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/lp/de-gruyter/just-end-poverty-now-the-case-for-a-global-minimum-income-Q8O0jyMmpY
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- de Gruyter
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- © 2019 Walter de Gruyter GmbH, Berlin/Boston
- ISSN
- 1932-0183
- eISSN
- 1932-0183
- DOI
- 10.1515/bis-2019-0009
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Abstract
IntroductionAccording to the World Bank’s latest figures, around 750 million people live in utter destitution, on less than $1.90 per day (World Bank, 2016). On the one hand this is a tremendous success, since as recently as 1990 some 1.85 billion people (35 % of the world’s then population) were in this condition.Methodological note: This paper relies on the global poverty statistics published by the World Bank. To facilitate international comparisons and head counts, the World Bank translates the consumption level of the national poverty thresholds used by extremely poor countries into US dollars adjusted for purchasing power parity (World Bank, 2016, Chapter 2). The current extreme poverty threshold of $1.90 is indexed to what a dollar could buy in 2011 and updates previous indexes ($1.25 in 2005 dollars; $1 in 1985 dollars). What counts as extreme poverty isn’t changed by these methodological shifts in how it is represented. To simplify the presentation of this paper’s argument, all numbers are given in current US dollars as if these are equivalent to the 2011 ppp dollars used in the World Bank’s statistics. Obviously this is not quite correct. On the other hand, it is still appalling that 1 in 10 human beings have less purchasing power than the average pet cat in the rich world.According to a costs breakdown by the American Society for the Prevention of Cruelty to Animals a cat costs about $1,200 in its first year (ASPCA, 2015).Extreme poverty may be the default condition of human beings, but it is not inevitable. 90 % of humanity have already escaped. Eliminating all remaining extreme poverty by 2030 is at the top of the Sustainable Development Goals promulgated by the UN in 2015.Although the SDG is short on real plans, it does define poverty in a broader way than the World Bank, beyond consumer purchasing power to other features of how well people’s lives are actually going (such as access to good education and whether they face social discrimination). As I acknowledge in Section IV, a Global Minimum Income can address income shortfalls, but this is only part – in many ways the easiest part – of the problem of poverty. Yet there isn’t much of a plan to achieve it beyond hoping that recent economic growth trends continue. Unfortunately such complacency cannot be justified. The world’s remaining destitute are concentrated in poorly governed rural areas far from the capitalistic economic opportunities that have greatly reduced poverty elsewhere (most dramatically in China) since 1990. Neither are they well served by conventional development aid, which works best with well-functioning and motivated local governments. Hence the need for a different kind of intervention.The idea of a Global Minimum Income is simple. In a world as rich as ours, no human being should be living in extreme poverty. The very least we should do is provide every destitute person with a claim on the world’s collective economic prosperity sufficient to escape that terrible condition. In practise this entails distributing a partial basic income of $1 per day to all residents of Low-income countries to bring them over the threshold of $1.90 per day, and a more sophisticated targeting system for the pockets of destitution remaining in Middle-income countries.Such an intervention would work in the same way as the elimination of smallpox: a global cooperative programme funded and logistically supported by richer governments, but also depending on the cooperation of middle and low-income states. However – also like efforts to eliminate contagious diseases – the Global Minimum Income can make substantial progress even in the non-ideal conditions of international politics. First, because the Global Minimum Income can be arrived at from many moral and religious perspectives, it does not require first persuading all parties to commit to any particular – and therefore disputed – substantive moral view, such as that natural resources are the common ownership of all humanity, or that the institutions of global capitalism are fundamentally unjust. Second, it is a flexible and scalable programme. This means that it can begin to be implemented by willing countries almost immediately, without waiting for agreement on a global plan. It also means that individual rich countries can commit to different levels of support, which might go beyond the minimal goals laid out here.This paper is organised as follows. In Section I, I explain how the Global Minimum Income relates to the standard ‘national’ model of Universal Basic Income and the moral priority of ending destitution. Section II analyses the failure of economic growth and conventional international development aid to achieve that goal. Section III, outlines how a Global Minimum Income might function, under a range of ideal and non-ideal circumstances. Section IV considers two significant objections: that rich world citizens won’t be willing to pay and that poverty is an institutional problem, not merely an income gap.IThe moral priority of ending povertyIn recent decades the idea of guaranteeing a basic income to all citizens has become increasingly popular in academic circles and political discussions. Yet it has generally been seen as a national rather than an international programme. Before going any further it is therefore important to clarify how the Global Minimum Income relates to the general idea of basic income.The Basic Income Earth Network (the preeminent forum for basic income academic research and advocacy) defines a basic income as “a periodic cash payment unconditionally delivered to all on an individual basis, without means-test or work requirement” (BIEN, n.d.).In full, the five characteristics of BIEN’s definition are:Periodic: it is paid at regular intervals (for example every month), not as a one-off grant.Cash payment: it is paid in an appropriate medium of exchange, allowing those who receive it to decide what they spend it on. It is not, therefore, paid either in kind (such as food or services) or in vouchers dedicated to a specific use.Individual: it is paid on an individual basis – and not, for instance, to households.Universal: it is paid to all, without means test.Unconditional: it is paid without a requirement to work or to demonstrate willingness-to-work. The Global Minimum Income complies with this definition on all characteristics, except perhaps ‘to all’. For the sake of administrative simplicity and cost-effectiveness, a basic income of $1 per day would be distributed universally only to residents of Low-income countries (as defined by the World Bank). The poor in Middle-income countries like Namibia might receive a more targeted distribution if that is more efficient or politically feasible. People living in High-income countries wouldn’t receive any payments under this scheme. (For fuller details of how a Global Minimum Income might work, see Section III.)As Philippe van Parijs and Yannick Vanderborght have noted, the idea of global justice draws us towards thinking about a global basic income (Van Parijs & Vanderborght, 2015, 2017, Chapter 8). Yet the idea is usually dismissed as soon as it is raised as too utopian. The underlying problem is that our moral standards are simply too high to realise globally. National basic income proposals often appeal to notions of a fair deal for members of our society – the idea that we have a special moral obligation to ensure our fellow citizens a decent quality of life by our standards. But it would be unaffordable, institutionally impractical, and politically unfeasible to try to extend such living standards globally. Vice versa, the moral and financial minimalism of a Global Minimum Income is unappealing to a rich country, where the scourge of utter destitution was eliminated long ago.My answer to this is that the Global Minimum Income is deliberately minimalist in its moral, financial, and institutional demands to make it easier to agree on and act on.Morally, it falls far short of almost any conception of social justice. It does not answer the traditional question, ‘What do we owe each other as fellow citizens (of the world)?’ but a much more basic question based on bare humanity, ‘What is the very least we should do to meet the needs of other human beings?’ The advantage of this minimalism is that answering this question does not require first raising and settling a substantive dispute about justice, such as what a fully just global economic order would look like or what responsibility former colonial powers bear for historical injustice. Pretty much every religion and ethical theory in the world agree on the obviousness of the duty to alleviate extreme poverty, whatever else they might disagree on. This means that the Global Minimum Income can be the object of an overlapping consensus among citizens, political movements, and governments motivated by quite different moral beliefs and ideals, and despite continuing profound disagreements about the nature and demands of true global justice.Financially, the transfers would be a tiny fraction of rich world income. The World Bank estimates the entire poverty gap at only 0.2 % of what global GDP stood at in 2013 (World Bank, 2016, p. 42). This is a figure so small that it is dwarfed by annual economic growth since then, or, indeed, the measurement errors in constructing the figures. Even swollen by administrative expenses and the overshoot costs of universal rather than targeted disbursement, this does not seem an amount that the rich world would miss. There is no morally significant task, including securing their own material comfort and that of their family, that rich world citizens would need to give up in order to fund the ending of extreme poverty.To put it very crudely: if economic growth is 2 % per year and your country’s share of the costs of the Global Minimum Income are 1 % of national GDP, then voting to fund it means voting to go back to how wealthy your country was 6 months ago. If life 6 months ago required no significant moral sacrifice, then neither will funding a Global Minimum Income.Institutionally (as elaborated below in Section III) the funding and distribution system should be jerry rigged as far as possible upon existing global institutions and infrastructure. But the Global Minimum Income is so flexible and scalable that even in the absence of global action, individual countries – or even international charities – could put it into action.This triple minimalism, combined with the complete exclusion of rich country citizens from its distribution, means that the Global Minimum Income is not in conflict with national basic income schemes. Advocating it would not derail the moral and political debate around a national basic income, nor would its success draw off essential funds or institutional capacity. Both can be achieved together. There is no contradiction in a Belgian supporting a national Universal Basic Income proposal of $1,000 per month for her fellow citizens while also endorsing a partial basic income payment of $30 per month to residents of Low-income countries like Malawi to bring them above the Global Minimum Income of $1.90.The only conflict that might take place between global and national basic income schemes is to do with timing. If it were only politically possible to achieve one or the other in the present moment, the moral priority of ending destitution should be the political priority. Our fellow citizens can wait a little longer for the fair and decent treatment they deserve; the people who cannot afford to feed their children cannot.Ending destitution is a priority because the costs of absolute poverty are much greater than those of relative poverty. The ability to acquire basic goods like food is vital to any human life. People living off less than the equivalent of $1.90 per day are living lives unfit for human beings. For example, they must routinely make moral choices that no human should ever have to, such as deciding which child gets to eat today, or which child gets to go to school while the others work. Their situation is made worse by the volatility of the little income they do obtain, which may be highly seasonal in the case of subsistence farmers or landless labourers (the majority of the world’s destitute). Lack of a reliable income stream makes it hard to maintain even a minimal level of consumption, takes away the ability to plan, and makes escaping poverty even less feasible (Collins, Morduch, Rutherford, & Ruthven, 2009).Moreover, destitution is an urgent problem because every moment it continues does grave and irreversible harm that will persist for decades and can even be transmitted to future generations. For example, the mal- and under-nourishment of children that is taking place right now around the world will cast a long shadow over their lives as (and if) they grow up into adulthood, even if their country’s economic circumstances improve in the meantime. Poor nourishment leads to physical and mental stunting, in turn making people more vulnerable to disease and less able to benefit from opportunities like education. The circle returns to its beginning, since as adults they will be less economically productive and earn lower incomes. Via poor maternal health, some of these disadvantages may also be passed on to their children (Dewey & Begum, 2011).To summarise, the Global Minimum Income has a different emphasis and justification but does not contradict or undermine efforts to establish national basic income schemes. Nevertheless, ending destitution deserves to be a political priority because it is a severe and urgent problem. As I will argue next, it also requires a concerted international intervention because it is a large and difficult problem that is not going to be solved by other means anytime soon.IIThe failure of alternativesSo far I have argued that there is a great and urgent need for raising the poorest people in the world out of extreme poverty. Yet this does not yet justify a concerted international intervention on the scale of a Global Minimum Income programme. For that I must show its superiority to the main alternative strategies for eliminating destitution: capitalistic economic growth and international development aid.Poverty is not exactly like a contagious disease (the smallpox model I mentioned earlier). For example, it is obviously not the case that an individual ‘carrier’ can transmit poverty into the wider population. But poverty can become endemic to a population just as malaria is endemic to certain parts of the world, because the poverty of each generation reproduces itself into the next. The cycle will continue unless there is a significant change in circumstances.History suggests that capitalistic economic growth is the main engine for changing these circumstances. The last 200 years have seen the poverty statistics flipped upside down, from 90 % of the world’s population living in destitution to 90 % living free of destitution (see Figure 1. below). This coincides neatly with the development and global spread of capitalistic institutions (such as factor markets and rivalrous competition between private profitmaking companies) and economists’ analysis of how these institutions work. Most recently the capitalistic economic growth thesis has been confirmed again by the dramatic progress of China from mass poverty under Maoist governance to mass prosperity, beginning from the moment that capitalistic institutions were permitted. Extrapolating from the historical trend suggests that all remaining extreme poverty should be eliminated in a few decades. No intervention is necessary.Figure 1:World population living in extreme poverty, 1820–2015. Extreme poverty is defined as living at a consumption (or income) level below 1.90 “international $” per day. International $ are adjusted for price differences between countries and for price changes over time (inflation).Source: World Poverty in absolute numbers – OWID based on World Bank (2016) and Bouguignon and Morrisson (2002). URL: OurWorldInData.org/extreme-poverty/ ● CC BY-SADespite this impressive track record, there are at least two reasons to be wary of relying on capitalistic economic growth to eliminate the world’s remaining destitution in the short to medium term: economic growth is not automatic and even if it occurs it may not reach the poorest.First, assuming that the trendline of economic growth can simply be projected into the future assumes what is to be proven. Capitalism has had 200 years to work on the world, with impressive results. For those countries which have not yet benefitted much from capitalism we should ask two questions: ‘What has been holding those countries back?’ and ‘Why should things be different now?’A persuasive answer to the first question comes from the economist Paul Collier (Collier, 2007). The poorest billion people live in around 60 (mostly small) countries afflicted by one or more ‘traps’ that keep them off the path of sustained economic development. The four traps are:1.Conflict, in which a significant part of a country is outside the control of the official government and its population subject to political violence. (Some countries have been in conflict for more than five decades, such as (South) Sudan and Burma.)2.Incompetent governance, in which the government is unable (and frankly often uninterested) in performing its basic functions effectively. Education ministries may be paying teachers who never go to work (and aren’t qualified anyway); utilities are unable to meet more than a fraction of demand; tax laws are literally impossible to comply with; and so on.3.The natural resource curse, in which possession of some valuable resource, such as oil or copper, becomes a burden to the country’s economic development by transforming politics into a competition for the spoils and reducing the price competitiveness of other export industries (such as textiles) that would employ more people.4.Being landlocked with poor neighbours, which eliminates a poor country’s comparative advantage of cheap labour since you have no one to trade with. (Like Switzerland, your economic growth depends on your neighbours getting rich first, and being friendly enough to build transport infrastructure up to your borders.)These traps explain why capitalism hasn’t worked its magic trick in many poor countries despite what general economic theory predicts about advantages like cheap labour.It is also true that these traps often have a history in the ‘extractive’ political institutions installed by colonial powers (Daron Acemoglu, Simon Johnson, & Robinson, 2001). Historical responsibility to make reparations to former colonies is one of the many substantive accounts of justice that can support an overlapping political consensus for the Global Minimum Income. (It may be especially relevant to motivating the bilateral option discussed in Section III.) They should also reduce our confidence that it will do so in the near future, unless we have a clear answer to the second question: ‘Why should things in this country be different now?’ This approach allows us to explain both China’s economic failure under incompetent Maoist governance, and its success when it pulled itself out of the governance trap. It also shows why we should not expect landlocked ill-governed countries like Malawi to spontaneously catch up with the global economic growth trend.The second reason we should not rely on capitalistic economic growth is that eliminating poverty does not depend on economic growth per se, but in how much of it reaches the poorest people. The problem is that the core mechanism behind capitalism’s success is competition, and this tends to generate income inequality between winners and losers. But if the gains of economic growth aren’t somehow shared with those at the bottom of society then extreme poverty can persist alongside growth in GDP. Uneven economic development can even make those left behind by a boom (such as landless labourers) poorer by driving up the price of goods like food and shelter. The inclusiveness of economic growth has become a major theme of the World Bank’s research and advocacy. According to its latest report, eliminating destitution as the Sustainable Development Goal envisages won’t even be close to possible unless much more of the gains of economic growth go to the poorest people of each country (World Bank, 2016).Note that these problems with relying on capitalism don’t apply to the Global Minimum Income. First, it represents a different route to raising incomes that can work even in countries subject to traps.Even the conflict trap may not be as great an obstacle as one would suppose. First, even in a country famous for conflict like Congo, most of the 75 million population live in areas peaceful enough to roll out a cash transfer programme. Second, it is relatively easy to transfer money across frontlines – governments routinely continue paying pensions and salaries to those trapped on the wrong side of civil wars. Second, it distributes the additional income equally across the population so that the poorest benefit. Moreover, a Global Minimum Income can itself be expected to contribute to economic development in at least two ways. First, by placing additional purchasing power in the hands of large numbers of ordinary citizens it will dramatically increase aggregate consumer demand, which may be expected to generate a corresponding increase in the capacity of the economy to supply things to buy – like food and shoes – and all that follows from that, such as jobs in making, moving and selling those products.This can be compared to the standard light manufacturing export development route followed by S. Korea and China among others. Those countries were once very poor, with very low average income and thus low domestic demand for economic goods and services. International trade greatly boosted the size of the economy by introducing foreign demand from rich world citizens. Workers making simple consumer goods in export factories gained a claim on the economic production of the rich world which they could in turn use to pay their fellow citizens for domestic goods and services (such as for better food and housing). The Global Minimum Income achieves the same outcome of an exogenous, widely distributed increase in domestic economic demand, but it skips the requirement that poor countries be lucky enough in their circumstances and government policies to support an export manufacturing boom and then wait several decades. Secondly, it supports a structural shift from a low productivity subsistence economy to one able to take advantage of the opportunities of modern capitalism. For example, parents would be able to afford to send all their children to school to learn the literacy and numeracy they would need for employment in a non-subsistence economy; more people may be willing to take economic risks as entrepreneurs (like growing higher yield but less drought resistant crop varieties) if they know that failure will not wipe them out.One last point about the relationship between economic growth and the Global Minimum Income. Suppose the worries I just explained are entirely misplaced and inclusive economic growth does eliminate destitution from the entire world within the next few decades. Even so, given the severity and urgency of extreme poverty, those looking back in 2050 would still agree that it would have been better to have eliminated it even sooner. There is no benefit, only grave humanitarian cost in making hundreds of millions of people wait another generation to escape poverty. Moreover, the financial costs of mistaken economic pessimism are limited. A Global Minimum Income is self-eliminating: as a country’s prosperity from other sources rises, its role (and costs) automatically recedes.The Global Minimum Income is a superior alternative to waiting around hoping for inclusive economic growth to finally arrive. But what makes it worth doing as well as – or even as a replacement for – the conventional development aid programmes already funded by rich world governments? Most development aid falls into two categories.I leave aside what is sometimes called ‘humanitarian aid’: immediate relief in extreme emergencies such as earthquake and famine. However, it is worth noting that cash transfers are also being extensively used to address such emergency needs, for example by the World Food Programme. It is logistically much simpler and faster to increase the purchasing power of the needy and let private traders find a way to reach them with food and other essentials than to ship it in from a far off rich country. It also allows these people to stay in (what is left of) their homes and economic livelihoods where they can start rebuilding their lives, rather than move to refugee camps and become utterly dependent on an aid organisation. (See further: Drèze & Sen, 1989, pp. 95–102) Economic development aid is intended to facilitate economic growth by capital investment; for example by funding port construction, electricity grids and paved roads. In theory this is efficient because a relatively small investment can remove the supply constraints preventing a country from accessing capitalistic economic growth opportunities. There are two problems with this kind of aid. Firstly, even if it works, this approach implies that the world’s poor should wait at least another generation to escape poverty. Secondly, there is scarce evidence that economic development aid does work as it is supposed to.To be specific, whether or not it has any positive effects and under what circumstances is contested in the academic literature, but even those who think it helps make modest claims for its success, such as moderating economic volatility (Guillaumont & Wagner, 2014). This is unsurprising since economic development aid is too small to drive economic growth by itself and it neither solves nor bypasses the traps identified by Collier (except perhaps the dependence on one’s neighbours’ infrastructure that comes with being landlocked). There is even evidence that international aid can exacerbate the traps, by corroding government competence and democratic accountability (Bräutigam & Knack, 2004), or by simulating the natural resources trap and turning politics into a competition for spoils (Moyo, 2009). On the one hand, no country that has escaped poverty has been shown to have done so as a result of this kind of aid (Easterly, 2007). And on the other hand, over the last 50 years, the countries in which the world’s poorest people live have already been the recipients of hundreds of billions of dollars and the best economic development planning that the rich world had to offer. Again we should ask: ‘If economic development aid has so far failed to lift these countries out of poverty, why should we expect that to change for the better in the near future?’In contrast, what may be called human development aid focuses on increasing a country’s ability to meet the basic needs of the world’s poor, principally by expanding access to public services like education, health care and sanitation (Sen, 1999; UNDP, 1990). It is associated with projects like the Millennium Development Goals and new Sustainable Development Goals. The great advantage of this approach is its directness: it sets out to meet the basic needs of the poor right now, rather than to encourage economic growth that may eventually increase their purchasing power. Nevertheless, the results of this approach have been disappointing. It turns out that poor people in Low-income countries are very hard – and expensive – to help because there is so little there to work with. Government ministries that barely function in the first place aren’t capable of spending extra money to expand piped water networks or hire competent teachers. This institutional gap forces international aid agencies to create parallel bureaucracies to run projects themselves, creating enormous and wasteful coordination problems.See for example the case of Liberia, where coordination problems occurred despite the best efforts of aid agencies and a technocratic government run by a former World Bank official (The Economist, 2017). Lack of security, a literate workforce, and basic infrastructure like electricity grids and paved roads make it surprisingly difficult and expensive to operate in Low-income countries, and especially hard to reach the very poorest people, who mostly live in rural areas (World Bank, 2016, pp. 42–45). Such problems explain why most international aid funding is directed to middle-income countries with functioning institutions able to turn aid into successful outcomes, even though their need is obviously so much less.For example, in 2017 Official Development Assistance from OECD countries totalled $146.6 billion, of which only 45 % went to Low-income countries (Gurría, 2018). (Another reason is that much government aid is motivated by geopolitical considerations, and most Low-income countries don’t have much strategic significance.)A further criticism of this model of aid, made particularly eloquently by former World Bank economist William Easterly, is that it fails systematically to meet the actual needs of the poor because it is a top down bureaucratic ‘planning’ approach accountable to its funders rather than its recipients.The foreign aid bureaucracy has never quite gotten it – its central problem is that the poor are orphans: they have no money or political voice to communicate their needs or motivate others to meet those needs. (Easterly, 2007, p. 146).No doubt these operational difficulties would also hinder the distribution of a basic income and raise its administration costs, but to a lesser degree. In this the Global Minimum Income has much in common with the kind of development aid about which there has recently been much justified optimism: targeted micro-interventions (such as giving anti-malarial bed nets to pregnant women) supported by empirical evidence from randomised controlled trials (e. g. Banerjee & Duflo, 2011). The focus there is on specific, self-contained interventions with clearly measurable outcomes for recipients rather than more ambitious but vague goals like ‘provide good quality elementary education to all’.Likewise, by now variants of giving money to the poor have been tried in numerous places, including parts of Lower Middle-Income countries like India and Indonesia, as well as national schemes in Upper Middle-Income countries like South Africa, Mexico and Brazil. There is a great deal of empirical evidence that they reduce poverty, without undermining the potential for economic growth by encouraging idleness or bad habits like alcohol consumption (Banerjee, Hanna, Kreindler, & Olken, 2017; Fiszbein et al., 2009; Hanlon, Barrientos, & Hulme, 2010; Standing, 2008). Poor people, it seems, are mostly quite capable of spending extra income ‘rationally’ on meeting their basic needs, and tend to do a better job of it than NGOs and government agencies.Moreover, experiments and pilot programmes in very poor populations show the potential of even tiny direct transfers to improve individual lives and communities. In Low-income Malawi, for example, a donor funded scheme distributing about $2-6 per month to 175,000 households reduced poverty, and increased food security, adult health, and school enrolment (Malawi Cash Transfer Evaluation Team, 2018; Miller, Tsoka, & Reichert, 2011). In Namibia (a Middle-income country but with very high inequality and poverty), a similar programme distributed 50c per person per day and resulted in higher enrolment in schools and economic activity while lowering child malnutrition, household poverty, crime and prostitution (Haarmann et al., 2009). One reason even tiny amounts of money can make a big difference to people’s standard of living is that poor people’s earnings tend to be very volatile from day to day and week to week (Collins et al., 2009). A guaranteed basic income, even one that only covers part of what people require, substantially reduces the uncertainty and mental stress in which the very poor have to live, always wondering where their next meal is coming from.The universality of the Global Minimum Income also allows its benefits to reach more people and dimensions of poverty than conventional aid. Take the problem of child labour, which is widespread in poorer countries and inflicts a long-term cost on lives and opportunities by displacing education. Parents send their children to work because they cannot earn enough by themselves to feed their family (Basu & Van, 1998). Institutional responses can do little. For example, improving the education system would not change families’ economic calculation, while enforcing a ban on employing children might only increase their dire poverty. In contrast, a basic income directly increases family income and so immediately removes the economic constraint on sending children to school (as the Namibia and Malawi programmes demonstrated)Finally, a particular advantage of Global Minimum Income compared to conventional human development aid is that it addresses Easterly’s critique of conventional aid by empowering the recipients rather than treating them as mere patients of an international do gooding bureaucracy. By directly increasing the purchasing power of the poor it gives a multitude of private producers and traders of goods and services a commercial reason to try to fulfil these people’s needs and interests – for example for adequate nutrition or education – and to do a good job or be fired by their customers.For example, in many poor countries public education systems are so woeful that even poor parents will pay to send their children to less bad private schools (The Economist, 2015).To sum up. It is generally agreed that ending extreme poverty is an especially significant and urgent problem. Yet the two main ways in which this is expected to come about – inclusive economic growth and international development aid – are especially unreliable in exactly those countries where most of the world’s poorest people live. Instead of pinning our hopes on these countries somehow overcoming their structural problems and ending poverty by themselves in the near future, we should consider the obvious alternative of giving money to the poor. The Global Minimum Income evades many of the problems that hinder alternatives, reaches people and needs that are otherwise hardest to help, and promises near immediate results. But now it is time to present a fuller picture of how the Global Minimum Income might work so that it can be subjected to the kind of critical scrutiny I just gave to its alternatives.IIIHow the global minimum income could workThe idea of a Global Minimum Income is scalable and institutionally minimalist. That means it avoids the bane of political philosophy theorising: it does not require perfect implementation to succeed. It does not depend on idealistic assumptions about (inter)national politics or government competence, and it would still be feasible and worth doing even if its coverage was only partial. So, although I am about to outline a highly ambitious ‘ideal’ way of implementing the Global Minimum Income, the reader should bear in mind that there are a variety of other ways to implement it in the meantime or instead.The ideal plan would involve a new binding global treaty based on the idea of a human right to freedom from destitution (already included in article 25 of the UN Declaration of Human Rights,“Everyone has the right to a standard of living adequate for the health and well-being of himself and of his family, including food, clothing, housing and medical care and necessary social services, and the right to security in the event of unemployment, sickness, disability, widowhood, old age or other lack of livelihood in circumstances beyond his control.” (United Nations, 1948) but rarely mentioned). The point of a treaty is to go beyond the mere hopefulness of the Sustainable Development Goals to create an actual plan with clear obligations for all parties. Such a treaty would affirm every individual’s entitlement to a Global Minimum Income; outline the responsibilities of states; and mandate an organisation to manage disbursement and logistics.Individual entitlementEvery human being has the right to a minimum income of $1.90 ppp per day. Those living on less than $1.90 would be entitled to a partial basic income of $1 per day. (This is enough to bring almost everyone over the threshold.)State responsibilityThe states in which the destitute live would be responsible for facilitating their citizens’ minimum income entitlement and for funding it if they are wealthy enough to do so.In Low-income countries (defined following the World Bank’s definition of a Gross National Income per capita of less than $1,000) such as Malawi, Haiti, or Madagascar, every resident would automatically receive the $1 basic income. In these countries the basic income would be entirely funded, managed and disbursed by an international agency acting independently of the local government. Governments’ main responsibility would be to provide a legal and security framework for the programme to operate.Lower-middle-income countries ($1,000–4,000) such as India, Ghana, or Honduras would be expected to help manage and partially fund their Minimum Income programme in collaboration with an international agency. These countries might depart from the universal distribution model or target a higher poverty threshold than $1.90 per day. As countries get richer, they will become gradually responsible for managing and funding more of the programme for themselves.However, care should be taken not to introduce a welfare trap wherein countries face a discouragingly high ‘marginal tax’ to their economic development.Upper-middle-income countries ($4,000–12,000) with substantial remaining pockets of poverty, such as Brazil, South Africa, and Namibia, would be responsible for guaranteeing their own citizens’ minimum income by funding, targeting, and distributing a sufficient additional income. They could meet this obligation in various ways other than a universal basic income, for example via a negative income tax.High-income countries (over $12,000 GNI per capita) would be collectively responsible for funding the remaining costs of the basic income and its administration, in proportion to the size of their economies. (This has similarities with the UN/IMF/World Bank funding structures.)ManagementA new international (UN) agency would be needed to manage the collection and disbursement of funds, develop and maintain the logistical infrastructure; and study the short and long-term effects of the programme (including unexpected problems and their remediation). It would be preferable to set this up within an existing institution – the World Bank is an obvious choice – in order to get up and running more quickly.LogisticsPaying a basic income to everyone in a certain country requires building a national register and a reliable system for recipients to identify themselves (to ensure that everyone receives their payment and no one receives it twice), as well as a secure way of delivering cash to them all on a weekly or monthly basis. Although setting up and managing such a system in a Low-income country is much more straightforward than trying to build an education or healthcare system, it will still be logistically demanding because of the previously mentioned special difficulties of operating in such countries. For example, the government may have only a vague idea of how many people live in the country; residents may lack any official way to prove their identity; high tech solutions like mobile money may not be accessible by the poorest rural population; criminal gangs may prey on basic income recipients; and so on.A key part of this proposal is that the money to pay the universal basic income in Low-income countries does not pass through local governments. This raises the possible problem of governments refusing to allow it, perhaps because the regime prefers a development aid system that leaves the people dependent on them and creates more opportunities for embezzlement. Although regimes this selfish certainly exist, there are probably few so short-sighted that they would turn down a free increase of the national income by up to 50 %. In many cases these problems will be solvable with ingenuity, time, and money. For example, one can build an online biometric identity register (as India has already done) and install solar powered biometric ATMs in remote villages. But it should be admitted that the Global Minimum Income will probably get running much earlier in Lower-Middle-Income countries like Bangladesh simply because there are already functioning institutions and government welfare systems there to work with. In addition, some problems may be insuperable in the short to medium term and result in persistent gaps in coverage (such as the conflict ravaged countryside in the provinces of Congo bordering Rwanda and Uganda).CostsThe theoretical annual cost of ending destitution by transferring $1 to every poor person would be $275 billion ($750 million per day), but the actual amount this would cost the citizens of the rich world would be a bit different.First, a significant chunk of the world’s destitute live in Upper-middle-income countries which are rich enough and whose governments are competent enough to lift them out of poverty if the political commitment is there. Mexico and Brazil demonstrate this – they have been running massive targeted cash transfer programmes for more than a decade with great success. The main contribution here by rich countries is to support that domestic political commitment by building and maintaining an international consensus around the right to freedom from destitution. And the most important part of that is to show their own commitment to this human right by adequately funding the global basic income entitlement in poorer countries.Second, while Upper-middle-income countries taking responsibility for their own poor removes perhaps 50 million from the statistics, a policy of universal coverage in all 31 Low-income countries (population 705 million) means that a significant number of people who are not quite destitute will still receive a basic income of $1 a day, including tens of millions of people who might be considered middle-class in their country. That raises costs, but the importance of reaching all the really poor people would seem to outweigh the risk of helping some less poor people by mistake.Third, several hundred million of the extreme poor live in Lower-middle-income countries like India and Nigeria. Although those countries would take on some of the funding and management of their own minimum income programmes (contributing more on a sliding scale as they get towards Upper-middle income status), there would be a substantial remaining bill.Fourth, there will also be considerable logistical costs – to staff a new international agency, to set up national identity registers, build networks of solar powered ATMs and keep them filled, and so forth. It is hard to estimate these costs in any detail from here, but there are good grounds to suppose they would compare favourably with the costs of conventional human development programmes. Furthermore, much of this infrastructure has dual use value. For example, if citizens can prove their identity they can more easily take part in the formal economy (for example by signing contracts and proving ownership of property) and insist on their rights against corrupt officials. Likewise, a universal biometric registry would make organising fair democratic elections much easier. India’s Aadhaar biometric register (which cost around $1.2 billion and covers 1/7 of the world’s population (The Times of India, 2017) is being used to better administer existing social protection programmes by reducing fraudulent (multiple) claims and embezzlement by middle-men and officials (Abraham, Bennett, Sen, & Shah, 2017). Distribution systems can also serve additional functions. For example, anytime a recipient faces a digital screen to receive their money is an opportunity to introduce even illiterate users to simple financial services like electronic transfers, savings accounts, and insurance that are also extremely helpful to the poor.So a rough estimate for the annual cost of the programme that the rich world would have to pay when it is fully up and running might be as high as $400 billion. That sounds like a big number. It is more than twice total Official Overseas Assistance for example. Yet it is not so large when put in context. The size of the world economy in 2016 was about $110 trillion (World Bank, 2017). $400 billion is less than a rounding error in that total. It is an eminently affordable annual outlay that would leave us almost exactly as rich as before. It is worth recalling that this remains a minimalist (the least we should do) proposal. If global income were perfectly equally shared, everyone would have around $14,500 per year to live on ($40 per day). The Global Minimum Income is not egalitarian. It merely proposes giving the poorest billion or so a top up so that their income reaches at least $700 per year.So much for the ideal. However, the basic idea of the Global Minimum Income is extremely flexible in practise and justification. This is one of its key advantages over the handful of other global basic income proposals that have been made. These tend to make things too hard for themselves by focusing on either the perfect plan or on perfect justice.For example, Busilacchi (2009) has an elegant proposal in which the scourge of global destitution is eliminated by a tax on greenhouse gas pollution, thus killing two birds with one stone. Unfortunately, this doubles the original problem by making action on poverty dependent on first solving a multi-faceted international political dispute about who should pay the costs of mitigating climate change. Both of these proposals are worth making independently, but linking them together leaves the morally minimalist consensus on ending poverty hostage to a more morally contentious dispute about global environmental justice.Clark (2006, n.d.) takes a more pragmatic approach to propose a ‘guaranteed minimum income’ similar to my own. However, his plan requires every country to set up and manage its own refundable tax-credit scheme, and this would seem to require far more organisational capacity than Low-income countries have. (Although it might be more promising for targeted schemes in Middle-Income countries.) Once again, the challenge of ending poverty is increased not reduced if we have to first solve a huge practical problem (radically improving governance) that has defeated conventional aid agencies for decades.A third example comes from van Parijs and Vanderborght (2017, pp. 228–230). They acknowledge the crucial practical point that any global basic income scheme would have to be extremely crude to work across very diverse cultures and in very weak institutional settings. Yet their own suggestion to start with a global pension modelled on South Africa’s is both too modest and too ambitious. Too modest because it leaves out most of the world’s poorest people (of which only 6 % are aged over 60 (World Bank, 2016, p. 7)), and too ambitious because it assumes local institutions as capable as South Africa’s to determine eligibility and disburse honestly.I believe my proposal can do better.First, although a global agreement would be ideal, the idea of a Global Minimum Income can be taken up by smaller groups of countries who wish to move faster. This could be on the formal model of the treaty establishing the International Criminal Court, in which countries sign up to prespecified commitments that are activated once enough countries have joined (other countries can still join later). Or it could be a less formal agreement, on the model of the Paris Agreement under the United Nations Framework Convention on Climate Change, in which countries privately decide and publicly declare their own commitment levels.Second, even if no other rich countries were willing to take part yet, a single rich world country could twin with a poor one – preferably of a similar size; the Netherlands and Malawi say – and roll out a bilateral direct cash transfer programme.If the Netherlands transferred $1 per day per Malawian, this would cost around 0.74 % of GDP, or about the same as the last few months of economic growth (Calculations: The population of Malawi is about 18.5 million according to the World Bank (World Bank, 2019a), so a partial basic income would cost about $6.75 billion. The Netherlands’ GDP in 2018 was $913 billion (World Bank, 2019b not ppp adjusted). No logistics costs are included.) Besides its direct achievement in raising an entire country out of poverty, such a bilateral arrangement could function as a pilot programme to work out the logistical kinks and full economic implications of implementing a truly Global Minimum Income.Finally, every individual who agrees with the idea of the Global Minimum Income is already free to act on it without waiting for it to attract enough political support from their compatriots to persuade their government to participate. Indeed, the moral obviousness, practicality and transparency of the idea is already attracting non-governmental actors. The charity Give Directly, for example, allows individuals to directly fund a daily basic income for one or more people in Sub-Saharan Africa with a few clicks on their website.In addition to this institutional flexibility, a Global Minimum Income can be scaled up after being implemented. Once it is clear what a difference an extra $1 per day can make to people’s lives, the rich world may well become more generous and more ambitious. For example, we may expand the programme to target the World Bank’s $3.10 per day ‘moderate poverty’ threshold instead of $1.90 (25 % of the world’s population). Although no longer quite ‘the least we should do’, such an expansion in coverage from the extremely poor to the very poor would make a lot of people’s lives much better at a still small cost. Or the basic income payment itself might be increased. $1 per day is only a partial basic income since it is merely aimed at topping up the meagre consumption level people can already achieve. It is not enough to live on by itself. But a higher basic income – say $2 per day – would have many of the benefits of a social insurance system for countries too poor or badly governed to organise one. It would cover the minimal subsistence needs of those unable to earn income because of their stages of life (childhood, old age), caring obligations (such as to young children), illness, disability, or the simple unavailability of jobs from one day to the next.IVTwo objectionsI believe the Global Minimum Income is a promising practical solution to a fundamental moral problem. It therefore deserves rigorous scrutiny of its reasoning and political, financial and logistical feasibility. Here I only consider two particularly salient challenges. First, that rich world citizens won’t be willing to pay for it. Second, that poverty is about much more than lack of money.The last decades have seen increasing scepticism about conventional international aid that often breaks out into outright cynicism.Such cynicism is not limited to populist ‘our country first’ politicians. I have encountered it several times in private conversations with employees of aid agencies. This follows from its disappointing record in either stimulating economic growth or directly improving lives. Some of the funding for a Global Minimum Income might be drawn from existing aid budgets, but a lot more money in total would be required. Given the widespread scepticism about funding international aid, why would rich world voters and governments agree to radically expand it to support a new scheme?I have argued that the alleviation of extreme poverty is an obvious moral duty required by nearly every secular or religious ethical system (i. e. it is overdetermined). Nor is this claim entirely theoretical. Most rich countries do put a lot of political attention to eliminating poverty within their borders. Yet many citizens of those same countries would reject the claim that they have an obligation to help poor people in other countries. Some attribute this discrepancy to a mistaken moral belief that the further away someone is the less they matter morally (e. g. Singer, 1972).Peter Singer has argued eloquently and repeatedly over several decades for a utilitarian duty to give aid to the global poor. This is consistent with the reasoning behind the Global Minimum Income. However, Singer is much less ambitious. He rejects large scale interventions that require the political system (such as conventional aid, but also any kind of global basic income (Singer, 2009, p. 56, 2015)), appealing instead to rich world individuals to buy as much good as they can for their dollar by donating to those charities most efficient in improving lives by delivering proven micro-interventions (such as deworming treatments for children). I think it may instead follow from scepticism of our ability to help poor people living in the rural backwaters of incapable or disinterested states thousands of miles away; a scepticism justified by the unimpressive record of conventional aid programmes over the last 50 years to deliver on their good intentions. If this diagnosis is correct, resistance to a Global Minimum Income would not come principally from the amorality of rich world citizens and politicians, but from beliefs about the practicality of our moral concern for the global poor. Such beliefs may be changed by evidence and argument.With conventional forms of aid, converting voters’ good intentions into valuable achievements such as mass literacy doesn’t only depend on the amount of aid money committed to education. Success takes many years and depends on local state institutions and on all sorts of factors outside the control of international development agencies (from the competence and motivation of teachers to local employment prospects for graduates). When a project doesn’t work out, it is difficult to see what went wrong or to make sure a future project would go better.In contrast to conventional aid, the Global Minimum Income is exceedingly simple, immediate, and transparent. It only aims to deliver a certain amount of money to all the members of a certain group of people, not to third parties with complicated plans to turn it into good works and eventually, hopefully, good outcomes. Its efficacy can be tracked and measured relatively straightforwardly: how much money goes in versus how much money reaches the poor. Additional claims made about how a partial basic income is expected to improve people’s lives (such as reduced child labour) can be followed up in the relatively short-term – which also allows problems to be identified and remediated early. It seems to me that such a system is much easier to trust in than conventional aid, exactly because it doesn’t require those who support it to do so out of faith or hope. As people see how successful a basic income can be, scepticism should decline.This reinforces the value of pilot versions of the Global Minimum Income (either by individual countries or large-scale NGO projects) as a demonstration of the programme’s practical effectiveness.So much for aid scepticism. The second challenge is more significant because it concerns what I have advanced as the distinctive strength of the Global Minimum Income: its reduction of the problem of poverty to a simple lack of purchasing power. According to the challenge, this is a misleading simplification. Poverty concerns shortfalls in one’s standard of living in a broad sense, which includes such items as reliable access to clean drinking water, sanitation, electricity, and transportation; the determinants of good health; security from violence; primary/secondary education; and so on. Researchers at the Oxford Poverty and Human Development Initiative developed the Multidimensional Poverty Index to measure this broader idea of poverty and map its global incidence (Alkire & Santos, 2010a, 2010b). They show that the distribution of basic needs poverty correlates with but is not identical to $1.90 poverty. An important reason for this is that many basic needs are ‘club goods’, in that they are most efficiently provided at large scale. For example, it is vastly cheaper to provide drinking water and electricity over a single fixed network in a city than from small scale bottom up ‘market’ solutions, such as water tankers and diesel generators.These examples are urban however, while 80 % of the world’s poor are not. Furthermore, there may sometimes be ‘leapfrog’ technological solutions to the scaling problem which reduce the need for top down solutions (such as microgrids and mobile phones). However, such large operations require a great deal of capital, organisational resources, and a supportive legal system – in turn requiring either the direct or indirect support of a competent, motivated government. Since most of the world’s destitute people live in poor and badly governed (parts of) states, club goods are often undersupplied. Thus, guaranteeing a minimum income is not enough to eliminate all dimensions of extreme poverty. That requires institutional development as well, the traditional focus of human development programmes.This challenge identifies an important limit to the power of basic income to fix poverty all by itself, and also to how far it should displace more conventional human development aid programmes focused on improving public services. Nevertheless, one can admit all this and still defend the implementation of a Global Minimum Income.Firstly, while purchasing power is not the whole of poverty, it is certainly a very important aspect of it – and one that has generally been neglected up until now. As I noted above, basic income can reach people and kinds of poverty that are hard to reach in any other way. It is also an important complement to public services, for example by making it affordable for people to make use of them (e. g. to travel to public health clinics).Secondly, although meeting certain basic needs by developing public services is theoretically much more efficient than giving individuals money to buy them with, in practice government provided services like education and energy in many poorer countries are absent or dreadful. Where first best solutions have not been achieved despite decades of efforts, the responsible thing to do is to turn to second best solutions like a basic income.Thirdly, in any case, this is not just a matter of efficiency but of enhancing and respecting the freedom of the poor to choose their own priorities. The contrast to the micro-management of many conventional programmes is a feature, not a bug.Finally, there may be an indirect link between a Global Minimum Income and the improvement of public services. Once people are lifted out of extreme destitution they are also liberated to some degree from the domination of circumstances and thus able to pay more attention to the institutions, people, and ideas that rule their lives, from local schools to national politics. People who aren’t hungry all the time are in a much better position to hold their government accountable for its performance in running basic services.ConclusionThe world is now so rich that the persistence of extreme poverty among a tenth of the world’s population has become both ridiculous and shameful. Economic growth cannot be relied on to end poverty anytime soon. It will require action, and not just repeating the same kind of development interventions that have achieved so little over the last 50 years. Giving people money is not only the most obvious way of removing them from poverty, it is also the most practically effective. Poverty is a greater scourge than smallpox or polio. If we can find the international commitment and organisational capability to eliminate those burdens on humanity, surely we can banish poverty too.
Journal
Basic Income Studies – de Gruyter
Published: Dec 1, 2019
Keywords: poverty; basic income; Sustainable Development Goals; development aid; global justice