Brazilian town embraces universal income experiment
Does being handed money every month—no strings attached—sound attractive? The residents of a small town in Brazil are finding out.
Governments and think-tanks around the world are increasingly fascinated by the idea of a universal basic income, where citizens are given cash to spend as they want.
In Marica, a seaside town of about 150,000 people near Rio de Janeiro, the left-wing municipal government has spent the last year finding out how it works.
“We are a laboratory for the Brazilian left,” says Washington Quaqua, who introduced the experiment as mayor in December 2015 before stepping down. He was replaced by another candidate from the leftist Workers’ Party, Francisco Horta.
The idea of a universal basic income isn’t new, but long-considered as a potential tool for social equality and redistribution of wealth.
The concept has gained traction more recently among high-powered business thinkers, especially in Silicon Valley, as they ponder how society will cope with the ever-expanding role of automation—a trend some futurists believe may create mass unemployment.
In Marica—a surviving Workers’ Party bastion in increasingly right-leaning Brazil — the basic income idea fits in well with the leadership’s socialist fervor.
Just about every public building is decorated in socialist red and Quaqua’s office sports portraits of communist revolutionary Che Guevara, whose name is also soon to be given to a new hospital.
“The world lacks creativity and Marica is giving the example of a town that knows how to redistribute its riches,” Quaqua says with pride about his pet project.
Despite his claims, Marica is only taking baby steps.
Inconclusively tried around the world for decades, the experiment is currently getting a high-profile rollout in Finland. The left-wing French presidential candidate Benoit Hamon, backed by the star economist Thomas Piketty, has also made the basic income part of his platform.
However, if Finland is handing out payments of about $590 a month—and only to a test group of unemployed people for now—the amount in Marica is a measly 10 reais, or about $3.20. The new mayor hopes to raise the amount to $32 in 2017.
Only the town’s 14,000 poorest families are currently being given the income, which is denominated in Mumbucas, a virtual currency created to pay welfare under Quaqua three years ago.
The 10 reais is added to the 85 reais ($27) monthly welfare check for families whose income doesn’t top three times the minimum wage. The extra money is also given to poorer people aged between 14 and 29 and pregnant women already receiving other benefits.
There’s another limitation: only 131 local businesses — less than 10 percent of the total — accept payment in Mumbucas, the mayor’s office says.
The currency, which physically exists only on specially issued red magnetic cards, is unpopular with business owners because they must wait more than a month after purchases are completed for the government to convert payments into reals.
Feasible or fantasy?
Opposition politician Filippe Poubel denounces what he calls an attempt to addict the people of Marica to welfare. Handing out an income, he says, will backfire.
“People want to work, they want to earn their income with dignity. They would be a lot happier if the mayor would create jobs and offer them decent hospital care.”
Horta dismisses such criticism saying a basic income will in fact create jobs, “stimulating the local economy.”
And he says that the town, which draws revenues from offshore oil exploitation, can afford to boost the program “in an exponential way over the next 10 years.”
“The rich love it when they get millions in tax breaks,” Quaqua says of his project’s opponents. “But they are furious when we give a few hundred reais to the poor."