Why not a basic income for all?
The US should be some sort of utopian society, judging by its most important economic statistic, unemployment. Under its 45th president, Donald Trump, and not because of him, the world’s biggest economy has its lowest jobless rate in almost 20 years. Growth is on a record run, stock markets are in record territory and the dollar is strengthening. Yet we know by its politics and its scary shift to right-wing extremism that economic insecurity grips that nation. Holding down a job is no longer the security blanket it once was as the gig economy and the accompanying pack of T-shirt-wearing aficionados from Silicon Valley cause cold sweats — and the automation that comes with it, seizures. While machinery hasn’t replaced the US worker entirely, there’s no doubting it has helped suppressed wages.
That’s a snapshot of an American story, which is the best economic story offered on the global stage. It is in the sweetest spot, which was further evidenced by this week’s quarterly GDP figures reporting a 4.2% expansion. When you consider the state of the US against that of an emerging-market nation such as ours, with unemployment levels exceeding 27% and growth rates that every now and then toy with the real prospect of recession, just how insecure should we feel? And how much has this already fed into our politics? In years to come, how much worse could they become?
Many an economist such as Brian Kantor speaks of the need for the state to finally break free from the idea that it is central to the economy, and let the private sector flourish in order to do what only it can do: create more jobs. I believe that the private sector is much more efficient with capital. The public wastage we’ve seen over the past decade is evidence enough of this. But if there’s one thing I doubt, it is our big monopolies’ ability to significantly dent our jobless numbers. Especially as they have to compete in a globalised economy.
Naspers’s pay-TV operation, once the cash cow that funded its expansion drive, now competes with firms such as Netflix, a multibillion-dollar company with a workforce of only 5,400. In SA alone, the media company’s pay-TV operation has 7,000 employees— and in total almost 25,000.
Telkom, which is really a South African business after its many failed continental adventures, has a workforce of more than 10,000. The administrative pressures, as it highlighted this week, are for further shrinkage in these numbers. When it listed in 2003, the company had some 60,000 employees. The challenges of keeping up with more nimble rivals, such as Vodacom and MTN, have forced a focus on efficiency, and workers have paid the price. I’ve highlighted just two of SA’s old-school giants, but this efficiency focus has been central for all. After buying SABMiller, Anheuser-Busch InBev wasted little time in trimming fat to meet its own thrifty standards.
With SA’s big businesses in the centre of a disruption storm, like most of their global peers, I can’t see them being a jobs centre as in decades past. And with our schooling system still focused on producing employees rather than entrepreneurs, what is to become of the graduates from that 12- to 15-year funnel? Where are the jobs going to come from? This isn’t necessarily a South African affliction. It’s global in nature and the cause of much uncertainty and rising tensions. Libertarians and labour leaders in free-market havens such as the US are now playing with the idea of providing a guaranteed income or a basic income for all.
As we speak, the percentage of households in SA receiving at least one form of social grant is in the high 40% region. We know that’s set to grow, given the state of mining and other industries.
It’s scary to consider just how much larger the social grants bill will be in years to come. Instead of growing this bill, is it not time we consider a universal basic income grant? Would taxpayers’ money be better placed back in the hands of the citizenry, rather than the state’s? It’s worth a thought.
The West has been thinking about it since the 18th century, aka the Elizabethan Poor Law. We once considered it in the late 90s.
It’s scary to consider how much larger the social grant bill will be