The History of BIG

Excerpts from:

New Era Online - BIG: Time to separate fact from fiction - by Lucy Edwards, 28 May 2010

History of BIG

As far back as 1795, Thomas Paine in Agrarian Justice made a call for redistributive economic justice through the creation of a fund that can make transfers to dispossessed citizens. In the context of an agrarian-based society, he recognized the systemic basis of poverty, inequality and exclusion and argued that poverty “is a thing created by civilized life and does exist not in the natural state”.

In other words, people are poor not because they are born to be so, but because of the way economic resources are distributed in society. A civilized society should remedy this and not simply leave it to the individual poor person to sort out for him or herself.

Paine argued that the land and all that is on or under it is in fact common property owned by the human race. This he called the natural state. With cultivation, he argued, “private landed monopoly began” and “with it has produced the greatest evil”.

It has dispossessed more than half the inhabitants of every nation of their natural inheritance, without providing for them, as ought to have been done, an indemnification for that loss, and has thereby created a species of poverty and wretchedness that did not exist before.”

Paine thus called for the creation of a fund to compensate the dispossessed, as “it is a right and not a charity.” This fund would serve as compensation to the poor person “in part, for the loss of his or her natural inheritance”. His notion of compensation for dispossession underlies calls for income guarantees.

Internationally, income guarantees to fight poverty have found support from diverse groups and individuals ranging from civil rights leader Martin Luther King to the high priest of free market economics and the minimalist state, Milton Friedman.

King in his last book Where Do We Go From Here: Chaos or Community (1967) argued that the simplest and most effective solution to abolish poverty is the guaranteed income. Friedman believed it could reduce both poverty and the size of government.

In 1968, 1 200 American economists that included luminaries like James Tobin, Paul Samuelson and John Kenneth Galbraith signed a document that called for a system of income guarantees.

In Brazil, the idea of BIG was first put on the agenda by Senator Eduardo Suplicy and was approved by the Senate in 1991.

In South Africa, the call for the introduction of BIG came from the 2002 government-appointed Taylor Committee of Inquiry into a Comprehensive Social Security System for South Africa.

The Basic Income European Network (BIEN), now Basic Income Earth Network, was launched in 1986.

In Namibia, the idea of income guarantees to overcome poverty and inequality came out of the 2002 recommendations of the government-appointed Namibian Tax Consortium (NAMTAX) report on taxation.

In 2005, the churches, trade unions and civil society organizations formed a coalition, thereafter known as the BIG Coalition, to lobby government for the implementation of such a grant.

Criticisms of BIG as a policy measure:

One must distinguish between those who oppose BIG as a matter of principle and those who support the principle, but reject some of the recommended implementation modalities. The common criticisms are about universality, productivity, dependency and affordability.

Those against the universality principle (i.e. that it should be available to all citizens) argue that the wealthy should not benefit and that it should be targeted at the poor. This will involve some means testing to prove that those targeted are in fact poor.

Proponents argue that through a progressive taxation system those who have sufficient income, and pay taxes, will in the end pay more in taxes than the sum they get as a grant and this would help fund the costs of the grant. This would also result in a redistributive effect.

In other words, we take from the wealthy to give to the poor. Proponents also argue that through a more efficient tax collection system, additional funding could be found.

Another reason for universality forwarded by proponents is that it reduces administrative costs. Government does not have to employ armies of social workers and administrative officials to conduct means tests, since citizenship is the only requirement.

This reduces implementation costs and corruption. It also eliminates the stigma associated with means testing. At the same time, it ensures wider reach.