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Universal basic income in Brazil

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Basic income has been discussed in modern Brazil at least since the 1980s. In 2001 a law was introduced by Senator Eduardo Suplicy of the Brazilian Workers Party which mandated the progressive institution of such a welfare system. By this move Brazil became the first country in the world to pass such a law. Suplicy had previously introduced a bill to create a Negative Income Tax, but that bill failed to pass. The new bill called for a national and universal basic income to be instituted, beginning with those most in need. The bill was approved by the Senate in 2002 and by the Chamber of Deputies in 2003. President Lula da Silva signed it into law in 2004, and according to the bill it is the president´s responsibility to gradually implement the reform. Since then Brasil has started to implement the bill through the Bolsa Família-program, which was a centerpiece of President Luiz Inácio Lula da Silva's social policy, and is reputed to have played a role in his victory in the Brazilian presidential election, 2006.

Bolsa Família

President Lula giving a speech to recipients of Bolsa Família and other federal assistance programs in Diadema
Main article: Bolsa Família

Bolsa Família is a social welfare program of the Brazilian government. The program attempts to both reduce short-term poverty by direct cash transfers and fight long-term poverty by increasing human capital among the poor through conditional cash transfers. It also works to give free education to children who cannot afford to go to school to show the importance of education.[1] The part of the program that is about direct welfare benefits could perhaps best be described as a basic income with some prerequisites. Families with children, to be eligible for the income, must ensure that their children attend school and have been vaccinated. The Bolsa Familia program has been mentioned as one factor contributing to the reduction of poverty in Brazil, which fell 27.7% during the first term in the Lula administration.[2] About 12 million Brazilian families receive funds from Bolsa Família,[3] which has been described as "the largest programme of its kind in the world."[3] By February 2011, 26% of the Brazilian population were covered by the program.[4]

The reaction from multilateral institutions to Bolsa Família has generally been enthusiastic. During a trip to Brazil in 2005, the former president of the World Bank, Paul Wolfowitz said, "Bolsa Familia has already become a highly praised model of effective social policy. Countries around the world are drawing lessons from Brazil’s experience and are trying to produce the same results for their own people." [5] Economic thinker and philosopher Joseph Heath praised the program in his 2010 book Economics without Illusions, citing it as an example of how to manage incentives of people whose poverty results from hyperbolic discounting. Heath wrote, "What makes programs such as this so successful is that they do not change people's incentives: They merely rearrange the temporal sequence in which these incentives are experienced. ... This has proven to be more valuable than a thousand recitations of the fable of the ant and the grasshopper."[6]

However, the program is far from being universally accepted by Brazilian society. Among the various criticisms it receives, one of the most recurrent is the assertion that it could discourage the search for employment, encouraging laziness of people. Under this premise, many people would give up trying to find a job, content, instead, to live on the Bolsa Família program.[7][8] The Catholic Church, through its powerful National Conference of Bishops of Brazil (CNBB), maintains[9][10] that "the program is addictive" and leads its beneficiaries to an "accommodation". This, however, is not what the World Bank finds. Having conducted several surveys on the subject, the World Bank came to the conclusion that the program does not discourage work, nor social ascension. On the contrary, says Bénédicte de la Brière, responsible for the program monitoring at the institution:

"Adult work is not impacted by income transfers. In some cases adults will even work harder because having this safety net encourages them to assume greater risks in their activities"' [11]

Another heavy criticism of the government program is the fact that it is perceived by opponents of the currently ruling party as a program meant to "buy" votes of poor people, creating clientism.

Surveys conducted by the Federal Government among Bolsa Família's beneficiaries indicate that the money is spent, in order of priority, on food; school supplies; clothing; and shoes.[12] A study conducted by The Federal University of Pernambuco, using sophisticated statistical methods, inferred that 87% of the money is used, by families living in rural areas, to buy food.[13]

According to research promoted by some universities and the Brazilian Institute of Geography and Statistics (IBGE) the program has clearly contributed to Brazil's recent improvements in its fight against poverty. An ex ante econometric evaluation of Bolsa Escola did find significant effects on both school attendance rates and the number of children involved in child labor.[14][15]

The World Bank, which provided a loan to assist the Brazilian government in managing the Bolsa Família Program,[16] declares that "Although the program is relatively young, some results are already apparent, including: (...) contributions to improved education outcomes, and impacts on children’s growth, food consumption, and diet quality".[17]

A study by the UNDP's International Policy Centre for Inclusive Growth[18] found that over 80% of the Bolsa Familia benefits go to families in poverty (making under half the minimum wage per capita), thus most of the benefits go to the poor. Bolsa Familia was also found to have been responsible for about 20% of the drop in inequality in Brazil since 2001, which is welcome in one of the most unequal countries on the planet.[19] Research promoted by the World Bank shows a significant reduction in child labor exploitation among children benefited by the Bolsa Família program.[20]

One positive effect of the program which is not immediately apparent is that it makes a significant impact on the ability of the poorest families to eat. Children in public schools receive one free meal a day—two in the poorest areas—and so less of their family's limited income is needed to pay for food. In a survey of Bolsa Familia recipients, 82.4% reported eating better; additionally, it was reported to increase the incomes of the poorer families by about 25%.

Quatinga Velho, Brazil

Quatinga Velho is a Brazilian village which is becoming well-known because of the basic income-project which is taking place there. The project started 2008 and is organized by the non-profit organization ReCivitas. The funding has so far been based entirely on private donations. In June 2011 83 people in the village got 30 Brazilian reals per person and month[21]. The organization hopes that all people in the village will eventually get the basic income, and also that similar projects will get going in other villages in and outside Brazil. The organizers are currently building a social bank, so that the basic income in the future can be financed through investments rather than donations. The idea is that the bank will operate as an investment bank, but the profit will go to basic income instead of a dividend to shareholders and managers. One plan is to use some of the first revenue to support the basic income project in Otjivero, Namibia, and then to initiate similar projects in different parts of Brazil.[22]

References

  1. ^ Decree nº 5.209, de 17 de setembro de 2004 – Regulates a Law-010.836-2004 – Bolsa Família Program.
  2. ^ BRANDÃO JR., Nilson Brandão e ARAGÃO, Marianna. Miséria no Brasil cai 27,7% no 1º mandato de Lula, Economia e Negócios, O Estado de S. Paulo, 20/09/2007, p. B14
  3. ^ a b Duffy, Gary (25 May 2010). "Family friendly: Brazil's scheme to tackle poverty". BBC News.
  4. ^ http://www.guardian.co.uk/global-development/poverty-matters/2011/feb/21/social-protection-innovation-un
  5. ^ News and Broadcast – Brazil’s Bolsa Familia Program Celebrates Progress in Lifting Families out of Poverty
  6. ^ Heath, Joseph (2010). Economics without Illusions: Debunking the Myths of Modern Capitalism. New York, NY: Broadway Books. p. 270. ISBN 978-0-307-59057-2.
  7. ^ http://www.democraticunderground.com/110817686
  8. ^ "Lula and the poetry of misery", Reinaldo Azevedo, 29/7/09 (in Portuguese)
  9. ^ "An economic policy of the power of money for money", CNBB, 1 March 2010 (in Portuguese)
  10. ^ "A Referendum" to divide farms?", CNBB, 27 July 2010 (in Portuguese)
  11. ^ BRAMATTI, Daniel. Banco Mundial vê Bolsa Família como modelo., São Paulo: Política, Terra Magazine, Sep. 17, 2007, 08h18
  12. ^ Bolsa Família, Perguntas e Respostas, Veja Online
  13. ^ DUARTE, Gisléia Benini, et al. Impactos do Programa Bolsa Família Sobre Os gastos Com Alimentos De Famílias Rurais.
  14. ^ SSRN-Ex-ante Evaluation of Conditional Cash Transfer Programs: The Case of Bolsa Escola by Francois Bourguignon, Francisco Ferreira, Phillippe Leite
  15. ^ RAWLINGS, Laura B. e RUBIO, Gloria M. Evaluating the Impact of Conditional Cash Transfer Programs - Lessons from Latin America, Volume 1, World Bank Policy Research Working Paper 3119, August 2003, The World Bank, 2003.
  16. ^ Brazil – Bolsa Familia Project, The World Bank
  17. ^ Brazil’s Bolsa Familia Program Celebrates Progress in Lifting Families out of Poverty, News & Broadcast, The World Bank, Brasilia, Brazil, December 19, 2005
  18. ^ http://www.ipc-undp.org/
  19. ^ untitled[dead link‍]
  20. ^ YAP, Yoon-Tien, Guilherme Sedlacek and Peter Orazem. 2001. Limiting Child Labor Through Behavior-Based Income Transfers: An Experimental Evaluation of the PETI Program in Rural Brazil. World Bank, Washington, DC
  21. ^ [1]
  22. ^ BRAZIL: RECIVITAS expands its local BIG to 83 people as it charters the “BIG Social Bank" BI News 2011-06
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