Discussion on Living Income Guaranteed

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A Living Income for South Africa

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Maite Zamora Moreno

We’ve Got Blood on our Hands
http://livingincomesa.blogspot.com/2014/10/weve-got-blood-on-our-hands.html

“Economic Freedom Fighters (EFF) leader Julius Malema and party chief whip Floyd Shivambu accused Deputy President Cyril Ramaphosa during a question and answer session in the National Assembly on Wednesday of killing the 34 mineworkers police shot dead in August 2012 in Marikana, saying he has blood on his hands and calling on him to accept responsibility for the deaths.” 

(http://mg.co.za/article/2014-09-17-eff-ramaphosa-has-blood-on-his-hands?utm_source=Mail+%26+Guardian&utm_medium=email&utm_campaign=Daily+newsletter&utm_term=http%3A%2F%2Fmg.co.za%2Farticle%2F2014-09-17-eff-ramaphosa-has-blood-on-his-hands )

For context on the Marikana shootings:

“The Marikana miners' strike or Lonmin strike was a wildcat strike at a mine owned by Lonmin in the Marikana area, close to Rustenburg, South Africa in 2012. The event garnered international attention following a series of violent incidents between the South African Police Service, Lonmin security, and strikers themselves among who the Association of Mineworkers and Construction Union (AMCU) emerged through intimidation, violence and killings that mostly affected the members and leaders of the National Union of Mineworkers (NUM). The NUM attributed the decline it experienced to the intimidation, violence and killings, and as a result of these, also the displacements of workers from work and their communities. This resulted in the deaths of 44 people, the majority of whom (34) were striking mineworkers killed on 16 August while 10, including 2 police officers and 2 private security guards, were killed between 10 and 11 August. At least 78 additional workers were also injured on 16 August. The total number of injuries during the strike remains unknown. Killings did not stop, but continued up to 2014, mostly affecting NUM members and leaders. In addition to the Lonmin strikers, there has been a wave of wildcat strikes across the South African mining sector.” 

(http://en.wikipedia.org/wiki/Wildcat_strike_action )

EFF leadership is out on a witch-hunt to find the one responsible for the deaths of the mineworkers during the Marikana strike and bring about justice – more so, they believe they know who is at fault and are demanding Cyril Ramaphosa to take responsibility.

Is it so? Is the Deputy President of South Africa, Cyril Ramaphosa, a murderer? Does he have blood on his hands? Is he responsible for the deaths of 34 people?

Of course he is.

But then again, who isn’t?

Who is responsible for the killings during this violent strike? The policemen who did the shooting? The union workers who were striking without the authorization of the union leadership? The ANC as the party in power? The people who voted the ANC into power? The system that created the conditions in which mineworkers felt the need to go strike to demand better wages? Or… all of us? For not preventing conflict where it could have been foreseen, for not preventing harm where it could have been predicted, for not preventing desperation that would obviously lead to compromise?

Let me ask you this: for all those who are leading relatively comfortable lives – enough to sustain yourselves, your family, with means of transportation, a decent house, access to technology for easy communication such as phones, computers, internet, a job that may not be ideal but doesn’t pose a threat to your life – how much would someone need to pay you to take up a job as a mineworker? Is there any amount someone can offer you that would make you say ‘yes, cool, if you pay me that much, I’ll leave my current job and start working in a mine’?

Answering that question for myself: No, there is no amount high enough that would sway me to go and work underground, digging up materials in less than pleasant and potentially dangerous conditions. Of course, I can only make that statement because I have alternatives. If I had no alternatives, no other means to generate an income while perhaps having others depending on me for support – and working in a mine would provide me that income – then ‘hell yeah’, you do what you have to. But is that acceptable? Is it acceptable that people find themselves in such a position, where it is desperation driving them to accept a job that, if they had other means of income, they would never place their lives and their health on the line?

It is possible of course that some genuinely love mine-working – I cannot say – but then wouldn’t you say that they require a salary worthy of heroes? Because in terms of South Africa’s economy – gold and platinum is what is keeping us going. And it is the mineworkers who herein have the toughest part to play – putting in the actual physical labor so that there is a mining industry that is really the backbone of our economy. Firefighters are considered heroes because they place their life on the line in the attempt to save others’ – which is really exactly the same for mineworkers. Why do they not have the same status in society and why is that not reflected in their wages?

With implementing a Living Income Guaranteed for all those who are unemployed – a living wage sufficient to take care of your living necessities – and placing the minimum wage at double the living income – here we have a first step towards both ensuring no one accepts a job that they wouldn’t do if they had alternatives as well as moving towards proper wages for those who do decide to continue working in a mine – giving them also more bargaining power, because hey, they can quit and receive a Living Income too – you better take care of your heroes.

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Maite Zamora Moreno

Low Wages and High Unemployment Rate – Where to Go from Here?
http://livingincomesa.blogspot.com/2014/11/low-wages-and-high-unemployment-rate.html

Many are familiar with the following proposition:

“If wages are increased, then the cost of labor increases for employers. To reduce costs, employers will not hire as many employees and unemployment will increase.”

It seems to make sense, right? It comes down to the fundamental relationship between price and quantity demanded: if something becomes more expensive, we’ll tend to buy less of it.

So, considering South Africa with an unemployment rate of about 25% and half of all employed workers earning R3000 or less – we seem to be in an impossible position; lowering wages to get more people employed would lower purchasing power even more and all but destroy the value of labor. Increasing wages, an equally important goal, would leave more people without jobs.

So – should we simply raise our hands in defeat and say ‘sorry, this is economics, nothing we can do about it – It is mathematically impossible to achieve both goals from where we currently are?’

What we often don’t see when looking at these propositions, are the assumptions that surround and subscribe them – these are the assumptions that we implicitly accept and have been accepting for such a long time that we have come to see them as ‘undeniable truths’ in the sense that: we don’t even question them anymore, they are just ‘part of the package’.

One such assumption is that only those who are employed should receive an income – or in other words: Income is a function of labor. The more you work, the more you earn. The less you work, the less you earn. And if you don’t work at all, you don’t earn anything at all either. Again, ‘it seems to make sense’. But does it? Can we regard wages and income as just some mathematical variable that can go up or down and that, other than being a number in an equation has no real meaning or value?

I’d like to draw your attention to a section in the Living Income Guaranteed Proposal for South Africa under the heading “Incomes are Lifelines”:

Personal income is the means through which individuals and households acquire access to the products and services they need to adequately support themselves. Traditionally, the argument is put forth that expanding the economy will ‘automatically’ increase the well-being and prosperity for each citizen. We can certainly say that the South African economy has been growing, but we do not observe the promised ‘trickle-down effect’. GDP is therefore not an appropriate indicator for the performance or state of the economy. Economic growth has been shown to take place without any form of equitable distribution. Our current economic model is focused, first and foremost, towards economic growth based on the assumption that most citizens are able to effectively participate in the economy. Those unable to participate or self-support are advised to be supported through government intervention; forcing the government to step in where the economy fails. The government’s interventionist role is designed to be of minimal support and as such, it lacks the capacity to adequately support all the citizens that require social assistance; a percentage representing a large, if not the majority, share of the population of South Africa.

The inequality of opportunity in South Africa – its legacy from a colonial past – has proven utterly unsustainable. We argue that the performance of the economy must be measured in accordance with its ability to provide each citizen with an adequate income –the purchasing power to secure basic human rights – and not according to gross national growth percentages.

We’ve gotten so used to seeing Income as a function of Labor that we forget the real meaning of income as that which – if adequate – enables a person to live a dignified life. Allowing Income to remain a function of Labor alone is in fact a violation of human rights, because within this equation, we allow the possibility of some to earn an income insufficient to support themselves, or worse – no income at all. Where are human rights within such an equation? Where are our Christian values? Our Ubuntu values? Our humanitarian values? It becomes clear then that our definition of income requires a re-evaluation and a new, morally justified, foundation.

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Maite Zamora Moreno

Low Wages and High Unemployment Rate – Where to Go from Here? – Part 2
http://livingincomesa.blogspot.com/2014/11/low-wages-and-high-unemployment-rate_20.html

I ended my previous blog with the following paragraph:

“We’ve gotten so used to seeing Income as a function of Labor that we forget the real meaning of income as that which – if adequate – enables a person to live a dignified life. Allowing Income to remain a function of Labor alone is in fact a violation of human rights, because within this equation, we allow the possibility of some to earn an income insufficient to support themselves, or worse – no income at all. Where are human rights within such an equation? Where are our Christian values? Our Ubuntu values? Our humanitarian values? It becomes clear then that our definition of income requires a re-evaluation and a new, morally justified, foundation.”

In a world where money is life-enabling, we cannot disconnect income from human rights. When looking at guaranteeing human rights, we are therefore firstly talking about guaranteeing an adequate income. Herein the condition should not be labor, but life – we are not discussing basic labor rights, we are discussing basic human rights. All South Africans have a right to a dignified life, not only those who are currently in a position of employment. For some reason that escapes me, this basic truth has deluded us all in how we created our economic system and the society that we’ve constructed upon it. When our economic system – and the rules by which it exists – does not support human rights: do we compromise human rights to preserve the economic system or do we adjust our economic system to make provision for human rights? At the Equal Life Foundation we propose the latter: through the implementation of a Living Income Guaranteed.

We suggest working towards providing a Living Income Guaranteed (LIG) of R4500 per month to any (adult) South African who is unemployed or retired. As soon as one takes up employment, one’s LIG falls away. Perhaps, dear reader, you are now scratching hour head wondering how this would at all solve the dilemma between higher wages and higher unemployment: won’t this cause unemployment to sky-rocket to an all-time high? We have a solution for that as well. We propose that a national minimum wage be introduced that stands at double the Living Income amount, or in other words: R9000 per month. That means that any South African taking up employment, would earn at least R9000 per month. That would provide sufficient incentive to take up employment if one is in a position to do so. One’s level of education, one’s level of expertise, skill and responsibility would all remain factors in determining the level of one’s income as it does now, with the only difference, that the minimum wage would be set at R9000.

And perhaps now, dear read, a dozen more questions or even objections find your way into your awareness, such as for instance: how would employers be able to afford paying these higher wages, wouldn’t we be hit by massive inflation, who will pay for these living incomes, and still, would some not choose to merely live off a living income, being satisfied with satisfying basic needs without taking up employment?

The answers to these questions can be found within the Living Income Guaranteed Proposal for South Africa, so if you’ve become intrigued or curious as to what we’re proposing as a new humane economic foundation for South Africa: please do read our proposal. If anything is unclear or more questions come up, please leave a comment. And if you’re excited towards building a future for South Africa in which poverty becomes a tale of the past and opportunities for success abound, then share the proposal with your friends and acquaintances, your neighbors, your political leaders, your teachers and professors.

One thing is clear: something has to change. Human beings have the unflattering characteristic of waiting for a situation to hit rock bottom before deciding to do something about it. We suggest that would be unnecessary as a new road can be paved, starting now. We suggest we don’t wait for anything to get worse and consequences to reach everyone – our future is in our hands – we can yell and scream about our problems as much as we like, but solutions will not magically be handed to us. Let’s rather then make a big noise about solutions that can be readily implemented such as the Living Income Guaranteed proposal – to lift all South Africans out of poverty, once and for all.

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Maite Zamora Moreno

Nkandla – We’re Not Asking the Most Important Question
http://livingincomesa.blogspot.com/2014/12/nkandla-were-not-asking-most-important.html

We keep getting more news reports on Nkandla. The country is in uproar because it may or may not be that public funds were misappropriated to further the personal pleasures of the president. The Nkandla-story is a great example of how we’ll tend to wake up, blink our eyes and start demanding accountability from our political leaders after the facts. While we’re all busy attempting to find out what actually happened and from different sides proposals are being made on how to go from here – we’re all missing the most important question: how do we prevent a similar situation in the future?

Do we think it is normal for instance, that we don’t actually know where public money is being spent on? Do we think it is normal that once we’ve elected a party into office, we’re no longer consulted on how this government is now to allocate public funds? Do we think it is normal that all the while money may have been spent on an issue that the public does not deem relevant, yet, we wouldn’t know about it until after the facts and the money is gone?

Here is a recent blog I wrote on participatory budgeting that would provide the preventative measures that are needed in South Africa to hold our leaders truly accountable and to all take responsibility for public funds:

Who is more Fiscally Responsible – Elected Politicians or Citizens?

In the blog-series ‘Democratization – Put your Money where your Mouth is with LIG’ I briefly discussed an argument against direct democracy (placing authority directly in the hands of citizens rather than elected politicians) that dates from the time of Plato – the argument being that citizens would make ‘bad decisions’ and don’t possess the necessary intelligence, knowledge and skills required in political decision-making.

I came across the following information when browsing through the comments on a blog regarding the implementation of a Basic Income in Switzerland:

"Switzerland is an interesting laboratory for direct democracy.

I dimly recall a very interesting study by (I believe) University of Zurich (maybe 20 years old).

They analyzed for each of the 26 Swiss cantons (=states): (1) influence of direct democracy on canton politics (which varies by canton. Some cantons don’t have all that much direct democracy. Others such as Appenzell-Innerrhoden don’t even have a parliament because EVERY single law is passed directly by the people). (2) fiscal situation of the state.

The highly fascinating result was this:

the stronger the people can directly influence public spending and taxes, the healthier the canton’s budgets (!!). The people tended NOT to spend more than they had. Rather, the professional politicians (or the canton’s that gave elected officials greater power) tended to be more fiscally irresponsible."

Naturally, my interest was peaked and I went to search for studies about this topic. And, yes, you guessed it – I found the material supporting these claims. I think we can all agree that when states spend beyond their means – we have a case of bad political decision-making. According to the logic of the argument that it would be dangerous to have citizens directly participate in politics, we would expect citizens’ involvement within budgeting decisions to exacerbate fiscal irresponsibility. And yet – here we have an example that not only shows that citizens wouldn’t make matters worse – but that citizens would do better than elected politicians when it comes to balancing the budget.

If at any point it is relevant to ask the citizens for their direct input on a particular topic to increase democratic practices, it would be: how should we spend public funds? Voting a person into office is one thing – but it is the budget that really determines political policy for the coming year. Mandatory budget referendums should be a minimum requirement for any regime to qualify as a democracy, really. When the extent of your political participation is to vote someone into office – then all you have is ‘hope’ that the people in power will use public funds responsibly and for the purposes that you expect them to. Mandatory budget referendums would create a point of direct accountability towards the citizenry that once politicians are in power, they are indeed acting out their mandate on behalf of the people. It would immediately reduce corruption and prevent budgetary deficiencies down the line, where one is suddenly told that the retirement age has been increased and austerity measures are being taken because there are insufficient public funds and one only then starts wondering ‘well, where did all the money go?’.

The fiscal problems most countries are experiencing today could have been prevented. It is now a time of walking through consequence that has already been created and yes, it is worthwhile looking for solutions to address current problems head-on – but it is most important to prevent the same scenario from taking place again. In Dutch there is a saying ‘a donkey doesn’t bump his head on the same rock twice’ – seems like humanity can learn a thing or two from donkeys since we have this tendency of not even looking at what it is we bumped our head on and why – but simply try to put some ice on the wound. However much we may be upset with governments and politicians – we are the ones who gave them the power to do what they did. The consequence that is here is as much ours as theirs – and rightfully so. If anything – let us at least learn from our mistakes – otherwise all the troubles we’re going through will really be for naught. Let us at least enshrine solutions within the constitution and develop new political practices that we can pass on to the next generations – we owe them that much.

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Maite Zamora Moreno

Eskom - Where is South Africa Headed and Who is in the Driver’s Seat?
http://livingincomesa.blogspot.com/2014/12/eskom-where-is-south-africa-headed-and.html

For those readers who are not South African – Eskom is the South African public utility company. The company has been increasing prices over the last few years and generally, South Africans often experience unexpected power outages, especially when living in more remote areas. So all in all Eskom is not a public favorite. That being the ‘normal state of affairs’ – now Eskom is in trouble. The infrastructure is compromised and the company is not able to meet the growing demand for electricity. This has resulted in scheduled load shedding. Practically, it means that every day we look on the Eskom website to see if there is any load shedding happening and what ‘stage’ of load shedding we’re on. Then each one can look up what the load shedding schedule is for their area – where either, power will not be turned off, will be turned off for 2,5 hours every three days, every day, or several times a day. Then we hope that the load shedding ‘stage’ does not suddenly change, where we are not prepared for the power outages, that the power comes on again when they say it does and that if no power outage is scheduled, that there won’t be any unexpected outages, leaving us in the dark anyways.

Obviously, it’s not a very pleasant situation, but what concerns me most is how it is driving South Africans into a particular course of action that is fuelled by emotion rather than practical considerations.

So – South Africans, I now address myself to you:

For a moment, take a step back from your direct experience with Eskom, and observe the ‘bigger picture’, the larger pattern that is playing out. What we’re going through at the moment has happened before – it is nothing new. You can look at examples in Greece, in Spain – in any country that started privatizing public utilities after the public increasingly voiced their displeasure with the companies’ performances. It just ‘made sense’ to ask for privatization, because ‘obviously’, the company, when in public hands, was not efficient and was not acting in the best interest of the public. The assumption or expectation exists that when the company is transferred to private hands, that it will perform better, be more responsible and, somehow, work in the interest of the public; its clients. But what actually happens when public utilities are transferred from the public to the private sector? The service becomes even scarcer, because it is now working according to private market logic – prices sky-rocket and so many lose access to a living requirement, because it’s just not affordable. But it does not only affect ‘the poor’. For others, financial pressures increase, because the utility bill is sky-high and purchasing power drops significantly.

Now – I’m sketching the pattern in large strokes and I’m not trying to make an argument for leaving things as they are. What I do want to stress is to be watchful for grasping at the first proposed alternative to the current situation in the expectation that it is an actual solution. That is what emotional decisions are. I’m sure you’ve had experiences in your personal life of making decisions when you were emotionally unstable – decisions that you regretted later on, because they were made in the heat or in the turbulence of the moment, when you did not see things clearly. That is what is happening right now – only on a larger scale.

I strongly suggestion watching the documentary ‘Catastroika’ as it shows how the exact same pattern has played out in other countries and what the actual consequences are. You can view the full documentary here: http://topdocumentaryfilms.com/catastroika/.

We are already heading in the same direction. Visit the Eskom’s facebook page, https://www.facebook.com/EskomSouthAfrica and have a look at the comments left by individuals to any of their posts – it’s a reflection of the emotional state the country is in. Then visit the website ‘mybroadbad.co.za’ , scroll down and to the right you will see a voting poll with the question “Should Eskom be privatized?” – currently 90% of voters (2238 votes) said ‘yes’ – while 10% (257 votes) said ‘no’. If Eskom is privatized, then those in power can say that ‘the people wanted it so’ – but who engineered the circumstances that drove the decision? Again – watch the documentary.

So – what else can we do? Even if Eskom is not privatized, is there an alternative? We tend to look at things in black and white and see only two options: nationalization and privatization – thinking along the lines of: ‘The company was already nationalized, we’re not happy now, so let’s try privatization instead.’ But there is another option. I’ll tell you all about it in my next post.

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Maite Zamora Moreno

Eskom – The Power Question
http://livingincomesa.blogspot.com/2014/12/eskom-power-question.html

I ended my previous post with the following:

“So – what else can we do? Even if Eskom is not privatised, is there an alternative? We tend to look at things in black and white and see only two options: nationalisation and privatisation – thinking along the lines of: ‘The company was already nationalised, we’re not happy now, so let’s try privatisation instead.’ But there is another option. I’ll tell you all about it in my next post.”

Interestingly – the day after I published my previous post, I came across the following news article: ANC eyes State sell-off to ease power crunch… and we are one step further on the road to privatisation.

But, as I said, we don’t have to go that route. Agreed – nationalisation often leads to severe problems such as corruption, inefficiency and mismanagement – but so does privatisation. Fortunately, there is another road we can take – one that you can call nationalisation or privatisation – because both words would be suitable – and yet, it would be totally different from the nationalisation or privatisation practices we have seen in the past. I apologise if I have confused you – allow me to explain.

The third road to take is to place Eskom in the hands of ever South African citizen – making each South African a shareholder of Eskom. I said you could call it both ‘nationalisation’ as well as ‘privatisation’. You could call it ‘nationalisation’ because the nation as each citizen would in fact own the power utility company. You could call it ‘privatisation’ because the company would be in the hands of private citizens and not in the hands of a government owning it ‘on behalf of’ the people. Let’s call the third road ‘citizen shareholding’ – why is this a preferred option?

To put it simply – a company will be managed in a way to secure the interests of the shareholders/whoever owns the company. At the moment – that is the government. If Eskom were privatised, it would be the interests of some other company or a select group of individuals that would be served. In such a scenario – you cannot guarantee that a company is run with the benefit of each South African in mind – the power is too centralised.

That is what Eskom is representing at this time: Power – who has the power to control the power? Are we going to place the power to control power in the hands of another small group of people and simply ‘trust’ they will not abuse their power to only further their own power? Or will we place the power in the hands of the people?
When applying citizen shareholding to Eskom, decentralisation is maximized with no one person/group of people having more power than another to influence how power is distributed in South Africa – personal agendas are taken out of the equation and what is best for South Africa can be created.

Citizen Shareholding forms an integral part of the Living Income for South Africa Proposal. Far too long have we taken a back-seat – hoping/waiting/trusting that everything will be okay – and complaining/protesting/striking when it turns out everything is getting worse. Here is a promise: nothing will change if we don’t start paying attention to what is going on, nothing will change if we don’t stand by real solutions, nothing will change if we don’t create awareness of other available options such as the Living Income Guaranteed Proposal. The power to actually change things is in our hands, and it has always been there – the question is: will we do something with it?

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