how they would prefer to get money. For instance, if you were a Kenya politician designing a basic income policy on a permanent basis, you could design it such that a recipient could opt into a $500 payment every two years or a $20 payment every month.

But barring that, long-term monthly payments seem to offer the best of all worlds because they enable people to use ROSCAs to generate lump sum payments when they want them. That enables flexibility: People who want monthly payments can get them, and people who need cash upfront can organize with their peers to get that.

Notice how small these payments are.  Yet they made a difference.   

The world's largest basic income experiment

sidents of a Kenyan village learn they will receive UBI payments from GiveDirectly.

 Oliver Ochanda/Vox

From Vox

Large sections of my brain that could contain useful knowledge are instead filled up with dumb tweets I saw years ago. One of my absolute favorites was someone identifying himself only as “Side Hustle King,” who would ask his followers, “Would you rather get paid $1,000,000 right now or $50 every month for the rest of your life? I’ll take Option B. That’s what passive income is.”

To save you some arithmetic: Unless you plan to live at least another 1,667 years (which is what it would take to make $1 million in $50 monthly increments) and do not care about inflation, Side Hustle King is mistaken. Option A is far better. It’s a case in point that, sometimes, you should take the lump sum, not regular payments.

GiveDirectly, a charitable nonprofit that sends cash directly to low-income households, has identified another such case, one where the answer was a little less obvious. For years now, GiveDirectly has been conducting the world’s largest test of basic income: It is giving around 6,000 people in rural Kenya a little more than $20 a month, every month, starting in 2016 and going until 2028. Tens of thousands more people are getting shorter-term or differently structured payments.

One of the big questions GiveDirectly is trying to answer is how to direct cash to low-income households. “Just give cash” is a fun thing to say, but it elides some important operational details. It matters whether someone gets $20 a month for two years or $480 all at once. Those add up to the same amount of money; this isn’t a Side Hustle King situation. But how you get the money still matters. A certain $20 every month can help you budget and take care of regular expenses, while $480 all at once can give you enough capital to start a business or another big project.

The case for giving all the money upfront

The latest research on the GiveDirectly pilot, done by MIT economists Tavneet Suri and Nobel Prize winner Abhijit Banerjee, compares three groups: short-term basic income recipients (who got the $20 payments for two years), long-term basic income recipients (who get the money for the full 12 years), and lump sum recipients, who got $500 all at once, or roughly the same amount as the short-term basic income group. Suri and Banerjee shared some results on a call with reporters this week.

By almost every financial metric, the lump sum group did better than the monthly payment group. Suri and Banerjee found that the lump sum group earned more, started more businesses, and spent more on education than the monthly group. “You end up seeing a doubling of net revenues” — or profits from small businesses — in the lump sum group, Suri said. The effects were about half that for the short-term $20-a-month group.

The explanation they arrived at was that the big $500 all at once provided valuable startup capital for new businesses and farms, which the $20 a month group would need to very conscientiously save over time to replicate. “The lump sum group doesn’t have to save,” Suri explains. “They just have the money upfront and can invest it.”

Intriguingly, the results for the long-term monthly group, which will receive about $20 a month for 12 years rather than two, had results that looked more like the lump sum group. The reason, Suri and Banerjee find, is that they used rotating savings and credit associations (ROSCAs). These are institutions that sprout up in small communities, especially in the developing world, where members pay small amounts regularly into a common fund in exchange for the right to withdraw a larger amount every so often.

“It converts the small streams into lump sums,” Suri summarizes. “We see that the long-term arm is actually using ROSCAs. A lot of their UBI is going into ROSCAs to generate these lump sums they can use to invest.”

I visited one of the villages receiving the 12-year UBI back in October 2016, and even then I observed people putting together ROSCAs and making plans to accumulate cash to invest. Edwine Odongo Anyango, a father of two and handyman who was 29 at the time, told me he had formed a ROSCA with 10 friends. “The monthly thing is not bad, but I think a lump sum payment would be better,” he told me. “That way you can do a big project at once.”

But I was surprised by just how often this attitude was reflected in Suri and Banerjee’s data. They found that the smallest increase in consumption — in actual regular spending on things like food and clothing — was in the long-term UBI group, which you might think is the group most able to spend a bit more every month. For the most part, they don’t do that: They invest the money instead.

The advantages of monthly

As you might expect, given how entrepreneurially minded the recipients are, the researchers found no evidence that any of the payments discouraged work or increased purchases of alcohol — two common criticisms of direct cash giving. In fact, so many people who used to work for wages instead started businesses that there was less competition for wage work, and overall wages in villages rose as a result.

And they found one major advantage for monthly payments over lump sum ones, despite the big benefits of lump sum payments for business formation. People who got monthly checks were generally happier and reported better mental health than lump sum recipients. “The lump sum group gets a huge amount of money and has to invest it, and this might cause them some stress,” Suri speculates. In any case, the long-term monthly recipients are happiest of all, and “some of that is because they know it’s going to be there for 12 years ... It provides mental health benefits in a stability sense.”

I think this points to the takeaway from this research not being “just give people a lump sum no matter what.” Ideally, you could ask specific people how they would prefer to get money. For instance, if you were a Kenya politician designing a basic income policy on a permanent basis, you could design it such that a recipient could opt into a $500 payment every two years or a $20 payment every month.

But barring that, long-term monthly payments seem to offer the best of all worlds because they enable people to use ROSCAs to generate lump sum payments when they want them. That enables flexibility: People who want monthly payments can get them, and people who need cash upfront can organize with their peers to get that.

Again and again, actual UBI (universal basic income) recipients have shown that they don't squander their gains on drink and frivolity.  Note how effective even tiny payments are in making a difference: $20/month, as they would be in South Africa.

Traditionally, a UBI in developed countries has been proposed as an alternative to unemployment benefit, the old age pension, child benefit, etc.  The traditional response is that it would be "too expensive", though if it were subject to income tax, which the poor do not pay, I personally don't think it would cost more than a couple of percent of GDP (I did my thesis on the negative income tax in South Africa).  

So perhaps, if we want to fight poverty, just give everybody $100 a month, even if they are already receiving the old age pension or unemployment benefits.  If old age pensions are already high in a country, perhaps they could be partially reduced to offset this.  In this case, a UBI, even of just $100 a month, would benefit the working poor.  And there are too many of those, thanks to neo-liberalism.  The best thing about it is that they wouldn't have to explain to some grumpy bureaucrat with her rule-book why they deserve it.

Money for nothing: A UBI

Source: Basic Income Australia

"UBI" stands for "universal basic income", and it is a periodic monthly or fortnightly income paid to everybody. The old age pension, in most countries, is a sort of UBI, confined to people past a certain age. A UBI which is above the poverty line is called a full basic income, if it's below the poverty line, it's called a partial basic income. Wikipedia has a nice piece on it here.

The old age pension, a sort of UBI for old people, was introduced because it was seen as the most effective way to eliminate poverty.   A UBI for everyone would be just as effective.  The old age pension has not affected my work ethic.  I would be happy to have an increase in my income, even though I get a fortnightly income from the government.  I see no reason why that would be any different for anybody else.  But obviously, people who deal with our garbage and our sewage will have to be paid more.   Which would a good thing.

[From The Guardian]

When Elinor O’Donovan found out she had been randomly selected to participate in a basic income pilot scheme, she couldn’t believe her luck. In return for a guaranteed salary of just over €1,400 (£1,200) a month from the Irish government, all the 27-year-old artist had to do was fill out a bi-annual questionnaire about her wellbeing and how she spends her time. “It was like winning the lottery. I was in such disbelief,” she says.

The income, which she will receive until September 2025, has enabled her to give up temping and focus instead on her art. “It covers my living expenses, my rent, food and day-to-day stuff.”

The concept of a guaranteed basic income might seem novel or neoteric, but it dates back to 1795, when the American founding father Thomas Paine suggested a “national fund” should pay every adult “rich or poor” a “ground rent” of £10 a year until the age of 50. Earth is “the common property of the human race”, he argued, so everyone has been collectively dispossessed by “the introduction of the system of landed property” and was entitled to compensation.

Today, as artificial intelligence (AI) learns from the collective intellectual and creative output of humans and uses this to dispossess workers of their livelihoods, the idea of universal basic income (UBI) as a possible solution is gaining traction. “We are seeing the most disruptive force in history,” Tesla founder and X (formerly Twitter) owner Elon Musk said last year, before speculating: “There will come a point where no job is needed – you can have a job if you want one for personal satisfaction – but AI will do everything.”

The counter argument is that although AI could replace a range of jobs, it will also create new roles (including oversight of AI decision making – known as “human in the loop”). Yet for many workers, the advance of AI continues to be alarming. In March, after analysing 22,000 tasks in the UK economy, covering every type of job, a model created by the Institute for Public Policy Research predicted that 59% of tasks currently done by humans – particularly women and young people – could be affected by AI in the next three to five years. In the worst-case scenario, this would trigger a “jobs apocalypse” where eight million people lose their jobs in the UK alone.

UBI would provide a vital safety net. “Under capitalism, you need money to survive. It’s that simple,” says Dr Neil Howard, an international development social protection researcher at the University of Bath. He and his team have helped to develop basic income pilots around the world and, like Thomas Paine, he believes that a redistribution of the privatised resources of all human beings is inherently just. Howard likens the large language models of AI that rely on the aggregated collection of human knowledge to the enclosure of the commons, which began in the 1600s and privatised most of England’s common land. “The common wealth of the world and of humanity, should, by rights, belong to all of us,” says Howard. “It has been appropriated by the few – and that leads the many to either have to struggle to survive or simply not effectively do so. So there’s justice underpinning the claim of UBI.”

Contrary to expectations, he says, “It wouldn’t necessarily lead to people doing less work – it would enable them to do better work or to invest their time in more socially useful activities.”

This argument is backed up by a 2020 study conducted by researchers at Utrecht University in the Netherlands. It found that unemployed individuals who were previously in receipt of benefits increased their participation in the labour market after they were given a basic income for three years. Rather than opting for insecure work – taking any job they could get – to fulfil the conditions imposed upon them by the benefits system, they were more likely to find and accept a long-term, well-paid job. They also took on more work.

“Humans need to do work that feels valuable, psychologically,” says Cleo Goodman, a UBI expert at the thinktank Autonomy. “It’s baked into us. It is complete nonsense to suggest that there’s a faction of society that just wants to sit around on the sofa all day, drinking beer and watching TV. We want to spend a fair amount of our time doing something that makes us proud.” She believes that everyone has the potential to find their “niche” – work they’re good at, that gives their lives meaning and purpose.

For example, she believes that if UBI was available, people would do more creative and charitable work. “The kind of work that it’s now very difficult to make an income from is the kind of work that I think people would move to in droves. And I think that would be positive for society.”

This is particularly true of care work and parenting, says Goodman. “People shouldn’t be punished for making those choices. Socially and economically, that work is valuable. But at the moment, economically, it’s not valued.”

Salaries for work that is essential, but unattractive, would need to rise if a UBI scheme was introduced. “We’d have to recognise the people that are doing the work in the sewers and cleaning the streets, they’re doing incredibly important jobs that we should be grateful for,” says Goodman. “So they should be compensated in a fair way. I think more people would be happy to get their hands dirty if they were being paid fairly.”

While no basic income scheme is now available in England, Autonomy is looking to change that. Goodman is fundraising to run a micropilot that would give 15 people in two areas – central Jarrow in South Tyneside and East Finchley in north London – £1,600 a month for two years, to observe the impact on their lives.

The only basic income pilot currently running in the UK is a Welsh government scheme for 600 young care leavers. Each is receiving £1,600 a month (£1,280 after tax), for 18 months, so that researchers can evaluate the scheme’s benefits. An interim report suggests recipients feel “a greater sense of choice and control over the future”.

In the US, where there are currently more than 100 UBI pilots being explored or delivered, researchers have seen similar results. One two-year pilot, In Her Hands, involving Black women in the state of Georgia, resulted in more women of colour returning to education.

Cheeoni Hampton, 47, a disabled grandmother who left school young to have children, was one of them. “When I found the flyer under my door, I was sceptical,” she says from her home in Atlanta where, at one point in her life, she experienced homelessness. “Then I researched it a bit, and thought: ‘Maybe I can get a real career, instead of hopping from job to job.’”

The income she is receiving – $850 [£673] a month until September – has enabled the former warehouse worker to take an online course and become a security guard, while simultaneously paying off debts. “A weight was lifted off my shoulders,” she says.

Hampton moved out of her subsidised apartment and bought a low-cost home with a mortgage. She is now earning enough to meet all her bills without getting into debt. With a little extra money, she says, you can really do a lot. “It motivated me to go out and do better for myself. It changed my outlook on life.”

In Cambridge, Massachusetts, former mayor Sumbul Siddiqui began a programme providing 2,000 low-income families with a guaranteed tax-free income of $500 [£395] a month, for 18 months. She is a member of Mayors for a Guaranteed Income, a coalition of 150 mayors in the US who are advocating for a nationwide guaranteed income scheme. Her scheme is costing the city $22m [£17m] but, she says, it was a “very easy” decision to make: “I think we have to do everything we can to provide financial stability and dignity to those who are the most vulnerable in our community.” She adds, “I think it’s important to say: ‘We recognise you could use help and assistance, and we trust you to figure out how best to use this money.”

An earlier pilot Siddiqui ran in the city resulted in significant improvements in financial health for 130 families, along with higher rates of employment, more time and space for parenting and improved educational outcomes for children.

In Cork, Elinor O’Donovan – who began receiving Ireland’s basic income for creative workers in 2022 – can now spend time doing a job that makes her feel fulfilled. “I made my first film last year, which was really huge for me, and I was able to pay other artists to work with me.”

Across the Irish sea, the Scottish government and the mayors of Manchester, Liverpool and London have all publicly expressed enthusiasm for running basic income pilots in their areas. But so far, none have managed to do so.

One of the biggest obstacles they face is that HMRC refuses to exempt participants from income tax, significantly increasing the gross amount that scheme providers must pay to provide each individual with a small but adequate net income. Participants also need to be financially compensated if other benefits are affected as a result of the pilot. That makes pilots in the UK more expensive than in other countries.

“It’s an impasse,” says economist Prof Mike Danson, who has carried out research advocating for a basic income scheme in Scotland. “We know that, privately, some senior civil servants are in favour. But politicians are afraid of making that big step and trusting the population to do the right thing.”

Research on the impact on participants of pilots in places with similar economies to the UK is so overwhelmingly positive that, he suggests, the resistance in government must be “ideological”. “So, until there’s quite a radical change in thinking in Westminster, nothing can change, really, anywhere in the UK.”

But AI may be the impetus for this radical change in thinking, especially if massive job losses do occur. “One view is that basic income has to happen because, to continue, businesses need people to have money. People need an income they can spend on goods and services. So if you’re taking a lot of income out of the economy, with people losing their jobs, then that’s a problem,” says Danson.

It’s not just economists who think a UBI scheme will be necessary in the future. Prof Geoffrey Hinton – a computer scientist generally regarded as “the godfather of AI” – is among those advocating for it. “I was consulted by people in Downing Street and I advised them that UBI was a good idea,” he told the BBC in May. He fears AI will destroy jobs and increase productivity: “It’s going to increase the gap between rich and poor,” he said.

Darrell West, author of The Future of Work: AI, Robots and Automation, says that just as policy innovations were needed in Thomas Paine’s time to help people transition from an agrarian to an industrial economy, they are needed today, as we transition to an AI economy. “There’s a risk that AI is going to take a lot of jobs,” he says. “A basic income could help navigate that situation.”

AI’s impact will be far-reaching, he predicts, affecting blue- and white-collar jobs. “It’s not just going to be entry-level people who are affected. And so we need to think about what this means for the economy, what it means for society as a whole. What are people going to do if robots and AI take a lot of the jobs?”

Nell Watson, a futurist who focuses on AI ethics, has a more pessimistic view. She believes we are witnessing the dawn of an age of “AI companies”: corporate environments where very few – if any – humans are employed at all. Instead, at these companies, lots of different AI sub-personalities will work independently on different tasks, occasionally hiring humans for “bits and pieces of work”.

These AI companies have the potential to be “enormously more efficient than human businesses”, driving almost everyone else out of business, “apart from a small selection of traditional old businesses that somehow stick in there because their traditional methods are appreciated”.

Watson speculates that only jobs that require human interaction (like hospital chaplains and care workers) or involve complex physical tasks (like plasterers, plumbers and hairdressers) will need to be done by humans in the future. As a result, she thinks it could be AI companies, not governments, that end up paying people a basic income.

AI companies, meanwhile, will have no salaries to pay. “Because there are no human beings in the loop, the profits and dividends of this company could be given to the needy. This could be a way of generating support income in a way that doesn’t need the state welfare. It’s fully compatible with capitalism. It’s just that the AI is doing it.”

Howard is also optimistic that we will one day see a basic income scheme introduced in the UK: “We have lots of evidence – and people make it very clear – that the universality, the unconditionality, the automaticity of payments give people a sense of dignity. It manifests that they matter and that their experiences as human beings matter enough to be given this solid cash floor,” he says.

“I think we need to be calling for basic income on the basis of a sense of shared morality, because economic insecurity is grim. It’s empirically damaging and it’s based on historical injustices that are translated into present inequalities. So there’s a very strong case for redistributive basic income right now, irrespective of whether or not the machines are coming.”

A basic income in South Africa

From Resolve Global Health

The streets and even the highways are empty, except for the police and military patrols. An eerie stillness has engulfed South Africa’s economic heart, Johannesburg.

It is March 27, 2020, and the country has embarked on one of the world’s strictest covid-19 lockdowns, confining most people to their homes, initially for three weeks. The country, already under a national state of disaster because of the virus, deploys the army in residential areas to enforce the shelter-in-place order.

Under the country’s apartheid government, South Africans of colour were forcibly relocated to segregated and underdeveloped areas called townships. In Johannesburg’s largest Black township, Soweto, self-trained photographer Thando Makhubu had been running a small business. “All our money was from event photography, but then lockdown came, and there was no work,” he says.

Still, Makhubu believed then that covid-19 would pass. “I wasn’t really worried,” he remembers. “We were just watching the news and trying to understand what’s going on.”

Soon, the three weeks of lockdown turned into five. By May 2020, Makhubu had joined the ranks of the roughly three million South Africans who became unemployed within the first three months of the covid-19 epidemic, according to a national survey by local universities. The research found an almost 20% decrease in jobs during the first three months of the outbreak and nearly half of the respondents reported running out of food during the lockdown.

“My bank accounts were drying up,” Makhubu says. “That’s when I realised that life wasn’t the same anymore.”

Unemployment on the rise

The epidemic worsened an already fragile employment situation. South Africa’s mix of historical racial oppression and poorer-than-expected economic growth has fuelled increasing unemployment in the last three decades. In what the World Bank estimates is the most unequal country in its global poverty database, almost half of working-age South Africans are unemployed, government statistics show.

“We’re looking at [a lot of] people whose probability of getting a well-paid job is almost nothing,” explains Isobel Frye, the director of the Studies in Poverty and Inequality Institute, on a recent podcast.

The country runs an extensive social grant programme for at least 17 million children and caregivers, the elderly, veterans and the disabled. Still, without social security for the country’s 11.5 million otherwise healthy yet unemployed, these grants often subsidise entire households. Almost one third of the country experiences daily hunger.

Reviving a decades-old idea

In May 2020, South Africa’s hard lockdown eased, and the country—like more than 200 other nations—extended social security protections in response to covid-19. For the first time in South Africa’s democratic history, the unemployed became eligible for a R350 (US$24) monthly grant.

Nearly 10 million people applied for the money in the first six months. More than 90% of the recipients surveyed used the money to buy food, helping increase the number of families who could regularly afford food, according to a 2021 United Nations University working paper. It helped reduce inequality in the country.

“When they announced the grant, the government said you can apply via SMS, WhatsApp or email and said you must just apply once,” Makhubu remembers. “I applied on SMS, WhatsApp and email. I really wanted to get this money and do something with it because I wasn’t receiving anything.”

The grant, which will run until March 2023, has reignited a decades-old debate about whether South Africa can afford a permanent basic income grant. Some of the country’s best economic minds say it can, but it will almost assuredly mean raising taxes.

“We can afford it, but let’s not pretend we can afford it without making sacrifices,” says Michael Sachs, an economist and adjunct professor at the University of Witwatersrand.

At the very least, a monthly basic income grant of R595 ($US41) could halve the number of hungry people, Sachs and others argue in a recent analysis. At most, a cash transfer of R1,300 ($US88) could almost eliminate some forms of poverty while making modest reductions in inequality.

But could it also buy South Africa gains in reducing deadly epidemics of non-communicable diseases (NCDs) like diabetes and depression? The answer lies buried in the many complicated and hidden ways poverty shapes our health and perhaps even our genes.

Hunger and an unfortunate inheritance

NCDs like type 2 diabetes and hypertension are often associated with lifestyle factors and overconsumption, but too few nutrients early on in life can also play a role.

The number of babies that die before their first birthday in South Africa is nearly five times that in the United States, 2019 World Health Organization (WHO) data shows. Dietitian and University of the Free State lecturer Chantell Witten has studied an important factor behind these deaths: the country’s abysmal rate for exclusive breastfeeding, which makes babies more vulnerable to die from conditions like diarrhoeal disease.

Babies who are not breastfed also have a higher risk of developing type 1 diabetes, high blood pressure and obesity, which is a risk factor for type 2 diabetes, the American Diabetes Association warns. For the mother, breastfeeding has been shown to lower the risk of type 2 diabetes, high blood pressure and breast or ovarian cancer.

Although it’s unclear how breast milk protects against NCDs, a 2014 research review posited that it could be epigenetic—meaning nutrition could influence how some genes behave and vice versa, leading to changes that could potentially be passed down through generations . In South Africa, this plays out in a broad context of increasing obesity driven partly by the rise of cheap, high-calorie and high-fat ultra-processed food.

Crucially, hunger may determine whether mothers feel able to breastfeed. As part of a 2020 study published in the International Breastfeeding Journal, Witten interviewed nearly 200 new mothers in poor townships. About 40% lived in households earning less than R2,900 (US$200) a month, and a similar proportion experienced signs of depression.

Witten found that hunger was physically and emotionally painful for these women—something they feared they could transmit to their children through their breast milk. “The minute the mother is aggravated, a baby can feel that—the mums in my study completely internalised this,” she says, describing what women in the study perceived as challenges to breastfeeding babies. “When they were breastfeeding, women would say, ‘I feel hungry. So I'm literally feeding my child my hunger’.”

In some ways, Witten says, the women are right. “Hunger is actually a trauma to the body—it elevates your cortisol, which is the stress hormone,” she explains. “Those stress hormones have been found in breastmilk.” But although cortisol levels in breastmilk can fluctuate depending on the mother’s stress, it is not known what, if any, impact this has on babies.

Still, for many women in Witten’s study, hunger—and their beliefs around it—played a role in their inability to exclusively breastfeed infants. Fewer than one in five women in her research exclusively breastfed their babies for the WHO-recommended six months.

"We live in a country where 95% of households access food through the formal, retail system," she says. "If they don't have money to buy food, we can't expect them to have good nutrition."

The poverty-depression link

By August 2020, Thando Makhubu had received three tranches of the covid-19 grant. The first bought family groceries, but the rest he used to open an ice cream shop out of the family home. The Soweto Creamery now employs five people, and its success garnered Makhubu a mention by name in the President’s February 2022 State of the Nation address.

In the public’s eye, Makhubu has come to represent what might be possible with a small amount of state-provided money in a country with widespread unemployment. “Unemployment isn’t really something I think about—it’s something I see,” he says, sitting at one of the many picnic tables for customers that now dot the family yard.

“Here in the ’hood, we're living in small spaces, we're malnourished, we don't have cars—it's depressing,” he explains. “Some people have lost hope.”

Living in poverty has been strongly linked to an increased risk of depression, says Crick Lund, a professor of global mental health and development at King’s College London. The link, he warns, is more complicated than it seems. The stress of poverty’s harsh realities—hunger, overcrowding, living in more dangerous communities—increases the risk of depression.

But the relationship also runs in the other direction. “If you’re living with depression, you’re more likely to drift into poverty,” Lund says. “You spend more on healthcare, and the disability associated with being depressed means it’s more difficult for you to generate income or maintain an occupation.”

He adds that people who are depressed are also more likely to have other conditions. People living with NCDs are also at an increased risk of depression, according to a 2007 research review in The Lancet.

Pairing cash with care

In South Africa, high unemployment triggers an ​​insidious chain reaction where poverty and hunger drive increased rates of NCDs like diabetes and hypertension. These conditions raise the risk of depression, which means people can struggle to earn an income and are therefore more likely to be depressed.

Still, as a recent review in Nature Human Behavior found, cash transfers like basic income grants improve mental health and wellbeing. Emerging research also suggests that pairing cash with a health intervention, like classes on coping skills, might make for an even more powerful tool for mental health, Lund says.

If this happened alongside a basic income grant in South Africa, it would allow health workers to finally reach a large population of men who might otherwise never set foot in a clinic, unlike women and children, who seek healthcare more frequently.

“There is emerging evidence to support pairing a mental health intervention with a cash transfer to yield interacting economic and mental health benefits, particularly for vulnerable populations like unemployed youth,” Lund says.

Economist Iraj Abedian is a former University of Cape Town professor and founder of Pan-African Investment and Research Services Group. He says the question is no longer if South Africa can afford a basic income grant.

"Often, I hear from different quarters: can South Africa afford this?” he says. “I'll flip it and ask: can we afford not to?”

 Even a very small basic income ($40/month) makes a difference.  Too often, basic income advocates ask for large basic incomes to be paid.  Of course, that would be the ideal.  But it makes paying basic incomes much more costly to the exchequer, which in turn means it isn't introduced.  

I've worked with poor people (I volunteer at an op shop (thrift store)) and I promise you that in Australia, even a few hundred dollars a month would make a significant difference to the real poverty I see every day.  It's time for a UBI, here in Australia and everywhere.  If South Africa can introduce a UBI, then very wealthy nations should be shamed into doing the same.

Populism and anti-vaxxing

From ZME Science:

In recent years, the world has witnessed a string of populist politicians rising to power. Archpopulist Donald Trump served as a lightning rod for most of the discussions but elsewhere in the world, other politicians have used similar approaches to climb into power. Jay Bolsonaro in Brazil and Rodrigo Duterte in the Philippines are two striking examples, but Europe has had its fair share of populists in recent times.

Perhaps uncoincidentally, Europe is also experiencing its biggest measles outbreaks in over a decade, largely fueled by vaccine reluctance. Researchers suspected a correlation between the two. Populism relies on fueling hate towards experts and the perceived elite, and antivaxxing relies on a similar approach. Lead author Dr. Jonathan Kennedy from Queen Mary University of London, study author, explained:

“It seems likely that scientific populism is driven by similar feelings to political populism, for example, a profound distrust of elites and experts by disenfranchised and marginalised parts of the population.”

“Even where programmes objectively improve the health of targeted populations, they can be viewed with suspicion by communities that do not trust elites and experts. In the case of vaccine hesitancy, distrust is focused on public health experts and pharmaceutical companies that advocate vaccines.”

So along with colleagues, Kennedy analyzed national-level data from 14 European countries, looking at the percentage of people who voted for populist leaders and comparing it to the percentage of people who think vaccines are not important and/or effective.

They found a strong correlation between the two: wherever people would support populists, they would also start to question the effectiveness of vaccines. In this sense, vaccination can serve as a “canary in the coal mine” for future populism. When elected, populist leaders also always tend to push an anti-vaccine agenda. In Italy, the newly elected Five Star Movement (5SM) repeatedly spoke against vaccines — with important results. The Italian Parliament recently passed a law to repeal legislation that makes vaccines compulsory for children enrolling in state schools. Meanwhile, in Italy, MMR vaccination coverage fell from 90% in 2013 to 85% in 2016, a seemingly harmless drop, which resulted in an increase in measles cases from 840 in 2016 to 5000 in 2017.

It seems that the more extreme a party is, the more likely they are to support antivaxxing — regardless of whether they are left or right wing. In Greece, the left-wing SYRIZA government proposed that parents should be able to opt out of vaccinating their children. However, their efforts haven’t been particularly fruitful, as Greek confidence in vaccines has recently been increasing. In France, where several childhood vaccinations have been made mandatory by law, the right-wing Front National have also raised concerns about vaccine safety.

Researchers also note just how much damage a single, blatantly flawed paper can cause. Much of the distrust in vaccinations comes from a paper published by Andrew Wakefield. Wakefield reported that the measles, mumps and rubella (MMR) vaccine can cause autism. This has not only been repeatedly disproved, but it has since been shown that Wakefield knowingly tampered with the data and subjected children to inhumane treatment — and yet, his echo still lives on.

In the US, Donald Trump has also spoken against vaccines. Although his own experts have disproved his claims, a recent survey has found that 1 in 3 Trump supporters believe vaccines and autism are related. Meanwhile, on the plus side, countries like Portugal, Finland, and Belgium seem to have no affinity towards either populist leaders or antivaxxing.

[Read more here]

Neo-liberalism has increased inequality within countries even as it had decreased inequality between countries.  China and India and Brazil and Turkey have go richer, but working class people in developed countries have been left behind.  Neo-liberalism has benefitted the already rich in developed countries, but incomes for the lowest one or two deciles of income have barely risen in real terms, while job security has declined.   But neo-liberalism hasn't just made our societies more unequal.  It has also made them nastier.  I doubt Trump would have won the election if working class per capita incomes hadn't stagnated for 30 years.  And if the working class hadn't come to believe that the Democrats had stopped caring about them.

What can be done about it?  Well, a universal basic income in developed countries would be a huge step to alleviating poverty.  Just as a universal old age pension helped reduce poverty among the old, so a UBI would reduce poverty among the poorest of our society, including the working poor.  A universal free healthcare system makes illness a health problem not a financial disaster like it is in the USA.  There are other steps our societies could take, for example, by making zero hours contracts illegal, but perhaps the biggest step would be the UBI, because it would give the jobless the option not to work for exploitative employers.   Things don't have to be like this.  We can change them.

48% of Americans support a UBI

A UBI is a "universal basic income" (also called  "the social wage" or "negative income tax").  The various proposals differ slightly, but essentially all schemes involve a fortnightly or monthly income from the government, which is given to everybody, but which is "clawed back" for each dollar or pound or euro you earn after that.  The claw back rate suggested is somewhere between 25 and 33.3 percent.  A slightly different proposal is that all income except the UBI be subject to income tax, which amounts to much the same thing as an explicit claw back rate, but is administratively simpler. The UBI would replace unemployment benefit, the old age pension, disability pensions, family income support and other tax credits.  The advantages in switching to a UBI are several:

1. The impact of the "poverty trap" is reduced.  This occurs when any income supplement (for example, the dole) is withdrawn when the recipient earns some income.  It is a powerful disincentive to getting work, especially where the only available work is part time.  In Australia, for example, the effective claw back rate for people on unemployment benefit can reach 80%.
2. A UBI raises income for the working poor, not just the unemployed or old age pensioners.
3. The rules are dramatically simplified, making them easy to understand and administer
4. The large bureaucracy required to administer the dole, the old age pension, etc., can be eliminated.

About half of Americans would support a Universal Basic Income for workers who lose their jobs to artificial intelligence, according to a new survey from Northeastern University and Gallup.

The results, which came from 3,297 adults in the U.S. ages 18 and older, showed that:

• 48% of Americans support a universal basic income program

• 46% of supporters would pay higher personal taxes to support it

• 80% of supporters say companies should pay higher taxes to fund the program

“It represents an enormous increase in support,” Karl Widerquist, an associate professor at Georgetown University in Qatar and an advocate for a Universal Basic Income, told CNBC. “It’s really promising.”

[Read more here]

Support in Europe is also high.  (Interesting--support in countries with existing robust welfare systems is not high.  Presumably they believe that with existing systems, a UBI isn't needed, but in fact the UBI would replace many existing welfare programs.)

Source

Scotland to try universal basic income

A cartoon by John Darkow

I talked about the universal basic income here.  To recap, UBI is a monthly payment by the state to everyone, aimed at replacing the dole (unemployment benefit), family income support, the old age pension, and disability pensions.  Typically, all income earned outside the UBI is then subject to tax, with the minimum rate set at 25%-33.3%.  This means that anyone whose income is less than 4 times (at 25%) or 3 times (at 33.3%) the level of the UBI is better off.  This low "clawback" rate sharply reduces the disincentives implicit in existing unemployment benefit schemes, where the "clawback" rate is often 50% or more and can exceed 100%.  It also greatly simplifies the rules needed to access welfare, and eliminates the need for a large bureaucracy to administer the rules. 

Both left and right like it, for different reasons.   Like the universal aged pension it should be a powerful tool for reducing and alleviating poverty.  But it will also reduce disincentives to work, and will probably cost about the same as all existing anti-poverty schemes combined, especially if you can reduce or eliminate the huge bureaucracy needed to administer them. 

Universal basic income is, according to its many and various supporters, an idea whose time has come. The deceptively simple notion of offering every citizen a regular payment without means testing or requiring them to work for it has backers as disparate as Mark Zuckerberg, Stephen Hawking, Caroline Lucas and Richard Branson. Ed Miliband chose the concept to launch his ideas podcast Reasons to be Cheerful in the autumn.

But it is in Scotland that four councils face the task of turning basic income from a utopian fantasy to contemporary reality as they build the first pilot schemes in the UK, with the support of a £250,000 grant announced by the Scottish government last month and the explicit support of Nicola Sturgeon.

The concept of a universal basic income revolves around the idea of offering every individual, regardless of their existing benefit entitlement or earned income, a non-conditional flat-rate payment, with any income earned above that taxed progressively. The intention is to replace the welfare safety net with a platform on which people can build their lives, whether they choose to earn, learn, care or set up a business.

[Read more here]

Margaret Thatcher: "Poverty is a personality defect"

Who else but Margaret Thatcher could say something so wrong?

Rutger Bregman gives an entertaining and informative speech about poverty.   He ends with "Poverty is not a lack of character.  Poverty is a lack of cash."  The video is only 15 minutes long but it is revelatory and fascinating.  Oh, and he proves The Iron Lady wrong.

The basic income

Although expanding free trade has been good for the world as a whole and for developing countries like China, India, Brazil, Mexico and so on, it has been bad for the working class in developed countries.  Real incomes for the already rich in rich countries have risen.  Real incomes in poor countries have risen too, by as much in percentage terms.  But the bottom half of the income pyramid in developed countries has had virtually no growth.  And these calcs were made before the GFC.  Since then, the real incomes of the bottom 2/3rds of the population in developed countries have stagnated, even as real GDP has risen, and the incomes of the top 3rd/quarter/one tenth have risen, extending the 1988 to 2008 trend.

You can see all this in the graphic  below.

Source

It is these people who voted for Trump, for Brexit, for Pauline Hanson's One Nation Party and will probably vote for right-wing populists in Europe's upcoming elections this year.

Opening up world trade has undoubtedly been good for world growth.  Higher growth in China, India, Brazil, Mexico etc., has lifted billions of people out of abject poverty, and that's a good thing.  But there have been losers, and they are angry.

So how do we make incomes more equal in developed countries, without tearing up trade agreements and without reducing growth rates?

One answer is the social wage or basic income.  I did my thesis on the negative income tax, which is pretty similar to the social wage.  How it works is simple.  The state pays everybody a monthly or fortnightly income.  This replaces the dole (unemployment benefit), the old age pension, disability pensions and family income supplements.  Everybody pays income tax, and income tax starts cutting in at zero income instead of having some tax-free minimum, so that for every dollar/pound/euro earned, the net payment (social wage less tax) declines.  Now in some developed countries, if you are receiving the dole (unemployment benefit)  this "clawback rate" is 100%.  In Australia it is 50%. In some cases, the cumulative loss of benefits can exceed 100% of earned income, and that's before you account for the cost of clothes to work in and transport fares to get to and from work.  This is a massive disincentive to work, especially when a lot of the work available these days is part-time.

Plus you need a whole department to administer the dole, the old age pension, disability benefits and family income support.  The rules of the negative income tax are simple, and most of the complex bureaucracy that is required to determine who is entitled to get support and how much they are entitled to can be eliminated.

How much would it cost?  In the analysis I did in my thesis 40 years ago, to lift all South Africans above the poverty line it would have cost 7% of GDP.  But in developed economies it would cost much less, because they already have a whole panoply of welfare measures, which it would replace.  And most of the analysts who have looked at the social wage reckon that its effect of incentives would actually increase output and incomes so that it paid for itself.

A basic income would be only one tool in the toolbox to reduce developed country inequality.  Others might be: a higher minimum wage, a wealth tax, greater educational equality, and in the USA, a decent public health system.  But a basic income would be a big first step on that road.

Some further reading (and watching)

Why we should give everybody a basic income:





Finland trials plans of basic income for the unemployed.

The basic income

Categorising the poor

An intriguing historical analysis:

The moral beliefs that drove both the harsh treatment of vagrants in the 16th century and the unintended cruelty of the Victorian workhouse system persist to this day.

The idea that “work must pay” encourages politicians to make claiming benefits extremely difficult for the unemployed and – more worryingly – for those who are unable to work due to illness or infirmity, just as in Victorian times, workhouse conditions were made deliberately harsh to discourage people from entering them.

Politicians castigate “generational worklessness”, promoting the idea that a tendency to worklessness is somehow inherited, passed on from parents to children. It was this idea that led to the brutal separation of families in the workhouses.

Above all, there remains a strong belief in the moral virtue of work. Work is indeed important for human dignity, so making it possible for people to work is important: but in what way mind-numbingly boring, pointless and demeaning work is dignifying and virtuous is hard to imagine. Nonetheless, the idea that people should be forced to do basic work to “earn” their benefits – even if their time might be better spent looking for a job that actually uses their skills - is electorally popular. Underlying this lies the unwarranted assumption that all jobs are intrinsically of value and therefore anyone who turns down work because it is poorly paid, socially useless and utterly boring is lazy. It was this idea that led to workhouse inmates being forced to work long hours in dreary, pointless jobs. Today, we impose benefit sanctions on people who turn down the dreary, pointless jobs we assign to them in the name of “work experience”. Giving it a different name doesn't change its nature. It's the workhouse work ethic all over again.

It is perhaps understandable that we feel angry when we see people we think should be working but aren't. And it is also understandable that when times are hard, we resent paying benefits to those we feel don't deserve them. I suppose the anger that we feel towards those we regard as “scroungers” and “shirkers” will never go away. But categorising the poor is not only difficult – it is harmful, not to the shirkers and scroungers, but to the genuinely deserving. And it is also economically damaging for society as a whole.

The Workhouse.  Image via Workhouses.org