ANTHONY BUTLER: A BIG mistake to save an unaffordable minister’s job?

Estimates of the proposed grant’s cost are about R200bn a year

BL PREMIUM 16 JULY 2020

The basic income grant, sometimes referred to as BIG, is a superficially attractive idea, but one that obviously won’t be realised any time soon. How should we interpret urgent demands for its immediate introduction?

Social development minister Lindiwe Zulu made the surprise announcement of government’s ostensible basic income grant plans at a government social cluster briefing on Monday. “We already have categorical grants for children, older persons and persons with disabilities,” Zulu said. “The basic income grant will be an income support grant for the population aged 18 to 59.” 

International networks of NGOs and academics have long promoted the concept as a lever for human capital development. In 2018, the SA Human Rights Commission indulged its notorious mission creep to produce a report on the modalities of basic income grants in the real world.

Debates about the displacement of human labour in an ostensible “fourth industrial revolution” — and the consequent need to keep the poor fed and quiescent — have made the grant popular among Davos types. Our own Colin Coleman, former sub-Saharan Africa CEO of Goldman Sachs, the great vampire squid wrapped around the face of humanity, touted the grant in a virtual lecture on Wednesday.

The grant promises a simple panacea for problems that are complex. Its proponents predictably seized on evidence from a National Income Dynamics Survey (NIDS) report released this week, which suggests that “since February this year 3-million South Africans lost their jobs, and 4,5-million people lost their incomes”. The NIDS report in reality provides no support for basic income grants, showing instead that targeted interventions, such as the child support grant top-up, were broadly successful, while the proto-basic income grant , the social relief of distress grant, comprehensively failed. As researchers noted, “these findings suggest that, as the pandemic unfolds in SA, current interventions need to be … far better targeted at informal workers, in general, and women informal workers in particular”. The key word is targeted.

The basic income grant is obviously unaffordable. Estimates of the cost are in the region of R200bn — every year, recurrently, because this is not a parastatal bail-out. Our context, as the economist Charles Simkins has observed, is one in which “we should be behaving as if we were about 8% poorer than in 2014. That is not austerity as a policy. It is decline as a fact.”

The basic income grant is a symbolic policy proposal that is designed to impart political messages to various audiences, rather than a substantive policy intervention. It offers an opportunity for virtue signalling: support for it shows you are on the side of the poor — even the DA has been a sporadic proponent. It displaces attention from the demands of powerful interest groups, such as the public servants who consume 60% of tax revenue, are protected from unemployment and yet still want pay rises in the middle of a global crisis.

Symbolic policies are also handy political tools. The supporters of “MMT” — which may mean modern monetary theory or magical money trees, two largely overlapping categories — want to take huge risks with the national economy. They represent established interests, such as state employees, rentiers and the beneficiaries of our state-owned entity supply chains. They are happier to use “help for the poor” as cover for their conservative positions than to initiate painful reforms and build a credible fiscal position.

Even individual politicians can use symbolic policies to protect their own interests, often at great cost to their country, as former president Jacob Zuma so ably demonstrated. A minister who believes she is shortly to be fired, perhaps in a much-needed cabinet reshuffle, can quite easily lay down a “radical” policy proposal. When the minister is removed, she can then claim it was the radical proposal, rather than her personal incompetence or other demerit, that was to blame.

• Butler teaches public policy at the University of Cape Town.