Two years on: Re-visiting The Buxton Proposal, Guyana’s proposed UBI Social Protection Mechanism, Part 3

Today’s column provides a general introduction to my revisit of the Buxton Proposal and the intended structure of my presentation. My two earlier columns [December 3 and 10] offer a prefatory indication on my studied efforts to revise the Buxton Proposal - a Universal Basic Income, UBI, social protection mechanism I have recommended as essential for Guyana’s eradication of its stubbornly persistent poverty - now juxtaposed to its recent windfall oil discoveries. The two columns had engaged respectively, the World Bank and the IMF’s recent publications on UBIs.

Six lessons have been drawn from that exercise and are listed below,

Lessons drawn

First, worldwide, oil-rich governments employ six basic mechanisms to address welfare, exclusion, income, wealth, as well as other poverty-related challenges; namely,

Universal direct cash transfers [universal basic income, UBI]

Targeted cash transfers to poor and vulnerable groups; Targeted transfers to mitigate the adverse impact of oil expansion [such as Dutch Disease]

Subsidies and taxes

5 Public sector employment [jobs]

6 Third Sector optimization [volunteerism, charities, social enterprises, cooperatives along with community involvement and social inclusion].

Second, while the six mechanisms clearly differ, each of the six options has had its separate and independent validity and usefulness validated. The only caveat I perceive is that, item 6 appears, in many ways, to operate as a useful complement for items 1to 5,

Third, the practice of outright a priori rejection of UBIs as an option on the grounds that they are misguided, distort incentives to work, generate unbearable social cost, lack economic rationality has been recognized as unworthy.

Fourth, as a direct response to the above listed lesson drawn, proponents of UBIs like myself advocate as a sine qua non that every such mechanism must be the subjected to national studies before adaptation [socio-economic, feasibility, appraisal]

Fifth, in worldwide practice a wide range of schemes have postured as UBIs, giving little credence to this mechanism’s two most distinctive properties, its universality and unconditionality of its cash transfer.

The sixth and final lesson that I refer to here, is the property of UBIs as attractive mechanisms in advanced developed economies, where poverty may not be the leading challenge but instead stubborn structural transitions and immense sectoral challenges

In conclusion I believe that Guyana’s small population size [number of households] compact geography [83 thousand square miles] in the context of oil and gas reserves that gives it the accolade of being the Americas fastest growing Petrostate come together to provide added significance to the lessons to be drawn, which are listed in the preceding Section

Previous Re-visit

Around a year ago I had re-addressed the UBI mechanism for Guyana, the Buxton Proposal, which I had proposed for tackling Guyana’s persistent poverty back in 2018. That effort was my reaction to two media reports; namely 1] professionals from a wide variety of disciplines who had resorted to ‘ludicrous exaggeration, lampooning, and even caricaturing of proposals and schemes aimed at benefiting the poor as the priority option” 2] the then President Granger’s response to questions on cash transfers to households from oil revenues was dismissive, to quote there was “No evidential basis for cash payouts”.

As I had noted payouts and handouts, are often used to disparage state transfers to the poor; while incentives and fiscal relief are reserved for transfers to businesses. As I shall remind readers the Proposal admits upfront to the absolute necessity for a successful government-ordered feasibility study as a condition for its implementation.

Turnaround

Subsequent to those incidents a Guest Editorial, in this paper, Stabroek News August 14 2021 carried a carefully modulated commentary on Direct Cash Transfers, which encouraged debate. This occurred as I published a Petroleum Road Map for Guyana’s way forward. That addressed the Buxton Proposal from an operational perspective. The Editorial made several observations, including 1] “the reception for the proposal was naturally divided along class lines, with enthusiasm among those who would benefit the most, while 2] exposing the hypocrisy of many who enjoyed tax concessions and other handouts for their businesses.

Indeed, “the primary objection to such a scheme seems to be the objection that people would stop working and live lives of dissolution. But human behaviour is hard to predict.”

While a compelling commentary, even more to the point is the observation in the Editorial that the disconnect between headlined expectations of oil revenues and day to day experiences of the broad mass of Guyanese is getting wider not narrower as oil revenues rise. In 2021 profit oil lifts to July 3, already exceed all such 2020 lifts!

Structure

I pondered at some length as to whether a thorough reframing of the structure of the presentation used in the previous edition was needed. Since this speaks to the analytical framework and that isn’t changed this presentation will follow a modified structure of the original, which is displayed below,

Section 1 Proximate Origin

Section 2 Constituent Features

Section 3 Programming and Operationalizing Section 4 The Nitty - gritty of Cash Transfers Section 5 Projected Petroleum Metrics

Conclusion

Based on the modified structure displayed above, I shall proceed to re-visit and update the Buxton Proposal, an UBI mechanism designed to eradicate persistent poverty in Guyana, the Americas fastest rising Petrostate.