'A regional basic income for Central America' An interview with the author

World Basic Income spoke with Alice Krozer of the University of Cambridge, author of the report 'A regional basic income: towards the eradication of extreme poverty in Central America', published by the UN's Economic Commission for Latin America and the Caribbean (ECLAC) in 2010.

WBI: Why did you research the potential for a regional basic income that work across borders?

AK: The idea made a lot of sense to me, as there are lots of issues in Central America that cross borders – poverty doesn't respect borders.

Migration is now a big issue there too. Not just out-migration but mass migration around the region. There always has been a lot of movement, for example a flow from Nicaragua to Costa Rica because Costa Rica is a better-off country and you can earn more there. But it is becoming more of an issue, partly because Mexico has come under pressure to enforce migration rules more strictly, to reduce the numbers of people that can reach the U.S. border. I'm not saying that immigration is a problem in itself, but it is a problem if you are forced out of the place that you don't actually want to leave due to economic circumstances that are unbearable. That's an increasingly big argument for a basic income. These issues are of course closely related to global inequality and if you have something like basic income you can affect them in a good way.

There are a lot of other cross-border issues too that affect social well-being which do not really care much about the political borders that we put in place, so in that sense it makes sense to have a regional or a global scheme.

WBI: What were the aims of the regional basic income that you were proposing?

AK: Initially it was framed as 'tools to deal with extreme poverty'. That's still an aim, but the current focus is a lot more on inequality, which makes perfect sense. Probably if I wrote the report now I would focus more on inequality.

The question of North-South inequality is a fairly ubiquitous one within the organisation [ECLAC]. But I think inequality as a transnational phenomenon is not dealt with as much at the moment, and that has to do with questions of data availability and internationally it has been a little less popular. Talking about the fact that it's unfair that some countries are rich and some are poor is not such a common thing anymore, although that's actually the origin of development studies in the first place.

WBI: Could basic income work at the regional level in Central America?

AK: I think the big challenge there is which institution provides this, and how is it anchored in legal terms? If you don't have something like a nation-state or a government that guarantees this right to a basic income, which institution do you rely on? That's probably why many people currently think of basic income in national terms. The UN in the end depends on national governments, so the question is whether that's what you want, or maybe not! One of the main inspiration points was a paper by Howard which proposed a NAFTA dividend, which I felt was a semi-brilliant idea, but I'm not sure that NAFTA is the right framework for something like that. It needs to sit within an organisation that is not based on a specific trade agreement.

WBI: What did people think of the proposal for regional-level funding?

AK: I think the intellectual and ethics questions had to be answered first, so the regional funding proposals didn't come up that much. But I think it didn't seem like that much of a big deal there because there is already a lot of regional integration in Latin America. There are lots of supranational institutions that are working on issues together, so it's not such a big idea. There's lots of regional integration in Africa and other regions too – it could be a good basis for beginning a world basic income.

WBI: How was your report received?

AK: I presented it at a research forum within ECLAC and there was lot of discussion! Initially there was scepticism as people hadn't worked with those kind of proposals before. Some people still think that the poor don't know what to do with themselves if they're not told, they think that if we give them money they will spend it on alcohol and drugs. Empirically that clearly isn't what happens. The other query is 'why would we also want to pay the rich?'. Of course there's very good arguments for why you would do that, in terms of administration costs and monitoring, and also because they will probably pay more towards it anyway [so the basic income you pay to them is effectively recouped].

And basic income isn't just about poverty alleviation – it's about human rights. Everyone has the right to survive, and just because you have a very high income today it doesn't mean you'll have it tomorrow, so why shouldn't you also have a guaranteed income to fall back on? It's about security and safety nets.

All these points were seriously debated, which in a way is strange because according to the UN you have the right to eat and to have shelter and so on, yet when it comes to having the right to pay for all these things it suddenly seems highly controversial! But despite the controversy, I think it's telling that ECLAC wanted to publish it anyway, and some people were very enthusiastic about it. I think now in the context of the new SDGs there will be more potential for this sort of thing.

WBI: Is there more interest in basic income now in the UN and ECLAC?

AK: There have been some very encouraging developments in this discussion, much more so than there were eight years ago. There's a lot more awareness. The discussion is now on a different level. People are not so focused on the very basic objections any more, and there's more discussion about how you can do it as a practical solution, what steps forward we can take. There's more data too, from real-world universal transfers like Mexico City's universal pension for the elderly.
ECLAC have taken up the idea of basic income again. There's been discussion of more universal programmes for a while and that's come out of the stronger focus on inequality in recent years, but this last year there's been a big focus on basic income specifically. I still think basic income is the best option we have.

WBI: What are you working on at the moment?

AK: My research now is mostly about inequality. A recent paper was titled 'The inequality we want: How much is too much?', and explored how the usual inequality measures can obscure growing inequality between the richest few and the bottom 40%. The Gini coefficient cannot really tell you much about what's going on at the extremes of the income distribution because it's focused around the middle. It's useful but you need to complement it with other measures that focus on what's going on at the top and bottom. The top 5% to bottom 40% ratio is particularly useful, because it turns out that the 50% in the middle of the income distribution – the 5th decile to the 9th decile – have roughly the same income share across most countries in the world - they tend to have just over 50% of all income. So the inequality level is really very much defined by the share that the top 5% or 10% have versus the share of the bottom 40%. And of course when you look at the data this way, it makes a very good case for basic income.