Basic income grant would have BIG impact

Distributing the money raised by a global carbon tax as a social dividend to all the people of the world would create an enormous market

Last week’s editorial argued that a carbon tax, especially a global carbon tax, would be a good thing for the world. But what would be the best way to use the money collected?

Climate scientist James Hansen has suggested there should be a global carbon tax with the proceeds distributed to everyone – in other words, give everyone a social dividend or a basic income grant (BIG).

This is a serious amount of money we’re talking about. A global carbon tax similar to British Columbia’s at $30 per tonne of carbon dioxide would generate about $600 billion per year.

Assuming there are 5 billion adults (aged 18 and over) in the world, such a tax would result in a social dividend of about $120 per person per year – effectively doubling the annual income of hundreds of millions of people.

Recently, your editor has been reading “Basic Income Worldwide: Horizons of Reform”, edited by Matthew C. Murray and Carole Pateman.

One chapter discusses a trial basic income grant (BIG) of N$100 per month (about $10 Canadian) given out to all 930 residents under age 60 of Otjivero, a small village in Namibia, in 2008 and 2009.

Namibia has the highest measured income disparity in the world – there are a few who are very wealthy, and a great many who are extremely poor, and Otjivero is one of the poorest villages.

The results of the trial were striking. The unemployment rate dropped from 60 per cent to 40 per cent. Many people started their own businesses as the BIG provided start-up capital and created demand.

Average income per capita went, in one year, from N$118 to N$152.

The percentage of malnourished children went from 42 per cent to 17 per cent in six months, and to effectively zero in one year.

The drop-out rate at the school went from 30 – 40 per cent to five per cent within six months and to zero at the end of the first year.

Better nutrition for the students meant a turnaround in behavior and performance.

The number of children in pre-school went from 13 to 52.

The overall crime rate went down by 36.5 per cent.

People enlarged their shanties from an average of 2.6 rooms (baseline) to 3.3 after one year. One-fifth indicated they had improved their roofs.

These people were still very poor at the end of the trial, but the data indicates that they were also much better off than they would have been otherwise.

 

Distributing the money raised by a global carbon tax as a social dividend to all the people of the world would create an enormous market for small-scale, alternative energy technologies. It would be relatively simple to administer and cheating would be difficult. It would do a great deal to lessen world income disparities. And it would help compensate those whose lives and livelihoods are threatened by the risk of climate change.

 

 

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