How to Reduce Poverty in Baganda*: A Universal Basic Income Approach
Social Safety Nets
Roughly half of the 50 million citizens of Baganda make less than $3.20 per day and roughly 10 million live on less than $1.90 per day.[1] Social safety nets, aimed at reducing this poverty and suffering, are therefore of massive importance in Baganda. There are several types of social safety nets, including short-term work guarantees, conditional and unconditional cash transfers to the poor, universal basic income, food distribution programs, and wage subsidies.
Seemingly the best of these is a universal basic income. The appeal of this program is that it offers the numerous psychological[2] and economic[3] benefits of unconditional cash transfers while saving the costs of targeting. Targeting is especially low in cost-benefit in a country such as Buganda where few people are above low-income anyway;[4] every dollar makes a difference.
Monetary Cost and Financing
By far the largest cost of UBI is the transfers themselves. A $0.50 per day UBI ($182.5 per year) would cost $9B total, but we could pay for some of this with aid and NGO’s. We could especially target the richest foundations, like the Gates foundation, who may want to use Baganda as a pilot project that they can then attempt in other countries if successful. Beyond that, I would propose a progressive tax, perhaps a property tax that only affects large properties to finance the UBI. Baganda has many of these big properties.[5]
There is also the smaller costs of registering everyone, or at least making everyone’s existence known to the government in such a way that we can give them money. While this may be challenging in rural areas, whatever cost this has is also implicit in every other social safety net (SSN), but notably UBI requires no more knowledge of a person than the fact that they live in Baganda. Verifying their income/wealth/other targeting metrics wouldn’t be necessary.
There is also a cost of distribution, which would exist, but it would notably be smaller than all non-transfer SSNs. Transfers are cheap in terms of distribution and they have lifted 36% of the extremely poor (less than $1.90 per day consumption) beneficiaries out of poverty.[6]
Implementation Struggles
Baganda’s governance has not been exemplary. For UBI to work, bureaucrats must be committed to the cause of ending poverty and must distribute funds universally and equally, without attention to any particular districts or income levels over others. Furthermore, if the progressive land/property tax is enacted, the government must be effective in actually taxing those rich landowners even if they are members of the ruling party. However, UBI has a simple execution without too big a bureaucracy, making it easier for a country with a history of poor governance like Baganda than something that requires targeting.
Political Effects
UBI would be politically popular. It doesn’t involve the installation of a very large bureaucracy (like a well-targeted CCT or a pension program or a jobs guarantee), pleasing the Western-educated, generally neoliberal class. It would also please the masses in the idea that they will simply be richer because of it. Nonetheless, some may resent that the rich receive it too.
[1] “List of Countries by Percentage of Population Living in Poverty,” Wikipedia (Wikimedia Foundation, October 26, 2019). https://en.wikipedia.org/wiki/List_of_countries_by_percentage_of_population_living_in_poverty.
If you look at a country that is roughly 25th percentile (say Yemen), the percentages I use seem accurate.
[2] Johannes Haushofer and Jeremy Shapiro, “The Short-Term Impact of Unconditional Cash Transfers to the Poor: Experimental Evidence from Kenya,” The Quarterly Journal of Economics 131, no. 4 (2016): pp. 1973-2042, https://doi.org/10.1093/qje/qjw025.
[3] Oleksiy Ivaschenko et al., “The State of Social Safety Nets 2018,” Handle Proxy (Washington, DC: World Bank, March 14, 2018), http://hdl.handle.net/10986/29115.
[4] Rakesh Kochhar, “Seven-in-Ten People Globally Live on $10 or Less per Day,” Pew Research Center, September 23, 2015, https://www.pewresearch.org/fact-tank/2015/09/23/seven-in-ten-people-globally-live-on-10-or-less-per-day/. Using the map and the Wikipedia link in endnote 1, countries that are 25th percentile usually seem to have around 90% low-income people.
[5] Many poor countries, especially in Africa, have many people/entities that own big farms or other big properties.
[6] Ivaschenko et al., “Social Safety Nets.”
Haushofer, Johannes and Jeremy Shapiro. “The Short-Term Impact of Unconditional Cash Transfers to the Poor: Experimental Evidence from Kenya.” The Quarterly Journal of Economics 131, no. 4 (2016): 1973–2042. https://doi.org/10.1093/qje/qjw025.
Ivaschenko, Oleksiy, Claudia Rodriguez, Marina Novikova, Caroline Romero, Thomas Bowen, and Linghui (Jude) Zhu. “The State of Social Safety Nets 2018.” Handle Proxy. Washington, DC: World Bank, March 14, 2018. http://hdl.handle.net/10986/29115.
Kochhar, Rakesh. “Seven-in-Ten People Globally Live on $10 or Less per Day.” Pew Research Center, September 23, 2015. https://www.pewresearch.org/fact-tank/2015/09/23/seven-in-ten-people-globally-live-on-10-or-less-per-day/.
“List of Countries by Percentage of Population Living in Poverty.” Wikipedia. Wikimedia Foundation, October 26, 2019. https://en.wikipedia.org/wiki/List_of_countries_by_percentage_of_population_living_in_poverty.
*Baganda is a fictional country with 25th percentile GDP per capita, along with 25th percentile governance, as well as all other comparable development metrics.