Basic income for the poor

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Ma. Lourdes N. Tiquia

HOW do we battle poverty? What would be a long-term program to fight poverty? Would the stopgap, seemingly palliative program such as the 4Ps be the way? Could that cut 2 percent per annum from our poverty incidence of 26 percent, thereby lowering our incidence to 14 percent by the end of the term of PRRD? If poverty is not arrested, whatever increase in GDP will just be a macroeconomic victory for the economic managers but still not inclusive because some are left behind. How do we therefore ensure redistribution of wealth that is a win-win for the market and those who comprise the market?

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UBI is one of the current buzz words in development economics. UBI stands for universal basic income. “A basic income is a periodic cash payment unconditionally delivered to all on an individual basis, without means-test or work requirement.” Social policy and economic policy can no longer be conceived separately, and basic income is increasingly viewed as the only viable way of “reconciling two of their respective central objectives: poverty relief and full employment.”

There are different models and UBI has been called different names, from unconditional basic income, citizen’s income, basic income guarantee, universal basic income or universal demo grant. Finland is pilot-testing basic income for 8,000 people from low-income groups. Finland Prime Minister Juha Sipila’s governmental programs include a number of social experiments, one of which is the grant of basic income to two experimental groups. The aim is “to reform the existing social policy to better match with societal changes, abolish work disincentives and diminish bureaucracy.” Starting in 2017, for the next two years and with funding from government at 20 billion euros, Finland will distribute roughly $590 each month to jobless Finns. Regardless of whether they find work during that period, the money will keep coming in at the beginning of each month — a trial version of basic income. The Finland experiment is being done in order to learn how offering free money for two years helps the unemployed get back to work.

Under universal basic income, people receive a standard amount of money just for being alive. By handing out the money to everyone, regardless of their income status, UBI advocates say, the system prevents people from falling through the cracks. By guaranteeing that everyone has at the very least, the minimum amount of voice with which to speak in the marketplace for basic goods and services, it is assured that the basic needs of life — those specific and universally important to all goods and services like food and shelter — are being created and distributed more efficiently.

It makes no sense to make sure 100 percent of the population gets exactly the same amount of bread. “Some may want more than others, and some may want less. It also doesn’t make sense to only make bread for 70 percent of the population, thinking that is the true demand for bread, when actually 80 percent of the population wants it, but 10 percent have zero means to voice their demand in the market. Bread makers would happily sell more bread and bread eaters would happily buy more bread. It’s a win-win to more accurately determine just the right amount.” The important point is cash is on hand for use, and how and when cash is used is dependent on the individual trying to determine how his life would be.

With basic income, the holder of the cash is now empowered. He has the basic wherewithal to make a go for the future. He can decide to be lazy and remain poor or he can choose to be an entrepreneur knowing that the basic needs are taken care of. As the campaign question is often asked: “What would you do if your income were taken care of?”

Martin Luther King said: “The solution to poverty is to abolish it directly by a now widely discussed measure: the guaranteed income. … We are likely to find that the problems of housing and education, instead of preceding the elimination of poverty, will themselves be affected if poverty is first abolished.”

The Pantawid Pamilyang Pilipino Program (4Ps) is a human development measure of the national government that provides conditional cash grants to the poorest of the poor, to improve the health, nutrition, and the education of children aged 0to 18. It is patterned after the conditional cash transfer (CCT) schemes in Latin American and African countries, which have lifted millions of people around the world from poverty.

The 4Ps has two types of cash grants that are given out to household-beneficiaries: health grant: P500 per household every month, or a total of P6,000 every year; and education grant: P300 per child every month for 10 months, or a total of P3,000 every year (a household may register a maximum of three children for the program). For a household with three children, it may receive P1,400 every month, or a total of P15,000 every year for five years. As of August 2015, a total of P27.15 billion cash grants were paid to eligible and compliant beneficiaries for the first to third period of 2015 covering January to August disbursements. From this amount, P13.23 billion was paid for education, and the remaining P13.92 billion was disbursed for health.

In 2016, the Department of Social Welfare and Development’s (DSWD) budget was P104.2 billion, P62.7 billion of which was allocated for 4Ps. Of the amount allocated for the CCT program, P59.4 billion benefited 4.4 million poor households registered under the regular CCT program. The remaining P3.3 billion covered 218,377 beneficiary households under the Modified CCT program. These beneficiaries range from itinerant families, homeless street families, and families in need of special protection due to manmade and natural disasters. Because a number of the households were set to graduate from the CCT program, the Sustainable Livelihood Program doubled its budget at P9.6 billion to help a targeted 170,470 families move from subsistence to self-sufficiency through micro-enterprise subsidies. The program was said to benefit 208,352 beneficiaries with skills and technical-vocational training to prepare them for future jobs.

Meanwhile, to increase communities’ access and participation in local planning, budgeting, and program implementation, the KALAHI-CIDSS National Community-Driven Development Program got P10.9 billion to empower 13,357 barangays in 627 municipalities across 58 provinces. The DSWD budget also implemented the provision of the senior citizens’ law—Republic Act 9994, or the Expanded Senior Citizens Act of 2010—mandating a P500 monthly pension for all indigent senior citizens nationwide. With a budgetary allocation of P7.5 billion, this pension program will target 1,182,941 senior citizens aged 60 years old and above. For the Supplementary Feeding Program, the DSWD was allocated P693 million, for a total budgetary support of P4.05 billion. This amount will help feed 2,150,621 day-care children with nutritious meals.

For 2017, DSWD will retain 4.4 million beneficiaries of the 4Ps program, with a budget of approximately P80 billion. If you put together all the safety net programs administered and managed by the DSWD, distributing basic income would be more efficient because it removes bureaucracy and the value-added increases.

Even Davos 2017 is buzzing with universal basic income. In fact, in one of the panels on UBI, India announced that it will be implementing a version of UBI.

Amitabh Kant, an Indian economic official, said the country is seriously considering a plan in which the government would hand out free money to about 20 million Indian citizens. The Indian government is reportedly close to releasing a formal report on the basic universal income proposal, which follows on India’s small 2011 UBI trial in Madhya Pradesh, a central state, and West Delhi.

The Duterte administration may want to do our own trial run of UBI in the top 10 poorest or the top 3 poorest provinces in the country for the next two to three years. Another reform measure is to provide a box in the income tax return so that taxpayers are empowered to identify where their tax contributions should go. Poverty after all is an all-hands-on-the-table problem, if we are to be really serious that we are the hottest economy this side of the globe.

Wealth redistribution is key in a world where nationalism and populism are becoming the clarion calls of our time. Indeed, Confucius was right, “In a country well governed, poverty is something to be ashamed of. In a country badly governed, wealth is something to be ashamed of.” An opportunity to have a new social order is upon us. We either confront it or we have pockets of revolutions where the wealthy are killed because they chose to be greedy and have the biggest share than the majority. Social contracts would be passé because it does not do much to alleviate the situation of the poor. And when we reach such a stage, anarchy prevails with the withering of the state.

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