Introduction
Thus far, I have observed that, from a purely pedagogic perspective, it has been very helpful for ease of explanation and hopefully, understanding, to introduce my presentation of the Buxton Proposal, beginning with a listing of four of its attributes before offering a formal comprehensive depiction or description of it. I shall proceed in this manner in the coming Sunday Stabroek columns on this topic.
Given this approach, I should indicate upfront, the four attributes listed below interact with each other in a synergistic or inter-dependent manner. Consequently, when the Buxton Proposal is considered holistically, it is always greater than the simple sum of its individual attributes. Furthermore, the order in which the attributes are listed is entirely random, and therefore, represents no order of preference or ranking.
Attributes
First, on hearing of the Buxton Proposal, a surprising number of persons have contacted me to express apprehension that, physically moving the large sums of cash involved in the proposed cash transfer mechanism adds exponentially to risks of theft and loss! While such risks cannot be entirely removed from consideration whenever large sums of “cash” are involved, in the case of the Buxton Proposal the “cash movement” envisaged is expected to be through electronic transfers/credits to the designated accounts of households. It is possible to arrange for such accounts to be conveniently established with commercial enterprises, designated government departments and agencies (post offices), or other cooperating establishments.
Such a requirement ensures cash transfers to households to become a part of Guyana’s formal credit and financial system. I would go further and state, it requires all cash transfer recipient households becoming a part of Guyana’s formal payments/receipts/credit system. And, a prerequisite for this is an e-identity. As matters presently stand, a majority of Guyanese remain outside the formal financial system.
As a corollary to this development, the Buxton Proposal might well lead to a transformational rise in both the quantity and quality of Guyana’s information, data-management and country-wide organizing capability. This, therefore, offers spill-over benefits to other social, economic, and security programs.
Second, under present law, cash transfers to households financed from Guyana’s expected petroleum revenues will constitute income received by them. This is liable for report to the Guyana Revenue Authority, GRA (and thereby taxed, based on the tax status of each household). The consequence of this is also transformational in that, it places every household within the tax system. Presently, Guyana’s tax net does not cover the large number of persons in the informal economy.
Third, I share the view of those who argue that, directing cash transfers to all households is race/ethnic neutral. Consequently, it reduces social and political conflicts/tensions that are promoted, advanced and otherwise supported by racial and ethnic diversity. Further, it does not promote, advance, or support other social and political divisions, save and except perhaps, it advances the position of the poor and powerless in Guyanese society.
Fourth, several analysts have observed that when ambitious anti-poverty interventions are introduced in Guyana-type economies, this often leads to more and more households acquiring an e-identity. Such an outcome facilitates the gathering, analysis, monitoring and review of the overall effectiveness of every intervention. One of the attributes of the Buxton Proposal, will be to provide synergies and spillovers into these larger endeavors.
Observations
The four attributes indicated above, make it clear, one of the major “appeals” of the Buxton Proposal, is that it is straightforward. This will become even clearer next week, when I focus on presenting a formal definition/description of the Proposal. I shall have to specify the size of the transfer; the source of Government financing; the target group (demographics of Guyana’s households); and, the frequency of such transfers.
In comparison, other government poverty intervention programs are seemingly more complex because of the need to design the target group, and control its elements, which may have discretionary features. This is not to claim the practical determination of a household is simple. However, after decades of social, economic and demographic surveys, this capability resides in the Bureau of Statistics. This Agency has repeatedly used the household as a cornerstone of many official surveys and studies.
Two other observations are warranted here. One is, a major aim of the Buxton Proposal is to reduction of poverty and inequality. Given this, the cash transfers envisaged must be large enough to impact both, if we are going to provide “help” on the scale required!
The other observation is that, there is a distinction in the poverty intervention literature between conditional and unconditional transfers. In the instance of the Buxton Proposal this is a “false dichotomy”. While all households will qualify automatically, without any explicit condition, the mechanism of transferring, carries implicit conditionalities. Thus, for example, becoming a part of the formal tax system, which is important, given that a majority of Guyanese operate outside the formal tax structure. The same is true for the formal parts of the financial system, which all households shall have to become a part of, in order to receive their income transfers.
More broadly, this makes clear that the Proposal reflects the workings of a social compact between citizens and the State.
2019 Nobel Prize
I would be remiss, if I did not bring to readers attention that the 2019 Nobel Prize in Economics was awarded to three economists (Abhijit Banerjee, Esther Dufllo and Michael Kremer for their work on poverty (breaking it down into more precise questions)) and in support of universal basic income provisions. This has been heralded by Sanjay Reddy (October 22, 2019) as “economics biggest success story is a cautionary tale”.
Conclusion
Next week I continue this discussion. I shall offer a formal definition/description of the Buxton Proposal.
