As long as the economy is driven mainly by profit maximisation, it will respond to the demand expressed by the richest groups of society, leading to extractive forms of production that worsen social exclusion in the name of creating more wealth, and it will fail to fulfil the rights of those in poverty.

(Olivier de Schutter)1

The obvious starting point is that what we produce in the world, the so-called global GDP, is sufficient to ensure a dignified and flourishing life for everyone. We can also use Net National Income, or add the already built infrastructure—houses, roads, electricity, water systems, streets, and so many inherited improvements—but the basic fact is what we have and produce is sufficient. To give a point of reference, the world GDP, 110 trillion dollars, for a population of 8 billion, is equivalent to 4,600 dollars per month per four-member family. Even in Brazil, with a GDP per capita of 10 thousand dollars per year, what we produce is equivalent to 3,300 dollars per month per four-member family. We can play around with numbers, but the basic fact is that our problem is not economic but of social and political organisation.

Of course we would have to adjust what we produce. The U.S. spent 2.3 trillion over 20 years in the Afghanistan war. This is equivalent to 315 million a day, a sum that would allow us to build 8 thousand houses a day, schools, houses, sewage systems, whatever. It would have been more popular. You could have done it in Pakistan—just to build political insertion. It certainly would have been more intelligent than bombing, if we consider the results. And building schools, taking people out of poverty, and generating jobs is politically more powerful than managing hundreds of military bases throughout the world.

This is just an example, but there are so many absurdities. We produce enough food for everybody, but we lose 30% of it by mismanagement. Certainly financial profits and the military industry do raise GDP, even if being net costs for society, but is this “growth” the aim? The issue is not growth but adjusting what we do to social needs and environmental challenges. We have the resources, the technologies, and we know where the dramas are.

A second point is that a basic income is desperately needed. We have 750 million suffering from hunger, and over 2 billion in food insecurity. Do they deserve it? Do some 180 million kids going hungry deserve it? In fact, neither the poor deserve their poverty, nor the financial corporate billionaires deserve their riches. We are not discussing merit here but basic humanity. Since when economics can be absolved from an ethical approach? We are speaking of a huge part of humanity in desperate situations, when solving the basic needs issue costs peanuts.2

Take a simple figure: Crédit Suisse/UBS figures show that the wealth of the 1% of richest adults in the world amounts to roughly 250 trillion dollars. The bottom half have 5 trillion. It simply means that a transfer of 2% of the richest 1% would double the wealth of the bottom half. In social terms, a dollar at the bottom of society is radically more productive than at the top. The marginal usefulness of money is maximised when you distribute it. I put it in these terms because it sounds so scientific, for economists. But it is a question of common sense and of respect for human dignity.

And kindly do not give me the bullshit that if you give money to the poor they will stop working. In Brazil, the Lula government program Bolsa Família, starting in 2003, reached over 50 million persons and radically raised employment. It is not manna falling from the sky, it is a floor on which the poor can stand on to build their lives. Yes, basic income as a floor. The World Bank made ample studies on the poverty trap, and presently, we have so many details on this with the World Inequality Database (WID), the Oxfam Publications, the studies by the Thomas Piketty team, and so many others. The lights are on, after so much Junk Economics, as Michael Hudson calls it.

What we saw in Brazil is that money at the bottom stimulates demand—they do not transfer to tax havens nor feed the public debt—which in turn stimulates production and job creation. And we are speaking of useful jobs, such as building houses, buying furniture or better food and the like. And it does not generate inflation since these are products where supply can expand rapidly, ensuring the supply/demand balance. As the economy expands, more money is raised in taxes, balancing the budget. No mystery here. During the 2003-2013 decade, we had drastic reduction of poverty and unemployment as well as strong investment and a 3.8% GDP growth. But the financial world hated it: it was prosperity based on production, not on financial extraction.3

What do we have so far, concerning the basic income issue? We have the money, we can make it useful (not Afghanistan or finance). It is badly needed, it is useful both in economic growth terms and in ethical terms, and we have all the necessary economics once you put junk economics aside. And we have large scale implementation over many years showing that it works. And the costs? In Brazil, helping all these people cost between 0.5% and 1.5% of GDP, according to the periods. Actually, these costs were overcompensated: the IPEA study showed that every 1 real invested in the Bolsa Família raised GDP by 1.78 real.

It is simply the multiplier effect: money at the bottom generates consumption, demand, jobs, and taxes. Money at the top generates political power and the social and environmental havoc we are facing—and the stone-faced discourse that they are responsible austerity-minded executives. Their austerity is moving, since their average pay-check is, in the U.S., 350 times their average employee’s check. Whom are we kidding?

But what turns so many people off is that while they toil for every cent, this money would reach everyone for free. A first issue on this argument is that we all do receive so many things for free. The land, the water, the beaches, nature, the so-called commons. Elinor Ostrom got the Bank of Sweden economic Nobel prize for her study on Governing the Commons. In Brazil this year, the privatisation of access to beaches is being discussed in Congress. Water privatisation is booming in so many regions. Free access to the commons has proved its usefulness. But there is much more. In most European countries, as well as in Canada or China, access to health services is free and universal. In so many countries, education is also free, as is access to parks in a city, or the use of streets, sidewalks, and roads. And it works. In the U.S., as in Brazil, huge financial groups have taken over education and health. It is a disaster.

Universal basic services represent costs, but we have them “for free”, meaning that the costs have been covered by the taxes we pay. No moral argument is raised here: the public free universal access systems are simple and radically more efficient in various areas. Compare the costs of health services in the U.S: 11 thousand dollars per person per year, with the 5 thousand dollars costs in Canada, with Canada way ahead of the U.S. in terms of longevity and overall health of the population. The same goes for education, with public universal access, or at least non-profit units, the system is more efficient, while privatisation leads to a kind of inefficient diploma industry.

According to the UN Schutter report, universal basic services work better when free. “The more basic needs are addressed by universal basic services, the less income differentials will matter, and the less low-income households will be penalised. Democratic deliberation should ensure that the resources available are dedicated primarily to ensuring adequate levels of provision of public services (in areas such as health, education, public transport, energy provision, and housing) and social protection, rather than catering to the demand expressed by the groups with the highest purchasing power.” (pp 9 and 15)

So in fact, many basic goods and services are free for everyone’s use, even if they have costs. As an order of magnitude, we can consider that two-thirds of economic wellbeing of families results from having money in your pocket, to use in shops or to pay the rent, while one-third results from access to what we call collective consumption goods, or an undirect salary, since it is paid for through public administration but certainly represents a part of our material comfort. Living on a paved street is certainly part of our comfort. The commons, the public services, the infrastructure are for free, independent of if and how much you pay in taxes. Can we not consider that some free money could be added to this? It certainly is not a moral issue, consider it a part of basic needs. And, as seen, it certainly is productive for the economy. Greed is stupid. A little free money is not very different from other forms of access to social wealth.

You can reverse the reasoning. Schutter again: “Approximately, 16.4 billion hours are spent each day on direct personal care of young children or older relatives and indirect care activities, such as cooking, cleaning, or collecting water or fuelwood. That represents 2 billion people working eight hours a day without remuneration. If that contribution were to be remunerated on the basis of the minimum hourly wage, it would represent 9 per cent of global GDP.” So many economic activities and so much profit is based on this exploitation of the care economy they do not pay for. A business will pay a salary to this youngster it is hiring, but it did not pay for the years of work to produce this educated worker.

So some things certainly need fixing. Ensuring a basic income is certainly the most effective, cheapest way of reducing suffering and stimulating the economy. Tom Malleson brings a basic argument: Just as it is absurd for a child to go hungry or be sick but not attended, because his parents have no money, basic support for a flourishing life should be provided to everyone, simply because he is a human being: “All human beings are of equal moral worth. The final, and perhaps strongest reason to be an egalitarian is the practical one: a society with more equality would, all things considered, be an immensely better place to live.” (253)4

An important issue is that providing a basic income is technically much easier with the modern virtual money and global connectivity. Our expertise in Brazil shows that it can work once you do your basic homework: a basic register—in building it we found out that many people just didn’t formally exist, for not having a birth certificate or any identity piece—and defining the amounts and conditions. By providing a specific credit card to each family, preferably to the mothers, money transferred reaches the families immediately—you just press 'Enter' at the managing bank. Low cost, and no middlemen.

Network management of the system is simple. You can start with low amounts, so the rich do not get too desperate on other people getting free money rather than themselves, and raise and adjust it progressively. On a world scale, the 2% tax on billionaires will certainly help. Basic income will not only raise Gross Domestic Happiness and stimulate the economy—it will put us on a right moral path. Our present global prosperity is a social construction, and society should benefit.

Notes

1 Olivier de Schutter, UN Special Rapporteur, Eradicating poverty beyond growth, UN, Human Rights Council, June 18 - July 12 2024.
2 Michael Sandel, The Tyranny of Merit: can we find the common good?, Picador Paper, 2021.
3 L. Dowbor and Bruno Barbosa Cezar, Distribution and exclusion in economic policy Latin American Perspectives, September 2022.
4 Tom Malleson, Against Inequality: the practical and ethical case for abolishing the superrich, Oxford University Press, 2023.