Citizen's Income and Welfare Regimes in Latin America: From Cash Transfers to Rights (Exploring the Basic Income Guarantee) 9780230338210, 0230338216

Table of contents :
Cover......Page 1
Half-Title......Page 2
Title......Page 4
Copyright......Page 5
Contents......Page 8
List of Illustrations......Page 10
Introduction......Page 12
Part I Citizen’s Income and Cash Transfers......Page 38
1 Brazil: The Lost Road to Citizen’s Income......Page 40
2 The Argentine “Universal Child Allowance”: Not the Poor but the Unemployed and Informal Workers......Page 62
3 Targeting and Conditionalities in Mexico: The End of a Cash Transfer Model?......Page 78
4 Basic Pensions in Latin America: Toward a Rights-Based Policy?......Page 98
5 A Regional Citizen’s Income to Reduce Poverty in Central America......Page 124
Part II Citizen’s Income and the Latin American Public Agenda......Page 150
6 Are Latin Americans—Brazilians in Particular—Willing to Support an Unconditional Citizen’s Income?......Page 152
7 The Politics of Citizen’s Income Programs in Latin America: Policy Legacies and Party Character......Page 180
8 Should Citizen’s Income Become a Goal for Feminism in Latin America?......Page 198
9 Citizen’s Income and Democratization in Latin America—A Multi-Institutional Perspective......Page 222
10 Citizen’s Income and the Material Basis of the Constitution......Page 244
Epilogue......Page 270
Notes on Contributors......Page 278
Index......Page 280

Citation preview

Citizen’s Income and Welfare Regimes in Latin America

Exploring the Basic Income Guarantee Basic income is one of the most innovative, powerful, straightforward, and controversial proposals for addressing poverty and growing inequalities. A Basic Income Guarantee (BIG) is designed to be an unconditional, government-insured guarantee that all citizens will have enough income to meet their basic needs. The concept of basic, or guaranteed, income is a form of social provision and this series examines the arguments for and against it from an interdisciplinary perspective with special focus on the economic and social factors. By systematically connecting abstract philosophical debates over competing principles of BIG to the empirical analysis of concrete policy proposals, this series contributes to the fields of economics, politics, social policy, and philosophy and establishes a theoretical framework for interdisciplinary research. It will bring together international and national scholars and activists to provide a comparative look at the main efforts to date to pass unconditional BIG legislation across regions of the globe and will identify commonalities and differences across countries drawing lessons for advancing social policies in general and BIG policies in particular. Series Editors:

Karl Widerquist is a visiting associate professor of Philosophy at Georgetown University-Qatar. James Bryan is an associate professor of Economics at Manhattanville College. Michael A. Lewis is an associate professor at Hunter College School of Social Work. Basic Income Reconsidered Simon Birnbaum Alaska’s Permanent Fund Dividend Edited by Karl Widerquist and Michael W. Howard Basic Income Guarantee Allan Sheahen Basic Income Guarantee and Politics Edited by Richard K. Caputo Exporting the Alaska Model Edited by Karl Widerquist and Michael W. Howard Citizen’s Income and Welfare Regimes in Latin America Edited by Rubén Lo Vuolo

Citizen’s Income and Welfare Regimes in Latin America From Cash Transfers to Rights

Edited by

Rubén Lo Vuolo

CITIZEN’S INCOME AND WELFARE REGIMES IN LATIN AMERICA

Copyright © Rubén Lo Vuolo, 2013. All rights reserved. First published in 2013 by PALGRAVE MACMILLAN® in the United States—a division of St. Martin’s Press LLC, 175 Fifth Avenue, New York, NY 10010. Where this book is distributed in the UK, Europe and the rest of the world, this is by Palgrave Macmillan, a division of Macmillan Publishers Limited, registered in England, company number 785998, of Houndmills, Basingstoke, Hampshire RG21 6XS. Palgrave Macmillan is the global academic imprint of the above companies and has companies and representatives throughout the world. Palgrave® and Macmillan® are registered trademarks in the United States, the United Kingdom, Europe and other countries. ISBN: 978–0–230–33821–0 Library of Congress Cataloging-in-Publication Data Citizen’s income and welfare regimes in Latin America : from cash transfers to rights / edited by Rubén Lo Vuolo. p. cm. ISBN 978–0–230–33821–0 (hardback) 1. Guaranteed annual income—Latin America. 2. Income maintenance programs—Latin America. I. Lo Vuolo, Rubén M. (Rubén Mario) HC130.I5C53 2013 331.2⬘36091724—dc23

2012028681

A catalogue record of the book is available from the British Library. Design by Newgen Imaging Systems (P) Ltd., Chennai, India. First edition: January 2013 10 9 8 7 6 5 4 3 2 1

Down the road, it is then possible to visualize a kind of social science that would be very different from the one most of us have been practicing: a moral-social science where moral considerations are not repressed or kept apart, but are systematically commingled with analytic argument, without guilt feelings over any lack of integration; where the transition from preaching to proving and back again is performed frequently and with ease; and where moral considerations need no longer be smuggled in surreptitiously, nor expressed unconsciously, but are displayed openly and disarmingly. Such would be, in part, my dream for a “social science for our grandchildren” Albert O. Hirschman, Morality and the Social Sciences: A Durable Tension

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C on ten ts

List of Illustrations

ix

Introduction Rubén Lo Vuolo

1

Part I Citizen’s Income and Cash Transfers 1

Brazil: The Lost Road to Citizen’s Income Lena Lavinas

2

The Argentine “Universal Child Allowance”: Not the Poor but the Unemployed and Informal Workers Rubén Lo Vuolo

51

Targeting and Conditionalities in Mexico: The End of a Cash Transfer Model? Pablo Yanes

67

Basic Pensions in Latin America: Toward a Rights-Based Policy? Camila Arza

87

3

4

5

A Regional Citizen’s Income to Reduce Poverty in Central America Alice Krozer and Rubén Lo Vuolo

29

113

Part II Citizen’s Income and the Latin American Public Agenda 6

7

Are Latin Americans—Brazilians in Particular—Willing to Support an Unconditional Citizen’s Income? Fábio D. Waltenberg

141

The Politics of Citizen’s Income Programs in Latin America: Policy Legacies and Party Character Jennifer Pribble

169

viii

CONTENTS

8 Should Citizen’s Income Become a Goal for Feminism in Latin America? Corina Rodríguez Enríquez

187

9 Citizen’s Income and Democratization in Latin America—A Multi-Institutional Perspective Louise Haagh

211

10 Citizen’s Income and the Material Basis of the Constitution Roberto Gargarella

233

Epilogue Rubén Lo Vuolo

259

Notes on Contributors

267

Index

269

Il lustr ations

Figures 6.1 Schematic representation of models of the determinants of individual demand for redistribution 9.1 Citizenship as an institutional set

145 214

Graphs 9.1 Public sector growth and schooling completion 9.2 Schooling resources and employment equalities 9.3 Schooling—employment equality of opportunity

222 223 225

Tables 3.1 Main characteristics of Mexico City Government and Federal Government social policies 4.1 Basic income principles in noncontributory pensions in Argentina, Bolivia, Brazil, and Chile 4.2 Degree of universality and institutionalization of noncontributory and semicontributory pensions in Argentina, Bolivia, Chile, and Brazil 5.1 Estimated costs of transfers for the Central American countries by age group 6.1 A summary of experimental and survey evidence concerning attitudes toward redistribution 6.2 A ranking of selected countries and their index of presumable support for Citizen’s Income 6.3 Factors correlated with the index of presumable support for Citizen’s Income 6.4 Students’ views on unconditional Citizen’s Income 6.5 A ranking of countries according to an “index of presumable support for Citizen’s Income” 7.1 Eight party types with examples from Latin America

74 103

105 128 146 151 154 159 162 174

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Introduction Rubén Lo Vuolo

The concept of a Basic Income (BI), or Citizen’s Income (CI), can pride itself on a long history and a large variety of analogous expressions (Van Trier, 1994): “universal grant,” “social dividend,” “citizen’s wage,” “social income,” etc. The common characteristic to all of these denominations is their allusion to a policy whose objective consists in the access guarantee to an unconditional monetary income for all people (or for the totality of a certain category of people) by the state. The principles and expectations that would justify such a policy differ from those underlying the current income transfer policies (Parker, 1989: 3, 21): (i) every person has the right to receive a basic level income, independently of her personal characteristics, social situation, and the family constellations in which she takes part; (ii) this right has to be guaranteed by the state via a monetary transfer; (iii) access to this transfer must be unconditional so that it can function as a base to which people can add other incomes. In practice, differentiated amounts would be accepted between certain categories of the population (for instance, according to age and disability), but not within categories. Every individual, and not the family, is the fiscally responsible benefit holder; the benefit functions like a tax credit deductible from income tax (organized in income brackets with progressive rates). In the chapters that constitute this book, the term CI is preferred over that of BI because the idea of a “citizenship” is considered to more adequately comprehend and symbolize the content and expectations such a policy represents for Latin America.1 The citizenship idea underscores the purpose of guaranteeing an entitlement that people can claim from the state, as opposed to the majority of current income transfer assistance policies where the state selects beneficiary groups at its discretion.2 This way it is emphasized that not only the access to a monetary benefit matters, but that the conditions of this access are fundamentally important too: for the CI proposal access ought to be universal and unconditional.

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These issues are important for a region that historically understands social rights as the rights of those gainfully employed. Thus, full citizenship is confused with “waged citizenship.” The leap from this waged citizenship toward a universal citizenship is of fundamental importance in a region where, under autocratic regimes and dictatorships, social rights often appeared before—at times even substituting for—political and civil rights. Currently, the confusion between social rights and targeted welfare benefits for those groups labeled “poor” or “needy” preserves the fragmentation that the “waged citizenship” imposes on the construction of universal rights. The proposal of a CI aims to overcome the prevailing fragmentation between “waged rights,” linked to formal employment and contributions, and welfare benefits conditioned to the compliance with certain personal characteristics. The idea of citizenship also permits emphasizing the relationship between economic and political rights that a CI entails. Namely, it embraces the ideal of economic empowerment as a central element for the exercise of political freedom. This ideal is not alien to the Latin American political tradition, although its proponents were defeated in the foundational stage of the countries’ constitutions.3 The policy of a CI thus links the ideals of the republican tradition and its defense of freedom as nondomination and absence of arbitrary interference by authorities in people’s lives and their public participation. The right to live and act politically with the highest possible degree of autonomy and independence is one of the arguments uttered frequently in defense of a CI (Raventós, 2007; Petit, 2007; Birnbaum and Casassas, 2007). The preference for the term CI also highlights the fact that the policy should impact positively on the traditional dimensions making up the full exercise of citizenship in Latin America. From its political dimension, because such an element is of fundamental importance should the greater part of the population be able to exert their political rights autonomously and escape from the networks of clientelism inherent to targeted conditional policies. From its civilian dimension, it avoids discrimination on the basis of civil status, gender, ethnicity, or other personal characteristics. From its social dimension, it would assimilate the right to a CI with other fundamental rights already constitutionally enshrined in the region (such as education, health, etc.). In summary, three organizational principles define this policy: universality, unconditionality, and a progressive fiscal integration between the monetary benefit and the income tax. The simultaneous presence of this trinity differentiates this policy from other better known fiscal income transfers. For instance, a CI does not require one to be employed or to have made contributions to a social insurance scheme (as is the case of retirement pensions, family allowances, and unemployment insurances), to be declared unfit for work (as with disability allowances), to

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demonstrate being unemployed (unemployment insurance), or to prove that one is poor (targeted and conditional assistance programs). CI is a simple though controversial policy affecting many areas of social and economic life.

Citizen’s Income and Employment A lot of controversy exists as to the effects a CI policy would have on the paid labor market and on the social division of work in general. Often mentioned worries include: (i) the kind of incentives such a policy would generate for the choice between leisure and paid work; (ii) its preference to guarantee a “right to income” over the traditional “right to work” (really, to employment); (iii) the erosion of “contributive ethics” that supposedly sustains typical social insurance schemes thanks to the payment of payroll taxes and contributions. It is often argued that, as it guarantees the coverage of basic needs, a CI policy would promote the preference for leisure and the withdrawal of labor supply from the labor market. There is no evidence to confirm this preoccupation, especially since incentives to take up remunerated work are not exhausted with the access to a basic level income. The increase and diversification of demand for goods and services provides an example of this fact. The real problem is not the reduction of labor supply when basic needs are covered, but the poverty and unemployment traps that arise with targeted conditional programs. When the access to benefits is conditioned to the testing of own incomes in a household, there is a range within which it is convenient for individuals not to generate (or declare) personal incomes, since otherwise they would face a reduction or even total loss of their benefits. One specific kind of such traps is the informality trap. It appears where individuals or members of a household prefer receiving income from informal activities in order to avoid registration and taxation of these incomes, and thus loss of their conditional benefits. This kind of trap falls on fertile grounds in Latin America, where informality is widespread and employment opportunities are precarious and unstable. By contrast, the universal and unconditional character of a CI would prevent such traps. Moreover, a CI could help to incorporate new activities into the labor market, especially of the cooperative and communitarian kinds, since they can facilitate a better distribution of working time including activities not remunerated by the market today. The final result of these processes for labor supply and employment is difficult to predict. In any case, to discuss this issue it is of paramount importance to distinguish between “work” and “paid employment.” To illustrate this,

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it is worth considering work in the “care economy.” It is overwhelmingly carried out in the domestic spheres, devoid of any remuneration.4 Other examples include work related to the communitarian service, the environment, cultural promotion, etc. The main problem is not that people do not want to work, but rather that the economic system is increasingly less able to employ and adequately pay all labor supply. A CI, however, would be capable of supporting the execution of work which is unpaid by the labor market today, thereby recognizing the collective responsibility in view of the socially unequal division of work (both paid and unpaid) that currently prevails. These issues help clarifying the controversy about the eventual erosion of the right to work in favor of the right to income that a CI implies. The right to work cannot be identified with the duty to accept any kind of job. If something has failed in Latin America it is the aim of guaranteeing well-paid employment under protected conditions for everybody. The right to work can only be understood as a right to exercise a laborious activity chosen as freely as possible. We also have to be very careful in identifying the right to work within the narrow conception of remunerated work as the only legitimate source of income, when in fact people receive incomes from profits, rents, interests, etc. Taking that into consideration, CI should neither be seen as an element negatively affecting the labor market, nor as a substitute for the right to work. Rather, it is a policy complementing more efficiently, and in a more egalitarian manner, both market and nonmarket work. A CI can foster the exercise of the right to work in at least two ways. First, it would imply a stable purchasing power, thereby also helping to create a macroeconomically favorable context fostering market employment. Second, it would enhance the possibility of people choosing more freely the type of work they pursue.

Citizen’s Income and Social Insurance The controversies about the relationship between CI and labor market also embrace traditional social insurance schemes. Directly or indirectly, to a greater or lesser degree, access to social insurance benefits always requires compensatory duties linked to paid work, be it (i) current employment (for instance, family allowances, health insurance); (ii) past employment (retirement and pensions, unemployment insurance); or (iii) the willingness to become employed (unemployment benefits). In these schemes, those who do not participate in the labor market can only access as “dependent kin” of those who do participate. Especially in Latin America, social insurance generally covers formal, waged employment, at times excluding even the self-employed.

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Social insurance suffers from severe limitations in the attempt to offer universal coverage for its own constituency, while its actual coverage replicates labor market inequalities (and income distribution inequalities more generally). Its contributive character partly explains these limitations. Many people remain excluded from social insurance coverage since they, in spite of working, cannot comply with the requirements established. This remains true although a tendency to blur the relation between payroll taxes and benefits can be observed in the region. On the one hand, some social insurance benefits are partially financed through general taxes, which in Latin America derive primarily from regressive taxes. On the other hand, noncontributive benefits are partially or totally funded with resources from payroll taxes. Thus, the distinction between the “contributive” and the “noncontributive” spheres is becoming increasingly vague; it continues however to label a social division in public policies. A CI attempts to overcome the limitations of social insurance insofar as its benefits are paid unconditionally to the totality of the population, and as it is not restricted to funding by a payroll tax (it would, in fact, prefer other resources). However, this should not lead to the erroneous conclusion that a CI would aim at the abolition of social insurance altogether. Rather, it wishes to function as a universal base above which the (reformed) social insurance schemes would stand (Atkinson, 1996). In the same way as a CI does not aim to substitute wages but to diversify people’s income sources in an efficient and egalitarian way, it does not pretend to eliminate social insurance but complements it. This becomes evident when recalling that the CI would allow people to keep all additional income without losing the unconditional income. This characteristic allows for complementarity with social security. At the same time it marks the fundamental difference to current targeted assistance programs that condition the reception of monetary transfers to income levels, subject to verification, below certain income thresholds established by the political bureaucracy.

Citizen’s Income and Conditional Cash Transfer Programs In recent years, a new wave of targeted assistance programs known as conditional cash transfer (CCT) programs have swept over Latin America. The origin of these programs is usually traced back to the Program for Education, Health and Nutrition (Programa de Educación, Salud y Alimentación, Progresa) launched by the Mexican Federal Government in 1997. Nonetheless, every country accounts for its own antecedents and trajectories, making the experience particular to the specific context

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in each case.5 Their operating rules tend to share a few general features however: (i) monetary transfers (in some cases complemented with in-kind transfers); (ii) targeting of poor and/or extremely poor households with children and adolescents (some programs do permit household categories without children); (iii) punitive conditionalities linked to school assistance and health checks of both children and adolescents, and for pregnant women; (iv) a preference for transferring the benefit to mothers; (v) the selection of beneficiaries according to geographic priority zones, self-identification, means and/or needs tests, etc. Although not all of these features are present in all CCT programs, most of them follow these basic operating rules in their attempt to comply with two formally declared objectives. In the short term, they aim to decrease families’ income poverty; in the long run they aspire to increase “human capital” formation in the younger generations. This is to improve future employability, which again would permit the breaking of the cycle of inherited income poverty. Such a scheme supposes that the rate of return of fiscal expenditures on income transfer programs would be higher with the transfer directed to the children, and compliance with conditionalities vouched for by their parents (World Bank, 2009). In practice, CCT programs seek to compensate for the incomplete coverage of the traditional social insurance schemes by their long history in the region: Family Allowance Programs (Programas de Asignaciones o Subsidios Familiares) for formal employees.6 In fact, parallel to the CCT programs, Noncontributive Family Allowance Schemes (Asignaciones Familiares no Contributivas) have spread as well. These programs, in general also targeted at and conditioned to means tests, pay benefits for dependent family members of those people not covered by traditional, contributive family allowance schemes. Chile, for instance, has the Single Family Subsidy (Subsidio Único Familiar) for low-income households that do not have access to contributory family allowances. Its beneficiaries are selected on the basis of their social and economic situation registered and evaluated by the issuing authorities.7 Uruguay expanded coverage of its contributive family allowances program to include noncontributive benefits.8 Argentina counts with a noncontributive benefit for unemployed and/or informally employed people with dependent children.9 Other noncontributive programs that are on the rise in the region are those paying pensions to elderly people.10 Examples include the rural pensions in Brazil (financed through a tax on sales of agricultural production and social security resources), and the “Income Dignity” program (Renta Dignidad ) in Bolivia (noncontributive and universal). Mexico is an interesting case, where a local program of universal and unconditional pensions—Mexico City’s “Food Pension for Senior Citizens” (Pensión Alimentaria de Adultos Mayores)—coexists with the national program “Seventy and Over” (Setenta y Más). The latter evolved from a program

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originally targeted and conditioned to households, into one that is less conditional and targets geographic localities of specific size.11 Argentina, for its part, has incorporated many beneficiaries into its pension schemes thanks to a “pension moratorium,” which discounts any amount of social security contributions not paid during working life from the pension received. Today’s income transfer programs to the economically dependent population offer a rich experience, while at the same time constituting the framework within which the CI debate should be placed in the region. The most striking issue about CCT programs, noncontributive family allowances, and noncontributive pension schemes in the region is that they transfer incomes, targeted and conditional, to that part of the population that is economically dependent, instead of the portion that is economically active. The question that immediately arises is whether they can then be viewed as a first step toward the application of a CI? Or do they instead, much to the contrary, constitute a deterrent for such a proposal? For instance, this conundrum makes sense when looking at the Brazilian case, where the CCT program Family Grant (Bolsa Família) was created at the same time of the Citizen’s Basic Income Law (Lei de Renda Básica de Cidadania) in January 2004 (the first law that recognizes the citizenry’s right to receiving an unconditional, universal income).12 The point is whether targeted and conditional programs as Bolsa Família can be a first step toward universal and unconditional rights as Renda Básica de Cidadania or, to the contrary, are they an obstacle to their achievement. In fact, critical evaluations of the targeted and conditional income transfer programs themselves point to numerous problems that a CI aims to overcome: arbitrary selection of beneficiaries, interference into people’s lives, political clientelism, stigmatization of recipients, incapability of achieving universal coverage and of acting preventively with regard to income poverty, fomentation of poverty traps and of informality, etc. Moreover, the programs receive criticism since both the means test applied and the benefit level consider the whole family, while compliance with conditionalities in practice becomes the responsibility of the women only.13 By contrast, a CI aims at achieving universality in coverage, preventing actual or future poverty, and constructing a base on top of which people can accumulate any additional income, reducing thereby the space for selectivity, discrimination, and political clientelism. Furthermore, a CI declares each person to be a fiscal unit. This grants a greater potential for strengthening personal autonomy as well as economic and political independence of the individual. This is not a purely technical issue; rather, it expresses profound differences in the conception of the way public policies should be organized.

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Citizen’s Income and the Fiscal System In Latin America, fiscal policy is conceived as two disconnected branches, one responsible for tax collection and the other for expenditure. Among other problems, this disintegrated conception of fiscal activity does not consider a “net” position of the taxpayer/beneficiary in their joint game of “pay and spend.” Among other things, this practice entails that, as long as expenditures reach some groups in the lowest scale of the income distribution, their impact is judged as “progressive” in distributive terms. Nevertheless, the issue is not that simple. First, many individuals and families in low income groups do not receive benefits, although they pay the taxes to finance them. Second, since the selection of the beneficiaries of cash transfers is conditioned to an arbitrarily established maximum personal or family income threshold, all additional income above this threshold in fact experiences an extremely high tax rate, considering that it implies the loss of the cash transfer. Third, when family income remains below income tax fiscal credits (which acknowledge minimum consumption of the taxpayer and her family), these credits are not “fully used” and the state does not pay the difference. Hence, income tax credits are in fact only accounted for in full by people with income above their value.14 The overall distributive impact of these aspects is difficult to measure. Further issues arise when families, instead of individuals, are considered the fiscal units (both for taxes and for transfers). This means that public policy treats citizens differently according to their cohabiting patterns and refrains from considering intra-family distributional conflicts. The policy of a CI acknowledges these fiscal complexities and intends to control the net distributive impact of taxes and spending. First, it is a universal fiscal credit paid to everybody that operates as an income tax deduction of the same amount. Second, it can establish a net tax-benefit position for every citizen vis-à-vis the treasury. Third, it can control the distributive impacts establishing income brackets scales and progressive marginal rates for income tax. In order to control the distributive effects, in practice tax policy must define a break-even point where the net position of the contributor/beneficiary is equal to zero (Atkinson, 1995; Barbeito, 1995). This means that those remaining below this break-even point receive a net subsidy, while those who exceed it pays a net tax. This fiscal mechanism of a CI is decisive when justifying the reason for paying the benefit to the totality of people (including the “rich”). Only universality of benefit can guarantee that all those people who need it will also receive it, as opposed to what is occurring with targeted programs that exclude many of the poor from their coverage. Paying benefits to the “rich” also is only apparently regressive, since high-income groups progressively “return” the benefit via their integration with income tax.

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This integrated fiscal practice must be adequately placed within the Latin American context. Without denying the extensive heterogeneity of levels and structures of tax collection, the region’s tax systems remain very regressive, with severe problems of administration and low collection levels, especially those concerning income taxes.15 Theoretically, a CI would help to improve progressivity and collection of this tax, just as it would reduce the high administrative costs associated with means-tested programs.16 Notwithstanding, these issues need to be carefully analyzed in each particular case. On the one hand, administrative problems and the traditional refusal of the Latin American elites to pay taxes, especially direct taxes on income, capital, rents, and heritage, are obstacles that cannot be disregarded. On the other, however, a CI policy may legitimize more progressive and efficient tax reforms in the region. Moreover, a policy like the CI should form part of the debate on the destination of fiscal income obtained from the exploitation of energy and mineral resources in the region.17 This is especially relevant considering that an increasing number of countries are engaging in growth strategies questionable for their extractive matrix with far from clear distributive results. The fact that a CI works as an income tax fiscal credit does not mean that it should be solely financed through income taxes. Rather, a variety of potential funding sources exist, and they should be judged in every particular context on their own merits, just as the level of the benefit, the point of fiscal indifference, and the scaling of tax rates. Universality of the CI benefit, however, as well as its operating as an effective and deductible fiscal credit on income tax should be safeguarded in all cases.

Citizen’s Income, Poverty, and Income Distribution In order to comprehend the complexity of the potential distributive impacts of a CI, it is necessary to consider several elements collectively. First, inasmuch as a CI would operate as a base to which people were to add their own income, none of this income would be penalized fiscally as is the case with means-tested benefits. Second, being a stable and regular base that provides certainty of income for people, a CI would encourage further income-generating activities, for instance because it would decrease the risks for micro-entrepreneurship in a region with high levels of self-employment. Third, and related to the previous point, a CI would create better conditions for access to credit, and for repayment, than current microcredit programs (Lo Vuolo, 2009). The preceding points explain why the impacts of a CI on income distribution and income poverty cannot be measured only in terms of benefit levels. Nor can such a

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universal and unconditional benefit be readily compared, on the basis of the benefit level, to targeted, conditional programs. In any case, in order to evaluate (and compare) likely impacts of income transfer policies, it is necessary to consider the welfare regime in which each policy operates, including the access to other goods and services that the population has in each case. Is it necessary to pay for services such as health, education, housing in the marketplace, or is access to these services universal and free? What restrictions exist concerning access to social insurance programs? Which kinds of taxes have to be paid? All public policy operates in an environment configured by different hierarchies of procedural practice: economic-financial (expenditure, income, market creation, etc.); administrative-institutional (management, centralization or decentralization, competition between or overlap of services, bureaucracy, etc.); ideological-political (universalization or selectivity of coverage, regressiveness or progressiveness of benefits, participation, social mobility, etc.). Public policy performance partly depends on its interaction with the particular context in which it operates. Also, in this regard Latin American countries are heterogeneous. Latin America bears a remarkable diversity of national social protection systems when scrutinizing the domains typically considered for international comparison: level of expenditure, historical path of institutional development, institutional architecture, instruments, risks covered, funding, etc. The complexity of these systems, as well as their diversity and particularities has become more accentuated over time. This makes the Latin American social protection systems difficult to analyze according to the paradigms and typologies of the European experiences. Nonetheless, this diversity is not to deny that certain specificities do mark the social protection regimes of the region.

Citizen’s Income in the Latin American Context In comparison to other countries of the world with similar development levels, Latin America sets itself apart in three main socio-structural dimensions (Filgueira, 2007): (i) high levels of inequality; (ii) coexistence of demographic transitions both in terms of child and elderly dependency ratios; and (iii) a high degree of urbanization. For instance, Latin American countries with a “high” human development index display comparatively high demographic dependency, high fertility rates, and high levels of inequality and urbanization. Many hypotheses have been offered to explain the region’s performance in economic development and inequality. These include colonial heritage, dependency on natural resources, structural limitations to

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developing dynamic industries and integrating modern and lagging sectors, etc. Politics also explain the region’s performance in social and economic indicators. Latin America suffered from long periods of restricted democracies and dictatorships. As has been documented, extended rule by repressive authoritarian regimes is associated with higher inequality (Huber et al., 2006). Inequality is a huge problem for the quality of democracy in Latin America. Social divisions and social mobility are shaped by institutional membership. Where inequality is high within one institution, it is less likely that other institutions will be inclusive, as inequalities are difficult to absorb or correct.18 The institutional set amplifies market inequality in Latin America. The lack of both political commitment and agreement on what would be the best way to sustain a stable distribution between wages, benefits, and the social wage has exacerbated distributional conflicts in the region. Historically, significant trust was placed on both economic and political aspects of a “virtuous circle” in which growth increases productivity, productivity increases wages, wages increase social protection, and social protection increases growth. In this virtuous circle, poverty is conceived as a temporary problem resulting from lack of employment. The huge and growing size of the informal labor market is a clear indicator that the real functioning of labor markets is far from the ideal virtuous circle. The informal economy provides labor, goods, and services to the formal economy, lowering its costs. Informality acts as a permanent buffer for labor market flexibility and works as low-cost manpower for employers trying to reduce labor costs. The problem is not limited to one “sector,” for informality is spread all over the economy (Tokman, 2007). Workers in the informal sectors tend to be overrepresented among youth, females, and the less educated. Given the way current social protection is designed they will also lack unemployment and labor-hazard health-related insurance, employment protection, and will access low quality retirement benefits—if at all—and low quality health care. While advocates of traditional contributory social systems believe that better regulations and increases in productivity will in the long run incorporate these sectors one is hard pressed to agree that it is all just a matter of waiting. Latin American social insurance systems assume that the average potential insured is an educated male in formal employment and with no labor market interruptions. Less educated workers, females, and the youth do not have much room in such systems. In some cases, almost no protection was granted to those working in domestic service and as rural workers. Policies applied during the 1980s and 1990s aggravate the structural problems in the region. Latin America was the region where the most

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extreme recommendations of the so-called Washington Consensus were put into practice. The prescriptions included a joint impact of strongly pro-market rhetoric, passive monetary policy and restraints to fiscal policy, openness to international flows of trade and capital, and several deregulatory measures in the markets of goods, finance, and labor. Deregulation of labor relations (in fact, “re-regulation”) was a key element of structural reforms. An increasing number of people started to fall out of protected work patterns, while wages and labor costs decreased sharply. As a result, countries in the region started to rely more heavily on market solutions for welfare and selectivity as the criterion for policy orientation. Many public institutions were reformed, even those which were marked “difficult to reform” in the European case studies, like the pension system. The universalistic elements of social policies were confronted with the argument that they did not serve the best interest of the poor. Thus, social policymakers were advised to set aside such universalistic aims and instead strengthen the relationship between benefits and contributions, preferably through private insurance. The “over-protection” that certain categories enjoyed within the social security system helped legitimize policies that pushed down benefits and smoothened the way for selectivity, despite the social insurance legacy. The poorest groups, selected by social management experts, would receive direct subsidies by means of social assistance programs. Other phenomena also help to explain the limitations to extending social policy coverage, such as the accelerated (and early) demographic transition: a decline in fertility rates and the aging of the population both pose new pressures on social spending. Moreover, growing economic activity rates among women generate a sustained change in household size and composition. They reduce the prevalence of the male breadwinner model, while nuclear families are increasingly different from the family model on which the social insurance scheme is based. In this scenario, the promise of incorporation into social protection through labor market inclusion failed, not because there was no incorporation but mainly because a great part of this incorporation continues to be fragile and precarious. New entrants to the labor market are confronted with a more “flexible” and unequal labor market, with fewer guarantees and more unemployment. While most of the new entrants were women, they had the least structural power to negotiate the conditions in which they joined the market. The frustration with this experience and the severe impacts of economic crises lead to changes during the first years of the new millennium. In many countries, policymakers now defend a larger state role in trade, financial regulatory systems, labor market regimes, and state enterprises and services. The common trends in social expenditure display the

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characteristics of this change: adjustment and strong fall in the 1980s, growth in the beginning of the 1990s, deceleration in the beginning and decrease in the middle of the decade, and return to growth after 2001–2002. Toward 2007–2008, all countries presented a social expenditure per capita level doubling or even tripling that of 1990–1991.19 General growth in per capita social expenditure did not eliminate the vast dispersion between the countries. Another characteristic has been retained: countries with higher Gross Domestic Product per capita also dedicate a higher share of total public spending to social expenditure. In 1980, those proportionally spending most were Chile, Uruguay, Argentina, and Brazil; the same countries remain at the top of spending lists around 2008–2009, with the proportions of social over total public spending rounding up to 65 percent. Meanwhile, Central American countries reach average levels of 50–55 percent. Most remarkable is the rise in the proportion of social spending in Brazil (74 percent) and Colombia (70 percent). The multiplication of CCTs has not changed this scenario, insofar as its spread has been correlated to country size. In fact, spending on pension systems remains the largest component of social expenditure, even in countries that have privatized their public pension systems due to the deficit created by redirecting pension contributions to individual accounts (the so-called transition costs). In general, countries showing high levels of social expenditure are also the ones displaying, inter alia, higher levels of formalization of employment, a social policy administration that covers their entire territory, and higher primary schooling levels. Other factors have to be added to the economic issues affecting public expenditure. Those countries with the lowest social expenditures are those facing most political problems progressing with important fiscal reforms, including efficiency of administrative units and ideological commitment of governments. For instance, the Brazilian case shows that even with a Gini coefficient so high it almost reaches Central American levels, spending levels and tax collection can lie among the highest for the region. This has translated into an important expansion of social programs. However, even after years of economic and social expenditure growth, the defining characteristics of the region continue to be its high inequality, insecurity, and resultant problems in the distribution of increases in productivity among the majority of the population. This is explained in part since, even where the renewed public policies favor state intervention in the economy, in general, they share the orthodox trust on distributional spillover effects of accelerated economic growth on employment, wages, and welfare. Attention continues to focus on a short- and medium-term distributive conflict rather than on broadbased capacity-building and institutional change.

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Citizen’s Income and the Latin American Welfare Regimes Over the years, the dynamics of Latin American social protection systems has been largely explained by the economic alliance between the political authorities and key groups of salaried employees placed in strategic positions. This alliance also explains one of the more general dilemmas for the social protection systems in the region: how to expand coverage so that new groups can be included without having the old ones lose their already obtained benefits, which tend to be quite generous in relative terms. Countries in the region have not come to possess a stable and coherent welfare state system, and it is very difficult to create typologies that would replicate the different configurations of the welfare state generally used in developed countries.20 Several of the criticisms issued for the analysis of typologies of the European welfare state are applicable to the Latin American countries as well.21 This particularly holds true for the one stating that, by grouping together the experiences of countries with very different histories and involving various actors and policies, their specificities are overlooked. This makes it difficult to capture the specific configuration between the state, the market, and the family (including social stratification deriving from the institutional system) in conventional welfare state regimes’ typologies. Also, in many countries, state institutions are weaker actors for some population groups than for others, lacking capacity (and interest) to defend and enforce social rights, which might be legally established, of the most vulnerable groups (Gough, 2004). This situation determines that the welfare of large parts of the population becomes more dependent on the domestic and communitarian spheres, as well as specifically targeted programs that do not represent social rights, but political instruments of “social risk management.” These issues are not very well captured by the concept of commodification/decommodification, rendering other criteria, such as “clientelization” and “declientelization” or universalization and focalization, etc. more relevant. These problems partly explain the difficulties in the attempts to group the Latin American social protection systems according to analytical typologies comparable to those of the so-called welfare state regimes. Fernando Filgueira (Filgueira, 1998, 2005) considers that around the 1980s the region’s social protection systems could be classified into three groups. A first group of countries, including Argentina, Uruguay, and Chile (and Costa Rica since the 1980s), had a social protection system of “stratified universalism” characterized by universal or quasi-universal coverage in the pension and retirement schemes, primary education, and basic health care. Except for education, these cases follow a marked

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pattern of stratification. In a second group of countries including Brazil and Mexico (together with Venezuela, Panama, and, to a lesser degree, Colombia) a “dual regime” can be identified insofar as a large proportion of the population (especially of the urban part) is covered by social services and income maintenance schemes (also stratified), while the other important part remains excluded from the public protection system. Finally, a third group comprising such countries as El Salvador, Honduras, Bolivia, Ecuador, and, to a lesser degree, Guatemala, can be denominated “exclusionary,” since only a small, privileged part of the population has access to social protection. The attempts of refining this sort of classifications encounter serious methodological difficulties, especially because important changes have been taking place in the region since the 1990s. Generally, social policies in the region are characterized by a sui generis institutional configuration in the four dimensions commonly used to compare them in macroinstitutional terms: the rules of access (eligibility), benefit formulae, financing regulations, and organizational-managerial arrangements. Even when there are policies covering a number of social risks for a significant proportion of the population, they remain segmented across occupation and income strata. Social protection in the region is highly fragmented on occupational lines, mainly in income guarantee policies (pension, family allowances) and in health care services. Also, a high degree of particularism characterizes both the payment of cash benefits (clientelistic manipulations) and financing (regressive tax systems, widespread tax evasion). As a result, social policies offer generous benefits for some groups and low degrees of coverage for the vast majority at the same time, showing high territorial disparities. In this scenario, the dual approach that distinguishes between a few structurally poor (targets for social assistance) and many with normal, secure employment (covered by social insurance) does not apply. Most people are somewhere in the middle. There is a huge area of working poor receiving low and unstable incomes that are excluded from both corporate “mutualisms” of social insurance and targeted assistance policies for the unemployed. The difficulties of accessing social protection coverage are experienced not only by unemployed and unregistered workers but also by “semiformal” workers, namely unregistered employees working at formal companies and employees only partly registered (for instance, for fewer hours or lower wages than they actually receive). Few people have stable, long-lasting employment, and insecurity of income is chronic: income loss is not only frequent but can arrive unexpectedly. Past and recent experience of the region shows that the potential to achieve universal inclusion through separate, targeted, and contribution-based schemes is inherently limited. Indeed, the spread of CCTs cannot overcome the formal–informal divide prevailing in the

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region, and its impacts on the levels of social protection and income inequality. First, in Latin America, the population that has income, access to insurance, and stock of capital that makes them capable of protecting themselves from shocks, be they external or biographic, is only close to half of the population or less (CEPAL, 2010, 2011). In several countries, the percentage of poor and vulnerable people exceeds 50 percent of the population. This means that the size of the vulnerable population is often too large to be covered by residual policies. Second, the conditionality of conditional cash transfers in countries where services are not available or hard to access by the poor makes it difficult to comply with. Third, a model of this type, with cut off points by income levels—at very low income levels—may strengthen the formal—informal divide, since eligibility for those in the informal sector may depend on not being formally employed. Conditional cash transfers to the poor remain, in many ways, too close to the poor law traditions (Aguirre and Lo Vuolo, 2010). Experience also shows that the very insecure nature of income assistance, leading workers to look for formal and more secure jobs, does not hold in this scenario. It is equally plausible to argue that the lack of a reliable safety net is what induces a preference for informal work, and indeed that the informal sector is in that sense making up for a broader public policy failure. Latin America shows that the more insecure labor economies are, the more stable and well-funded income maintenance systems must be. These experiences and common problems enable a discussion about the CI under a regional perspective, without however ignoring the particularities of each country (Lo Vuolo, 2005, 1995). Effective enforcement of the “duty” to work is difficult in countries with a large informal economy that offers many opportunities for undeclared work and has weak public employment services. This scenario increases the dilemma of horizontal solidarity in countries where labor ethics have always been the prevailing value, which share the social insurance ethos, and where a great part of the population, including unions and political parties, mistrusts universal policies.

Citizen’s Income, Actors, and Systems of Political Representation Even where the debate is more advanced, the proposal of a CI has received more support from academia and some specific social groups than from political parties and labor unions (Offe, 1992; Vandenborght, 2006). Something similar occurs in Latin America, where the proposal is encountering difficulties to gain substantive political support.

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Despite the arguments vouching for its technical rationality as an income support policy, its normatively egalitarian and empowering character, and its consistency with a surrounding environment of informal and unstable labor markets, the CI has not (yet) been incorporated into the political agenda in the region’s countries. Even in Brazil, the country that passed the first (and only) law recognizing the right to a CI in the world, neither the population nor the political parties appear fully convinced about the actual application of the policy.22 Nor is the CI proposal incorporated into the agenda of regional agreements, although it could hold particular relevance here, considering that many countries in the region face high levels of poverty, migrations flows, and need to permanently resort to international support in order to boost their weak fiscal and institutional capacity. Agreements involving the CI proposal could help to coordinate public policies, while such a policy could be an effective instrument to strengthen regional development strategies.23 While resource constraints are often cited as a core obstacle to the incorporation of CI in the political agenda of the region, probably political aspects are more important. The design of previous and current policies, the character and the internal dynamics of political parties, as well as their external linkage mechanisms are among the factors to be considered in order to understand the political conditions that facilitate the adoption of CI schemes in Latin America.24 When discussing why a CI is not on the political agenda, the particular environment of each specific political system matters greatly, because the political system establishes the relation of people’s “social acknowledgment” of themselves as right-holders (Théret, 1997). Using as an example the case of a country that has been studied extensively with regard to the subject, the US regime corresponds to a highly differentiated society that only activates its institutions of social protection and political representation very weakly. The system’s coherence rests on its direct relations between the domestic sphere and the primary systems of mediation, embedded in the preeminent individualist ideology. In the same vein, it can be argued that a system that conducts conditional targeted programs to be verified bureaucratically, as is the case with CCTs in the region, is consistent with a political representation system that revolves around clientelism and a highly stratified society that favors administrative control over subordinate population groups. By contrast, a social protection system based on the universalization of coverage with homogeneous benefits, as is the CI, is more consistent with a pluralist political system where strong representation (that might be more or less corporatist) exists in all sectors, and with a scarcely stratified society that stimulates increased autonomy in people’s exercise of their rights.

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The diversity of social protection systems evident in the region contrasts with the apparent homogeneity striven for in income transfer programs such as the CCT and its variants. If something characterizes the region, it is a reading of its social problems as founded in “risk coverage” instead of a vision based on social rights. As a result, there is a tendency to make inventories and catalogs of the risks, or rather of “populations in risk,” after which a set of appropriate techniques to cover them are discussed and applied. This vision permits, for instance, the statement that certain risks are covered first and foremost by the elementary solidarity of the family or market, and that the state (or rather, collective solidarity) plays a secondary role only. From here derives the widespread adherence to a strategy of combining transfers targeting children with obligations to be fulfilled by parents, which allegedly augment the individual capacities of future generations to overcome poverty. This reasoning ignores the social character of the origin of risk. As a matter of fact, it confuses social rights with individual risks. In general terms, social rights are those derived from the very fact of living in a society. The protection they offer arises from the right of being collectively protected or insured against the risks of living in a society. This conception of social rights universally comprising the entirety of the population is the one still absent in the region. The most that can be observed is a collective solidarity between the formally employed and a paternalistic state taking care of those who individually suffer from the consequences of being excluded from waged citizenship. The tricky question is how to shift perspective from a technology to struggle against poverty to an approach of (re)constructing the whole system of social protection under universal and unconditional principles. This seems to be the central struggle for a CI in Latin America.

The Contents of This Book The objective of the following chapters is not to explain the functioning of the CI proposal, since the existing literature on this topic is both abundant and technically sound.25 Instead, the aim of this book is to analyze certain themes selected on the basis of their importance for understanding the debate around the proposal’s relevance and importance in the particular context of Latin America. The aim is to discuss the pertinence, opportunity, and feasibility of policies organized according to the principles of a CI, in order to overcome specific problems identified in Latin American social protection systems. Considering the region’s heterogeneity, the intention here is not to offer a single conclusion, but rather to contextualize a debate that

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comprises some elements that can be generalized, and others that are highly specific to each case. Generally speaking, the debate around the CI in Latin America largely focuses on current cash transfer policies, particularly those functioning outside contributive social security, such as the CCT programs, noncontributive family allowances, and noncontributive pensions. These programs presently compete with the proposal of a CI insofar as they present themselves as directed toward similar objectives. However, they are organized under opposing principles: focalization versus universalization, conditionality versus inconditionality, fiscal disintegration versus fiscal integration. Also, these programs are generally oriented to the economic dependent population (children and older adults) rather than to the active labor force. The aim of the chapters included in the first part of the book is to discuss a number of cash transfer programs that currently operate in the region, framed within their specific context. The journey starts with Lena Lavinas analyzing the relation of Brazil’s Bolsa Família program with the Lei de Renda Básica de Cidadanía, which was approved in January 2004. Its approval made Brazil the first country to formally recognize the right to a CI by law. Lavinas discusses the particular historical and institutional context of Brazil, as well as the widespread idea according to which the Bolsa Família program constitutes a first step toward the application of that law. She grants special attention to the effective functioning of the program’s conditionalities regarding health and education, the coverage gaps, and the way in which it gained legitimacy in the country, hampering the application of the CI law. The chapter aims to demonstrate that targeting and conditionalities—tested by Bolsa Família —have little chance of paving the way to universalization and unconditionality as values supported for the Brazilian society. Such impediments lead to current ostracism of the CI law. Rubén Lo Vuolo, in turn, discusses the experience of Argentina’s “Universal Child Allowance for Social Protection” (Asignación Universal por Hijo para Protección Social —AUH ). The particularity of this noncontributive program lies in its beneficiaries’ receiving a transfer for their children when they are unemployed or informally employed, as long as they report incomes below the minimum legal wage for formal work. A percentage of the benefit is retained each month to be paid later upon compliance with conditionalities regarding health checkups and educational attainment. The AUH, financed with resources from the payroll tax, feeds the debate about CI in the region. In this case, beneficiaries are not poor families as such but the unemployed and the informal workers with low income. In this chapter the likely impacts of these particularities are discussed, as well as the program’s relation with the CI policy.

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Pablo Yanes compares two income transfer programs in Mexico, which represent two distinct views of conceiving this type of policies: the federal government’s Oportunidades program, organized as a CCT, and the “Universal Citizen Pension” (Pensión Ciudadana Universal ) launched in 2001 by Mexico City’s local government. This comparison proves helpful when discussing how diverse conceptions of social policies coexist in the same country in a mutually influencing way. Special focus is given to the issue of conditionalities as expression of these different conceptions, as well as to the political processes linked to the programs. The chapter also discuss why, even when the Universal Citizen Pension has gained legitimacy in the country, it is far from building a sufficiently solid support in favor of CI. Camila Arza analyzes other noncontributive pension schemes. Recent developments in Latin America point to a redirection of pension policy in some countries, which have expanded pension coverage through non or semi-contributory pension schemes. These programs aim to fill the void of coverage gaps left by contributive pension programs as a result of short or precarious employment trajectories during people’s active life. By analyzing the differing experiences of four countries (Argentina, Bolivia, Brazil, and Chile), Arza examines the results of the expansion of noncontributive pension coverage and its relation with a right-based approach to universal old age protection in line with the rationale of a CI. Alice Krozer and Rubén Lo Vuolo analyze the opportunity of a transnational CI program for Central America. Considering the diversities of Central American countries and the fact that poverty and related transnational problems such as migration need to be tackled beyond national borders, the chapter aims to evaluate the potential impact of a regional CI fund on an integrated development strategy. The chapter succinctly examines the social protection systems of the Central American countries, with particular emphasis on their income transfer programs. Thereafter, it proposes a regional CI policy, whose gradual implementation would start by including the children, continue with the elderly, and finally encompass the entire population. The second part of the book addresses the issues related to the political support that the CI could eventually obtain in the region. While the chapters in the first part identified tendencies to expand coverage of cash transfer policies directed to children and older adults, these policies cannot be simply taken to indicate a path toward the acceptance of CI principles. Rather, the issue is more complex, and is connected to perceptions of the citizenry, the prevailing conceptions of distributive justice, the functioning of the political parties, the support of stakeholders, interest groups and social movements, the normative structure of institutional arrangements, policy legacies, etc.

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On this matter, Fabio Waltenberg analyzes a number of questions that would explain why a policy such as the CI has serious problems raising broader support among the population, even in countries like Brazil where the right is recognized through existing law. He aims to answer the question about whether citizens of different countries would be willing to support a CI policy, given their social position, moral sentiments, beliefs, commonsense normative views, etc. Using data from international surveys he describes the degree of acceptance of redistributive policies among the population. The results obtained for Latin American countries are complemented with author-collected data specifically oriented to assess the legitimacy attained by cash transfer programs in Brazil. Jennifer Pribble, in turn, pays attention to factors that support the formation of a political coalition capable of promoting and passing a CI policy. She argues that the design of previous policies and the character of political parties influences the ability of Latin American states to reform existing policies, expand coverage, and standardize benefits across different sectors of society. She presents a categorization of the political parties in Latin America and reflects on the eventual support that these parties might provide to income transfer policies with a universal scope. Looking at the cases of Brazil, Uruguay, and Venezuela, she identifies the parties’ internal dynamics, their ideological affiliation, and coalition practices on the one hand, and the reform processes of selected cash transfer policies on the other, to think about the political conditions that would render a party endorsement for a CI in the region possible. Corina Rodríguez Enríquez addresses the problems that the support of a CI policy would raise among intellectual and activist feminisms. Her analysis helps to illustrate the debates that the proposal generates among social groups that in principle should position favorably but raise doubts about the proposal’s practical results in the current Latin American context. The chapter addresses the role women currently occupy in the CCT programs, as well as the potential impacts of a CI on the distribution of the work time within the household, and on women’s participation in the labor market. It then observes the complementary policies that would need to be implemented for the proposal to generate positive impacts on the women’s welfare and personal autonomy. Roberto Gargarella offers a historical overview of the founding stages of the region’s nation states, with the objective of demonstrating how the egalitarian constitutionalist tradition compatible with a CI has been overturned in this foundational period. Such defeat could explain the region’s reluctance to the proposal, and continued favoritism for the concentration of power in the Executive, low popular participation in the decision-making processes, and the perpetuation of historical inequalities in the region. As a result, the importance of guaranteeing basic levels of economic independence necessary for the exercise of political

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independence remains undervalued in the region. Herein lies one important obstacle for the legitimization of a policy like the CI. Louise Haag also deals with the region’s inequalities arising from current institutional arrangements. She draws on a multi-institutional perspective in order to study the processes of democratization, showing the interrelation between the functioning of key institutions and the welfare of the citizenry. This highlights the importance of observing the way in which access and treatment inequalities are transmitted through institutions, in order to discuss the impact that a CI would have for improving institutional functioning and democracy in the region. Finally, the epilogue draws on a number of points that stand out from the earlier chapters, with the objective of delineating the debate-ground and highlighting the difficulties still encountered in incorporating the CI policy into the public policy agenda of the region. Among other conclusions, it emphasizes the need to avoid confusing this proposal with currently existing programs, as well as its potential as a social right capable of empowering people and improving the quality of the democracies in the region.

Acknowledgment I would like to thank Julio L. Aguirre (Ciepp, Buenos Aires) for his excellent research assistance, comments and suggestions for revising and editing the chapters of this book. Notes 1. The idea of citizenry is also adopted by the networks promoting such a proposal in the region, such as the Red Argentina de Ingreso Ciudadano (Redaic), and Mexico’s Red de Ingreso Ciudadano Universal (ICU). The Rede Brasileira de Renda Básica de Cidadania combines both the terms. 2. The term entitlement is used here to indicate the recognized right of the benefit holders that forces the State (and other actors) to carry out—or refrain from carrying out—a certain action as a result of this right. An entitlement gives people the authority to initiate procedures that would lead to the actual application of this attested right. 3. See Roberto Gargarella’s chapter in this volume. 4. See Corina Rodríguez Enríquez’s chapter in this volume. 5. In 2010, the ECLAC (United Nations Economic Commission for Latin America and the Caribbean) databases recognized CCT programs in 18 countries in the region, covering over 25 million households (roughly 113 million people), with an average cost of 0.4% of GDP (Cechini and Madariaga, 2011). Notwithstanding, the included programs differ in their operating rules, magnitude, coverage and resources. See also World Bank, 2009.

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6. Family Allowance programs have been established right after the pension schemes: Chile, 1937; Brazil, 1941; Uruguay, 1943; Bolivia, 1953, Argentina, 1957; Colombia, 1957; Mexico, 1973; and Costa Rica, 1974. See ISSA, 2010. 7. Additionally, the households included in the Chile Solidario program participate automatically in this subsidy. The system also grants other benefits, such as maternity support, a family protection bonus (for those families in the Chile Solidario program), the March bonus (a benefit paid at the beginning of the school year to families with children whose monthly income falls short of a certain threshold), etc. In 2009, the amounts transferred per child in contributive and noncontributive schemes have been aligned. 8. Uruguay counts with a program of family allowances for poor families since 2000, which grants benefits independently of the kind of labor insertion of the beneficiary. In 2008, this program has been replaced with the New Family Allowance Regime, which increased coverage and pays a variable benefit depending on the number of children per household. The established conversion scale assigns higher amounts to those children enrolled in primary or secondary school (OIT, 2008). 9. See Rubén Lo Vuolo’s chapter in this volume. 10. See Camila Arza’s chapter in this volume. 11. See Pablo Yanes’s chapter in this volume. 12. Refer to the chapters by Lena Lavinas and Fabio Waltenberg in this volume. See also Matarazzo Suplicy, 2011; Britto, 2008; and Britto and Veras Soares, 2011. 13. See Corina Rodríguez Enríquez’s chapter in this volume. 14. Such a refund is proposed with the Negative Income Tax (Parker, 1989: Chapter 10). For a comparison with the Earned Income Tax Credit program, see Van Parijs, Jacquet, and Caesar Salinas, 2002. 15. See Cetrángolo and Gómez-Sabaini, 2007 and Gómez-Sabaini and Jiménez, 2011. 16. Administration costs of a CI would be lower than those of conditioned and targeted programs, although this point is controversial (De Wispelaere and Stirton, 2011). 17. Experience from the case of Alaska’s Permanent Fund Dividend is highly instructive on the matter (Widerquist and Howard, 2012). 18. See Louise Haagh’s chapter in this volume. 19. See CEPAL, 2010, 2011, 2012. 20. See Esping-Andersen, 1990, 1999 for the most renowned typologies of the European welfare states. 21. See, for instance, Hicks, 1991; Ferrera, 1996; and Théret, 1997. 22. See the chapters by Fabio Waltenberg and Lena Lavinas in this volume. 23. See Alice Krozer and Rubén Lo Vuolo’s chapter in this volume. 24. Refer to the chapter by Jennifer Pribble in this volume. 25. Among numerous texts about the contents, advantages and disadvantages of the CI proposal, refer for instance to Van Parijs, 1992, 1995; Van Parijs an Vanderborght, 2006; Raventós, 2001, 2007; Van der Veen and Groot, 2000; and Lo Vuolo, 1995.

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Bibliography Atkinson, Anthony B. “The Case for a Participation Income.” The Political Quarterly 67, no. 1 (January-March, 1996): 67–70. ———. Public Economics in Action. The Basic Income/Flat Tax Proposal. Oxford, UK: Clarendon Press, 1995. Aguirre, Julio, and Rubén Mario Lo Vuolo. “El sistema de Speenhamland, el Ingreso Ciudadano y la retórica de la reacción.” Revista de Historia de América no. 143 (Julio-Diciembre, 2010): 117–143. Barbeito, Alberto. “La integración de los sistemas de transferencias fiscales como instrumento de integración social.” In Contra la exclusión. La propuesta del ingreso ciudadano, edited by Rubén Mario Lo Vuolo. Buenos Aires, Argentina: Miño y Dávila /Ciepp. 1995. Birnbaum, Simon, and David Casassas, “Beyond Welfare State Capitalism? Foundations of a Citizen Society in Europe.” Paper for the NSU workshop on “Social Republicanism and the Welfare State,” Wik Castle, Sweden, July 22–29, 2007. Britto, Tatiana. “Brazil’s Bolsa Família: Understanding Its Origins and Challenges.” In Cash Transfers Lessons from Africa and Latin America, edited by Dego Hailu and Fábio Veras Soares. Brasilia DF: International Poverty Centre, 2008. Britto, Tatiana, and Fábio Veras Soares. “Bolsa Família and the Citizen´s Basic Income: A Misstep?” Working Paper 77, International Policy Center for Inclusion Growth (IPC-IG), Brasilia, DF, 2011. Cechini, Simone, and Aldo Madariaga. “Programas de transferencias condicionadas. Balance de la experiencia reciente en América Latina y el Caribe.” Cuadernos de la CEPAL 95. Santiago de Chile: CEPAL, 2011. CEPAL. Panorama Social de América Latina 2011. Santiago de Chile, CEPAL, 2012. CEPAL . Panorama Social de América Latina 2010. Santiago de Chile, CEPAL, 2011. CEPAL . Panorama Social de América Latina 2009. Santiago de Chile, CEPAL, 2010. Cetrángolo, Oscar, and Juan Carlos Gómez-Sabaini. “La tributación directa en América Latina y los desafíos a la imposición sobre la renta.” Serie Macroeconomía del desarrollo 60, edited by CEPAL-GTZ. Santiago de Chile: División de Desarrollo Económico, CEPAL, 2007. De Wispelaere, Jurgen, and Lindsay Stirton. “The Administrative Efficiency of Basic Income.” Policy & Politics 39, no. 1 (2011): 115–132. Esping-Andersen, Gosta. Social Foundations of Postindustrial Economies. Oxford: Oxford University Press, 1999. ———. The Three Worlds of Welfare Capitalism. Princeton, USA: Princeton University Press, 1990. Ferrera, Maurizio. “The ‘Southern Model’ of Welfare in Social Europe”. Journal of European Social Policy 6, no. 1 (1996): 17–37. Filgueira, Fernando. “Cohesión, riesgo y arquitectura de protección social en América Latina.” Serie Políticas Sociales 135 (working paper). Santiago de Chile: División de Desarrollo Económico, CEPAL, 2007.

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———. “El nuevo modelo de prestaciones sociales en América Latina: Residualismo y Ciudadanía Estratificada.” In Ciudadanía y política social, edited by B. Roberts. San José, Costa Rica: FLACSO/SSRC, 1998. ———. “Welfare and Democracy in Latin America: The Development, Crises and Aftermath of Universal, Dual and Exclusionary Social States.” UNRISD Project on Social Policy and Democratization, UNRISD, Geneva, 2005. Gómez-Sabaini, Juan Carlos, and Juan Pablo Jiménez. Estructura tributaria y evasión impositiva en América Latina. Caracas: CAF, 2011. Gough, Ian. “Welfare Regimes in Development Contexts: A Global and Regional Analysis.” In Insecurity and Welfare Regimes in Asia, Africa and Latin America, edited by I. Gough and G. Wood. Cambridge, UK: Cambridge University Press. 2004. Hicks, A . “Review of G. Esping-Andersen, The Three Worlds of Welfare Capitalism, Princeton: Princeton University Press, 1990.” Contemporary Sociology: An International Journal of Review 20, no. 3 (1991): 399–401. Huber, Evelyne, François Nielsen, Jenny Pribble, and John Stephens. “Politics and Inequality in Latin America and the Caribbean.” American Sociological Review 71 (2006): 943–963. ISSA . “Social Security Programs Throughout the World: The Americas, 2009.” International Social Security Association, Washington, DC, 2010. Lo Vuolo, Rubén Mario. “A modo de presentación: Los contenidos de la propuesta del ingreso ciudadano.” In Contra la exclusión. La propuesta del ingreso ciudadano, edited by Ruben Mario Lo Vuolo. Buenos Aires, Argentina: Miño y Dávila / Ciepp, 1995. ———. “Social Exclusion Policies and Labour Markets in Latin America.” In Financing Social Policy: Mobilizing Resources for Social Development,” edited by K. Hujo and S. McClanahan. Basingstoke: Palgrave/UNR ISD, 2009. ———. “Social Protection in Latin America: Different Approaches to Managing Social Exclusion and their Outcomes.” Conference: “Social Policy, Stability and Exclusion in Latin America,” ESRC Series, Institute of Latin American Studies, University of London, London, June 2–3, 2005. Matarazzo Suplicy, Eduardo. “Towards an Unconditional Basic Income in Brazil?” In Arguing about Justice. Essays for Philippe Van Parijs, edited by A. Gosseries and Y. Vanderborght. Louvain: Presses universitaires de Louvain, 2011. Offe, Claus. “A Non-Productivist Desing for Social Policies.” In Arguing for Basic Income. Ethical Foundations for a Radical Reform, edited by P. Van Parijs. London, UK: Verso, 1992. OIT. Asignaciones familiares en Uruguay. Evaluación y propuestas de reforma. Santiago de Chile: Oficina Internacional del Trabajo, 2008. Parker, Hermione. Instead of the Dole. An Enquiry into Integration of the Tax and Benefit Systems. London, UK: Routledge, 1989. Petit, Philippe. “A Republican Right to Basic Income?” Basic Income Studies 2, no. 2 (2007). Raventós, Daniel, ed. La renta básica. Por una ciudadanía más libre, más igualitaria y más fraterna. Barcelona, España: Ariel Ciencia Política, 2001. ———. Las condiciones materiales de la libertad. España: El viejo topo, 2007.

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Standing, Guy. “How Cash Transfers Boost Work and Economic Security.” DESA Working Paper 58, United Nations, New York, 2007. Théret, Bruno. “Méthodologie des comparaisons internationales, approches de l´effet sociétal et de la régulation: Fondements pour une lecture structuralliste des systèmes nationaux de protection sociale.” In L´année de la régulation. Économie, Institutions, Pouvoirs. Paris, France: La Decouverte, 1997. Tokman, Víctor. “Flexiguridad con informalidad: opciones y restricciones.” Macroeconomía del desarrollo 70 (working paper). Santiago de Chile: División de Desarrollo Económico, CEPAL, 2007. Van Der Veen, Robert, and Loek Groot, eds. Basic Income on the Agenda. Policy Objectives and Political Chances. Amsterdam: Amsterdam University Press, 2000. Van Parijs, Philippe, ed. Arguing for Basic Income. Ethical Foundations for a Radical Reform. London, UK: Verso, 1992. ———. Real Freedom for All. What (if anything) can Justify Capitalism? Oxford: Clarendon Press, 1995. Van Parijs, Philippe, and Yannick Vanderborght. La renta básica. Una medida eficaz para luchar contra la pobreza. Barcelona: Paidós, 2006. Van Parijs, Philippe, Laurence Jacquet, and Claudio Caesar Salinas. “Basic Income and its Cognates: Partial Basic Income versus Earned Income Tax Credit and Reductions of Social Security Contributions as Alternative Ways of Addressing the ‘New Social Question.’” In Basic Income on the Agenda. Policy Objectives and Political Chances, edited by R. Van Der Veen and L. Groot. Amsterdam: Amsterdam University Press. 2002. Van Trier, Walter. Every One a King. Leuven: Department of Sociologie, Katholieke Universiteit Leuven. 1994. Vandenborght, Yannick. “Why Trade Unions Oppose Basic Income?” Basic Income Studies 1, no. 1 (2006). Widerquist, Karl, and Michael W. Howard, eds. Alaska’s Permanent Fund Dividend. Examining its Suitability as a Model, Exploring the Basic Income Guarantee. New York: Palgrave Macmillan. 2012. World Bank. Conditional Cash Transfers: Reducing Present and Future Poverty. A World Bank Policy Research Report. Washington, DC: World Bank. 2009.

PA R T

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Citizen’s Income and Cash Transfers

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CH A P T ER

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Brazil: The Lost Road to Citizen’s Income Lena Lavinas

Introduction This essay aims to reflect on some of the impasses in the implementation of Citizen’s Income (CI) in Brazil. While the country is an exception in the international scenario as the first in the world to adopt Citizen´s Income by law, its experience is riddled with paradoxes that raise doubts on the possibility of moving from conditional cash transfer programs (CCTs) to the unconditional, universal CI. According to Law 10.835 of January 2004 (Lei de Renda Básica de Cidadania), which establishes a CI, every Brazilian citizen or foreigner residing in the country for more than five years is entitled to a basic income (BI) “regardless of socioeconomic condition.”1 However, Brazil’s unprecedented initiative appears to be swept away by the law’s very design, which encompasses conditionalities and is required to target the poorest. The law recognizes that “the benefit should be paid with an equal amount for all, sufficient to meet each person’s minimum expenses with food, education, and health.” According to the law, the right to a CI is to be implemented “by stages, at the discretion of the executive branch, prioritizing the poorest segments of the population.” Finally, the law stipulates the budget outlay to ensure its provision is a prerogative of the federal executive branch. This means that the law is subject to the caveats of macroeconomic policy and that its financing may be jeopardized by budget constraints and immediate political and economic issues. Two restrictions in the law itself undermine the principle of the right to an unconditional and universal CI: the policy of targeting the poorest

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and the law’s subordination to the federal government’s assessment to define the schedule and pace of its implementation, based on the balance in the public accounts. Its format thus combines mutually exclusive requirements, targeting the poorest and aiming for uniformity and universality. Therefore, the Brazilian CI was already born distorted. In practice, the right to a CI ended up being confused with the Bolsa Família (Family Grant, BF) program, the largest CCT in Latin America, enacted by Law 10.836 only 24 hours after the CI Law. Both laws appeared at the end of the first year in the Luiz Inácio Lula da Silva Administration (2003–2010), but with two radically different trajectories. While Law 10.835 became empty rhetoric, BF has been consolidated at both domestic and international levels to create a social policy focused on the effective fight against poverty. Rather than the CI, what gained legitimacy was a conditional, targeted cash transfer program that was absent from the Brazilian social protection system until 1988. In the misguided view of the Brazilian federal executive and legislative branches, the progressive expansion of BF would lead automatically to its metamorphosis into a universal CI. This shift was merely a matter of time and resources.2 This official discourse serves as the counterargument to criticism aimed at the Brazilian state for failure to enforce Law 10.835. Despite its huge scale, BF has not succeeded in fully meeting the demand for a minimum income to reduce the extent of destitution among the poorest. An important contingent of the targeted public has not been considered as having a right to a safety net, due to targeting criteria that restricted the program’s coverage (Lavinas, 2010). Meanwhile, it is widely known that the CI law has not even moved beyond paper. What can explain this backslide in redistributive programs in a country that is so profoundly in need of them and whose strongest identity trait is inequality? Why does Brazilian society rule out unconditionality, preferring conditions and targeting to orient public policies? Why was CI left out of the recent political debate on how best to use the extraordinary resources from the royalties on the new pre-salt petroleum reserves? Could the pre-salt fields (discovered in the late 2000s and estimated at billions of dollars) be the long-awaited, secure, long-lasting financial solution for CI? Will Brazil learn from Alaska, which created the Permanent Fund with resources from the exploration of its natural riches, to share the fund equally among all its inhabitants? (Goldsmith, 2002). In the first section “Introduction,” this chapter aims to demonstrate why targeting and conditionalities—already tested by BF—have little chance of paving the way to universal and unconditional CI in Brazil. The obstacles faced by universalization and unconditionality as values for all of Brazilian society are also examined. The chapter also discusses why such impediments end up inhibiting the materialization of CI and leading to its total ostracism after being legally enforced for eight years.

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Following this introduction, the second section “Social Security: Universal Schemes and Their Paradoxes” briefly contextualizes the Brazilian social protection system, consecrated by the 1988 Constitution, in order to highlight how the universal dimensions of social security, which emerged with the country’s re-democratization process, are nowadays subject to challenges, tensions, and repeated attempts at de-constitutionalization. The third section “Bolsa Família: Conditionalities Make Their Appearance” provides an analysis of the BF program, drawing on empirical examples to elucidate the effects of conditionalities and targeting. The fourth section “The Ostracism of Citizen´s Income in Brazil” focuses on the recent debate on the use of the petroleum royalties to reflect on the reasons that prevent CI from entering the contemporary Brazilian debate on timely redistribution of the national wealth. The last section “Final Remarks”provides some final comments on the prospects for CI in Brazil.

Social Security: Universal Schemes and Their Paradoxes Brazil’s 1988 Constitution established social security in the country with its own budget and “an integrated set of actions at the initiative of the Public Powers and society, dedicated to ensuring the rights to health, pension benefits, and social assistance” (Brasil, 1988: art. 194).3 This tripod ended up shaping a new system of rights in which health is universal and unconditional, social insurance is guaranteed to those who contribute according to uniform rules, and social assistance is targeted for those who can prove an income deficit and unmet basic needs (Abrahão Castro and Ribeiro, 2009). The two characteristics—universal coverage and uniform benefits— should promote a more comprehensive and redistributive system thus making redundant the previous one, which was class-based, fragmented, incomplete, and therefore exclusionary. However, universality and uniformity are not always achieved in practice (as in the case of health) and are sometimes even rejected as illegitimate and pernicious principles (as in the case of rural pensions and other benefits). In what follows, I will examine some evidence of “de-constitutionalization” of universal social security rights, in light of each of the three sectors—health, basic pensions, and social assistance—in order to understand why universality is still a work in progress in the Brazilian society. Health Under the 1988 Constitution, health became a right for all citizens and the duty of the state, through the Unified National Health System.

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Theoretically, participation by the private sector was expected to be merely complementary.4 As a result, the health sector required increasing amounts of resources to meet the exponentially growing demand for universal coverage and diversification of services, ranging from primary care to high-complexity therapies. Since the creation of the Unified National Health System, numerous programs have been progressively incorporated with an emphasis on prevention. This favored the expansion of the healthcare network throughout the country (Piola et al., 2009; Alvim, 2011). Universal immunization was achieved for all age groups; free distribution of a wide range of medicines was maintained, including those classified as strategic in cases of sexually transmitted diseases and HIV/ AIDS; and medical consultations and hospitalizations in the public sector increased steadily. However, underfinancing jeopardizes the universal dimension of the health system. Underfinancing “restricts the public system’s action and supply capacity and the organization of a case-resolving network. The result is a burden on families, who have to devote an important share of the family budget to health expenses” (Alvim, 2011). Expenditures on health goods and services for families reached 56.3 percent of all expenditures in the health sector, considering the amounts allocated by the three levels of government (IBGE, 2011). Thus, private health expenditures in Brazil reached 5.3 percent of the GDP in 2009, much higher than public expenditures, which was 3.5 percent. This belies the claims of a free and universal health system. This is partially due to the fact that billions of Reais are granted in subsidies for private expenditures. The federal government uses income tax deductions to reimburse up to 27.5 percent of what the very wealthy spend on private health plans and doctors; there is no limit on deducting private health expenditures from personal income tax.5 In 2006, “the Federal government failed to levy for health nearly a third of what the Ministry of Health spent that year” (Ocké-Reis and Santos, 2011). In a national survey conducted in 2012, although 61 percent of the interviewees disapproved of the current public health system, and 95 percent felt that it needed more investments; 96 percent were against recreating a tax to finance the sector in order to ensure universal public provision.6 President Dilma Rouseff (in office since 2010) signed the constitutional amendment 29/2000 in 2012. The bill defined mandatory expenditures for the public health system at all levels of government, and threatened to impose sanctions against states and municipalities that failed to comply with the rules. Even so, the sector remains underfinanced. Although the terms of a universal system are laid out in the legislation, the new middle class is willing to consume more private health insurance plans: “The deepening segmentation of the Brazilian health system will be accompanied by more injustice and discrimination, because the private plans

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targeting new contingents of consumers suffer from reduced coverage and low-quality care” (Bahia, 12011). Despite concrete arguments based on economics (not only on social justice, Barr, 2003) justifying public and universal health provision, the magnitude of underfinancing of the health sector in Brazil reinforces its segmented meritocratic profile and condemns programs and policies inspired by universal principles and values. Brazil thus runs the overt risk of a dual health system, contradicting the principles of the universalistic model that both inspired the creation of the National Health System and its regulation. Though private care subsidized indirectly by the government, funded by money from taxes, seems to be the best choice (for the more fortunate), it leaves the poorer sections of society at the mercy of second-class public healthcare. The Unified National Health System’s inability to ensure universal and unconditional provision exposes the challenge of building and defending the universal and unconditional principle of CI. Basic Pensions for the Rural Health is not the only area in which the principle of universalism is challenged in Brazil. Rural basic pensions, another important achievement of the 1988 Constitution, are systematically brought into question by conservative groups who interpellate its constitutionality.7 One of the new features of the 1988 Constitution was to equalize and standardize social benefits for rural and urban workers (Delgado and Cardoso, 1999; Musse, 2008). Rural workers and small family farmers were now entitled to receive a retirement pension identical to the minimum benefit for urban workers, namely one month’s minimum wage. The rural pensioners do not contribute in full to a social insurance scheme, thus creating another category of “special rural pensioners” entitled to retirement based on age. Rural women occupied in subsistence family farming can now retire at 55 years of age and receive one monthly minimum wage, while for rural men the age is 60 years.8 Delgado and Cardoso (1999) have shown how rural pensions have helped in reducing the Gini index in rural areas to satisfactory levels (0.280), in addition to significantly decreasing gender differences and the rural–urban income gap. The sharp reduction in poverty rates in the Brazilian countryside is mainly due to the redistributive impact of rural pensions.9 However, since contributions from the “special pensioners” covers less than 10 percent of the total rural pension’s expenditures, this redistributive effect is considered illegitimate and harmful to social security accounts. The actuarial argument of a social security deficit diverges from and contradicts the logic and structure of the social security budget.10 However, the argument is widely used in the attempt to reduce

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coverage and transform rural pensions into means-tested welfare benefits at far lower amounts. Another frequent argument against the recognition of rural pensions is that impoverished couples who worked at noncommercial activities end up obtaining a monetary income far superior to their previous working income. In addition to discouraging compulsory contribution to social security, this “advantage” appears “unfair” to some categories of urban workers whose monthly contributory pension value is in the average between 65 and 70 percent of pre-retirement earnings. The attempt at making universal rural pensions unconstitutional, replacing them with targeted welfare benefits to be guaranteed only for extremely poor rural elderly, reveals the objection to the principles of unconditionality and universality in social policies. How can one dissociate a right (benefit) from conditionality (contribution)? How can one ignore social asymmetries that have forged social positions? The attempts to challenge the universal rural pension system in Brazil illustrate how the very foundations of CI are undermined by placing universality and unconditionality in check. Welfare Schemes Since 1988, there has been a radical transformation in the arena of social assistance. Welfare schemes have gained public policy status. Regulated by a new set of entitlements under the Social Assistance Organic Law (1993), the welfare schemes have been replacing the philanthropic and the paternalistic charity bias of the previously isolated, ineffective interventions in this area. In 1996, the so-called Benefício de Prestação Continuada (BPC, Noncontributory Regular Pension) was introduced. This program guarantees a solidarity income to the elderly (65 years or older) and individuals with disabilities who live in households with a per capita family income of one-fourth the prevailing minimum wage or less. The only condition is that they do not receive other social insurance benefits.11 The BPC program currently pays 3.6 million benefits of one minimum wage (0.6% of Brazil’s GDP). Although proportionally small, the BPC, like rural pensions, is the target of great controversy. Many opine that it treats unequal individuals, namely the poor and workers, as if they were equal. The argument being that while the latter contribute to social security, they are “awarded” the same minimum social security benefit as the former who are, it is felt, “encouraged” to remain indigent for decades. Those who oppose this type of policy consider it unacceptable to combine contributive mechanisms (retirement pensions and unemployment insurance) with noncontributive ones (safety nets) to create a singlebenefit. The reason being that they apply value judgment of worthiness and unworthiness to

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individuals with distinctive employment status. This division has been overcome in Brazil by the historical mass demonstrations and widespread grassroots mobilization for a democratic constitution committed to promoting social justice. However, the BPC still suffers from attempts at de-constitutionalization. These attempts are oriented to dissociate the BPC from the minimum wage, thereby challenging the very existence of a universal minimum amount both for welfare and labor performance. Once more, the claim is that the government accounts are doomed by excessive spending on a system that encourages idleness and clashes with meritocratic values. The usual orthodox claim of excessive social spending needs to be clarified. In the last decade, the federal government spending on targeted income transfers increased by 250 percent, far greater than the 50 percent mean increase in total federal spending (Lavinas, 2010). The reason is the new regulatory and institutional framework of social assistance, expanded after the creation of the BF program in 2004. Yet it is equally true that the resumption of a more vigorous economic growth since 2004 with the generation of formal jobs,12 a sharp drop in unemployment rates,13 and an increase in average income, especially due to the recovery of the minimum wage,14 contributed to the major decrease in poverty and extreme poverty rates in the country. During 2001–2010, the poverty rate fell from 33.3 to 10.1 percent and 29 million Brazilians rose out of poverty.15 It is thus expected that the demand for welfare benefits, after an accelerated increase in the initial phase of recognition of rights for the more destitute, will experience a downturn in the expansion of its coverage. Thus, the upward curve in the spending for welfare programs would decline and the positive macroeconomic performance would favor social security accounts. However, conservative pressure groups continue demanding cuts in social spending by the elimination of the system’s universalistic features. Rather than solving the deficit in universalization that social security tackled partially (resulting in greater redistribution of welfare), these groups attempt to return to a past of strong segmentation and social exclusion claiming differences in status and merit. The BF program has also played a role in undermining the universal and unconditional features of the CI. The program aims to promote targeting and conditionalities as indispensable ingredients for overcoming extreme poverty by disciplining the poor. In the middle and long term, this will be the only way to offer a “door out” for those depending on conditional cash transfers. The idea is that since BF is only a compensatory, time-bound benefit, its objective is to encourage the escape from poverty by creating work incentive mechanisms. The solution to the poverty trap is work. The underlying premise is that the poor do not work, even though the employment rate among BF beneficiaries 17–64 years

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of age is 60 percent. The problem in actuality is that a substantial part of the population lives in extreme poverty, despite actively working. Many remain poor for having precarious and intermittent jobs. The “door out” rhetoric in the discourse of the government, political parties, elites, and the media, is the death blow to the possibility of transition from BF to BI. In order to understand the limits of the, it is necessary to analyze its contours in detail and examine the institutional emergence of conditionalities in the first place.

B OLS A FAMÍLI A : Conditionalities Make Their Appearance Drawing on the new institutional social security framework, the Lula administration innovated by expanding the coverage of social assistance beyond the elderly poor or disabled. BF aimed to ensure a minimum income for indigent families (monthly per capita family income less than US$39 approximately) and poor families (monthly per capita family income from US$39 to US$78 approximately). Rather than a single benefit, flexible parameters were adopted, adjusting the final amount of the benefit according to the families’ composition.16 To receive the stipend, families were required to comply with certain conditions in health (regular visits to health clinics, especially for breastfeeding women, children under five years, and pregnant women) and/or education (minimum 75 percent school attendance for children 6–17 years of age, to discourage the tendency to drop out from school). Mothers are the government’s agents in ensuring compliance with the conditions. As the nominal beneficiaries, they are held directly responsible for the program’s expected “results”; they must enforce its rules and optimize scarce resources. In other words, yet again women are held accountable (Molyneux, 2006; Chant, 2007) for managing scarcity. This is a clear reproduction and reaffirmation of the subordinate role enforced on women inside the family, perpetrating gender asymmetries. The initial recipient base of BF was formed by the so-called Remaining Programs (Food Stamps, Food Grant, School Grant, and Natural Gas Subsidy), which were highly fragmented and scarcely effective compensatory policies with strong clientelistic traits (Lavinas and Garcia, 2004). In December 2010 BF reached 12.9 million families, around 45 million persons, and 23 percent of the total Brazilian population. The largest concentration of recipients was in the northeast region (55 percent), which is not only where the program’s implementation began but also the region with the highest poverty rate. Three features distinguish BF from BPC (the other huge welfare program in the country): (i) BF is subject to conditionalities; (ii) the BPC is a targeted program, but the target population is not subject to restrictions

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in terms of age or other characteristics except for poverty; (iii) the value of the monthly benefit and the formula for calculating poverty and indigence are different. Conditionalities Conditional welfare programs are still hotly debated in Brazil. For instance, some scholars argue that the imposition of conditionalities guarantee capital accumulation among the poor, preventing the negative impacts of child malnutrition or underinvestment in education and allowing investments in productive assets (Soares and Britto, 2008; Grosh et al., 2008). There are two main objectives of CCT programs: short-term poverty relief (through the transfers) and the breaking of intergenerational cycles of poverty (via health and education conditionalities). Other scholars claim that there are no reliable mechanisms for monitoring the conditionalities. There is neither an efficient follow-up on school attendance or visits to health clinics (Cobo, 2010; Cobo and Lavinas, 2010) nor is there an integrated data system that allows some degree of monitoring the beneficiary population. The crux of the debate is that there is no direct causal relationship between human capital accumulation by the family; the children achieving elementary school education, and completing the immunization calendar; and the families’ escape from poverty. In addition, the imposition of conditionalities assumes that the poor are unaware of universal rights and are incapable of making rational long-term choices due to asymmetries both in power and information (Barr, 2003). Conditional schemes thus involve a paternalist view of poverty, assuming that poor people do not know how to spend or act “appropriately” and that the state is responsible for bypassing their preferences, correcting them, making their children’s schooling compulsory (which is already a law), or enforcing the monitoring of all the family members’ health. In practice, conditionalities appear more appropriate for overcoming poor people’s resistance to meeting their civic obligations, amidst containment of public spending. Especially since the state is far short of providing a broad and diversified set of de-commodified services with the adequate quality and quantity. Conditionalities based on health work with two assumptions: “First, that the poor population supposedly does not use health services, thus requiring the conditionality for them to receive the benefit; and second, that health is a conditional rather than universal right” (Fonseca and Viana, 2009). The first issue is a clear example of the paternalistic argument. The second exposes the contradiction between a universal right guaranteed by the constitution (health) and conditionalities in welfare programs incapable of guaranteeing coverage even to all those eligible for the program.

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Health conditionalities “are focused heavily on primary care and limited to mothers and children, with no commitment to comprehensive treatment for all health problems and needs, much less to the notion of the right to health.” In addition, “pushing for the expansion of coverage for some health actions introduced by the programs may materialize in a limited way and fail to lead to improvement in the permanent supply of primary care” (Fonseca and Viana, 2009: 16). While the success of follow-up of conditionalities in BF is measured by the Decentralized Management Index (IGD), the provision of health information is critically low in most municipalities. This contradiction compromises the program’s management as a whole, and affects the financial transfers to local governments by the Ministry of Social Development (Cobo and Lavinas, 2010). Even while the BF conditionalities seek to fill a longstanding gap in access to educational and health services for a major share of Brazilian citizens, the program involves “the difficult choice between breaking with the notion of an unconditional right on the one hand, to the extent that the commitments require the beneficiaries to share the responsibility for overcoming their difficulties, while adopting the strategy of demanding conditions from the perspective of simultaneously attacking various dimensions of poverty on the other” (Monnerat et al., 2007). As it occurs in other countries, “the logic of imposing conditionalities is based on the perspective that social rights are defined ‘contractually,’ linking rights to obligations,” but punishing families that fail to comply with the conditionalities proves inconsistent with the objectives of social promotion that such programs assume as crucial in their initial formulations. The central problem is that justifying CCT programs on the grounds of conditionalities clashes with the fact that education, health, food, and security are citizens’ rights (Fonseca, 2010). Imposing conditionalities to access these “rights” means that they are temporary rights depending the selection criteria for targeting (e.g., children up to a given age) or lasting only as long as the individuals’ dependence on the program (the shorter, the better). In other words, CCT programs do not guarantee rights and they end up eroding universal principles and jeopardizing citizens’ rights as a whole. Targeting To only maintain targeted antipoverty programs acting ex-post rather than ex-ante (preventively) entails disadvantages and risks. In order to be effective, targeting must be closely correlated to poverty, it should not be easily subverted by the beneficiary, and must be easily observed, without involving additional administrative costs (Barr, 2003). To enhance targeting criteria nearly always means increasing the intermediary or administrative expenditure, to the detriment of the ultimate expenditure (benefits). The

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risks are well known: targeting generally causes a nonnegligible deficit in coverage, since the potential target population does not always display the relevant characteristics of poverty. Thus, targeting ends up reducing the demand, through the imposition of high inconvenience costs to access benefits (self-targeting). This multiplies the horizontal inefficiencies (i.e., part of the target population is covered, while part is not). Targeting also introduces vertical inefficiencies, allowing evasion (instance.g., some families are included as poor without actually being poor). In the case of BF the deficit in the take-up rate is more serious than vertical inefficiency. Based on data from the National Household Sample Survey as of 2009, around 2.2 million poor families (9 million persons) that are eligible for the program are not recipients (Lavinas, 2010). In part, this is explained by the fact that BF is not a right, but a means-tested welfare benefit subject to budget constraints, which always had a definite ceiling on the number of beneficiaries. Here lies one of its main weaknesses: the program shows high horizontal inefficiency, generating inequities among the most underprivileged groups as a consequence of targeting those depending on welfare benefits. Every two years, the data on BF are updated in the National Registry of Eligible Individuals for BF. However, selection of the deserving poor is always based on arbitrary criteria and frequently discriminative. For instance, the use of nonmonetary selection parameters like housing standards when the housing deficit is high and slum expansion is widespread in the large cities and elsewhere, might create confusion in the selection of the deserving poor. If the goal is to include, there are more effective, efficient, and safer methods such as providing given types of benefits to the whole population. Universal benefits smooth out consumption and reduce income gaps, thereby preventing situations of risk or uncertainty from leading to a sharp loss of well-being or burning up already scarce assets in the groups that are exposed to poverty and most vulnerable. One of the merits of universal benefits is to act ex-ante, preventing poverty. Another paradox within the Brazilian state is that the country still has not established any mechanism to act preventively in the fight against poverty, even though there is a legal and institutional framework for that purpose (Lavinas, 2006). One of the main examples of this contradiction is that the law creating BF overshadows the law creating CI, making the latter unviable as an alternative for promoting a fairer redistribution pattern, based on unconditionality. Bolsa Família: Moving toward a Workfare Program? Strictly applied, conditionalities may be pushed even further in Brazilian welfare programs. An example is Bill of Law 44 of 2007. The bill

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introduces an amendment to the BF’s Law, adding the principle of workfare (without extra pay) for adult recipients in order to award the benefit: “it is a commitment by beneficiary families to government and society, which finances the cash transfer,” and “represents an opportunity for the beneficiary to enter the labor market.” Even though this new conditionality contradicts the right to need-based social protection as established by the constitution and regulated by the Unified System for Social Assistance, the Committee on Citizenship and Justice of the Chamber of Deputies approved the Bill of Law unanimously, with the unconditional support of all the political parties. This Bill of Law will be next debated at the Chamber and the Senate. Yet again, the underlying premise is that beneficiaries of the social assistance policy do not work and are thus to be deserving of the cash transfer they request from the state, that is, they are required to perform some kind of compulsory labor. This Brazilian variant of “workfare” shows a heavily ideological bent, since it lacks any basis in reality. The rate of working people and people looking for work among the working-age poor and extremely poor population is slightly lower than among the nonpoor, but even so it exceeds 65 percent in both cases. The distortion that such a decision would create in the labor market, by legitimating a new minimum pay for unskilled work, based on the amount of the benefits, would certainly prevent a feasible “door out” for the recipients of antipoverty cash transfer programs. If this Bill of Law is passed by the Brazilian Congress, it will undermine 25 years of work on the path toward institutionalization of an integrated social protection system that in spite of recurrent attempts at de-constitutionalization has remained cohesive and operational. Since its creation, the BF program has been viewed as a complementary, time-bound income designed to fill an acute gap in welfare. This new path toward more conditionalities through work requirements fully contradicts the idea that BF is a first step in the road leading to a CI. On the contrary, there is reason to fear that the program could move toward a workfare program.

The Ostracism of Citizen´s Income in Brazil The original CI Bill of Law was submitted in 2001 by Senator Eduardo Suplicy (2004). This bill contained no reference to the last sentence in paragraph 2, which stated that the law’s scope would be “reached in stages, at the criterion of the Executive Branch, prioritizing the neediest segments of the population.” The sentence was appended when the bill was passed into Law 18.035 in 2004. This change could be interpreted as the result of a last-minute negotiation by which, and thanks to a new majority political coalition, it would be possible to submit to vote and

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pass the law that would make rights universal, ensuring for the first time a monetary benefit to be shared by all Brazilian citizens or resident foreigners, “regardless of socioeconomic condition.” In the post-1988 social struggles in Brazil, the prevailing issue in the national political scenario was the advent of minimum income programs. Minimum income programs had in fact been tackled as early as 1991 in a Bill of Law entitled the Guaranteed Minimum Income Program (PGRM) designed by Senator Suplicy himself. The aim was to use a negative income tax to benefit all residents over 25 years of age who had a monthly income below a given threshold (around one minimum wage at that time). The idea was to implement the program gradually, starting with the elderly population and incorporating a new age bracket each year. The entire potential target population would be covered in eight years. This law was passed by the Senate but never came up for a vote in the Chamber of Deputies, and ended up being shelved. However, it did have the merit of sparking debate in the academic community and elsewhere about the best way to tackle poverty in the midst of the re-democratization process. An alternative to this bill was the proposal by José Márcio Camargo (2004), economist and university professor, suggesting an inversion in the target population. A cash transfer program would be targeted to prioritize school-age children (7–14 years). To break the intergenerational poverty cycle and to keep minors away from the early labor that jeopardized their future development,17 school attendance would have to be mandatory. The idea stuck. Newly elected mayors began to adopt decentralized guaranteed minimum income programs conditional on school attendance, with local resources and limited coverage. The Bolsa Escola or “School Grant” programs, as they came to be known, spread across the country in the 1990s.18 Their positive results, improving living conditions in the poorest population, led the Cardoso administration to create in 2001 the National Minimum Income Program Linked to Schooling (the federal Bolsa Escola program). This federal program never reached more than a million children and ended up being replaced by the BF program, after Luiz Inácio Lula da Silva won the presidential elections. In Brazil, diverse CCT programs across a full decade of debate stood out as innovative and effective tools, awaiting a new institutional framework that would allow them to reach a greater scale and national scope. This transmutation occurred through the fusion of all the existing programs to create the BF. Meanwhile, what became of the CI law? Already disfigured by the razor of targeting, it gradually lost its differential as a means to guarantee universal and unconditional rights. BI and minimum income for the overall population are frequently confused, and since both are attributed

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to Senator Suplicy, their ardent defender, they are one and the same in the public mind. Without a doubt, budget issues became equally dissuasive to the enforcement of CI as defined in the law. But even with a new momentum, with possibilities for extra financing through important non-budget resources, the banner of universal income was never unfurled. The recent national debate over distribution of royalties from Brazil’s newly discovered offshore pre-salt layer petroleum reserves19 is the last example and illustrates the virtual impossibility of the CI law being enforced in practice and escaping the ostracism it has suffered so far.20 The discovery of 15.1 to 20.5 billion barrels of oil and gas in the pre-salt fields—exceeding all of Brazil’s current production—sparked the drafting of various proposals since 2009 that have polarized the debate on the use and application of the new royalties.21 Corporatism and uncooperative federalism dominated the debate with the few production states arguing they should maintain their prerogatives as the major beneficiaries of royalties. One of the most important proposals was Bill of Law 12.351/2010, providing for the creation of a social fund with the aim of establishing a long-term public savings account based on the revenues received by the federal government. This source of financing would funnel additional resources to priority areas. The bill received numerous amendments in the Chamber of Deputies and Senate. While some demanded that at least 5 percent of the federal government’s funds go to complement the social security budget, others suggested that 50 percent of the royalties be earmarked for education (primary, secondary, and university). Even the country’s agrarian reform, which was functioning in slow motion, was included on the list of priorities. In the Senate, once again Eduardo Suplicy was the lone voice pointing to the country’s existing commitments (Martins, 2010). In the end, the Social Fund was established to earmark resources for future generations. The money was to be used to create programs and projects for development and to support the fight against poverty. Culture, education, sports, public health, science and technology, environment, and climate risks were highlighted as constitutive areas of the Social Fund. Financing CI, as in the case of the Alaska Permanent Fund 22 (Goldsmith, 2002) was not contemplated. It was overlooked by Congress, which passed the CI Law in 2004, the Workers’ Party that defended it, and especially by the administration that signed it. It was (and still is) in limbo.

Final Remarks In the midst of so many contradictions and paradoxes, Brazil has adopted an inside-out strategy for reworking what were already troubled and

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nonlinear approaches to legitimizing rights. In the 1920s, although it never passed in Congress, the so-called Eloy Chaves Law23 established the point of departure toward social insurance schemes in the country. Many decades passed before Brazil succeeded in establishing a broad, relatively uniform social protection system, backed by universal references, despite still being fairly segmented. Nearly a century later, the CI law was passed. It should have consecrated and crowned a long process of social innovation, this time anchored in the principle of the universal and unconditional right of all citizens to enjoy equal conditions of wealth in the country. But this process was aborted, before it was enforced in practice. And the promise of an expression of citizenship previously unknown to Brazilians gave way to a timid and voluntarist experiment 24 with dubious sustainability, whose characteristics clash with those of CI. In Brazil, obstacles to CI enforcement include recurrent pressure to de-constitutionalize universalizing tendencies that emerged during re-democratization. Universality and uniformity failed to become legitimate national values. While the neoliberal wave did not succeed in reforming social security with privatization or the complete dismantling of the public health system, as was the case in other Latin American countries, it did lay the basis for selectiveness, tighter controls, and conditionalities. The current success of the BF program has been especially due to its positive impact by preserving domestic demand during the international crisis in 2009 (by heating the internal market through the consumption of non-durable goods and durable goods and services by the beneficiares of the Bolsa Familia scheme), thereby counteracting several stigmas and highlighting the role of safety nets in the economy’s functioning. By helping expand the consumer capacity of the poor segments of the population (approximately 50 million people), BF attenuated acute deficits and thus reduced the intensity and severity of poverty. However, it has been much less successful at reducing poverty per se, but its low efficacy really matters little. BF showed that it was possible, with modest resources (around 0.4 percent of national GDP), to act in an exemplary way in moralizing poverty: rigorous standardization of the criteria for assigning eligibility, monitoring to prevent abuses by those who deem that need alone justifies welfare benefits, and signaling that the “door out” is the immediate horizon for welfare recipients. BF reinforces the adequacy of residual interventions and control measures in dealing with poverty, thus running in the opposite direction of universality and unconditionality. The expected “door out” makes it palatable for an unequal society to transfer some income for those who have never had any rights. BF instituted a previously nonexistent principle, that of a conditional benefit. (It was

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not a right since part of the target population is not reached by the scheme.) BF is the antithesis of a CI. Thus, it cannot be seen as a starting point toward a universal and unconditional income, nor does it even show the way to reach the point of departure that was left behind, inexplicably. The prospects are not promising for Brazil to make CI a reality. One path to reach it has been lost. This potential legacy has been ignored, and the odds of remaining forgotten are great. Perhaps waiting along the long road to building a more homogeneous, equal, and just society; will once again direct us to a universal and unconditional income.

Notes 1. See: www.planalto.gov.br/ccivil_03/_ato2004–2006/2004/lei/10.835 .htm. 2. This is also the understanding of Senator Eduardo Suplicy, who authored the Citizen’s Income law: “Thus, the Bolsa Família program is a step in the direction of basic income!” (Suplicy, 2006). 3. One of the novel characteristics of social security was that it consolidated a specific budget with exclusive revenues: compulsory contributions by employees and employers, in the form of social insurance, and indirect social contributions from taxes levied on the whole population’s consumption. Compulsory contributions financed social insurance benefits (retirement, unemployment insurance, pensions, maternity leave, and sick leave) and the other revenues financed health and the compensatory social assistance programs. In 2010, 53% of the social security budget came from indirect social contributions. 4. For further information see Werneck Vianna, 1998. Previously, only workers in the formal sector, who paid regularly to social security, could benefit from care in the public health system. The poor and informal workers were left on their own and their treatment was left to the discretion of the private charity-based health system. They frequently received marginal and makeshift care through the Santas Casas da Misericórdia (Mercy Hospitals). 5. Any and all healthcare expense is eligible for income tax deduction, including non-reconstructive plastic surgery. 6. See “Portraits of Brazilian Society: Public Health” (National Confederation of Industry and IBOPE [Instituto Brasileiro de Opinião Pública e Estatística]). In 1996, Brazil enacted the Provisional Payment on Financial Transactions (CPMF), a tax levied on each bank withdrawal. The funds from this tax were to be utilized to finance the universalization of the National Health System. In practice, these additional funds were siphoned from health and spent on other areas (national anti-poverty fund and social security). In 2007 the Brazilian Senate voted down a new extension of this tax. The National Health System was replaced by the Social Contribution for Health (CSS), but this measure was definitively voted down by the National Congress in December 2011.

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7. Unlike other Latin American countries, the Brazilian social security system did not undergo privatization or profound reforms, only parametric adjustments (Alvim, 2011; Fagnani, 2012; Matijascic, Kay, and Ribeiro, 2008; Mesa-Lago, 2005; World Bank, 2005). 8. Until 1988, heads of family farms received a social security benefit which amounted to one-half of the monthly minimum wage from FUNRUR AL, while spouses received nothing. Both spouses are now entitled to individual retirement as special rural pensioners. 9. In 2009, rural pensions were paid to 8.1 million beneficiaries (99% of the pensions were in the value of one month minimum wage), compared to a total of 15.7 million urban social security benefits, 67% of which were in the amount of a monthly minimum wage as well. Rural pensions’ share in the Brazilian GDP is 1.4%. 10. With the increase in formal employment (46% from 2001 to 2010 as compared to 9% for informal work), Brazil’s social security surplus has grown even during the economic recession of 2009 (-0.6%). For more on the financial situation in Brazil’s social security system, see Gentil and Maringoni, 2008; Salvador, 2011; Fagnani, 2012; and Lavinas and Cavalcanti, 2008, among others. 11. However, a poor family with an elderly member that receives the BPC can also benefit from BF cash transfers. The BPC does not take into account the per capita family income in order to judge the eligiblity for BF. 12. The Lula Administration (2003–2010) logged a net positive balance of 11.2 million formal, protected jobs, as compared to 2 million under the Cardoso Administration (1995–2002). CAGED, Cadastro Geral de Empregados e Desempregados, Ministério do Trabalho e Emprego, Brazil. 13. The open unemployment rate, measured by the Monthly Employment Survey (PME) of the IBGE (Instituto Brasileiro de Geografia e Estatística), was 6.7% in 2010, as compared to 12.4% in 2003. 14. From January 2003 (the first year of the Lula Administration) to January 2012, the minimum wage increased by 91.3% in ground reality (IPEADATA). 15. The poverty line used for this estimation is the one used for targeting purposes in the BF program: BRL 140 (or US$ 78) per capita monthly income. Brazil does not have an official poverty line, but uses different estimations and methodologies. 16. At the beginning of 2012, benefits were the following. In addition to a basic benefit for indigent families—and always approximately—other benefits are: each child (up to a total of 5) in the age 0–14 years receives US$ 18; adolescents (up to 2) receive US$ 12; pregnant and breastfeeding women receive US$ 12 The mean value of the Bolsa Família transfer was US$67 per family. 17. Other programs were developed for this purpose, one of which was the Program for the Eradication of Child Labor (PETI), now part of Bolsa Família. 18. In 2000, around 150 municipalities, out of a total of more than 5000, had adopted some type of Bolsa Escola program. See Suplicy, 2004 and 2006a; and Lavinas, 1999.

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19. In 2009, Brazil’s production reached 12.9 billion barrels of petroleum (Tolmasquim and Queiroz Pinto Júnior, 2012). 20. The pre-salt layer is a set of offshore rock formations along the Brazilian coast, with the potential to generate and accumulate petroleum. It is referred to as pre-salt because these geological formations exist under an extensive layer of salt which reaches a thickness of up to two kilometers in some offshore stretches. Thus, the total distance between the ocean surface and the petroleum reservoirs under the salt layer can reach more than seven kilometers. Thus, the costs of exploring these new reserves will be high. These offshore pre-salt layer petroleum reserves were discovered in the late 2006 (during President Lula’s administration), but the announcement was made to the public only a year later. 21. In 2010, the petroleum royalties reached around US$ 5.5 billion— approximately the amount spent on the Bolsa Família Program that year. 22. Since the formation of the Alaska Permanent Fund in the 1980s (with 50% of the royalties from the exploration of natural resources); the population enjoys access (in the form of a dividend, with equal value for all inhabitants) to the equivalent of approximately 6% of the state’s GDP. 23. A Decree-Law from 1923 named after the author Eloy Chaves of the bill, established the creation of a Retirement and Pension Fund for railroad employees. 24. The municipality of Santo Antônio do Pinhal, in the interior of São Paulo State, with 6,500 inhabitants and an economy based on tourism and small and medium-sized farming, established a pilot project for CI at the municipal level in 2009. The benefit to be paid to each inhabitant is conditioned on the availability of budget resources in the Municipal Citizen’s Income Fund. However, as in the case of Law 10.835, the municipal law provides that the benefit will be implemented “by stages,” beginning with the poorest segments of the population. The fund is nurtured by a percentage from municipal tax revenues, donations from physical or legal persons (public or private, national or international), transfers from other levels of government (state or federal), revenue from the investment of available resources, and others. Bibliography Abrahão Castro, Jorge, and Jose Aparecido Ribeiro. As Políticas Sociais e a Constituição de 1988: Conquistas e Desafios. In IPEA (Instituto de Pesquisa Econômica Aplicada). Políticas Sociais: Acompanhamento e análise. Vinte Anos da Constituição Federal. Chapter. 1. Brasília: IPEA, 2009. Alvim, Renata. “Seguridade Social na América Latina: Trajetórias Recentes de Reforma e Contrarreforma.” Master diss., Institute of Economics, Federal University of Rio de Janeiro, 2011. ANFIP. Análise da Seguridade Social 2010, (Annual Report). Brasília: Associação Nacional dos Auditores Fiscais da Receita Federal do Brasil, Brasil, 2011. Bahia, Ligia. Interview at www.viomundo.com.br/voce-escreve/ligia-bahia“o-s us-nos-tornara-mais-humanos”.html, November 2, 2011.

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Barbosa Thais de Oliveira. “Análise do Financiamento da Educação no Brasil no Ano de 2005.” Final Undergraduate diss. Institute of Economics, Federal University of Rio de Janeiro, 2011. Barr, Nicholas. Economics of the Welfare State. London: Oxford University Press, 2003. Camargo, José Márcio. “Política Social no Brasil: prioridades erradas, incentivos perversos.” São Paulo em Perspectivas, 18 no. 2 (2004): 68–77. Chant, Sylvia. Gender, Generation and Poverty. Northampton: Edward Elgar, 2007. Cobo, Barbara. “Sistemas Focalizados de Transferência de Renda: Contextos e desafios ao bem-estar.” PhD diss., Institute of Economics, Federal University of Rio de Janeiro, 2010. Cobo, Barbara, and Lena Lavinas. “Políticas Sociais e Universais Incondicionais na América Latina: Há chances reais de sua adoção na América Latina?” Paper presented at at the 13th International Congress of the Basic Income Earth Network. Institute of Economics and Administration, University of São Paulo, São Paulo, June 30–July 2, 2010. (www.bien2010brasil.com). Delgado, Guilherme, and José Celso Cardoso Jr. “O Idoso e a Previdência Rural no Brasil.” In Muito além dos 60, edited by Ana Amélia Camarano, Brasília: IPEA, 1999. Fagnani, Eduardo. O Limiar da Igualdade: 50 anos de política social no Brasil (1964/2010). Forthcoming in 2012. São Paulo: Editora da UNICAMP. Fonseca, Ana Maria Medeiros. “Transferências Condicionadas: Erradicación del hambre y de la desnutrición crónica.” Seminários FAO (2006–2008). Iniciativa America Latina y Caribe Sin Hambre (ALSCH). Volumen I. Santiago de Chile, 2010. Fonseca, Ana Maria Medeiros, and Ana Luiza d´Ávila Viana. “Programas de Transferência de Renda na América Latina e Direito à Saúde.” Paper presented at a meeting at Faculdade de Medicina, Universidade de São Paulo, Departamento de Medicina Preventiva, São Paulo, 2009. Gentil, Denise, and Gilberto Maringoni. “A Constituição de 1988 e a Seguridade Social: Uma disputa em meio à financeirização do Estado.” In Avaliação e Desafios da Seguridade Social, edited by ANFIP, 45–54. Brasília: ANFIP, 2008. Goldsmith, Scott. “The Alaska Permanent Fund Dividend: An Experiment in Wealth Distribution. ” Paper presented at the 9th International Congress of the Basic Income European Network, ILO, Geneva, September 2002, 12–14. Grosh, Margareth, Carlo del Ninno, Emil Tesliuc, and Azedine Ouergui. For Protection and for Promotion: The Design and Implementation of Effective Safety Nets. New York: The World Bank, 2008. IBGE. Departamento de Contas Nacionais, 2011. Lavinas, Lena. “From Means-Test Schemes to Basic Income in Brazil”. International Social Security Review, 59, no. 3 (2006): 103–125. ———. “Pobreza: Métricas e Evolução Recente no Brasil e no Nordeste.” Cadernos do Desenvolvimento 5, no. 7 (2010): 126–148. ———. “Renda Mínima: Práticas e viabilidade”. Novos Estudos Cebrap 53 (1999): 65–83.

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Lavinas, Lena, and André A. Cavalcanti. “O Legado da Constituição de 1988: É possível incluir sem universalizar?” In Previdência Social: Como Incluir os Excluídos. Economia Social e do Trabalho 4 (2008): 468–491. Lavinas, Lena, and Eduardo Garcia. Programas Sociais de Combate à Fome. O legado dos anos de estabilização econômica. Rio de Janeiro: Editora UFRJ/ IPEA, 2004. Lavinas, Lena, Barbara Cobo, and Alinne Veiga. “Bolsa Família: Impacto das transferências de renda sobre a autonomia das mulheres pobres e as relações de gênero.” evista Latinoamericana de Población, año 6, n°10, enero –junio (2012: 31–56 Martins, Paula Ferreira. “A Redução da Pobreza através da Renda Básica de Cidadania.” Paper presented at the 13th International Congress of the Basic Income Earth Network. Institute of Economics and Administration, University of São Paulo, São Paulo, June 30 –July 2, 2010. www.bien2010brasil.com. Matijascic, Milko , Sthephen J. Kay, and José Olavo Leite Ribeiro. “Financiamento e Gastos da Previdência e da Seguridade Social: A experiência brasileira e os parâmetros internacionais.” Previdência Social: Como Incluir os Excluídos, Economia Social e do Trabalho 4 (2008): 231–256. Mesa-Lago , Carmelo. “Assessing the World Bank Report Keeping the Promise of Social Security.” International Social Security Review 58, no. 2–3, pp. 97–117, July 2005. Available at SSRN: http://ssrn.com/abstract=733708 Molyneux, Maxine. “Mothers at the Service of the New Poverty Agenda: Progresa/ Oportunidades, Mexico’s Conditional Transfer Programme.” Social Policy & Administration 40, no. 4 (2006): 420–449. Monnerat, Gisèle Lavinas, Mônica de Castro Maia Senna, Vanessa Schottz, Rosana Magalhães, and Luciene Burlandy. “Do direito incondicional à condicionalidade do direito: As contrapartidas do Programa Bolsa Família.” Revista Ciência & Saúde Coletiva 12, no. 6 (2007): 1453–1462. Musse, Juliano S. “Uma Análise da Previdência Social ‘Rural’ com Foco na Redução da Pobreza.” Previdência Social: Como Incluir os Excluídos, Economia Social e do Trabalho 4 (2008): 549–562. Ocké-Reis, Carlos Octávio, and Fausto Pereira dos Santos. Mensuração dos Gastos Sociais em Saúde. IPEA, Working Paper n. 1637, Brasília, 2011. Piola S. F., E. D. Barros, R. P. Nogueira, L. M Servo, E. B Sá, and A. Paiva. Vinte Anos da Constituição de 1988: O que significam para a saúde da população brasileira? In IPEA (Instituto de Pesquisa Econômica Aplicada) Políticas Sociais: Acompanhamento e análise. Vinte Anos da Constituição Federal. Chapter. 4. Brasília, 2009. Salvador, Evilásio. Fundo Público e Seguridade Social no Brasil. São Paulo: Ed. Cortez, 2011. Soares, Fabio Veras, and Tatiana Britto. Dores de Crescimento: Os principais desafios dos novos programas de transferência condicional de renda na América Latina. Brasília: Programa das Nações Unidas para o Desenvolvimento e Centro Internacional de Pobreza, 2008. Suplicy, Eduardo Matarazzo. Preface to Renda Básica de Cidadania. Argumentos Éticos e Econômicos, Vanderborght Y. and Van Parijs P. Rio de Janeiro: Civilização Brasileira, 2006.

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——— . Renda Básica de Cidadania: A Resposta Dada Pelo Vento. São Paulo: L&PM Editora, 2006a. ———. Renda de Cidadania: A Saída é Pela Porta. São Paulo: Fundação Perseu Abramo / Cortez Editora, 2004. Tolmasquim, Mauricio Tiomno, and Helder Queiroz Pinto Júnior. Marcos Regulatórios da Indústria Mundial do Petróleo. Rio de Janeiro: Ed. Synergia, 2012. Vanderborght, Yannick, and Philippe Van Parijs P. Renda Básica de Cidadania. Argumentos Éticos e Econômicos. Translated by Maria Beatriz de Medina. Rio de Janeiro: Editora Civilização Brasileira, 2006. Werneck Vianna M. L . A Americanização (Perversa) da Seguridade Social no Brasil. Rio de Janeiro: Ed. Revan, 1998. World Bank. Keeping the Promise of Social Security in Latin America. Palo Alto: Stanford University Press, 2005.

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CH A P T ER

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The Argentine “Universal Child Allowance”: Not the Poor but the Unemployed and Informal Workers Rubén Lo Vuolo

Labor Market Failures and Monetary Income Transfers One of the controversial issues about Basic Income (BI), or Citizen’s Income (CI) policy, is its declared aim of distributing a stable and unconditional income to all people independently of their status or position in the labor market. This makes it a policy capable of mitigating the contradictory dual function that the capitalist system imposes on the wage relation: that it simultaneously and via a single mechanism resolve both the challenges of job allocation and income distribution among the labor force (and from there among the entire population). Thus, the CI offers a solution to the historical dilemma that remuneration for employment (wages) poses by acting as part of the production cost, while simultaneously being the main component of the population’s purchasing power. According to orthodox views, such interference would restrict the freedom of contract of the capitalist labor market. However, it is evident that in practice this freedom is mere fiction. Employment recruitment is subject to legal criteria and operating rules that impose strict limits on all parts (Offe, 2008). For instance, the labor contract is limited by two boundaries: a “superior” one that wages cannot exeed without jeopardizing profitability of the production unit (and therefore the very existence

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of the employment position), and an “inferior” one that wages cannot fall short of without risking the subsistence of the worker and her family (and thus the reproduction of the labor force). Other factors belonging to the modern social state have to be added to this list of restrictions. For example, employment remuneration also needs to cover the funding of social security via different schemes, and must include sufficient income for people’s nonworking periods. Besides, the burden of payroll and income taxes, which finance transfers and benefit schemes of diverse types, must be considered. In recent decades, increasing economic openness and the globalization of capital accumulation has incremented firms’ exposure to international competitiveness. This adds to the pressure on both the reduction of social labor costs and the increase in labor productivity. As a result of these processes, two tendencies are becoming increasingly pronounced. For one, the forms of precarious employment are multiplying, further eroding the bases of sustainability (and funding) for social security. At the same time, the importance of personal income transfer policies financed through fiscal measures is increasing. The way these tendencies express themselves in a given country depends to a large degree on the contexts and institutional heritage of its national social protection system. Unemployment insurance, for instance, has traditionally held the function of guaranteeing an income to those who have lost jobs and are searching the market for employment. This policy has proven rather effective in the contexts of large, formal labor markets and cases of temporary unemployment, but it loses effectiveness in the face of a growing informal sector and structural unemployment. To counter these deficiencies, “active employment policies” are increasing. Among them, workfare programs pay temporary benefits to people in return for working at tasks assigned by the state. In Latin America, unemployment insurance has historically been very limited if not nonexistent, precisely because employment in the informal sector, unemployment, and precarious employment in the region are structural phenomena impairing its efficiency. Active employment policies have also been limited, and were mostly intended as antipoverty policies rather than as employment policies. The effects of these policies have been negligible and less than encouraging. Therefore, employment in the informal sector and precarious employment in general continue encouraging labor flexibility and the social fragmentation of the region. Despite this situation, the prevailing conception is that the labor market holds the solution to the population’s welfare problems, and hence the belief that income transfer programs must be temporary, exceptional, and targeted at narrowly defined groups. Frustrations with past experiences on this matter, the persistence of structural employment problems, the recurrent economic crisis, and

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a political dynamic that focuses more on the most vulnerable groups of society, have fostered new trials of income transfer policies in the region. The most renowned are the so called Conditional Cash Transfer Programs (CCTs) whose operating rules suppose that the rate of return of fiscal income transfer programs would be higher with the transfer directed toward children with conditionalities vouched for by their parents (World Bank, 2005). Formally, CCT programs are justified on the basis of two objectives: to reduce income poverty in the short run and to increase the accumulation of human capital in the long run. This is to improve future employability, which would break the “hereditary” cycle of income poverty. In practice, however, CCT programs seek to compensate for the incomplete coverage of the traditional Family Allowances programs (Programas de Asignaciones o Subsidios Familiares) for formal employees. In fact, parallel to the CCT programs, Non-Contributive Family Allowance schemes have spread as well. In this context, Argentina implemented the Universal Child Allowance for Social Protection (Asignación Universal por Hijo para Protección Social, AUH) at the end of 2009, imposed by decree to the law of Family Allowances for formal wage earners.1 As a general criterion, the AUH grants noncontributive benefits for every child under 18 whose parents are unemployed or work in the informal sector earning less than the minimum wage (Salario Mínimo, Vital y Móvil ). These income and employment conditionalities apply to all adults integrating the household.2 Payment of the benefit is conditional on compliance with educational and health requirements. The AUH emerges from a particular political context. For some years, a Childhood CI was promoted in Argentina. The proposal envisioned a universal and unconditional income for persons under 18.3 Introduced as a bill in the Parliament in 1998, this proposal triggered the presentation of other bills, which became integrated into the agenda of different parliamentary groups.4 During the campaign for the legislative elections in 2009, a number of parties opposing the government of President Cristina Kirchner (since 2007) included them in their agenda. After the elections, the government ousted opposition demands in this issue with the launch of the AUH program.5 The AUH replaced previous assistance programs. In particular, the Program for Unemployed Heads of Household (Programa Jefes y Jefas de Hogar Desocupados), launched in 2002 after the hyper-devaluation of the Argentine currency, which put an abrupt end to the convertibility regime that had been enforced in the country for a decade.6 At that moment, this workfare program introduced two innovations: cash transfers and self-targeting. Household heads were assigned a task, whether in-service training or in-job assignment in a productive activity. Coverage was

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huge in relative terms, but impact on poverty and unemployment were not relevant. This is explained by a combination of several factors: the program paid an equal benefit for households of different sizes, most of the working poor were excluded, there were control failures, there was engagement of nonworking people, and it became a substitution of public employment. However, the Programa Jefes y Jefas de Hogar Desocupados proved to be an effective political instrument as it turned into one of the central elements in the survival strategy of many low-income households. In practice, the two most evident impacts of this program are: (i) it encourages and becomes functional to the generalized environment of precarious labor conditions, and (ii) it works as a mechanism for attracting political loyalties and capturing votes (Auyero, 2004). The AUH recognizes these antecedents, while at the same time it appears to feed the debate about a CI in the region with new data. Its hybrid status between a CCT program and a Non-Contributive Family Allowance program, its universalist claim, and its coverage according to beneficiaries’ labor market position are all elements that deserve a closer look. The AUH represents a new conditional income transfer scheme that enriches the debate, and at the same time it challenges the potential progress of a CI in the Latin American countries.

The Operating Rules of the AUH in Argentina As opposed to other CCT programs, such as Bolsa Família in Brazil, the AUH has no explicit limits (quotas) with regard to the total number of beneficiaries. In principle, all unemployed people or those working in the informal sector own the right to claim the benefit. Just like other CCTs, the AUH demands compliance with two types of conditionalities: income levels, and education and health responsibilities. The peculiarity of the Argentine program lies in the income ceiling it established at the minimum wage for formal labor contracts and the resultant value of the benefit (equivalent to the one paid to low-income formally employed).7 Another particularity of the AUH is that it retains 20 percent of the monthly transfer, which is refunded at the end of the year after the annual certification of compliance with health and educational requirements. In the case of noncompliance, the benefit is lost and there can even be penalizations for “falsification of the affidavit.” Originally, the benefit could be collected from birth, but since April 2011 pregnant women can also receive a benefit of equal size and under the same conditions as the Universal Pregnancy Allowance for Social Protection (Asignación Universal por Embarazo para Protección Social, AUE).8

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The AUH (including the AUE henceforth) is financed through resources from the social security system, including the annual yields from the Guarantee Fund for the Sustainability of the Public Social Security Regime (Fondo de Garantía y Sustentabilidad del Régimen Previsional Público de Reparto). With the renationalization of the social security system in 2008, this fund absorbed the funding until then managed by private enterprises (Administradoras de Fondos de Jubilaciones y Pensiones).9 To summarize, some of the features of the AUH are listed below: (i) It is a noncontributive benefit included in the law of Family Allowances for formally employed wage workers. (ii) Instead of considering the total household income, the labor situation of every member of the family and the income ceiling of the minimum wage is taken into account to decide the transfer of benefits. (iii) The value of the benefit corresponds to that of the Family Allowance program for formal, low-income employees. (iv) A portion of the monthly transfer (20 percent) is retained until compliance with conditionalities is certified. (v) The benefit is financed with social security resources. With these operating rules, the AUH emerged as a new species within the large family of CCTs and Non-Contributive Family Allowance programs in Latin America.

The Functioning of the AUH Program Many problems with information prevail in the program. To this day, the registration records of beneficiaries’ characteristics remain unavailable, rendering it impossible to compare beneficiaries’ conditions before and after getting access to the benefit. Reliable accounts of the number of unemployed people do not exist. Meanwhile, the Argentinean unemployment insurance only covers 6 to 10 percent of the unemployment registered in the Permanent Household Survey (Encuesta Permanente de Hogares, EPH). To the preceding list of concerns, a more general problem has to be added. There is a marked distrust toward official poverty and labor market indicators, since the national government intervened in the National Statistics and Census Institute (INDEC) in early 2007. For example, official statistics estimated the amount of indigent families to lie at around 2 percent and that of poor families at 6.8 percent of the entire population in the second semester of 2010. Calculations using

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alternative indicators, which are more compatible with time series, place these percentages closer to 16 percent and 29 percent, respectively (Lozano el al., 2011). It is not surprising, then, that the “simulation” exercises that tried to measure the global distributive impact of the program have reached widely dispersed results, depending on the assumptions adopted for the calculation.10 It can only be assumed that the AUH has had a positive distributive impact, because those groups in precarious employment situations received benefits they did not enjoy before. A number of issues need to be added to the already identified complications with the data sources. These include: the persistence of institutional fragmentation and related differentiated benefits, the changes in people’s labor relations, the difficulty of controlling informal incomes (which in practice are based on self-declaration), the selective criteria of bureaucracy in relation to the monitoring of conditionalities, etc. All of these problems are common in other Latin American countries, and in the targeted conditional programs. Besides, “an ‘additional coverage’ exists by way of in terms of [either one of the two] the income tax deductions for people with family responsibilities. It implies that those earning more than the established limits to qualify for AUH and family allowances nonetheless enjoy tax credits for their children. This disintegration of the tax system obstructs the estimation of a “net position” of every taxpayer and hence of the net distributive impact of transfers (Barbeito, 1995). Similar problems are encountered in other dimensions, particularly where the program (AUH) exhibits innovative and improved features with respect to other regional programs. For one, the coverage is considered “universal,” which results from regarding a beneficiary as any person unemployed and/or employed informally. Another characteristic consists in the particular form of “preventive” sanction that conditionalities operate with, whilst the third features its stability and the guarantee of funding taken out of social security. Coverage: Is It Universal? The characterization of the AUH as “universal” deserves objection. For starters, the very concept of “informal economy” is rather ambiguous, insofar as it covers a range of very heterogeneous activities that are difficult to define (Ministerio de Trabajo Empleo y Seguridad Social, Banco Mundial, 2008). The common practice is to consider as informal those which are not registered with the social security system, but the issue is not that easy. The informal economy hosts activities that are registered, but characterized by low capital, low productivity, low incomes, etc. This

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ambiguity is a problem that can be observed in targeted programs: the state decides which population is covered. This way, among those groups excluded from the benefit, are the independent workers fiscally registered as “mono-taxpayers” (monotributistas). However, those independent workers registered as “social mono-taxpayers” receive the benefit.11 Other groups, such as domestic employees were originally excluded from the benefit, but (apparently) incorporated afterwards. In practice, the first people to be incorporated were those already registered in the records of the National Social Security Administration (ANSES), the institution responsible for the administration and financial funding of the program. The people who at some point had registered employment and/or participated in welfare programs that were terminated and transferred to the AUH, were included in the records. The transfer of welfare programs explains large parts of an apparent paradox: in late 2011, almost 90 percent of the enrollment corresponded to women registered as “unemployed.” This fact is inconsistent with official labor market statistics, both in terms of the composition of the unemployed versus informal workers and with regard to the ratio of female to male unemployment. The explanation lies in a combination of three intuitive reasons. The first points to the previously existing programs that were “absorbed” by the AUH, which predominantly accepted women as beneficiaries (Lozano and Raffo, 2011).12 The second reason lies in men’s fear to fiscalize their informal labor relations. The third aspect is that if and when inactive people (generally women) prefered to be registered as unemployed, since this way they were guaranteed to “permanently” receive the benefit. They would not be able to ensure this if they were to change their employment situation. Therefore, people seem to prefer the relative stability of the “unemployed” category over the instability of being subjected to inspections and changes in their employment relation. However, in reality, a large part of the labor force moves freely between different situations of employment (formal/informal), unemployment, and inactivity. These and other problems are reflected in the discrepancies of measuring the coverage of the program. The results are very disperse depending on the assumptions adopted about the actual functioning of the program (in terms of registration, compliance with conditionalities, actual number of informal workers and unemployed, etc.).13 An additional problem lies in the increasing number of benefits which are suspended on the basis of incompatibility of databases (especially between the national instances that pay, and the Provinces that administer the health and educational services), documentation that has not been withdrawn, noncompliance with conditionalities, etc.

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The above argument does not deny the fact that the coverage of the AUH is larger than that of similar programs in the region. However, universal coverage is not even achieved for very needy and vulnerable groups. Moreover, it seems that besides the typical poverty trap problems associated with all welfare programs conditioned to some income threshold, the AUH additionally develops a sort of “informality trap” the effects of which are difficult to measure with the information available.14 Punitive Conditionalities: Children’s Rights and Human Capital Formation? The monthly retention of 20 percent of the benefit in exchange for compliance with program conditionalities merits various objections (in addition to the criticisms about the conditionalities themselves). First, this mechanism implies a loss of the benefit’s real value, and a decreased expenditure, in an economy with high inflation levels (between 20 and 30 percent annually since the launch of the program). Moreover, it represents an unjustified differential treatment when compared to the formally employed, who neither face income retention, nor need to comply with conditionalities in order to receive the benefit for their dependent children. On the contrary, the formally employed are paid an extra amount per year—a kind of reward—when children are attending school. This differential treatment is also evidenced in other rules. For instance, the formally employed are not limited to the five benefitted children per household that apply for the AUH. Furthermore, established norms demand beneficiaries to attend state schools for the collection of their AUH benefits, while formally employed do not face this constraint.15 These unequal treatments lead to a serious questioning of the official discourse of presenting the program’s punitive conditionalities as encouraging the creation of human capital and preserving children’s rights. Neither the conditionalities, nor the retention of parts of the benefit, or the actual loss of the benefit due to noncompliance are applied to formally employed, who even receive a reward for sending their children to school (besides the other family allowances). How can these benefits be considered rights when they can be withdrawn as a punitive measure against non–compliance of rules over which the children and adolescents themselves do not have any control? How can they be universal rights when those in the worst situations face the most demanding conditions and penalizations? If the conditionalities are really that good, why are they not rigorously enforced on those in better employment situations? This emphasizes what other studies on CCT programs have expressed as well: that the punitive conditionalities in these programs are not designed to promote capabilities, but rather serve to exert control over

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people. The differential enforcement of the conditions also create an atmosphere of selectivity and clientelism over the most vulnerable groups of society.16 These programs consolidate unequal treatment, institutional fragmentation, and unjustifiable subordination and discrimination of their own beneficiaries. What they call rights are, in practice, organized obligations which transfer the responsibility of poverty to the unfortunate victims. Finance: Guaranteed and Stable? As opposed to most other CCT programs in Latin America, which are financed via general taxes and/or external loans, the AUH receives resources from the social security system. This weakens the traditional separation between contributive and noncontributive benefits. On the one hand, social security benefits are financed increasingly through general taxation, while on the other hand noncontributive benefits are paid with resources obtained from income tax.17 The pension reform of 1994 is a milestone for these tendencies (Goldberg and Lo Vuolo, 2006). At the time, the fiscal gap generated by the transfer of worker’s payroll toward the individual capitalization accounts was filled by transferring general tax collection to the social security system. When in late 2008 the system was renationalized, recreating a single unified public distribution system, the treasury recovered the income from personal contributions, but resources from general tax continued financing the social security system (Arza, 2009).18 To these resources, the assets and rents of the above-mentioned Guarantee Fund for the Sustainability of the Public Social Security Regime had to be added. The fund was constituted with the resources accumulated by private administrators during the period of validity of the now-abolished regime of individual capitalization of contributions. The combination of these elements generated a surplus in the social security system, which in turn contributed resources for the AUH. Nonetheless, there are reasons to be pessimistic about the future. The first concern is the increasing expenditure of social security programs, especially of pensions, due to a particular moratorium for those contributors who did not comply with their contributions during their working life.19 The second cause for worry is the persisting payroll tax evasion, especially considering the enormous mass of informal workers. The third issue, is that projections for pension’s payments, just like the accumulation of debt due to underpaid benefits, anticipate problems for the funding of the social security system in the future. To summarize, the AUH attempts to consolidate the tendency towards unification of the sources of finance for social programs, but it does so under economic conditions unlikely to last. Using social security

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resources to finance the program does not seem to guarantee stability of the funding, and it postpones the debate about the necessity of a progressive tax reform in the country (and in Latin America).

What New Insights Does the AUH Add to the CI Debate in Latin America? Argentina’s AUH reveals both differences and continuity with respect to other CCT programs spread throughout Latin America. In principle, just like those programs, its operating rules insist on organization principles that have proven inconvenient: focalization, punitive conditionality, temporality, and lack of integration with the tributary system. Indeed, all of these are organizational principles that proponents of a CI seriously question. The persistence of these organizational criteria highlight a common constraint of these programs: they do not wish to alter the distribution of social advantages and disadvantages that emerge from the labor market in order to preserve the “ethics of employment.” This leads to payment of lower benefits and the demand for more rigorous access conditionalities from those already struggling in the labor market, following the conviction that this way the search for better labor opportunities will not be undermined. The AUH reaffirms these criteria insofar as it concedes differentiated rights depending on the position of mother or father in the labor market. It is vital to understand the embedded morality in the policies. To the adult “guilty” of not having work or being in precarious employment to support her family needs, the state transfers resources so that she can cover the expenses of her “innocent” children. The central contradiction lies in the punitive conditionalities. The sanction for not complying with conditionalities is the withdrawal of the benefit, which harms the very children supposedly favored. The sanctions seem further unjust as the children who are affected are not responsible for the noncompliance. Understood from this perspective, these programs cannot be presented as safeguarding children’s rights. The AUH cannot recognize the rights of children and adolescents while it continues fragmenting the institutions of social protection. In fact, the AUH recognizes the legal rights of an unlawful legal form: unregistered employment. Additionally, since it is integrated in the law that regulates family allowances for the formally employed, and is financed by social security funding, the AUH further blurs the differences between contributive and noncontributive benefits. In practice, it consolidates the institutional fragmentation and variety of income transfer payments for attending to responsibilities of the family.

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Financing the AUH with social security funds also has its share of pros and cons. On the one hand, it is positive that the program relies on domestic sources of finance, and that these sources blur the distinction between contributive and noncontributive programs. On the other hand, however, It consolidates the central role that labor relacion plays in defining access to different social benefis. Moreover, the capability of the social security system to guarantee funding is questionable at a time when many programs compete for the available resources. This is particularly the case in the absence of a tax reform that would reverse the regressive bias of the current system, which heavily taxes wages, but only levies limited personal income taxes. The greatest virtue of the AUH lies in its demonstration that the more general the category to target beneficiaries (in this case, informal employment and unemployment), the higher the chances to expand coverage. The larger coverage potential is derived from the lack of quotas for the number of beneficiaries. Nevertheless, the relatively increased coverage does not resolve problems like the lack of universal coverage, the heterogeneity of the benefits, and the selectivity in their distribution. For the time being, the Argentine state continues valuing children based on the labor relation and income level of their parents. To the problems of poverty trap and unemployment trap, the AUH adds an informality trap. This is evidenced in the disproportional registration of women beneficiaries as unemployed. It proves that all targeted, selective, and conditional programs oblige people to “adapt” their lives to the criteria established by political and bureaucratic powers. This interference in the personal autonomy of an individual also goes against the tenets of the CI. In short, when compared to other CCTs, the AUH improves targeting criteria, increases coverage, and progresses toward a better institutional integration of contributive and noncontributive benefits. All of these aspects can be considered positive steps toward institutional arrangements inspired by the organizational principles of a CI. Nevertheless, the AUH consolidates the primacy of other rules and values that completely oppose those of a CI: focalization, punitive conditionality, temporality for receiving the benefit, and the lack of integration of the monetary benefit with the tax system. The differences are not merely technical, they define a specific vision of the social question and social rights in political practice. Indeed, these programs are devoted to a view of the social question as concentrated in certain groups of poor that are bureaucratically selected. Social benefits are those that a paternalistic state (easily confused with the government of the day) grants to beneficiaries who in exchange follow criteria dictated by the government.

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On the other hand, a CI opposes operating rules or those programs based on focalization, conditionality, temporality, and disintegration of subsidies and taxes. This makes sense because it embraces a different conception of the social question and social rights. The social question is seen as a problem deriving from the way income and employment distribution mechanisms are organized in capitalist societies, while social rights are taken to be the individual rights of people with equal rights to exist autonomously.

Final Reflections: A Universal, Unconditional, and Fiscally Integrated Childhood Income The central problem that a CI aims to resolve is the fundamental contradiction of a labor market that using the same mechanism, has to simultaneously reconcile the allocation of jobs in the productive system, and the distribution of both income and social rights among the labor force (and from there to the entire population). On the contrary, the AUH, in line with other assistance conditional programs attempt to preserve the current system of social organization which is based on a contradiction. These programs ignore four clear realities of the way Latin American societies are organized. Here, it is obviously not possible to: i) obtain the ideal of full employment for all of the labor force, let alone under conditions that foment welfare and personal autonomy; ii) comply with the imperatives that today’s capitalist system imposes on the labor contract with regard to the allocation of available jobs and the distribution of income; iii) reach universal and egalitarian coverage with targeted and conditional programs; iv) generate a progressive income distribution and sustain sources of funding, if subsidies are not combined with progressive taxes. The income transfer programs directed at children could constitute a reasonable gateway for a CI in Latin America. However, it is doubtful whether this could be the result of the expansion of current CCTs, Non-Contributive Family Allowance schemes, AUH, or other programs of the same family simply because their conception and operating rules are opposing those of a CI. It could even be conceived that due to the consolidation and legitimation of these programs, a debate on the CI might be considered unnecessary in the region. This is the case of the Argentina’s bill for a Childhood CI upon initiation of the AUH. In other words, conditional and focalized assistance programs in all their variants cannot be considered a step toward the gradual implementation of a CI in the region. They can only serve to legitimize monetary income transfers to poor families, and take steps to expand coverage to an ever-increasing population group. However, an income transfer program aiming at children clearly needs to be organized under different

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premises if it is to become a solid pillar in the difficult task of legitimizing a CI in the region. First of all, the justification of transfers aimed at children should not be built on the understanding of them as “innocent” persons, because this leads to construction of policies that are based on the idea of individual “risk” (moral or material), which foster paternalistic state actions and social control. In contrast, following the principles that inspire a CI, the children’s right to receive an income derives from their very existence as persons. This understanding of the child was established in the International Convention on the Rights of the Child and the Latin American countries have integrated it into their Constitutions. This right cannot be punitively conditioned any further than having the income transfer serve as stimulation and promotion to access essential health and educational services. Though access to these services tends to be obligatory on the basis of other specific regulations, the children and adolescents themselves are not to be harmed should they for some reason fail to comply with these obligations. Ultimately, the peole to be held accountable are the parents or those responsible for the administration of the benefits. Should the need arise to take punitive action, it should be done after guaranteeing that this penalization would not end up adversely affecting the actual holders of this right to income. From the above it follows that the children’s right to receive an income should not become an addition to the salary of their parents, but remain as a remuneration in its own right and unrelated to the situation of their progenitors. This guarantees equality and universality of the coverage. It also avoids operative problems resulting from changes in the labor status and in the income situation of the adults. Moreover, it could bring about solutions for other operative problems, such as those emanating from the fiscal disintegration between child benefits paid and tax credits granted on the same motive for personal income taxes. A fiscal integration on this account would enable the inclusion of monetary transfers as tax credits, operationalizing in this way a progressive scale on the income tax. Embedded in these principles, a Childhood CI could form a strong base from which the state can proceed toward the legitimacy of a CI for other age groups. Neither seems to be the case with the Argentine AUH, not with other programs of the same family that work with principles contrary to those of a CI. Instead, they remain trapped in their own contradictions of heterogeneous, unequal, and volatile labor relations. Notes 1. Family Allowances for formal waged labor include: (i) those paid monthly over a specified period (prenatal, maternity, and disabled child); (ii) the one-off payments (birth or adoption, marriage, and education assistance). The amount varies and decreases until reaching zero, and the quantity is

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2.

3. 4.

5.

6.

7. 8.

9.

10. 11.

12.

13. 14. 15.

16.

based on salary and geographic area. The program is financed via income tax. The individual state jurisdictions (national, provincial, and municipal) pay their employees directly. At the most, five AUH per household can be obtained. The benefits can be paid either to the mother or father of the dependent provided they are residents of the Argentine Republic. See Barbeito and Lo Vuolo (2009) and the bibliography presented. For further details and a comparison of the bills, see Berrenechea and Straschnoy (2008), Repetto et al. (2009), and the information available on the web page of the Argentinian Network of Citizen’s Income (www .ingresociudadano.org). Something similar seems to have happened with the law of the Renda Básica de Cidadania and the Bolsa Família program in Brazil. See also the chapter by Lena Lavinas in this volume. Galasso and Ravaillon (2003) offer the World Bank´s point of view regarding this programme. For a critical analysis see Barbeito, Zuazúa, and Enríquez (2003). This amounts to approximately US$ 62 at the end of 2011. In 2011, the value of the benefit during pregnancy was equal to the AUH, and it was linked to the “prenatal allowance” under the “general area” of the Family Allowance program. Scheduled medical checks are required in the “Plan Nacer” (Birth Plan) of the Health Ministry. At this point in time, Argentina eliminated the capitalization component of the social security regime (pension funds) administered by private firms, which was created in 1994 in order to return to a single state-distribution system (Arza, 2009; Mesa-Lago, 2009; Lo Vuolo, 2008). See for instance Agis, Cañete and Panigo (2010); Lozano and Raffo (2010); Gasparini and Cruces (2010); Bertranou (2010) Social Mono-taxpayer is a nebulous category identifying a person whose productive, service, or trade activities “obstruct her insertion in the formal economy due to finding herself in a situation of social vulnerability.” The Social Mono-taxpayer is listed under a special registry. This is the case for the “Families for Social Inclusion Scheme” (Zaga Szenquer, 2009) that subsidized goods for women with dependent children if and when they did not participate in the labor market (i.e., they were unemployed) employment/unemployment scheme (primarily under the programs of “Jefes y Jefas de Hogar Desocupados” and “Empleo Comunitario”). Half of the annual expected costs for the AUH (0.6% of GDP) is estimated to have been “saved” by the transfer of benefits from other programs (Lozano and Raffo, 2010). See Lozano and Raffo (2010), Bertranou (2010), and Gasparini and Cruces (2010). See the Introduction of this volume. In practice, this requirement has been suspended, but the legal norm remains in force, testifying to the room for arbitrary and discretionary use of the political power. Similar conclusions are obtained in the case of programs such as Bolsa Família (Medeiros, Britto, and Soares 2007, 18).

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17. Just like for the rest of Latin America, in Argentina the greatest tax collection is from indirect taxes and wage tax. The tax burden on personal income, and capital is rather low (Cetrángolo and Gómez-Sabaini, 2007). 18. In 2009, the resources collected from the wage tax represented only 57% of the total income of the Argentine social welfare system. 19. See the chapter by Camila Arza in this volume. Bibliography Auyero, Javier. “Política, dominación y desigualdad en la Argentina contemporánea. Un ensayo etnográfico.” Nueva Sociedad, N° 193. September– October 2004. Agis Emmanuel, Cañete Carlos, and Panigo Demián. El impacto de la asignación universal por hijo en Argentina. Buenos Aires: Cenda/PROFPE/ CEIL-PIETTE, mimeo, 2010. Arza, Camila. Back to the state. Pension fund nationalization in Argentina. Documentos de Trabajo Ciepp 73. Centro Interdisciplinario para el Estudio de Políticas Públicas, Buenos Aires, 2009. Barbeito, Alberto. “La integración de los sistemas de transferencias fiscales como instrumento de integración social.” In Contra la exclusión: La propuesta del ingreso ciudadano, edited by Ruben Lo Vuolo, 177–234. Buenos Aires, Argentina: Miño y Dávila /Ciepp, 1995. Barbeito, Alberto, and Rubén Lo Vuolo. “Ingreso Ciudadano para la niñez. Reelaborando ideas para construir una sociedad más igualitaria.” Documentos de Trabajo Ciepp, 70, Centro Interdisciplinario para el Estudio de Políticas Públicas, Septiembre, 2009. Barbeito, Alberto, Noemí Giosa Zuazúa, and Corina Rodríguez Enríquez. “La cuestión social en Argentina y el Plan Jefes y Jefas de Hogar desocupados.” Proyecto Enfrentando los retos al trabajo decente en la crisis argentina, Buenos Aires: OIT (Organización Internacional del Trabajo)/Gobierno Argentino (MTSS [Ministerio de Trabajo y Seguridad Social]), mimeo, 2003. Bertranou, Fabio. Aportes para la construcción de un piso de protección social en Argentina: El caso de las asignaciones familiares. Buenos Aires: OIT, 2010. Carmona Berrenechea, Verónica, and Mora Straschnoy. “El Ingreso Ciudadano para la Infancia: una Nueva Perspectiva sobre las Políticas Sociales.” Encuentro Iberoamericano de Ingreso Ciudadano, Buenos Aires. de noviembre, 6–7, mimeo, 2008. Cechini, Simone, and Aldo Madariaga. Programas de transferencias condicionadas. Balance de la experiencia reciente en América Latina y el Caribe. Cuadernos de la CEPAL (Comisión Económica para América Latina), 95. Santiago de Chile, CEPAL, 2011. Cetrángolo Oscar, and Juan Carlos Gómez-Sabaini. La tributación directa en América Latina y los desafíos a la imposición sobre la renta, Serie Macroeconomía del desarrollo 60. Economic Development Division, CEPAL, Santiago de Chile, 2007. Galasso, Emanuela, and Martín Ravaillon. Social Protection in Crisis: Argentina’s Plan Jefes y Jefas. Washington, DC: The World Bank, Development Research Group, July 2003.

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Gasparini, Leonardo, and Guillermo Cruces. “Las Asignaciones Universales por Hijo: Impacto, Discusión y Alternativas.” Documento de Trabajo 102. CEDLAS-Universidad de La Plata, La Plata, 2010. Goldberg, Laura, and Rubén Lo Vuolo. Falsas Promesas. Sistema de Previsión Social y Régimen de Acumulación. Buenos Aires and Madrid: Ciepp/ Miño y Dávila, 2006. Lo Vuolo, Rubén, Alberto C. Barbeito, Laura Pautassi, and Corina Rodriguez. La pobreza de la política contra la pobreza. Buenos Aires: Ciepp/ Miño y Dávila, 1999. ———. Promesas falsas y necesidades ciertas. Acerca del proyecto de creación del sistema integrado de previsión argentino, Análisis de Coyuntura 18. Centro Interdisciplinario para el Estudio de Políticas Públicas, Buenos Aires, 2008. Lozano, Claudio, and Tomás Raffo. Actualización de la cobertura; AUH (Asignación Universal por Hijo para la Protección Social) y AUE (Asignación Universal por embarazo). Buenos Aires: Mimeo. IPYPP (Instituto Pensamiento y Políticas Públicas), 2011. ———. Bicentenario sin hambre. Evaluación del programa “Asignación universal por Hijo para la Protección Social” en sus primeros 4 meses de implementación. Buenos Aires, Idep-CTA, mimeo, 2010. Lozano, Claudio, Daniel Petetta, Tomás Raffo, and Ana Rameri. El mapa de la pobreza argentina: Los efectos de actualizar la metodología. Buenos Aires: Idep-Cta, Mimeo, 2011. Medeiros, Marcelo, Tatiana Britto, and Fábio Veras Soares. Programas focalizados de transferência de renda no brasil: Contribuições para o debate, Textos para Discussão 1283, IPEA, Brasília, 2007. Mesa-Lago Carmelo. “La ley de reforma de la previsión social argentina. Antecedentes, razones, características y análisis de posibles resultados y riesgos.” Nueva Sociedad 219 (2009): 14–30. Ministerio de Trabajo, Empleo y Seguridad Social, Banco Mundial. Aportes para una nueva visión de la informalidad laboral en la Argentina. Buenos Aires: Ministry of Labor, Employment and Social Security / World Bank, 2008. Offe, Claus. “Basic Income and the Labor Contract.” Basic Income Studies 219, 3 (2008). Repetto, F., G. Díaz Langou, V. Marazzi (2009) “¿Hacia un Sistema de Protección Social Integral? El Ingreso para la Niñez es sólo la Punta del Ovillo,” Documentos de Políticas Públicas CIPPEC 67. Rodríguez Enríquez, Corina. “Programas de transferencia condicionada de ingresos e igualdad de género. ¿Por dónde anda América Latina?” CEPAL. Serie Mujer y desarrollo n. 109 (Noviembre),, Santiago, 2011. World Bank. Conditional Cash Transfers. Reducing Present and Future Poverty, A World Bank Policy Research Report 47603. Washington, DC: World Bank, 2009. ———. Informe sobre el desarrollo mundial 2006. Equidad y desarrollo. Washington, DC: World Bank, 2005. Zaga Szenquer, Daniel. Programa Familias por la Inclusión Social. Un análisis comparado, Documentos de Trabajo Ciepp 71. Centro Interdisciplinario para el Estudio de Políticas Públicas, Buenos Aires, 2009.

CH A P T ER

3

Targeting and Conditionalities in Mexico: The End of a Cash Transfer Model? Pablo Yanes

Mexico presents a noteworthy persistence in its conditional cash transfer (CCT) programs. The federal government’s main program, Oportunidades, is a continuation from the Zedillo administration’s (1994–2000) Progresa, implemented in 1997. The Progresa replaced Solidaridad or Pronasol program from the Carlos Salinas´ government (1988–1994). History was made when Vicente Fox, a member of the Partido Acción Nacional (PAN), became president in 2000 (2000– 2006). He was the first president in 70 years who was not a member of the Partido Revolucionario Institucional (PRI). It was during his term as president (2000–2006) that Oportunidades as Oportunidades/Progresa began. Thus there was continuity between the last PRI government and the first nonPRI government with respect to the main poverty-fighting program. During the government of Ernesto Zedillo, Progresa operated on a relatively small scale and exclusively in rural communities with high levels of poverty. The governments of Vicente Fox and his successor Felipe Calderón (2006–2012) greatly broadened the program but kept its conceptual body and fundamental orientation intact. During the administration of these two governments, the coverage provided by Oportunidades reached 5.8 million families with an annual budget of 4.8 billion dollars. On average, each household received a transfer equivalent to 65 dollars a month. The amount of the transfers varies greatly but the maximum that can be granted, when a household includes middle-school children with scholarships, is 203 dollars a month

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per household. Even if Oportunidades is a large program in absolute terms, it represents a small fraction of the federal government’s budget. Oportunidades is a typical conditional CCT, created to fight the intergenerational transfer of poverty and to promote the accumulation of “human capital” of children and youngsters, under the hypothesis that higher levels of education will create better employment and income in the future. Conditionality and targeting are two of the program’s main characteristics. The targeting applies only to households that meet the conditions of poverty defined by the program itself. The conditionality comes into play as the transfers hinge upon the fulfillment of so-called co-responsibilities (corresponsabilidades) by beneficiaries. These mainly include that children do not miss more than three days of school per month and that family members attend a medical clinic at least once a month for either checkups or talks on health care. Failure to comply with these conditions results in being dropped from the program and loss of the transfer. Oportunidades is frequently noted as an example of good practices by the multilateral credit organizations. It has been receiving several awards from these organizations and is being held as a model for the world to follow. With this program, Mexico has become, at least in Latin America, an exporter of “social technology.” However, in opposition to the essentially positive view of Oportunidades that is prevalent among multilateral credit organizations, international agencies, academic groups, and the program’s own evaluation structure (it is one of the most studied programs in Mexican history), there have been various criticisms against the program. The main critiques focus on the rigid targeting and the low impact that the program has on reducing poverty. With respect to targeting, errors of inclusion and exclusion are highlighted. Attention is also drawn to the social fragmentation that is produced in communities with very high poverty where there are beneficiaries and nonbeneficiaries with minimal differences between them.1 The well known problems relating to the poverty trap are also noted. The debate around Oportunidades, however, has not included a broader reflection on the usefulness, sense, or implications of conditionality. Even so, a small window for broaching the subject opened up in Mexico due to the events of the Sierra Tarahumara in the state of Chihuahua in 2012, where starvation was declared at the beginning of the year amongst the Rarámuri people.

Starvation in the S IER R A TAR AHUM AR A : Conditionality on Trial In 2011, several media outlets reported that 20 thousand indigenous people belonging to the Rarámuri people who had been fed with

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emergency foodstuffs due to starvation, had earlier been dropped from the Oportunidades program for failing to comply with the conditions. During 2011, 20 percent of the Rarámuri population living in 11 thousand locations was dropped from the program. The program’s national coordinator, Salvador Escobedo, remarked in an article in the newspaper Milenio on Feburay 8, 20122: “Yes, they have been dropped as they are not meeting their commitments to their co-responsibilities, because the nearest hospital is a 12 hour walk away and you can’t build a hospital for three families. They also need to walk 12 hours to pick up their food, for us it would take 36 hours to go up.” So, they lost the Oportunidades cash transfers, even though the situation was so dire that they had to be sent food and emergency supplies to overcome starvation, because they could not fulfill the co-responsibilities. This measure was taken because there are no hospitals nearby, they live in scattered settlement patterns and thus, they can’t be provided with services. They can’t pick up the transfer because they have to walk 12 hours to do so and the institutions are not willing to invest 36 hours in getting it to them. It was precisely in the Sierra Tarahumara, in the town of Batopilas, the second poorest municipality in the country, where, in front of members of the Rarámuri people, President Felipe Calderón announced, on November 2011, the “bankarization” of the program. This event remains relevant because it means the delivery of a bank card for withdrawing the aid in a region where there are no banks and where according to the program’s own national coordinator, Rarámuri women (the titular holders of the transfer) must walk at least 12 hours to use the cards.3 After this announcement, and faced with reality, the program was modified so that withdrawals could be made at Linconsa or Conasupo stores. The matter does not end there. The aforementioned article points out: “They also lack nearby schools (continues saying the National Coordinator). This is very complicated because you can’t change the rules. There is a lot of dispersion in the 17 municipalities where they live, there are almost 11 thousand locations [ . . . ] the conditions of remoteness in which they live makes it so that they don’t fulfill their co-responsibilities or so that they can’t go and pick up the support, and when they don’t do it for three bimesters, we have to drop them from the program, we’ll probably reinstate them in the coming months, and they won’t leave again.” The Rarámuri failed to comply with the co-responsibilities because the state does not provide the services needed to do so, but this is the Rarámuri’s problem and so they are dropped from the program. They are punished for living in an isolated and remote manner and for not using services that are usually nonexistent, remote, and culturally inappropriate.

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In this case, with the demand of co-responsibilites from the underpriviledged and indigenous people, the state seems to have turned the logic of the CCT programs on its head. In this case, the state, without fulfilling its responsibilities, demands that the people, especially poor people, fulfill obligations in exchange for a small cash transfer. Peoples and communities, in this case one of the indigenous peoples of Mexico, are those who must adapt to the institutions, policies, and programs, and not the other way around. This is so because it is assumed that the CCTs are, in addition to being instruments of social control, also tools for an authoritarian pedagogy, where the state instructs the poor to fulfill their obligations, sees to their best interests, teaches them to accumulate human capital, and punishes them for lack of compliance or disobedience. During the early decades of the twentieth century the “Mexican indigenism” began; a theory stated that indigenous people should be integrated and assimilated into the so-called national culture. At that time the expression “headquarters civilizes the Indian” was common; today it seems that the CCT must “civilize the Indians,” giving them education and making them take care of their health so that, in the dominant vocabulary, they can accumulate human capital. This demonstrates that the official concept of the treatment of indigenous people by the state has barely changed in a century. An apt example of this is the nature of the press release by the government of the state of Chihuahua denying essentially false stories of suicides among the Rarámuri due to starvation. In it, the government states that these stories “are not aware of the idiosyncrasies of the Tarahumara race,” using a nineteenth-century name for the Rarámuri people that is loaded with disdain.4 This exposes the fact that the political powers see the recipients of Oportunidades not as right holders but as beneficiaries with obligations, punishable subjects that were not excluded from the program; they abandoned it. This general characteristic of the program’s design is aggravated in the case of indigenous peoples, where poverty is more concentrated and population dispersed. The coverage provided by public services makes fulfilling the co-responsibilities much more difficult and impedes access to quality services, thus creating a heavier burden on indigenous women than the program’s average. All the additional difficulties faced by the indigenous population are not considered by the program. They are just seen as a population that is not fulfilling its co-responsibilities and so must be dropped from the program. As quoted before, it is not surprising that the program’s national coordinator said: “we will probably reinstate them in the coming months, and they will not leave again.” In fact, after dropping 20 thousand Rarámuris and before the starvation crisis, the federal government decided to reinstate the Rarámuris into some of the components of the program, as

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well as into other programs that do not require the fulfillment of conditions such as nutritional programs (22 dollars per month per family), energy support (3.50 dollars per month per family), and child support (7.5 dollars per month per child under nine years, with a limit of three children per family). However, the Rarámuris are still excluded from the program’s main transfer, scholarships. This is not a minor issue in the analysis of the program’s functioning. People, families, and communities known for their high levels of poverty are deliberately kept from a monetary benefit due to reasons outside of their poverty. This decision is taken despite the well-known fact that their political and administrative exclusion will negatively impact their situation. The obligation and public responsibility to combat poverty turns into a tool for punishing private behavior, knowing full well that this punishment will add to the social and personal conditions that led these families into being included in the program in the first place. In brief, they are incorporated into the program because they are poor and deserve help (being poor) and they are dropped from the same program because they cannot fulfill the program’s conditionalities (being poor). Ironically, the beneficiaries deserve help and deserve punishment, the consequence of their poverty. Public institutions thus work under a system of administrative decisions and not under a system of guarantees. In this way, the authorities decide who is poor enough to be in the program and who deserves to be dropped; they excuse themselves by saying that the operational rules are hard to change. The motto seems to be, from each one according to his/her condition/needs, to each one according to his/her behavior. Everything is approved based on a set of rules created by the political powers. Faced with suggestions to alter the program’s “Operational Rules,” the national coordinator stated: “The rules will not be changed or made more flexible, because it is legally very complicated and would cause problems. There are single women that do next to impossible things to meet their co-responsibilities, (so) benefiting some would lead others to not want to comply.”5 The truth is that there is no such difficulty, as no law would have to be altered and no parliamentary paperwork would have to be dealt with. The publication of the modification is an annual exercise, the responsibility for which falls on the Federal Government. The legal-technical argument is an excuse to defend a public policy. Within the program’s value scale and underlying anthropology there seems to be no room for the idea that the problem is not that people are not fulfilling the conditionalities, but the problem is the conditionalities themselves. The state of the Rarámuri people has drawn the attention of people to the subject of hunger in the country and has made the relevance of

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the limitations of poverty measurement in Mexico more poignant. In particular, it serves to question some aspects of the method used by the CONEVAL (National Council for the Evaluation of Social Development Policy) to calculate poverty. According to this method, the poor are those who are below a certain income threshold. This minimum income considered necessary for acquiring a certain group of essential goods is called the “Welfare Line”.6 “Lack of sufficient income” is one of the six dimensions considered for calculating poverty. Access to social security, medical services, educational lag, basic household services, and access to food are the other dimensions. Those who are under the “Minimal Welfare Line” and are deficient in at least three of the criteria are considered “extremely poor.” 7 According to this method, only 10.4 percent of the country’s population was “extremely poor” in 2012. In brief, even if a person or family lacks sufficient income to acquire basic goods, the person or family could not be classified as poor. This is evident in the calculations of poverty “by income line” made by CONEVAL. In 2010, it was estimated that 24.9 percent of the population was in some degree lacking (severe, grave, or lesser) in access to food, 19.4 percent under the “minimal welfare line,” and 18.8 percent in a situation of “nutritional poverty.” Beyond the issue of whether the set of goods used calculated by CONEVAL is adequate and sufficient to define accurately the poverty line,8 according to the income line calculations, one in five (22.4 million people) of the country’s inhabitants is in a situation of nutritional poverty and one in four (28 million people) lack proper access to food. These numbers are not only much higher than those from the multidimensional analysis; they also show that nutritional insecurity is still a grave issue in Mexico after a full decade of CCT programs. This is so because, in practice, CCTs (due to their amount, coverage, and conditions) have a small effect on overcoming poverty itself. Their more relevant and lasting effects are on the reduction of the intensity of poverty. As a study about Oportunidades notes (Cortés, Banegas and Solís, 2007: 32), “the relative effects tend to be larger on the attenuation of the intensity of poverty rather than the incidence of poverty, which suggests that Oportunidades tends to “make the poor less poor” rather than taking them out of poverty.”

Two Concepts in Play: Between the Federal and the Local It is important to remember that, Oportunidades is neither the only social program in Mexico nor are its guiding principles unique concepts

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in social policy.9 Broadly speaking, we can say that there are two basic ideas regarding social policy in Mexico: those of the federal government and those of Mexico City government.10 The dominant ideal within the federal government perspective is characterized by targeting and is centered on fighting poverty. It is neither universal nor guaranteed, but based on the principles of subsidiarity and its design relates to market categories (cost, benefit, incentive, actives, human capital, social capital), with a theoretical foundation on methodological individualism and rational choice. Within the federal government, social policy is seen as programs, unrelated to rights, that are increasingly thought of as services from the state for the population (such as education or health care). In this way, social policy is not articulated with economic policy, while at the same time it is separated from the construction of an equal society due to the exclusionary logic of compensatory measures. Based on the underlying principle of the conditionalities, citizen participation is an abstract idea of co-responsibilities in which the state’s own responsibilities become diluted. What is public is seen as a zero sum game between the state and society. Through the CCTs, the state aims at the achievement of equality of opportunity, understood as the creation of favorable environments for an equal start to the “accumulation of human capital” for all people and achieving the most egalitarian insertion into the job market. It is assumed that differences in income (and achievements) will be the outcome of different levels of human capital and of the efficient redistribution of monetary resources. This means the state is responsible for preparing people to compete, but it should not interfere with the results of the said competition. In the case of Mexico City, social policy is fundamentally upheld on the recognition, exercise, and demandability of social rights; the guaranteed character of state action; and the recovery of the beneficiaries’ social responsibilities. It is assumed that the construction of citizenship is a process of exercising rights, defending their universal nature, and building policies and programs according to this philosophy. Because of this, social policies and rights are articulated, and then linked to economic policy. The fundamental value of policy in this area is to achieve equality of rights and results. At the same time that the central nature of equality is stated, the diversity and heterogeneity of society is seen as a fundamental fact of contemporary societies. Thus, the promotion of social equity is bound to the quest for social equality. They are not interchangeable processes but rather complementary ones; equality is not replaceable with equity. They are two aspects of a public policy seeking to achieve equality in difference (as a guarantee of universality) and to recognize particularities with

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rights. Citizen participation is seen as a constitutive element of social policy. Authorities must be regularly held accountable while the growing citizen participation is checked through the demandability of rights and the involvement in the processes of decision making in policies, plans, and programs. Table 3.1 summarizes the two ideas and displays the contrast between the policies designed and implemented since 1997 by the three governments of Mexico City on the one hand and the dominant social policy within the federal government on the other. The underpinnings of Mexico City’s policy has been expressly stated in the Social Development Law of Mexico City, created in October of 2000 and reformed in May of 2005.11 The policy is formally defined in the Social Development Program 2007–2012, which took wing during the Marcelo Ebrard administration. This perspective advanced while the mainstream promoted targeting and subsidiarity as the the ruling principles in Latin America and Mexico’s Federal government. In a context that disqualified any policy or program with a universal nature as populist, regressive, and nonviable; the Mexico City experience has placed the debate on different grounds. Not only has the debate on universality been relocated, it has impacted the design of policies and programs in other entities including the federal government, creating a growing international interest in learning more about this experience.12 Consequently, just as Oportunidades is the best example of the federal ideal of social policy, so is the Universal Citizen Pension program (Pensión Ciudadana Universal ), as it was originally known, or Food Pension for Senior Citizens (Pensión Alimentaria de Adultos Mayores)s, the program that best summarizes Mexico City’s alternate concept. So it is useful to compare and contrast the two programs.

Table 3.1 Main characteristics of Mexico City Government and Federal Government social policies Mexico City Government

Federal Government

Equality of rights and results Social responsibilities from the state Universality in the enjoyment of programs and rights or territorial regional targeting Demandability of rights Rights are institutional Support no smaller than half a minimum wage

Equality of opportunities Co-responsibilities Individual targeting as a rule Support is conditional Programs are transitory Small support and limits per households

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The Contrast between O PORTU NI DADES (Federal) and Universal Pension (Mexico City): Two Concepts for Social Policy in Practice Oportunidades is SEDESOL’s (Secretaría de Desarrollo Social ) star program, and it receives most of the available funding for cash transfers. It is a program designed and executed by the federal government where federal entities, with the exception of Mexico City, are responsible in the areas of health care and education. Mexico City, in 2004, began a modest version of the program under the control of the federal government. Toward the middle of 2009, it reached its highest coverage in Mexico City (25 thousand households, around 1 percent of the total in the city); two years later the number dropped to around 22.5 thousand, mainly due to the fact that many beneficiaries failed to meet the co-responsibilities. Oportunidades initially served only boys and girls from the third year of elementary school (nine years old) up to the last year of high school, through cash transfers differentiated by grade and gender. The transfers are administered by women, most of them being the heads of the household. Recently, a new component has been added to the tune of seven and a half dollars a month for every child under the age of nine, with a limit of three per household. The initial selection of beneficiaries is carried out by means tested methods, and the inclusion or exclusion decision is left to the authorities. Oportunidades is a targeted program with an essentially rural concept of poverty, although it has recently expanded into urban areas. As was mentioned, another of the program’s central characteristics is the conditional nature of both its design and operation. Conditionality transforms rights into services, so that demandability by the citizens turns into conditional access to a cash transfer. Because of this, the promotion of citizen autonomy becomes forced compliance with the program’s conditions. Conditionality makes relevant the question “who demands?” Does the state demand from the citizens or the citizens from the state? The ex-president Vicente Fox began the massive expansion of Oportunidades in 2001. At the same time, the government of Mexico City launched the Pensión Ciudadana Universal or Pensión Alimentaria de Adultos Mayores, as it was defined in the corresponding law on November 18, 2003. The law only has five articles, which establish the nature of the pension as a right, the requirements for having access, the mandatory nature of its inclusion into budgets, and the obligation of public servants to enforce it while respecting the principles of equality and fairness (threat of sanctions if the pension is not fairly distributed).

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The original beneficiaries were all adult persons aged 70 or over in Mexico City, but in 2008 the law was reformed to extend benefits to those aged 68 and over. The benefit consists of a monthly transfer, through an electronic wallet, of at least half a minimum wage (65 dollars, approximately). It is universal, unconditional, and demandable as a right. The senior citizen even has the right not to receive it, but it is his/ her personal choice. The term “universal” means that the benefit can be received by all persons that meet the requisite age criteria and have previous residence of three years in Mexico City; “unconditional” means that the pension is not dependent on levels of poverty or income and does not include any tests (it does not even demand Mexican nationality).13 The Pensión Alimentaria seeks to create an effective network of social protection and security that is universal, as well as to recognize that social rights are for the entire society and not only for those chosen by the political authorities. The program was complemented with another law that established the right to medical services and free medication for people without work-related social security, in order to achieve universality in health care, protection, and social security. The senior citizens’ pension considers that all senior citizens, through different forms of work and not only paid work, contributed towards the construction and functioning of society, their communities, and families. Thus, it has been received as a first step towards the social recognition of community work, the invisible domestic work of women, and the contributions of people from other countries towards the development of the city. It also aims to show that the city can create a new urban citizenship. By February 2012, the pension reached 466 thousand people, around 90 percent of the eligible population; thus, it is a nearly universal service for this group. However, between the years of 2010 and 2012, the program registered signs of stagnation and even a small reduction in coverage derived from financial pressures on the city’s social spending. As a result, the program did not accomplish full universality, which would mean that it should have catered to 520 thousand beneficiaries. instead of the 480 thousand that will be enrolled by the end of 2012. The different perception polls on the Pensión Alimentaria that the Institute for Senior Citizens takes annually highlight, among other results, the importance of the improvements in nutrition, access to previously unreachable goods, and improved health care that the pension provides.14 Similar consequences are found in the external evaluations of the design and operation of the program (Duhau, 2009). In addition to the improvements in income and consumption, different positive effects in social dynamic are found, such as a higher degree of autonomy, heightened respect within the family environments, higher visibility in public spaces, an improved self-perception, and social respect.

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However, the road towards the social acceptance and institutionalization of the program has been a complex one. Proof of this is that in the first years of implementation (2001–2002) the middle and upper class sectors rejected the program, as they thought that it labeled them “poor.” However, two years later, these same social groups demanded to be included in the program, to the point that the rejection rate among senior citizens is estimated at 2 percent. Another example of the change in social perception is that, according to polls, in 2003 only 30 percent of senior citizens saw the citizen’s pension as a right; they mostly considered it as a “government aid”. In contrast, in 2006, 78 percent of senior citizens saw the benefit as a right. Accordingly, in 2003 the law was passed with votes from only the congressmen who were members of the ruling party (Democratic Revolution Party, PRD), while in 2008 the reform to increase the coverage and was passed unanimously by members of all parties. Notwithstanding these achievements, the program shows limitations and problems with regard to their declared aims. According to an external evaluation (Duhau, 2009) and the recommendations and controversy imposed by the Mexico City Social Development Policy Evaluation Council (EVALÚA-DF), the pension has three aspects that should be improved. First, the transfer is still carried out via an electronic wallet that is usable only in affiliated establishments, making it “semi-money”; the recommendation is to make the transfer in cash to improve the freedom and decision-making ability of beneficiaries. Second, the amount is insufficient;15 strictly speaking, the program does not live up to its name as a “food pension” and even less so as a noncontributive basic pension. Third, access to the benefit depends on continuous residence in Mexico; if the beneficiary leaves the city to the neighboring municipalities, the benefit would be lost. Thus, a supposedly unconditional right can be taken away and this feature could be interpreted as a condition. To summarize, Oportunidades and the Pensión Alimentaria for senior citizens symbolize the two dominant concepts of social policy in the country, particularly regarding cash transfers. Oportunidades is targeted, conditional, and temporary. Pensión Alimentaria is universal, demandable, and permanent. The first one implies duties for the citizen, while the second one for the state. One reproduces the logic of social subordination; the other one helps to build citizenship and social autonomy. This contrast is not merely descriptive; the existence of both concepts and programs has led to changes in the country’s social policies. For instance, in the last years Oportunidades has changed from its original design and the federal government incorporated and increased coverage for senior citizens.

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Imitation? The Hybridization of Cash Transfers by the Federal Government In 2005, Oportunidades introduced a senior citizen dimension, transferring approximately 20 dollars a month to people over 70 years of age (a third of the amount of Mexico City’s program) and conditioned to the senior citizen’s use of health care services.16 This change took place as a result of a social movement named El campo no aguanta más, in which several rural organizations gathered to demand a set of petitions aimed at reactivating the countryside and improving the living conditions of the rural population. Among their most heartfelt petitions, they demanded a pension for rural senior citizens. This was an important change in Oportunidades, since it represents an adjustment made to one of the program’s stated objectives: to serve minors in order to stop the intergenerational transfer of poverty. Since then, the program is no longer just about today’s children, but also about today’s senior citizens. In any case, this component of the program is in the closing stages, due to the creation of a separate transfer program for senior citizens called “Seventy and over” (Setenta y Más). Since 2007, other modifications were made to Oportunidades. For example, the inclusion of the “energetic component”; this cash transfer is paid to compensate spending on sources of energy (power, coal, wood, gas, or candles).17 In addition, the biggest change in Oportunidades came in 2010 with a new transfer called “Better Life Child Aid” (Apoyo Infantil Vivir Mejor). This new transfer consists of seven dollars per month to each child under the age of nine (with a maximum of three transfers per household) and challenges the original idea of a program built around accumulating human capital, understood as fundamentally schooling. Until this change, the benefit began in the third year of elementary school (children around nine years of age) and lasted until age twenty. The lower limit was strongly criticized, as families with very small children require the aid the most. The counterargument was that the program could not build incentives that would translate into higher birth rates, under the assumption that the aid would lead the poor to have more children in order to obtain more transfers. This original refusal to help families with small children was not based on proven evidence. Thus, with the financial crisis of 2008 and its sharp effect on poor families, the federal government extended Oportunidades ’s to children under nine years of age. Parallely, the change that began with the incorporation of benefits for senior citizens was then continued by Setenta y Más. Strictly speaking, this program was not designed by the federal government; it was a response by Congress to the rural mobilizations of 2004 and 2005 that demanded a rural pension. Setenta y Más is a program with universal

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coverage for all people over seventy years of age who reside in localities of up to 30 thousand inhabitants; in 2011 the program reached coverage of little over 2.3 million people. In contrast to Oportunidades, Setenta y Más does not include any kind of co-responsibility or compensation and represents the transition from an individually targeted, conditional program to a territorially targeted, unconditional program. Therefore, Oportunidades has being changing some of its original ideas without renouncing its essence of being a targeted CCT. First, by granting benefits to senior citizens, it left its objective of halting the intergenerational transfer of poverty by the wayside. Then, by incorporating benefits for children the program abandoned its “birthing” concept and the idea of focusing on those attending school. Both changes involved important budgetary commitments.18 In particular, the strong budgetary increase for 2012 and the extension into urban areas, as well as the increase in the size of localities where the program functions imply the political decision of increasing the Setenta y Más coverage. However, this program does not receive the interest and publicity that Oportunidades does in academic and institutional circles, because it reveals an important change in some of the original ideals of the mainstream social policy. Setenta y Más shows the possibility of transitioning from an individually targeted approach to a territorially targeted approach as a pit stop towards universality; at the same time, the program offers the possibility of transitioning from conditionality to unconditionality. In other words, two simultaneously occurring models of cash transfers can be identified inside the federal Social Development Ministery. To better understand this point, it is useful to analyze the ruling framework pertaining to the nature, reach, and implications of the conditionalities. In relation to Oportunidades ’s operational rules for 2011, the chapter regarding the obligations of beneficiary families is of particular interest. According to this chapter, families must “support those receiving a scholarship, so that they attend school regularly and take maximum advantage of it.” (Diario Oficial de la Federación, 2010: 30) Here, it is interesting to note how responsibility is transferred from the state towards women. Not only is the meaning of “support” vague, but it is also questionable to make families responsible for taking advantage of schooling, which should be the responsibility of the school system and not a mother’s obligation. It should be noted that “helping the beneficiaries to attend both school and community workshops on self care, as well as in participating in a dynamic manner in activities marked in plans and study programs for each federal entity” is also an obligation. How can anyone be responsible for young people “participating in a dynamic manner in activities marked in plans and study programs” when this depends more on the real quality, relevance, and attractiveness of the education being offered?

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Likewise, in the same chapter it is stated that “receiving and consuming nutritional supplements delivered in health clinics to children and women who are pregnant or breast feeding” is a conditionality (Diario Oficial de la Federación, 2010: 30). This establishes an obligation to consume supplements regardless of will, taste, or flavor. In addition, there is a condition for women who receive the cash transfer for the household: “Deliver to the senior citizens the cash aid destined for them”. Like the mother of small children, the titular holder of the Oportunidades benefits must absurdly deliver the money to her parents. This introduces a relation of power within the family, in which the senior citizen is made to be a child and has no direct access to the resources that he or she is entitled to, save by means of his or her daughter. Even worse, according to these same operational rules, the cash aid is definitively suspended once the senior citizen “leaves the home” (Diario Oficial de la Federación, 2010: 33). In other words, senior citizens are punished for having an autonomous life or their own home. Under Oportunidades rules, senior citizens receive the aid from their daughters and lose it should they begin to live in a different home. This serves to illustrate the hybrid nature of Mexican social policy. Programs are built using different organizational principles and programs aimed at the same group of people are organized differently. While the senior citizen component of Oportunidades gives a monthly transfer of 25 dollars, Setenta y Mas pays 35; the first program is conditional, the second one is not; one makes people get the aid from their daughters and the other gives the aid to them directly; in one program they lose the aid should they move out of the house while within the other the only way to lose the transfer is to move to a location with more than 30 thousand inhabitants. These contradictions do nothing but heighten the questioning of the principles of CCT programs, of which Oportunidades is a main exponent. In fact, its objectives and operational rules are under increasing attack, even those connected to well-known argument that links conditionalities to the “accumulation of human capital” and to social mobility.

The Mexican Experience and the Possibilities of Citizen’s Income The Mexican experience is one of the richest ones for understanding the current Latin American trends and debates in cash transfer programs and social policies in general. In the same country, one can find programs with different ideals and operational rules running simultaneously, so a comparison can be made between the functioning of different perspectives and their results.

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The situation of the Rarámuri People, the experience of the citizen’s pension of Mexico City, the evaluations of Oportunidades program, and the changes and contradictions within the federal government’s social policy, are all elements that have placed the efficiency of CCTs at the center of the debate. These programs do not reduce poverty in a significant and lasting manner and their very operational strategy does not build citizenship, social cohesion, and personal autonomy. Even the economic merits of these programs are questionable, especially the aim of halting the intergenerational transfer of poverty with the accumulation of human capital by educating young people and the subsequent access to better jobs and incomes than their predecessors. This hypothesis hinges on the assumption that the labor market functions in an almost perfect manner, that wages are the result mostly of individual negotiations between the employer and the employee who possesses skills that the market will reward accurately. This theoretical framework believes that the labor market is a place for individual exchanges and not for social conglomerates; thus, salary regulations, collective bargaining and recruitment and promotion networks are not taken into account. This vision clashes with the perspective that sees education as a positional good in which everyone moves. Thus, even if the poorer sectors increase their education, so will the richer sectors, maintaining the educational gaps, both in quality and in quantity. This concept questions the idea that education guarantees social mobility and states that education is a necessary but not sufficient condition for improving salaries, productivity, and the distributive structure of society. For example, analyzing the link between educational and income poverty for Oportunidades and Progresa, Julio Boltvinik (2004, 35) holds that: “Several matters need to be noted. First, while the educational poverty of adults decreased rapidly during these thirty years (1968–2000), income poverty remained practically constant during the period (going from 72.6 percent to 68.5 percent). Comparing only the extremes, the premise that the low level of education is the main cause income poverty (the main premise behind Progresa) should be rejected. In the period 1980 to 2000, we find that while educational poverty dropped by 60 percent from 43.7 percent to 26.3 percent, income poverty actually increased by 41 percent from 48.5 percent in 1981 to 68.5 percent in the year 2000. At least in recent history, we can state that the evolution of incomes by households (and thus their income poverty) is not associated with the educational level of adults. Thus if Oportunidades had been designed in 1980, they would have lost the gambit: the children who were students in 1980 and beyond were unable to join productive activities and well paid jobs” (Boltvinik, 2004: 345). This weakness adds to the existing criticisms levelled against CCT programs: the errors of exclusion that are common in targeted programs,

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the ex-post intervention only for identified poor, the lack of a preventive dimension, and the presumption that the fight against poverty is a straight line in which those who leave poverty never return and thus policies and programs forget about those who cross the threshold. It is also about pro-cycle programs that get results, however modest, during economic growth spurts and lose all the ground gained in one or two years of economic crisis. Seen in medium-length terms, we can’t state that we are, at least in the case of Mexico and Oportunidades, in front of a strategy that guarantees a firm and sustained drop in poverty. The most positive effect of its impact is the attenuation of the intensity of poverty. The program seems to help poor people to be less poor, but neither does it reduce the number of poor nor does it promote inter-generational social mobility. If to this we add the vulnerability of economic cycles, an alternative vision for these policies is imposed. Consequently, the limitations of CCTs for preventing and abating poverty and the weakness of their central premise, calls for a different orientation for cash transfer policies. Within the context of the crisis of the wage society, the deterioration of workers’ income in combination with massive and prolonged unemployment, the citizen’s income proposal becomes pertinent and relevant because it answers these challenges in a more consistent manner. In this sense, the citizen’s pension in Mexico City is an unavoidable reference for an alternative strategy that shows notable affinity with the citizen’s income proposal. Even though the program is not, strictly speaking, a citizen’s income since it limits its coverage to a certain population group, it shares its basic principles: universality, unconditionality, atemporality, and demandability. Experience shows that these principles are gaining grounds. The senior citizen’s pension of Mexico City gained widespread social acceptance, getting a very strong national projection that forced the electoral candidates of 2006 to include it in their manifestos in varying degrees. Another indication is the changes in the federal government policies, First, on the eve of the 2006 electoral year, the federal government began its own program for senior citizens, but focused only on the families in the Oportunidades program, with conditions and a small transfer. After that, with the initiative of Congress, it launched a noncontributive transfer rural pension (Setenta y Mas) which continues to expand. Moreover, the campaigns of all 2012 presidential candidates include a noncontributive universal pension for senior citizens, with a different emphasis for each one. The experience of the Pensión Alimentaria was able to show, in a relatively short time, that universal policies help to build citizenship and social cohesion, as opposed to targeted policies that divide communities.

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This approach conquered a new social legitimacy in favor of the universal and guaranteed approach. However, the citizen’s pension is far from building a sufficiently solid argument in favor of a Citizen’s Income. The acceptance and social legitimacy of the citizen’s pension are mainly derived from being a transfer to people who are no longer considered to be in working age. The idea of a universal and unconditional pension is already accepted in Mexico, but the idea of people in working age having access to a guaranteed income is altogether different. Surely, the social resistance will be much higher as this puts into question the idea that income should be dependent on the market, or as is usually said, “one must earn his bread with the sweat from his brow, and he or she who does not work does not eat.” However, the Citizen’s Income debate has acquired notoriety in the country public policy debates. There are two initiatives of law in Congress in favor of citizen’s income. In the Letter for the City’s Rights of Mexico City, the proposal was explicitly included. Senator Manlio Fabio Beltrones proposed it as part of his campaign for the PRI 2012 presidential nomination, and an important group of academicians studying social policies gathered for the “ Dialogues for a Social Mexico” at the National Autonomous University of Mexico included the proposal as part of the new welfare state to be built in Mexico. During the course of a few years, the Citizen’s Income proposal in Mexico went from a small, relatively unknown proposal to being part of all of the political and academic agendas. This may represent the construction of the basis for a coalition that can drive the proposal as part of the social and political transformations that Mexico needs. In any case, the presence of the citizen’s income proposal on the nation’s public agenda and the growing acceptance of noncontributive and unconditional pensions, such as the Mexico City one, have reinvigorated the social debate, allowing us to think beyond CCTs and opening new paths in which basic income (BI) will play a part for years to come. Notes 1. See Boltvinik (2004: 315–347). Likewise, one may read author’s articles on the matter at La Jornada (www.jornada.unam.mx). 2. “Sedesol: 20 mil rarámuris, fuera de Oportunidades ”. Periódico Milenio, febrero 8, 2012. México. www.milenio.com.mx. 3. In order to address this reality, the program was altered so that the withdrawals could be made at non-banking institutions. 4. Rarámuri is the name they give to themselves. Tarahumara is a foreign denomination with a disdainful tone and “Tarahumara race” includes a racist context that belongs in the state parlance of the nineteenth and early twentieth centuries.

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5. “Sedesol: 20 mil rarámuris, fuera de Oportunidades ”. Periódico Milenio, febrero 8, 2012. México. www.milenio.com.mx. 6. The welfare line constitutes the income needed to purchase basic goods, not limited to food. 7. The minimum welfare line is defined as insufficient income to acquire only basic foodstuffs, under the premise that all income in the house will go exclusively to that purpose. In other words, it assumes that the so-called “Engel coefficient” is equivalent to 1. Thus, if the coefficient tends toward 1, poverty increases, and decreases as the coefficient tends toward 0; the poorer the person is, the higher the income percentage that is dedicated to purchasing food. 8. The cost of basic goods is $1.90 per capita in the countryside and $2.70 per capita in the cities. 9. Some of the ideas expressed here were originally examined in Yanes (2006). 10. For more, see the unedited work of Martínez Mendizábal (2011). 11. The Social Development Law for Mexico City defines the aforementioned concepts as follows: (1) Universality: The social development policy is aimed at all inhabitants of the city and its purpose is to grant every person access to the exercise of social rights, the use and enjoyment of urban goods, and a better quality of life (2) Equality: This is the main objective of social development and is expressed in a continuous improvement in the distribution of wealth, income, and property; in the access to the set of public goods; and the abatement of the great differences between people, families, social groups, and territories; (3) Demandability: The right of inhabitants to, through a set of rules and procedures, make social rights progressively demandable within the framework of the different policies and programs and the available budget. 12. An example of this is the International Conference of March 2012 organized by ECLAC (United Nations Economic Commission for Latin America and the Caribbean) and the Mexico City government for the analysis of the experience in the framework of the rights of senior citizens. 13. In 2012, about 1,200 beneficiaries are from other nationalities. 14. See www.adultomayor.df.gob.mx 15. The amount of the Pensión Alimentaria’s benefits—at least half a minimum wage—is one of the country’s highest transfers (around $65 a month, in comparison to $35 in the case of the federal program “Setenta y Más ”. However, still it is low for the purchase of basic goods and the necessary fuel for cooking them. Dollar estimations vary according to the exchange rate. 16. This section follows the arguments on Yanes (2011). 17. Even when energy could be considered as part of the program’s food dimension, it implies a new dimension. 18. By 2011 the budget for Apoyo Infantil Vivir Mejor was $649 million and that of Setenta y Más was $ 1.1 billion. Both components made up around 25 percent of Oportunidades ’s budget.

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Bibliography Boltvinik, Julio. “Políticas focalizadas de combate a la pobreza en México. El Progresa/Oportunidades.” In La Pobreza en México y el Mundo. Realidades y Desafíos, edited by Julio Boltvinik and A. Damián México: Siglo XXI Editores, 2004. Cortés, Fernando, Israel Banegas, and Patricio Solís. “Pobres con Oportunidades, México 2002–2005.” Revista de Estudios Sociológicos de. El Colegio de México 25 (2007): 73, México. Diario Oficial de la Federación. “Reglas de Operación del Programa de Desarrollo Humano Oportunidades.” diciembre 31, 2010. Duhau, Emilio. “Evaluación externa de diseño y operación de la pensión alimentaria de adultos mayores del Distrito Federal.” México, www.evalua.df.gob .mx, 2009. Martínez Mendizábal, David. “Notas distintivas de la política social del DF. Ejes problemáticos para un análisis comparativo de los mesogobiernos.” Universidad Iberoamericana, Campus León. http://investigacion.leon.uia .mx/PDFs/david/Paradigma_Social_del_DF.pdf, 2011. Yanes, Pablo. “ La pensión ciudadana universal en la Ciudad de México: Oportunidad para abrir el debate en torno a la renta básica.” Basic Income Earth Network Congress, Capetown, South Africa, November 6, 2006. ———. “Mexico s Targeted and Conditional Transfers: Between Oportunidades and Rights.” Economic and Political Weekly. XLVI, no. 21 (May 21–27, 2011), 49–54. Mombasa, India.

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CH A P T ER

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Basic Pensions in Latin America: Toward a Rights-Based Policy? * Camila Arza

Introduction Social security development is not homogenous across Latin American countries. Some enacted their first pension schemes at the beginning of the twentieth century while others had to wait several decades until pension benefits were made available to a significant share of the workforce. Several countries still have very low pension coverage rates today. Despite these differences, some important pension design features are shared across countries, such as the widespread adoption of employment-related pension schemes based on the Bismarckian model. In recent decades, some of these pension schemes were transformed into privately administered systems of individual accounts. In countries with well-established pension schemes with wide coverage, pension benefits and retirement (i.e., withdrawal from the labor force) became a legitimate right, building popular expectations on the roles and duties of individuals and of the state in providing old-age economic security. Among formal workers, retirement became institutionalized as a legitimate stage in the lifecourse. As a result, the issue of political contention was not whether pension systems should exist at all, but how they should be organized. In other words, the design of pension schemes, their principles, and the specific tools for achieving them was now the subject of discussion. The debate in the 1980s and 1990s around pay-as-you-go (PAYG) and fully funded pensions was partly about this. Social expectations on the state’s role to guarantee economic protection

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for older adults remained high even in countries which had undergone structural reforms that transformed pension schemes into individualized systems of personal savings and private administration. On the other hand, in Latin America, the consolidation and expansion of social security under employment-related and contributory models has often ruled out the development of alternative pension schemes, organized under noncontributory, universal, and unconditional principles. Noncontributory pensions (if existing at all) often remained a residual social assistance program oriented only to assist the poorest. Recent developments, however, point to a redirection of pension policy in some countries that have adopted measures to extend coverage through noncontributory or semi-contributory pension systems. This development has produced a significant expansion of old-age protection. It has also brought in policy debates confronting the impacts of selective or universalistic designs for pensions. This chapter focuses on the experience of four countries: Argentina, Bolivia, Brazil, and Chile, which despite a tradition of pension systems based on the contributory model and high levels of labor market informality, have managed to achieve some of the highest levels of pension coverage in the region. This was possible with the implementation (or expansion) of alternative pension schemes or programs that provided old-age benefits with no contributory requirements, or with more limited contributory requirements than in traditional Bismarckian systems. These pension schemes and programs have proved very effective in making coverage wider and more evenly distributed across regions, gender groups, and income strata. Does this process signal a move toward a universalistic approach to old-age protection? To what extent do the schemes implemented comply with the principles of universality and unconditionality that characterize the Citizen’s Income (CI) proposal? Have they changed the structure of old-age income protection to create more inclusive and equitable pension regimes? These are some of the issues that this chapter will address. After this introduction, it presents the basic characteristics of alternative pension system designs and highlights the advantages that universal noncontributory pensions can have in the Latin American context. It then briefly presents the experiences of Argentina, Bolivia, Brazil, and Chile, addresses the main features of retirement pension systems in these countries and describes the ways in which they have managed to achieve wide coverage in highly informal labor markets. Finally, the chapter discusses the principles underpinning the noncontributory or semicontributory pension schemes existing in these countries and the extent to which they are likely to consolidate a rights-based approach to old-age protection. The conclusion summarizes the main findings.

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Employment-Related, Universal, and Means-Tested Pensions The pension systems originally established in Latin America followed the employment-related social insurance model. In these systems, eligibility for old-age pensions is linked to the length of employment and/ or contributions prior to retirement; benefits are related to the level of earnings; and financing is based on contributions made by employers and workers (plus government transfers, in some cases). After the 1980s, structural pension reforms in several Latin American countries have produced a shift from these types of systems to mandatory individual saving accounts, administered by private firms (Mesa-Lago, 2004, 2006; Bertranou and Rofman, 2002; Madrid, 2003; Brooks, 2009). These reforms have modified the administration of resources (from PAYG to fully funded, and from public to private) and the mechanisms for the calculation of benefits upon retirement (from defined to non-defined benefits). They have also strengthened the connection between formal employment and contributions, on the one hand, and pension benefit entitlements, on the other while adding new elements in the benefit calculation formula, such as investment returns and life expectancies. Generally speaking, in contributory pension systems (both public social insurance and private individual accounts), individuals need to have a sufficient record of contributions to get a reasonable pension benefit, or even to get a benefit at all. Thus these systems fail to offer adequate old-age protection to the Latin American population who do not work in the formal labor market, such as informal workers, individuals working full-time in the household, or people taking care of others. Guided by a familiaristic design, these schemes have also conceived the protection of household members performing unpaid work (mostly women), as derived from their partners, providing some (but often lower) protection to married women but no autonomous right to an individual pension. Data from household surveys show that the coverage gaps among gender, income, and occupational groups have been wide throughout the Latin American region (Rofman, Lucchetti, and Ourens, 2009). Contributory pension schemes have been unable to guarantee universal protection and economic inclusion in old age. In Latin America, as well as in other developing countries, recent concern over the coverage limitations of contributory pensions has brought greater attention to the potential benefits of noncontributory schemes. Several institutions and policy analysts have pointed out the advantages of complementing contributory pensions with noncontributory benefits in multi-pillar pension designs (Gill, Packard, and

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Yermo, 2005; HelpAge International, 2004; Holzmann, Robalino, and Takayama, 2009; Willmore, 2001; International Labour Office, 2010; ECLAC, 2006, UNRISD, 2010, among others). However, the specific design of noncontributory schemes is important and there is a lot of difference in the proposals of policy developments in this area. Some have explicitly campaigned for universal noncontributory pensions (such as HelpAge International, 2004; Willmore, 2001; UNRISD, 2010), pointing at the difference between selective and universalistic designs and highlighting the advantages of the latter. So while the need to cover the gaps left by contributory pensions has recently raised considerable support for the development of noncontributory pensions, the key issue now is how entitlements under these schemes should be allocated. As a result, the wide differences, in both principles and impacts, between universal and selective policy measures have come back to the surface. Noncontributory pensions are old-age cash benefits that do not base eligibility on contributions or length of employment and are often (though not always) financed with revenues from general taxes. Noncontributory pensions can be universal or means-tested. Universal pensions provide benefits to all the population above a certain age, without consideration of income, employment, contributions, or assets. In contrast, means-tested pensions provide benefits only to the lowest income strata, following a “test of means.” For a long time, means-tested pensions were preferred over universal schemes in Latin America, and in some countries these schemes were established to complement social insurance pensions (see Bertranou, 2002). However, the means-tested schemes were limited in both coverage and spending. In some cases, waiting lists or budget restrictions constrained coverage of potentially eligible individuals and households (as in Chile and Argentina). Benefits were conceived as a last resource to prevent poverty among the elderly but the budget available for these benefits was often insufficient to achieve that aim. The choice of a means-tested design was also guided by prevailing ideas that universal schemes were unaffordable and that they generated disincentives for people to work, save, or contribute. There was also the belief that targeted schemes were fairer because they were geared toward the poorest. Now, quite a large body of research has pointed out the limitations of means-tested schemes in theory and practice, in both high- and low-income countries (Atkinson, 1995, 1996; Standing, 2007; Juurikkala, 2008; Sen, 1995; Korpi and Palme, 1998; among others; see also the introduction to this book). One of the problems with means-tested benefits is that they tend to penalize personal effort, generating both poverty and unemployment traps. Increase in income or savings (above a certain threshold) may lead to disentitlement to the means-tested benefit. Hence, an incentive is generated

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for people and families to maintain a declared income below that threshold and to remain unemployed or in informal employment (see Standing, 2007: 3; Atkinson, 1995, 1996). As the test of means is often performed on the household and not just on individual income, the means-testing trap may operate also for other members of the family. While for pensioners the unemployment trap may be less of a problem (under the idea that retirement, and hence the withdrawal from the labor force, is expected after a certain age), there may be a savings trap for both pension contributions and capital income (Atkinson, 1996; Juurikkala, 2008). The second issue with means-tested pensions relates to the so-called take-up problem. In several countries with means-tested schemes, there often remains a significant minority of individuals and families with income below the social assistance threshold who do not claim the benefits they are entitled to. This may be due to incomplete information regarding application procedures or benefits available, or a consequence of stigma that leads people to voluntarily remain outside these programs (Atkinson, 1996; Hancock et al., 2003). Indeed, means-tested schemes have been widely criticized for making the wellbeing of the poor dependent on selection techniques that may be invasive of privacy, and prone to clientelistic manipulation. The third problem is that means-tested schemes are designed to provide benefits only to people who “really need them,” that is, those who could not secure a living by other means (work, own pension entitlement, income from other members of the household, and so on). For this reason, the test of means is often performed to the entire household (the family as a unit). This runs counter to the principle of autonomy in a social security system: especially in the case of women. Testing a pension entitlement on the household income fails to evaluate economic independence since it is often impossible to know how income is distributed within the household (Atkinson, 1996). Finally, an additional problem of means-tested schemes is establishing a person’s income (especially in developing countries) when it is likely to fluctuate erratically and substantially over time. In relation to this, Amartya Sen identifies five problems with means-tested schemes: (1) “information distortion” when it is not possible to accurately determine who is eligible; (2) “incentives distortion” when benefits affect people’s economic behavior (to save, work, and so on); (3) “disutility and stigma” when benefits requiring people to be identified as poor are likely to affect self-respect and the respect by others; (4) “administrative and invasive losses” produced by high administrative costs to select beneficiaries (and test conditions) and losses in individual privacy and autonomy for the same selection procedures; and (5) “political sustainability and quality” related to the political support these benefits have (Sen, 1995).

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This last point, though sometimes neglected in policy discussions, can be important. Several authors have called our attention to the political issues associated with selective and universalistic policies (Huber, Pribble, and Stephens, 2008; Korpi and Palme, 1998; Nelson, 2007; Pritchett, 2005). One of the key issues at stake is the size of the redistributive budget (Korpi and Palme 1998). From a political point of view, the size of that budget is associated to the degree of targeting of the program. As the poor tend to be less politically organized, they are often less able to protect their interests. Also, as beneficiaries and financiers of means-tested programs are seldom the same people, the political constrains to implement cutbacks on these benefits is typically weaker than for instance in employment-based contributory pensions.1 As a result, quite often, “programs for the poor are poor programs”: under-budgeted, institutionally weak, often discretional, and prone to political manipulation. The stigma that often surrounds poverty, ideas of “deservingness,” and the “culture of dependency” have been part of the ideological baggage used to delegitimize benefits oriented to the poor, and facilitate cutbacks. In contrast, a universal noncontributory pension (also called “citizen’s pension” or “demogrant”) is a flat-rate benefit provided to all the population above a certain age, regardless of income, work history, or assets. Unlike means-tested benefits, a pension like this does not require invasive and costly selection practices to determine eligibility. Instead, it is simply given to all who reach retirement age. As the entitlement is also independent from work and contribution history, it avoids the exclusionary bias that contributory benefits tend to have in highly informal labor markets (as in Latin America) as well as the gender gaps in pension coverage partly derived from the unequal distribution of paid and unpaid work in the household between men and women (Arza, 2012b). Universal pensions are also easier to administer, do not stigmatize recipients, avoid disincentives to work and save, and can (if set at an adequate level) ensure that no older adult lives in poverty. Last but not the least, these benefits can consolidate a truly universal right to old-age protection and enhance the individual’s autonomy and welfare. They can “decommodify” and “defamiliarize” access to benefits, making old-age protection a matter of right, no longer dependent on labor market participation, savings capacity, position in the family (as in traditional social insurance pensions and individual savings schemes), or on household poverty (as in means-tested pensions).

Pension Systems and Reforms in Latin America In the twentieth century, Latin American countries have introduced employment-related pension schemes, often starting with some occupational groups to later extend to all (or most) of the formally working

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population (Mesa-Lago, 1978). Although Latin American countries differed in terms of when they introduced social security development and the rates of coverage achieved at each particular point in time, they shared some important design features, including a contributory design providing earnings-related benefits to formal workers and their families. As it is now widely recognized, these types of schemes can only work properly in contexts of full formal labor markets and stable families, which are not the case in Latin America. In particular, the high incidence of informal work generated a segmented system of old-age protection: workers with the best jobs and securities could obtain retirement benefits while the rest (precarious, low paid, temporary, or casual workers) were uncovered. Self-employment also pushed total coverage down as in some countries affiliation is not mandatory for the self-employed, and in those countries where it is, contribution evasion is high. 2 Structural reforms that took place after 1980, especially over the 1990s and early 2000s, have modified these schemes in a number of countries (see Mesa-Lago, 2004). These reforms tended to strengthen the link between contributions and benefits, replacing social insurance pensions with individual saving schemes and connecting still more closely the benefits with individual labor market trajectories. In practice, these reforms also failed to enhance compliance and increase coverage rates, which remained low and in some countries fell in the years that followed (Rofman, Lucchetti, and Ourens, 2009; Mesa-Lago, 2004: 66). Harder-to-meet contributory requirements (also implemented with some of these reforms) exacerbated the limitations of contributory pension systems to offer universal coverage. In some countries, recent policies have produced a significant improvement. Argentina, Bolivia, Brazil, and Chile, the four countries studied in this chapter, have all managed to achieve high pension coverage rates thanks to alternative pension schemes and programs that provide benefits outside the traditional contributory logic. If both contributory and noncontributory benefits are considered, these countries now have (together with Uruguay) the highest coverage rates in the region—above 80 percent in all cases (see Rofman and Oliveri, 2012: 27). Despite this shared outcome, these countries differ in their preexisting pension arrangements as well as in the specific design and timing of pension policies that have effectively helped to expand coverage. Chile: The Institutionalization of a Basic Benefit Guarantee in a Fully Funded Pension System Chile was the first Latin American country to adopt a system of individual pension accounts administered by private companies, which soon

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became the model promoted in other countries and regions in the 1990s and early 2000s. By the turn of the century, several problems of the Chilean system of individual accounts acquired particular salience and a certain consensus on the need of reform started to emerge (Berstein et al., 2009). One of the central issues of concern was the poor coverage in the contributory system. Many workers had short contribution histories and insufficient savings for old age in the fully funded pillar. A requirement of 20 years of contributions to obtain the state minimum pension also left many having to rely on social assistance. In 2003, about 25 percent of men and 41 percent of women aged 65–69 received no income from old-age or widow pensions.3 Prospects for future coverage were also poor: It was estimated that in the future a significant percentage of older adults would have a pension benefit below the minimum but no right to the state minimum pension benefit due to insufficient contributory records (Berstein et al., 2006: figure 7; see also Berstein et al., 2009: 40; and Bertranou, Gana, and Vázquez, 2006: 1). Apart from coverage limitations, another problem was gender inequality, with women being more likely to lack adequate protection than men (Arza, 2012b). Individuals with no access to pensions in the contributory system could apply for the noncontributory social assistance pension (PASIS—Pensiones Asistenciales), a means-tested benefit worth 50 percent the minimum pension (between about US$ 110 and US$ 128 per month depending on age),4 and limited by a waiting list (Mesa-Lago, 2009: 603; Gana Cornejo, 2002). In this context, growing dissatisfaction with the existing pension system helped to put the issue in the government agenda. In 2006, President Bachelet opened up a reform process by setting an expert’s commission to analyze the pension system and provide advice for reform. In 2008, a pension reform bill was sanctioned by the Chilean Parliament, modifying several aspects of the existing system (see, among others, Berstein et al., 2009; Délano, 2010; Mesa-Lago, 2009). One of the central innovations was the creation of a solidarity pillar, financed by the state, to guarantee a basic protection for older adults in low-income households. The solidarity pillar includes the Basic Solidarity Pension (BSP—Pensión Básica Solidaria), currently worth about US$ 158 per month,5 and the Solidarity Pension Contribution (SPC—Aporte Previsional Solidario), which tops up the benefits of pensioners with limited savings to their individual accounts (and low benefits). Eligibility to the solidarity pillar is means-tested: benefits are oriented to older adults living in households that belong to the three first quintiles of income distribution (60 percent lowest-income households). According to some estimations, overall coverage of the solidarity pillar is expected to grow from 600,000 beneficiaries in 2008 to 1.2 million in 2012 and 2 million in 2025 (Arenas de Mesa et al., 2008: 59).

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The new system improved protection for people with limited contributory histories. Benefits were made available without waiting lists and the means-test was generous enough to include (after a transition period) households in the three first income quintiles. As the solidarity pillar is integrated into the contributory pension system and does not require contribution from the beneficiaries, it helps avoid the segmentation of workers into those entitled to a minimum benefit from the contributory system and the rest, who have to rely on social assistance. Indeed, the BSP offers a guaranteed benefit to individuals in lower income households who spend long periods out of paid employment or those who work in the informal sector. It is also expected to have positive effects on gender equality as estimations suggest that about two out of three beneficiaries of the BSP will be women (see Arenas de Mesa et al., 2008: 60). In short, Chile adopted a reform which was at the same time path dependent and innovative. It maintained individual accounts and at the same time introduced a new pension pillar to guarantee better coverage for the elderly with insufficient contributory records and/or low pension savings. The benefit was institutionalized through a reform legislated in the parliament which integrated these benefit guarantees into the pension system. Although the target population is wider than normal for a social assistance scheme, the pension system maintains a means-tested model that conditions entitlements on household income. While the solidarity pillar offers better protection against discretional measures and waiting lists, access to benefits is not an unconditional right for all. The means-test is rather inclusive, but it remains the basis of eligibility to the solidarity pillar and therefore some of the problems of mean-tested benefits, mentioned earlier on, are likely to be relevant for this case as well. Bolivia: A Universalistic Approach to Basic Old-Age Protection Bolivia currently has a very low level of coverage for contributory pensions but one of the highest in Latin America when noncontributory benefits are considered. This is possible thanks to Renta Dignidad (Dignity Income), a universal, noncontributory pension given to all the elderly independent of assets, income, work, or family position. The benefit was created in 2007 and implemented in 2008, replacing a preexisting universal scheme called Bono Solidario (or Bonosol/Solidarity Bonus) first established a decade earlier. In 2009, the new Bolivian constitution enhanced the social rights of older adults establishing that “every person of adult age has the right to a dignified old-age that has quality and human warmth. . . . The State shall provide an old-age pension within the framework of full social security, in accordance with the law.”6 Renta Dignidad ’s predecessor, Bonosol, was introduced in 1996 as part of a structural reform process in the country, which involved both

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the privatization of the pension system and of several state-owned enterprises (public utilities and transport companies) (see Müller, 2009). At that time, the government promised to distribute about half of the shares of capitalized (privatized) firms among the elderly, creating a noncontributory universal pension payable annually and for life to all Bolivian citizens who were aged 21 or more in 1995 upon reaching 65 years of age (Aponte et al., 2006; see also Barrientos, 2009 and Willmore, 2006). The shares were invested in a collective capitalization fund to finance Bonosol, but this financing mechanism soon became problematic due to insufficient liquidity in the system. There were also administrative problems, since many Bolivians lacked the required IDs to get the benefits, and some suspicions of fraud (Rofman, 2006: 403). Bonosol was first paid in 1997, but discontinued in 1998 when it was replaced with another benefit called Bolivida at a lower value and restricted to a narrower cohort (Bolivians aged 50 or over by December 1995) (see Willmore, 2006: 27). The payment of Bolivida was also suspended in 2002, and in 2003 the original Bonosol was restored. However, financing problems persisted as dividends from the collective capitalization fund were insufficient to finance the benefit (Müller, 2009 and Ticona Gonzales, 2011: 48). In late 2007, President Evo Morales created Renta Dignidad, a universal pension which replaced Bonosol and was first paid in 2008, with a yearly value of about US$ 342 (except for recipients of another pension who got only 75 percent of the amount, about US$ 257). Eligibility was set at 60 years of age, and the cohort restriction of Bonosol was lifted, making Renta Dignidad a truly universal, noncontributory pension. The benefit was financed with a share of revenues from the direct tax on hydrocarbons, plus dividends from capitalized firms (many undergoing a process of nationalization). The redirection of resources from the tax on hydrocarbons from regions, municipalities, and universities to finance the universal benefit generated strong resistance, especially from regions governed by the opposition (Müller, 2009: 6). Bonosol and Renta Dignidad have been especially important in the context of the very low coverage in the contributory pension system in the country: in 2007 only 17 percent of people aged 65 and over were receiving pensions from the contributory system, but if noncontributory benefits are considered, coverage rises to 91 percent of the population aged 65 and over (Rofman and Oliveri, 2012: 208). Recent estimates suggest that 97 percent of the eligible population receives Renta Dignidad. In the first half of 2010, there were about 800,000 beneficiaries, 83 percent of whom were receiving no other pension (Ticona Gonzales, 2011: 47, 55). The establishment of Renta Dignidad, a truly universal benefit with no contributory requirement, no means-test, and no cohort restriction

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has helped to consolidate the path toward universal old-age protection in Bolivia. Although the benefit level is rather low (about 30 percent of the minimum wage—Ticona Gonzales, 2011: 57—compared to the Brazilian rural pension at 100 percent of the minimum wage), its universal scope is an outstanding experience in a low-income country. It is the only nation-wide, universal, and noncontributory pension in Latin America providing benefits to all as a matter of right, with no behavioral or contributory conditions and no recourse to a means-test. Brazil: Wide Coverage in Urban and Rural Areas Brazil has also managed to achieve one of the highest rates of old-age pension coverage in Latin America. Contributing to this were two pension schemes that complement traditional social insurance pensions: a rural pension and a means-tested benefit for the elderly and disabled people with low income. These two schemes were created in the 1970s and reformed and expanded in the 1990s. The rural pension was implemented in 1971 as a flat-rate benefit for people aged 65 or over who worked in the rural economy, and later extended to gold washers and fishermen working within a family economy (see Schwarzer and Querino, 2002 and Duarte Barbosa, 2011). The design of the rural pension deviates from the traditional Bismarckian model: benefits are flat-rate and unrelated to previous income or contribution records. Contributions are not earnings-related but based on a percentage of the primary value of commercial output.7 Originally, the benefit was worth half the value of the minimum wage (the widow pension was one third), and only available for the head of the household, which in practice excluded most women (who were only entitled to a pension of their own if living alone). The 1988 Constitution established a new concept of social security with a universalistic scope, bringing about a significant improvement of noncontributory or semicontributory benefits. Legislation expanding both the rural pension and the social-assistance pension followed. Among other things, the new measures increased the rural pension to the value of one minimum wage (which is currently worth about US$ 312 per month)8 and extended the right to benefits to the spouse (in practice, the woman), regardless of whether the “head” was already collecting a benefit. The new legislation preserved the specific contribution rule based on commercialized output (not on earned income), and the beneficiary does not need to document years of contribution but years of rural work to qualify for a pension.9 The new legislation produced a significant increase in the number of benefits, from 4.1 million at the end of 1991 to about 6.4 million in

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1994, and 7.9 million in 2008 (Duarte Barbosa, 2011: 92, graph 5). The rise in the overall pension coverage rate from 68.6 percent in 1992 to 76 percent in 1995 also reflects this expansion of rural pension benefits (Schwarzer and Querino, 2002: 2). Studies carried out in a couple of Brazilian regions suggest that the rural pension makes a significant contribution to poverty alleviation, access to social services and medicines, quality of life and housing, as well as the development of the local economy (Schwarzer and Querino, 2002 and Schwarzer, 2000). It is the main source of income for many rural families and has improved the living conditions and social status of the elderly, moving them from “dependants” to “providers” of the family (Duarte Barbosa, 2011: 85). The social assistance pension scheme also expanded after the 1988 Constitution. The preexisting benefit, Renda Mesal Vitalícia or Lifelong Monthly Income (RMV), had been created in the 1970s as a means-tested benefit for disabled and elderly people. Eligibility required a contribution record of at least 12 months, which left out individuals who had never worked in the formal labor market. As in the case of the rural pension, the benefit was set at half the value of the minimum wage. The RMV was replaced by the BPC (Benefício de Prestação Continuada or Continuous Cash Benefit), established by law in 1993 and implemented in 1996, as a means-tested cash transfer worth one minimum wage for elderly and disabled people living in households with a per capita family income below one quarter of the minimum wage.10 Overall, the BPC is more generous than its predecessor, with a higher benefit, no contribution requirement, and a broader definition of disability that in practice encompassed a significant extension of coverage among the handicapped poor (Schwarzer and Querino, 2002: 20–21). In 2009, the scheme provided 3.2 million benefits (Duarte Barbosa, 2011: 86). However, being means-tested on household income (with a low-entry threshold) it is based on a selective design which remains far from the CI logic. In short, the Brazilian rural pension and BPC stand out as two pension schemes organized under a different logic than the traditional social insurance systems, which can provide protection to older adults who are not employed in the urban formal labor market. While the BPC is the less innovative scheme following a typically means-tested model, the rural pension has a completely different design and is more universalistic: it offers equal benefits to the elderly in the rural economy without the contributory requirements that often leave much of the rural population outside formal protection. These outcomes reveal the value of this universalistic scope: among Latin American countries for which data are available, Brazil stands out as the country with the highest rate of pension coverage in rural areas (even higher than the urban coverage) (see Rofman and Oliveri, 2012: 30, graph 13).

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Argentina: Coverage Expansion through Exceptional Contributory Facilities In the 1990s, Argentina, as several other Latin American countries, reformed the existing public PAYG pension system and created a mixed public-private pension system of fully funded individual pension accounts administered by private companies (Goldberg and Lo Vuolo, 2006; Arza, 2008; Mesa-Lago, 2006, among others). One of the central problems with the new system was low coverage. Under the rules implemented in 1994, workers needed to accumulate 30 years of contributions to be eligible for benefits, a requirement that was difficult to meet for many individuals in the context of large informal labor markets. As a result, the percentage of older adults receiving a pension started to decline after the reform, falling from 77.6 to 67.8 percent of the population aged 65 and over, between 1994 and 2004 (Rofman, Lucchetti, and Ourens, 2009: 30, table A1.1). Although this pension system was subject to several modifications (the most important ones in 2007 and 2008, when privately administered individual accounts were abolished), the contributory requirements to access retirement benefits did not change. Most improvements in coverage resulted from less institutionalized measures, which from 2005 onwards, have allowed the elderly with limited or no contributory records to obtain a pension benefit (Cetrangolo and Grushka, 2008; Rofman, Fajnzylber, and Herrera, 2009; D’Elia, 2007; Arza, 2012a; Bertranou et al., 2011). The so-called pension moratorium was a wide-ranging program that helped expand benefits to include the elderly who could not meet the contributory requirements for ordinary retirement pensions. Benefit levels vary according to contribution records, but are often close to (sometimes below) the value of the minimum pension (currently worth about US$ 380 per month).11 In order to receive the benefits, intended beneficiaries had to join a payment plan for unpaid contributions, which entitled them to start receiving a pension benefit and healthcare insurance. These facilities produced a significant turn-around in coverage trends, bringing in about 2.7 million new benefits between July 2005 and September 2011 (MTESS, 2011: 35).12 Given women’s longer life expectancy and lower initial coverage rates, the majority of the new beneficiaries were women, which helped to narrow the gender gap in pension coverage. From 2005 to 2010, coverage increased from about 62 to 85 percent of the population at or above the age of retirement (60 for women and 65 for men) (Arza, 2012a).13 However, the program only allowed workers to complete contribution records for periods of work until 1993. This means that as time passes, fewer years can be included within these facilities, and more people are likely to face, yet again, problems of access to pensions if no other measures are taken.

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Argentina also had a preexisting noncontributory pension program for people aged 70 and over, among other population targets (such as mothers of seven or more children, war veterans, disabled people, etc.). This noncontributory program is means-tested and only oriented to poor individuals who have no access to social security and hold no assets, income, or resources for their subsistence (Bertranou and Grushka, 2002: 5). The number of benefits allocated under this program had remained stagnant for several years due to budget restrictions. In 2003 these restrictions were lifted and more funds were made available, increasing the total number of benefits. However, most new benefits were oriented to the disabled and mothers of seven children, and not to the elderly (see Bertranou et al., 2011: 111–112; and MTESS, 2011: 37). By September 2011, there were only about 44,031 old-age social assistance pensions (out of a total of 1.17 million social assistance benefits for different groups of people [MTESS, 2011: 37]). This was far more limited than the 2.7 million new benefits given under the “pension moratorium,” which was indeed the main source of coverage expansion over the past years. Although the “pension moratorium” accounted for a significant expansion of pension coverage, which also helped to reduce many of the preexisting inequalities in access to benefits (across gender and income groups, for instance) (Arza, 2012a), the pension expansion strategy was concentrated in the short term, and did not modify the contributory nature of the Argentine pension regime for the future, or create a lasting universal benefit or solidarity pillar. Despite major changes in the pension system following the elimination of private individual accounts in 2008, the structure of the public pension system (the benefits available and the mechanisms for access) remained largely untouched by the reform. As a result, further measures to institutionalize universal access to basic protection are needed in the near future in order to maintain the high levels of coverage achieved through the “pension moratorium.”

Comparing Policy Strategies: How Far from Universal Pensions Is Latin America? In his analysis of cash transfer programs, Standing (2007) proposes a number of principles to evaluate and compare alternative schemes. Three of them are particularly relevant for the assessment of non-contributory and semicontributory pensions in the countries studied here: (1) The security difference principle, which states that “a policy is socially just only if it improves the security and work prospects of the least secure groups in society” (Standing, 2007: 5). For the evaluation of pension schemes, this principle can be conceived broadly as a test on the likely impact of a policy on economic

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security (rather than with a focus on job prospects). Hence, a pension scheme would satisfy this principle only if it enhances the economic security of the least secure social groups. (2) The paternalism test principle, in which “a policy is socially just only if it does not impose controls on some groups that are not imposed on the most free groups in society” (Standing, 2007: 5). This refers to a policy that allows people full control of their lives and does not force specific types of behavior, such as requiring people to undertake specific types of work or training (as in workfare programs) in order to receive the benefit. In a pension policy, this principle can be taken to identify whether older adults receiving benefits are required to take specific actions or behavior which could limit the control of their lives and their personal freedom (such as spending the benefit in a specified way). (3) The rights-not-charity principle, which looks at whether the policy enhances the rights of the beneficiary and limits the discretionary power of the providers (Standing, 2007: 6). This principle is at the heart of the difference between selective and universalistic policies. In order to comply with this principle, policies need to attach rights to citizenship or residence and avoid selection procedures. People should not have to rely on the benevolence of politicians or civil servants to give them assistance in times of need; their entitlements should be rights not subject to political or administrative discretion. One other principle could be added: (4) The family neutrality principle, related to the capacity of a policy to secure each individual’s wellbeing independently of gender and family status (i.e., the extent to which access to benefits is detached from family type and composition). This principle helps differentiate universal, contributory, and means-tested schemes and their impacts on gender equality and women’s autonomy. In traditional social insurance systems, family members who perform unpaid household and care duties (typically female) are generally only protected as “dependent” members of a household with a covered household head. On the other hand, means-tested benefits that define eligibility on the basis of family (not individual) income (the most common approach in poverty-prevention strategies) are not neutral with respect to family type. As it is often impossible to know whether income is equally distributed within the household, or whether the needs of each and every member of the household are being met, means-tested benefits that take the household as a single unit cannot effectively guarantee gender-equal access to social protection.

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A universal noncontributory pension provided to all the elderly regardless of income, work history, and assets, can comply with all four principles. As it reaches everyone it necessarily helps the less secure groups in society, it imposes no conditions for benefit receipt, it offers benefits as a matter of right to every person upon reaching the retirement age, and it makes eligibility independent of family status and composition (and thus fosters gender equality in both access to benefits and benefit distribution). Instead, in Latin America at least, contributory social insurance schemes often fail to comply with the first and fourth principles. They tend not to meet the security difference principle because, in a context of widespread labor market informality, large segments of the population (and mostly the low-income groups) are lifelong informal workers or have interrupted work trajectories that prevent them from meeting the contributory requirements to be eligible for benefits. Contributory social insurance schemes also typically fail to meet the family neutrality principle because they organize old-age security on the basis of the family, and cannot therefore secure pension rights for all independent from family status. Under these systems, women performing household and care duties are often only protected through “derived” benefits from the covered household head. On the other hand, means-tested schemes are typically designed to comply with the security difference principle, but can only succeed if they minimize the selection error (effectively including everyone in need). Means-tested schemes are unable to comply with the rights-not-charity principle because they place significant discretionary power on the provider, who decides and applies the selection criteria. Besides, as some Latin American cases show, budgeting decisions and waiting lists may limit the capacity of these schemes to guarantee the inclusion of all the eligible population. As mentioned above, when means-tested schemes base eligibility on household (rather than individual) income, they also fail to meet the family neutrality principle. How do the pension schemes analyzed in this chapter comply with these principles? In all four countries studied, the significant increase in old-age pension coverage achieved in recent years was made possible by alternative pension schemes or programs that deviated from the traditional contributory model. However, as these four experiences show, there has not been a single design for coverage extension applied across countries. Instead, design features and the terms of entitlement varied, which have had a variety of social and political impacts, both in the short and long term. For the same reasons, they also have different degrees of compliance with the above mentioned principles. Noncontributory or semicontributory pension schemes and programs applied in Argentina, Brazil, Bolivia, and Chile tend to comply with the security difference principle, although among the nonuniversal schemes

Table 4.1

Basic income principles in noncontributory pensions in Argentina, Bolivia, Brazil, and Chile Argentina

Bolivia

Brazil

Chile

Principles

Social assisPension Bonosol tance pension “moratorium” (until 2007)

Renta Social assistance Rural Pension Social assistance Basic Dignidad (BPC) (PASIS) Solidarity (until 2007) Pension (BSP)

Security difference

Possibly

Possibly

Yes

Yes

Possibly

Generally, yes Possibly

Possibly

Paternalism test

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Rights-notcharity

No

No

Yes, but only Yes for some cohorts

No

Yes, but only for rural workers

No

No, but closer

Family neutrality No

Yes

Yes

No

Yes

No

No

Yes

Source : Elaborated by the author using some of the principles developed by Standing (2007).

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this is not assured: it depends on whether the least secure groups in society actually apply and get the benefit (which would imply no budget restrictions, quotas, or waiting lists) (Table 4.1). All the schemes studied here seem to comply with the paternalism test principle because none of them imposes behavioral conditions, restrictions or guidelines on the beneficiary. Only universal (or quasi-universal) schemes can be considered to comply with the rights-not-charity principle (Renta Dignidad, its predecessor Bonosol, and the Brazilian rural pension); the others are subject to mechanisms of selection and/or discretion. Renta Dignidad is the most universal of all, since it does not restrict rights to one cohort (as Bonosol did), or to workers in a specific region (as the Brazilian rural pension does). Indeed, in Bolivia, the replacement of Bonosol with Renta Dignidad in 2008 enhanced this principle establishing universal pension rights for all. In Chile, the creation of the Basic Solidarity Pension has also improved protection by eliminating waiting lists and widening the eligible population. However, as it maintained means-tested access it could not take a step forward to a rights-based universal system. The “pension moratorium” in Argentina deserves mention as a policy that has contributed to a massive expansion of pension coverage in a short period of time, but it is unlikely to comply with the rights-not-charity principle. Being essentially a set of facilities to help older adults meet the contributory requirements to get retirement benefits, than a proper pension scheme, it is largely dependent on the discretionary power of policymakers. So, even though it is not means-tested, it has not established a durable right to a universal and unconditional entitlement to old-age protection. Finally, some of these schemes are weaker than the others when the family neutrality principle is considered. The Brazilian BPC, the Argentine social assistance pension, and the Chilean PASIS and BSP, all test eligibility on family rather than individual income, which makes individual eligibility dependent on the income received by other members of the household. The Argentine moratoria could be considered to meet this principle because family type does not affect eligibility or benefit level.14 Universal benefits such as Bonosol, Renta Dignidad, and the Brazilian rural pension, also fare better with regard to this principle. In Brazil, the reform of the rural pension scheme in the 1990s has enhanced family neutrality by making each member of the household eligible (not just the household head), which in practice extended protection to many women. Another way to assess noncontributory pension schemes is to specifically look at the selective versus universal cleavage discussed at the beginning of this chapter. This can be combined with another important feature, their level of institutionalization, in other words, how stable, enforceable, and well-rooted, these systems are. Both dimensions are crucial to consolidate a rights-based strategy of old-age protection.

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On the one hand, universal and unconditional schemes, available to all the elderly, are better able to provide old-age protection as a matter of right and secure autonomy and freedom for older people (both freedom from need and freedom from invasive selective procedures and behavioral constrains). On the other, the level of institutionalization can also be decisive for a truly rights-based policy: even universal benefits, if too dependent on the discretion of policymakers or on changing political and economic circumstances, can fail to guarantee stable rights and protection. Hence the institutionalization of a policy can be an indicator of how stable it will be through changes in the context and how secure and well-established the rights it provides will actually be. In order to evaluate these two dimensions each scheme has been assessed considering a number of indicators of universality and institutionalization.15 This helps to contrast and compare programs across countries. Substantial differences in schemes are found in both dimensions (Table 4.2). The Brazilian BPC and rural pensions enjoy a rather well-rooted history, which afford them a relatively high level of institutionalization. They have operated for several decades and are backed by the social rights established in the 1988 National Constitution. However, they differ significantly in their level of universality: while the Brazilian rural pension is virtually universal for rural workers, the BPC is selective. Bolivian Renta Dignidad also scores high in terms of institutionalization, as it has its own legislation, and after 2009 it also enjoys a constitutional status. It has however a shorter history than the Brazilian schemes. Its close relative, Bonosol, has been in place for longer but suffered interruptions in payment due to political and financial situations. On the other hand, the Chilean Basic Solidarity Pension (BSP) and the Table 4.2 Degree of universality and institutionalization of noncontributory and semicontributory pensions in Argentina, Bolivia, Chile, and Brazil Institutionalization

Universality High

High

Medium

Low

Renta Dignidad Rural pension BPC (Bolivia) (Brazil) (Brazil)

Medium

BSP (Chile)

Low

Moratorium (Argentina)

Source: Elaborated by the author.

Social assistance pension (Argentina)

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Argentine social assistance pension have a relatively similar level of institutionalization, but differ more markedly in terms of universality. The social assistance pension in Argentina is means tested and has been in the past limited by waiting lists or budget restrictions that have weakened the degree of protection it could offer. This situates it at a low level of universality and a medium level of institutionalization. The BSP fares better since it applies to a broader eligible population. It is also likely to achieve higher levels of institutionalization as time passes (it now scores midway largely due to its short history). Finally, the “pension moratorium” in Argentina is less selective than social assistance pensions, since it involves no means-test, but more selective than universal schemes (like Renta Dignidad ). It is however rather weak in terms of institutionalization: it is time bound, shortlived, and operates only as an exception to the general contributory rule, which guarantees no rights or entitlements for the future. Finally, the pension schemes analyzed here also vary in terms of the quantity of monetary benefit they provide, and therefore there is difference in their capacity to enhance the living standards of recipient families and effectively lift elderly people out of poverty. While most of the analysis up to here has been on the different “logics of entitlement” across pension schemes (how universal and unconditional they are), benefit levels are also a key feature for a rights-based pension policy strategy. Although an evaluation of this issue is beyond the scope of this chapter, it is worth noting that differences in this matter are wide: Renta Dignidad in Bolivia, the most universal benefit, is significantly lower than the others, both in absolute and relative terms (as percentage of the country’s GDP and minimum wage). The Chilean BSP is in between while the most generous benefits are those offered under the Argentine “pension moratorium” (for which, however, the net benefit is difficult to know given the variable deductions that are made) and under the rural pension scheme in Brazil. With a benefit currently set at 100 percent the value of the Brazilian minimum wage, the rural pension can account for a substantial reduction on poverty levels among eligible rural households (see, e.g., Assunçao and Chein, 2009).

Final Remarks The general trend, among the countries studied here, toward the expansion of pension coverage through non-contributory or semicontributory pension schemes has generated a remarkable improvement in levels of old-age protection. While a consensus seems to have been reached regarding the need to complement existing social insurance systems with alternative schemes, significant differences remain in the policies adopted, partly reflecting the diverse institutional trajectories and political process of the countries. Hence, in spite of the trend toward broader

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coverage and the recognition of the limitations of contributory pensions, a shared path toward universalism in old-age protection is not yet apparent. However, in some countries in which universal pensions have been implemented and/or expanded (Bolivia and, to some extent, rural Brazil) progress toward a rights-based strategy for old-age protection seems to be underway. As discussed, the policies implemented also differ with regard to their levels of institutionalization. This can be a crucial variable to ensure stable rights to old age protection for current and future generations of older adults. Policies aiming to create universal protection, if not well institutionalized through stable rules and secure financing, can be only a short-term achievements. Policies that are excessively dependent on circumstantial resources are more prone to cutbacks and policy reversals. This can hinder the achievement of universal rights in old-age protection, even in cases of pension schemes initially conceived with a universalistic scope. Hence the institutionalization of these policies is itself a relevant aspect in the consolidation of a rights-based strategy for old-age protection. In short, the experiences of Argentina, Chile, Bolivia, and Brazil show a movement toward greater protection for older adults through innovative combinations of contributory, noncontributory, and semicontributory schemes. There has not been, however, a single path taking all systems toward universalism. Some countries have moved closer to the CI principles, establishing a universal and unconditional right to oldage benefits, while others may remain far away despite recent improvements in pension coverage. The expansion of economic protection of older adults in Latin America over the past few decades demands further conceptual and empirical evaluation of the impact of alternative pension scheme designs oriented to enhance levels of protection and overcome the coverage limitations of traditional social insurance systems. The contrast between selective and universal measures, both in their principles and impacts, is one of the central aspects to be considered in future policymaking in the area. Notes * Financial support from CONICET-PIP 2010–2012 and Agencia Nacional de Promoción Científica y Tecnológica, Programa de Modernización Tecnológica III, BID 1728/OC-AR is gratefully acknowledged. 1. See Nelson, 2007: 36; and the literature there cited. 2. In Chile, for instance, the self-employed had no mandatory coverage up until the 2008 reform, when a transition period for their affiliation was established (Délano, 2010: 78). 3. Data from the National Socioeconomic Characterization Survey (CASEN) for 2003 (see Berstein et al., 2009: 27).

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4. Values as of March 2008 (Rofman, Fajnzylber, and Herrera, 2009: note 23). 5. Chilean pesos 78,449 per month as of July 2011 (Superintendencia de Pensiones at www.safp.cl/573/article-5784.html, last accessed 15/5/2012). 6. Political constitution of the Plurinational State of Bolivia, art. 67, cited by Ticona Gonzales, 2011: 46. 7. In practice revenues from this contribution on commercialization were largely insufficient to finance the benefit and the bulk of resources came from a 3% additional employer contribution on the urban payroll, which instituted a urban-rural cross-subsidiarization (Schwarzer and Querino, 2002: 9) 8. Brazilian Real 622 per month as of January 2012 (Decree 7655/2011). 9. This applies to the so-called “specially insured category.” For details see Duarte Barbosa, 2011: 93–94, 87. 10. The benefit is only accorded to a person if no family member receives another social security benefit or unemployed insurance, but there is no secure way to check this in practice (Schwarzer and Querino, 2002: 20). 11. Argentine Pesos 1687 per month as of March 2012 (Resolution ANSES 47/2012). 12. For comparative purposes, in September 2011 the total number of benefits in the public pension system was 5.4 million (about 4 million retirement benefits and 1.4 million widow pensions) (MTESS, 2011: 30). 13. For the population aged 65 and over the coverage rate was estimated at 90.4% from household surveys (urban areas) (Rofman and Oliveri, 2012: 42), and at 93% from the National Census 2010 (national total) (INDEC, Table P15, retrieved from www.censo2010.indec.gov.ar/cuadrosDefinitivos /Total_pais/P15-Total_pais.xls, last accessed February 15, 2012). 14. This refers to retirement pensions obtained through the “pension moratorium.” Family type affects eligibility to widow pensions, which are also available under that program, but represent a minority. 15. For the level of universality three dimensions were included: (1) coverage (percentage of the elderly population receiving benefits); (2) selectiveness (whether eligibility involves a means-test and how restrictive it is); and (3) other restrictions of access ([i] cohort-restriction or time-limit to apply; [ii] benefit restricted to one member of the household only, or means-test performed on household rather than individual income; [iii] budget constrain/waiting list; [iv] years of contribution required; [v] years of work (at least formally) required). For the level of institutionalization four dimensions were included: (1) established scheme (whether the scheme has its own rules of eligibility, benefit calculation, contributions and/or budgeting); (2) constitutional right (whether the benefit is supported by a right established in the National Constitution); (3) history (how many years the scheme has been operating for); and (4) other restrictions on continuity ([i] weak legislation—ad hoc classification based on the nature of the legislation on which the scheme is based; and [ii] past discontinuity—whether there have been suspensions in benefit payment in the past, or budget restrictions that prevented the allocation of new benefits to eligible individuals, or whether benefits can be easily blocked or discontinued in the future).

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para el sistema de pensiones.” Buenos Aires: CEPAL y Oficina Internacional del Trabajo, 2011. Brooks, Sarah. Social Protection and the Market in Latin America. The Transformation of Social Security Institutions. New York: Cambridge University Press, 2009. Cetrangolo, Oscar, and Carlos Grushka. “Perspectivas previsionales en Argentina y su financiamiento tras la expansión de la cobertura.” Serie Financiamiento del Desarrollo 205. Santiago: CEPAL, 2008. D ’ Elia, Vanesa. “Pobreza en hogares con adultos mayores: Un análisis a partir del plan de inclusión previsional.” Estudios especiales de la seguridad social: Administración Nacional de la Seguridad Social, 2007. Délano, Daniel. “Reforma previsional en Chile: Protección social para todos.” Santiago de Chile: Oficina Internacional del Trabajo, 2010. Duarte Barbosa, Edvardo. “The Rural Social Insurance Programme.” In Sharing Innovative Experiences, edited by UNDP, 81–98. New York: United Nations Development Program, Special Unit for South-South Cooperation and International Labour Organization, 2011. ECLAC. “Shaping the future of social protection. Access, financing and solidarity.” Economic Commission for Latin America and the Caribbean, 2006. Gana Cornejo, Pamela. “Las pensiones no contributivas en Chile: Pensiones asistenciales (PASIS).” In Pensiones no contributivas y asistenciales. Argentina, Brasil, Chile, Costa Rica y Uruguay, edited by F. Bertranou. Santiago: Oficina Internacional del Trabajo, 2002. Gill, Indermit, Truman Packard, and Juan Yermo. Keeping the Promise of Old Age Income Security in Latin America. Washington DC: World Bank, 2005. Goldberg, Laura, and Rubén M. Lo Vuolo. Falsas promesas. Sistema de previsión social y régimen de acumulación. Buenos Aires: Miño y Dávila, Centro Interdisciplinario para el Estudio de Políticas Públicas CIEPP, 2006. Hancock, Ruth, Stephen Pudney, Geraldine Barker, Mónica Hernández, and Holly Sutherland. “The Take-Up of Multiple Means-Tested Benefits by British Pensioners: Evidence from the Family Resources Survey.” Fiscal Studies 25 (2003): 279–303. HelpAge International. “Age and Security. How Social Pensions can Deliver Effective Aid to Poor Older People and Their Families.” London: HelpAge International, 2004. Holzmann, Robert, David Robalino, and Noriyuki Takayama, eds. Closing the Coverage Gap: The Role of Social Pensions and Other Retirement Income Transfers. Washington DC: World Bank, 2009. Huber, Evelyne, Jennifer Pribble, and John Stephens. “The Politics of Effective and Sustainable Redistribution.” In Stuck in the Middle: Is Fiscal Policy Failing the Middle Class?, edited by A. Estache and D. Leipziger, 155–188. Washington DC: Brookings Institution Press, 2008. International Labour Office. Extending Social Security to All. A Guide through Challenges and Options. Geneva: ILO Social Security Department, 2010. Juurikkala, Oskari. “Punishing the Poor: A Critique of Means-Tested Retirement Benefits.” Economic Affairs 28 (2008): 11–16.

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Korpi, Walter, and Joakim Palme. “The Paradox of Redistribution and Strategies of Equality: Welfare State Institutions, Inequality, and Poverty in Western countries.” American Sociological Review 63 (1998): 661–687. Madrid, Raúl. Retiring the State. The Politics of Pension Privatization in Latin America and beyond. Standford: Standford University Press, 2003. Mesa-Lago, Carmelo. “An Appraisal of a Quarter-Century of Structural Pension Reforms in Latin America.” CEPAL Review 84 (2004): 57–81. ———. “Private and Public Pension Systems Compared: An Evaluation of the Latin American Experience.” Review of Political Economy 18 (2006): 317–334. ———. “Re-reform of Latin American Private Pension Systems: Argentinian and Chilean Models and Lessons.” The Geneva Papers 34 (2009): 602–617. ———. Social security in Latin America. Pressure groups, Stratification and Inequality. Pittsburgh: University of Pittsburgh Press, 1978. ———. “Structural Pension Reform—Privatization—in Latin America.” In The Oxford Handbook of Pensions and Retirement Income, edited by G. Clark, A. Munnell, and M. Orszag, 663–683. Oxford and New York: Oxford University Press, 2006. MTESS. Boletín estadístico de la seguridad social. Tercer trimestre de 2011. Buenos Aires: Ministerio de Trabajo, Empleo y Seguridad Social, 2011. Müller, Katharina. “Contested Universalism: From Bonosol to Renta Dignidad in Bolivia.” International Journal of Social Welfare 18 (2009): 163–172. Nelson, Kenneth. “Universalism versus Targeting: The Vulnerability of Social Insurance and Means-Tested Minimum Income Protection in 18 Countries, 1990–2002.” International Social Security Review 60 (2007): 33–58. Pritchett, Lant. “A Lecture on the Political Economy of Targeted Safety Nets.” Social Protection Discussion Paper Series, 501. World Bank, Washington, DC, 2005. Rofman, Rafael. “Sistema de pensiones: Las reformas de la reforma.” In Bolivia por el bienestar de todos, edited by V. Fretes-Cibilis, M. Giugale, and C. Luff. Washington, DC: World Bank, 2006. Rofman, Rafael, and María Laura Oliveri. “La cobertura de los sistemas previsionales en América Latina: Conceptos e indicadores.” Serie de Documentos de Trabajo sobre Políticas Sociales, 7. Buenos Aires: Banco Mundial, 2012. Rofman, Rafael, Eduardo Fajnzylber, and Germán Herrera. Reformando las reformas previsionales. Las recientes iniciativas adoptadas por Argentina y Chile. Serie Documentos de Trabajo sobre Políticas Sociales Nº 4. Buenos Aires: Banco Mundial, 2009. Rofman, Rafael. “Reforming Pension Reforms. The Recent Initiatives and Actions on Pensions in Argentina and Chile.” Serie Documentos de Trabajo sobre Políticas Sociales Nº 4. Buenos Aires: World Bank, 2009. Rofman, Rafael, Leonardo Lucchetti, and Guzmán Ourens. Pension Systems in Latin America: Concepts and Measurements of Coverage. Buenos Aires: World Bank, 2009. Schwarzer, Helmut. “Impactos Sócioeconômicos do Sistema de Aposentadorias Rurais no Brasil—Evidências Empíricas de um Estudo de Caso no Estado do Pará.” Texto para Discussao, 729. Rio de Janeiro: IPEA, 2000.

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Schwarzer, Helmut, and Carolina Querino. “Non-Contributory Pensions in Brazil: The Impact on Poverty Reduction.” Working paper, 11. International Labour Office, Geneva, 2002. Sen, Amartya. “The Political Economy of Targeting.” In Public Spending and the Poor: Theory and Evidence., edited by D. Van de Walle and Kimberly Nead, 11–23, Baltimore and London: The Johns Hopkins University Press for the World Bank, 1995. Standing, Guy. “How Cash Transfers Boost Growth and Economic Security.” Working Paper, 58, DESA, 2007. Ticona Gonzales, Marcelo. “The Dignity Pension (Renta Dignidad): A Universal Old-Age Pension Scheme.” In Sharing Innovative Experiences. Successful Social Protection Floor Experiences, edited by UNDP/ILO, 45–60. New York: Special Unit for South-South Cooperation, United Nations Development Programme, 2011. UNRISD. Combating Poverty and Inequality. Structural Change, Social Policy and Politics. Geneva: United Nations Research Institute for Social Development, 2010. Willmore, Larry. Non-Contributory Pensions: Bolivia and Antigua in an International Context. Serie Financiamiento del Desarrollo 167. Santiago de Chile: Comisión Económica para América Latina y el Caribe, 2006. ———. Universal Pensions in Low Income Countries. Task Force on Pension Reform and Social Insurance, Initiative for Policy Dialogue: Columbia University, 2001.

CH A P T ER

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A Regional Citizen’s Income to Reduce Poverty in Central America Alice Krozer and Rubén Lo Vuolo

Introduction Citizen’s Income (CI) has many different, relevant facets, depending on contextual circumstances, implementation procedures, objectives, levels of transfer, sources of finance, focus granted, etc. Two important and interconnected aspects of this policy proposal, which are particularly worthwhile in the Latin American context, are its potential to reduce poverty, especially in its extreme forms, and the opportunities it offers in terms of regional coordination of public policies. However, the CI should not be confused with a simple antipoverty program. The proposal might have positive impacts on income distribution, social inclusion and cohesion, gender issues, deepen democracy, and many other relevant aspects of everyday life. However, as Raventós (2007: 94) declares, even if a CI “were no more than a measure against poverty that alone would be sufficient to take it very seriously.” In this vein, evidence from both high-income and low-income countries suggests that poverty levels have fallen after the introduction of comprehensive social transfers aiming at universal coverage (UNRISD, 2010). At the same time, if CI is taken as a policy reaching beyond the national level, it can lead to the creation of strategic ties among countries facing similar developmental and social challenges. Albeit this aspect has been discussed to some degree in the context of developed countries, mainly the European Union (Van Parijs and Vanderborght, 2010; Schmitter and Bauer, 2001), the potential of such a policy for Latin America has

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been underestimated so far. Moreover, considering that poverty does not respect national borders, as exemplified by large-scale economic migration and the costly efforts to curb it, the implementation of a CI as a regional scheme may constitute a worthy alternative. To illustrate these aspects of the CI proposal, this chapter discusses the opportunity and feasibility of a hypothetical regional CI program for Central America. What makes Central America suitable for such an analysis? First, the region is plagued by high levels of income and structural poverty, with the particularly acute manifestation of an increasing infantilization of poverty. Second, Central America displays severely exclusionary social protection systems, even for Latin American levels, featuring conditional cash transfer (CCT) programs that have a very poor record of curbing poverty. Third, governments in the region have voiced their interest in regional social policies in view of the recent impetus to the social integration process in the region. The remainder of this chapter will present some social and economic indicators to illustrate common challenges faced by the Central American countries. Subsequently, the current welfare regime and income transfer policies will be examined. Thereafter, the proposal of a regional CI scheme and its possible implementation will be laid out. Finally, the conclusion will evaluate whether such a proposal should be preferred over the current system.

Central America: The Need for a Regional Poverty Eradication Strategy The Central American population approached 41 million in 2010 and its GDP represented less than 3 percent of the total GDP of Latin America. Differences, both within and between countries, remain significant. For instance, while regional GDP per capita represents less than 40 percent of the Latin American average, Costa Rica doubled the Central American average, El Salvador lies at the regional average, followed by Guatemala, Honduras, and finally Nicaragua with levels inferior to one-third this value. Although these gaps would diminish when considering purchasing power parity (PPP), it indicates important differences in the countries’ respective development position, relating inter alia to the diverging public social expenditure and redistributive policies by the countries’ governments. Central America consists of seven countries: Guatemala, Belize, El Salvador, Honduras, Nicaragua, Costa Rica, and Panama (from north to south). However, for the purpose of this study, we select the member countries of the Central American Common Market, namely Guatemala, El Salvador, Honduras, Nicaragua, and Costa Rica. The reason lies in both the history of integration and common measures that resulted in

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the creation of the Central American Integration System (Sistema para la Integración Centroamericana, SICA).1 Formally initiated in the 1950s, the General Integration Treaty establishing Central American regional economic integration, mirroring the European Union treaty, was signed in 1960 (Zapata and Pérez, 2001).2 The monetary union formalized in 1964 was never implemented in its totality, and internal struggles related to the long-lasting civil wars hindered continuous progress of the integration agenda. Nonetheless, in 1991 the SICA was established, managing five subsystems in which cooperation was furthered: political, economic, social, cultural, and educational (recently an environmental subsystem was added). In line with the general recommendations of the “Washington Consensus,” the isthmus’s countries drastically modified their economic growth strategy in the late 1980s and early 1990s. They all applied far-reaching reforms, significantly liberalizing their economies and opening up to international trade, financial liberalization, and fiscal reforms (Trejos and Gindling, 2004). Besides, a number of trade agreements with the aim of strengthening subregional integration were signed by the Central American countries during the 1990s,3 creating the institutional backbone of free trade area and constituting the Central American Customs Union. Notwithstanding these agreements and the significant increase of the external sector, export destinations have not changed much during the past two decades: at least half of the countries’ total exports are destined either to the United States or the Central American Common Market.4 Central America today accommodates an internal common market, a free trade area, with (almost) harmonized external tariffs, and a Central American Bank for Economic Integration. It is receiving more international cooperation than ever, especially in the area of common politics, and its most recent accomplishment comprises the establishment of a regional comptroller entity. In this setting, the SICA as the responsible organ for regional integration aims to “achieve a system of regional welfare and economic and social justice” for all citizens of the area, eradicate extreme poverty, and endorse sustainable development, according to its mission statement. A Social Integration Council and the post of Secretary of Social Integration have been created to foster this development. Such statements acknowledge the fact that poverty and related transnational problems need to be tackled across national borders, and pinpoint the potential of achievements on a regional level in the fight against poverty. Migration is a clear example of this point: while all Central American countries are “exporters” of labor, strong intraregional migration patterns coexist with the extra-regional flows, and Costa Rica is the major home and host country in the region. While it clearly benefits from

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the inflows, it might be interested in curbing illegal migration through tighter cooperation in regional social policies, instead relying on the less effective border protection. If Latin America is considered a region of dual societies, Central America would hold the privilege of being the spearhead of this duality (Martinez, 2008). Labor markets prove incapable of providing sufficient and well paid jobs : over half of the labor force in Central America works in the informal sector, and hence has little or no social protection, being excluded even from the minimal existing welfare system. While in Costa Rica the number of people working in the informal sector is close to 35 percent of the working population, in El Salvador and Guatemala informality rounds up to 50 percent. Other social and economic indicators are also diverse in the region. Costa Rica´s poverty rate lies at 18.6 percent of its population and is the lowest in the isthmus, representing roughly half of the regional average and remaining below the average of Latin America. In El Salvador poverty levels are similar to the Latin American average; in Guatemala, Honduras, and Nicaragua over half the population lives under conditions of poverty. In spite of a continuous decrease, Honduras maintains one of the highest extreme poverty levels in Latin America at 46 percent of the population. Poverty reduction trends remain volatile through the region, and 2008 onward, indigence levels started rising again in Central America (ECLAC, 2009). A demographic structure comprising an extraordinarily large population of youth and the fact that children are affected by persistent poverty led to an “infantilization of poverty” in the region. Suffice it to mention that 42.4 percent of Nicaraguan children live under conditions of extreme poverty, and half the children under five years of age in Guatemala suffer from chronic malnutrition (ECLAC/UNICEF, 2010). On the other hand, the slowing down of population growth rates implies favorable dependency ratios (the ratio between the population in working age and the dependent remainder), anticipating a “demographic bonus” for the region. Costa Rica has already entered this phase, leaving around 20 years before the elderly part of the population would outgrow the favorable dependency ratios again (Zapata, forthcoming). The remaining countries’ demographic transition is less advanced, but El Salvador and Nicaragua are about to enter their demographic bonus phases, too, while Honduras will do so in 2020 and Guatemala not until 2030 (Zapata, forthcoming). Central America does not only deal with elevated poverty levels, but also maintains the unf lattering record of being one of the most unequal regions of the world. While the wealthiest decile of the population accounts for over a third of total regional income (over 40 percent in Nicaragua), the income share of the four poorest deciles averages

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less than 15 percent of the total (ECLAC, 2010b). This means that the income of the richest 20 percent of the population exceeds that of the poorest quintile on average by a factor of more than 20 times (PEN, 2011). With a Gini coefficient hovering at just under 0.6, its extreme and durable inequality in terms of income distribution and social equity becomes one of Central America’s most characteristic trademarks. While the Central American countries are diverse, they share the main social and economic challenges: high poverty and inequality levels, high levels of informality, high violence and crime rates, and high demographic change processes, as well as resultant problems such as strong migration pressures. Guatemala, Nicaragua, Honduras, and El Salvador, and to a lesser degree the slightly exceptional case of Costa Rica, share overlapping tendencies in these and other important characteristics. Recently, interest in the integration agenda of the regional entities governing the area re-awakened, with policymakers searching for a unified poverty eradication strategy. However, at the time being, no such unified strategy exists in the region (Pérez Gaitán, 2011), and the current fragmented and exclusionary national social protection networks are unable to turn social challenges around.

The Central American Welfare Regimes One of the underlying reasons for the inability to advance in a unified poverty eradication strategy can be found in the traditional conception and organization of welfare regimes in the region. Most countries rely on “exclusionary” regimes where only a small privileged part of the population has access to social security, while the rest depends on informal protection structures, such as family networks. For instance, in the poorest quintile, less than one in every ten households is insured for health in Guatemala, El Salvador, Honduras, and Nicaragua (Filgueira, 2007). In general, in these countries most part of the responsibility of risk management currently lies in the private, rather than the public realm, qualifying the regime as “informal-familiaristic.” The four countries stand in strong opposition to the Costa R ican experience. Costa R ica constitutes a special case, even beyond the isthmus’s borders, as it is one of the oldest and best-developed welfare states in Latin America. The Costa R ican “state system” is grouped around collective risk management (Martínez, 2008), and shows degrees of a “stratified universalism” with extensive though segmented (according to occupation) policies (Filgueira, 2007). Costa R ican social spending by far exceeds average Central American levels. It is evenly divided between the categories of education, health, and

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social security and assistance with a comparatively smaller housing component. In Central America, social spending levels are lower than in the rest of Latin America.5 Albeit social expenditure, following the Latin American trend, has been expanded greatly in recent years, average Central American social spending in 2009 remained lower than 12 percent of GDP. Moreover, while the last decade saw over 40 percent growth in this realm for Costa Rica and almost 70 percent in Nicaragua, Guatemala experienced only a 20 percent increase. Most importantly, public social expenditure is considerably regressive for the rubric of social security, particularly in Honduras and Guatemala. In the last decades, countries in the region incorporated the agenda of minimalist social pro-poor policies. These policies saw poverty as a residual category that would eventually disappear with the reinitiation of economic growth and industrialization, and hence only had to be supported in the meantime via strictly focalized, palliative programs for the most vulnerable sectors. Focus thus lay on the efficiency of the economic development model, rather than on its design —obscuring the fact that national labor markets were incapable of absorbing the large-scale structurally unemployed and providing them with the necessary income to support their families. Nonetheless, even when growth did resume after some years, almost half of the population fell behind, struck by poverty and facing incrementing inequality levels. Even Costa Rica’s relatively elaborate welfare regime seemed unable to overcome extreme poverty in the country; recent increases in the country’s inequality levels further makes apparent this inability. The increase of remittances helped to assist families. The last decade has witnessed growth rates of more than 20 percent in remittances, increasing their percentage of GDP. In some cases, such as El Salvador and Honduras, the remittance levels have reached nearly 20 percent of GDP (Zapata, forthcoming). In fact, in some countries today, remittances surpass the combined amount of net official flows and Foreign Direct Investment (FDI), granting them a pivotal role in local development as well as in the performance of the national economy. Temporary enthusiasm about this “private” social security regime received a blow in 2009 when there was, for the first time, a significant fall in remittances. The sending and receiving of remittances is a dangerous substitute for a public welfare system. Remittances depend on factors beyond the control of economic authorities of the recipient countries, thus increasing their external economic vulnerability. This dependence on the host countries might weaken the home countries’ own economic cycles, making countercyclical policies much more expensive. Besides, it is well-appreciated that while migration is associated with poverty;

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migrants are not necessarily from extremely poor households.6 This means indigent citizens remain excluded from the welfare transfers received through migration, further increasing inequality patterns. Moreover, remittances cannot compensate for the losses mass migration generates in terms of brain drain and dysfunctional families. Migration also changes demographic and dependency ratios in the countries of origin. In actuality, remittances postpone the need of welfare and fiscal reforms in the region. One of the main obstacles in the expansion of social protection is the restricted financial leeway Central American governments confront, due to the states’ limited tax collection capacity. The problem is not the countries’ nominal tax levels, which could be considered reasonable; the problem lies in the poor efficiency of income tax disbursement and high levels of tax evasion and elusion. Thus, while on the one hand the average regional total tax burden in 2003 reached 12.6 percent of GDP, direct taxes only corresponded to 30 percent of these. Evasion is a widespread problem. In Costa Rica, for instance, it represented 5.2 percent of GDP in 2010, the highest levels in Latin America (ECLAC, 2010a), while in El Salvador only 1–3 percent of companies are tax registered (IADB, 2010). On the other hand, the effective tax rate paid by Nicaraguan taxpayers reached 1.4 percent in 2001, when marginal rates lay at 25 percent— numbers that are comparable for the remainder of countries (Gómez Sabaini, 2005).7 Such circumstances exert a dual impact on the social protection system. For one, the fact that most tax yields stem from indirect taxes, like VAT, makes the taxing system unduly regressive, charging the poor relatively more and increasing further the highly skewed regional income distribution. Second, the low levels of absolute yield decrease the governments’ income and hence its scope for social policies.

Income Transfer Programs in the Region The Central American welfare regimes suffer from widespread system fragmentation in their social security schemes. Pension programs are in the center of the explanation. Of the countries considered, Costa Rica and Guatemala, with three programs each, have the least segmented pension systems while El Salvador and Nicaragua have four pension schemes each, and Honduras owns ten (Mesa-Lago, 2012). In these highly segmented systems, coverage and benefits are largely determined by income, education, and location: it increases with income and educational attainments, and is higher in urban than in rural areas.8 Irrespective of the quantity of institutions, social security coverage is very low in Central America, and the lack of coordination between the different schemes leads to coverage gaps and simultaneous program

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overlaps. Except for Costa Rica, where coverage allegedly exceeds 88 percent, the countries’ average protection levels, including those indirectly assured, hardly reached a quarter of the population in 2008. The regional average coverage for the elderly barely surpassed 27 percent in 20069; however, Costa Rican public pension coverage in 2009 exceeded three times Salvadorian public and private systems combined. Elderly protection levels in Costa Rica are augmented by a combination of tax-financed and contributory pensions. This contrasts with the remainder of the countries, where about 80 percent of the economically active population and 84–95 percent of the elderly are excluded, since tax-financed pensions did not exist until few years ago (they still don’t in the case of Nicaragua). In total, 9 percent of the poor in Costa Rica, and about 1 percent in the remainder countries are protected by tax-financed or noncontributive pension schemes. In order to qualify for those, elderly citizens must be extremely poor and not covered by other schemes. The discrepancy in social security coverage relates to differences in social security policies. For instance, Costa Rican self-employed workers are covered mandatorily, those with low incomes receiving a fiscal subsidy, and so 43 percent of nonsalaried EAP is pension insured.10 While excluded in Honduras, the self-employed have voluntary affiliation in the other three countries, which however proved ineffective.11 Only 2–6 percent of all agricultural workers are covered in Guatemala, El Salvador, and Honduras. In these countries, as in Nicaragua, social insurance provisions have been unable to incorporate informal workers, marking severe barriers to higher coverage levels. To summarize, the pension systems in the region prove incapable of offering a universal coverage for its citizens in so far as their labor markets establish insurmountable entry barriers for major labor groups, while simultaneously designing a fragmented institutional system. Noncontributive schemes practiced thus far are scarce and fail to offer income support for those not covered by contributive programs. Conditional Cash Transfer Programs in the Region No country in the region has a comprehensive unemployment benefit scheme. Costa Rica and Nicaragua are the only countries with separate family allowance schemes, with a fixed amount in the former, and an income-dependent level in the latter, reducing the transfer significantly (ISSA, 2010). The absence or insufficiency of these programs vis-à-vis the elevated poverty levels, particularly of child poverty, justify the spreading of CCT throughout Central America.

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The CCT programs in the region share some “standard” features. Targeting follows narrowly defined population segments identified via “double selectivity” of both geographic poverty mapping and proxy means tests, generally leading to the identification of the “severely extreme poor” (as in El Salvador) with dependent underage children or pregnant women. Programs tend to delimit a maximum period during which beneficiaries are allowed to stay in the program, ranging from six months to three years, and feature flat transfer levels that are suspended in case of noncompliance with the related conditionalities. Transfers are delivered in cash on public events (except for Costa Rica, where the money is transferred to a bank account), generally to the female head of household.12 Costa Rica, the country with the most developed social protection system, is the one hosting the least ostentatious CCT in terms of its aims: Avancemos, created in 2006 and financed by the Costa Rican government, aims to address secondary education school desertion, targeting families with children between the ages of 12 and 25. Beneficiaries, 3.3 percent of the population or 17.4 percent of those considered poor, are identified via proxy means-tests, and benefits are contingent on compliance with educational and health requirements. Although Nicaragua terminated its CCT scheme Red de Protección Social (RPS) in 2006,13 it today extends benefits with the Hambre Cero program for rural areas and the Usura Cero for urban areas, which, in spite of emphasizing its “non-welfaristic and rehabilitative nature” (Moore, 2009) is in fact comparable to CCTs. Its aim of chronic hunger elimination is to be reached by increasing food production through in-kind transfers (livestock or seed), excluding however the poorest population which does not own the required hectares of land. In urban areas the program offers microcredits instead of the in-kind transfers. The remainder of the countries have attempted to create a kind of comprehensive parallel micro social system for the extremely poor, rather than rely solely on a CCT program. Besides the CCTs, they include pension schemes, workfare programs, and infrastructure development. Guatemala’s program Mi Familia Progresa (MIFAPRO), the most recent CCT in the region was initiated in 2008 and is still defining its position. It falls between this differentiation due to featuring “only” two basic components, education and health. El Salvador’s program Comunidades Solidarias and Honduras’ Family Allocation Program (PR AF) deal with five to seven individual components. The first covers 17.1 percent of the poor, or 8 percent of total population at the cost of 0.02 percent of GDP, making it by far the least costly program of the region. On the other hand Honduras’s PR AF—one of the oldest CCTs in Latin

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America—costs 0.24 percent of GDP (2009) for the coverage of 8.7 percent of its population. Except Avancemos, which is only equipped with the first, CCT programs thus feature both a conditional education and health component: an educational transfer for families with children between 6 and 15, and a Health Bonus for those with children under age 5 and/or pregnant women, and their related education and health requirements. A family is entitled to a maximum of one transfer per household (three in the case of Honduras’ health benefit), delivered bimonthly (or per semester). Additionally, the Salvadorian, Honduran, and Nicaraguan programs involve a youth component, variously referred to as Temporary Income Support Program (El Salvador), Youth Allowance (Honduras), or Occupational Training Bonus (Nicaragua), which targets youngsters between 14 and 25 without formal employment, in return for assisting vocational training, presenting a business plan, and eventually starting their own enterprise. These programs are further conditioned to the attendance of work programs, daily school, vocational training, etc. Neither of the vocational components seems to have been very successful in achieving their goals (Moore, 2009). Additionally, Honduras and El Salvador’s fourth component constitutes an Elderly Pension. In the case of El Salvador, which initiated its program in 2009, it contemplates complementary health services and is only granted when no other pension scheme applies. Additionally, the Salvadorian is the only CCT program in the region that entails the expansion of basic services (such as water, energy, sanitation, and street lights) and basic infrastructure (roads and improvement of housing and habitat in rural areas) with the additional focus on improvement of the slum situation in urban areas. However, a supply-side infrastructure component of some kind has become a paramount feature of the Central American antipoverty schemes. For instance, Honduras’s PR AF includes supply-side incentives, such as transfers to educational and health care establishments per population received, in the attempt to harmonize program-related increases in demand and institutional supply (Cecchini et al., 2009).14 The same is true for Nicaragua’s now-terminated RPS: here, health care providers received transfers according to the number of patients and their age, as well as the kind of treatment prescribed, while teachers received an annual transfer per child. In spite of such a diverse “welfare mimicry” for the poor, poverty reduction has been extremely limited in the region. This is due to not only serious deficiencies both in program implementation and coordination, but also the very conception of a support strategy relying on CCT programs.

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Conditional Cash Transfer Schemes as Umbrella Programs Substituting for an Inclusive Welfare System The most important lapse in the CCT programs is the targeting and selectivity strategy. Most of the region’s programs identify their target population narrowly in terms of both geography (poverty maps) and means, with rather similar eligibility criteria (families with under-aged offspring, pregnant mothers). While clearly the identified beneficiaries require the attention, families that are just marginally above any defined threshold would not be covered, creating a dilemma. Wherever a conditionality of some income threshold is considered, families are incited to cheat in order to escape the poverty traps. “Nonfamilies”, that is, poor people outside the construct of family, such as orphans, elderly, youth over 15 years, and even families with older children, often feel tempted to create (or simulate) specific family patterns just to comply with the conditionality. Moreover, such biases not only further skew poverty patterns toward particular disadvantaged groups, the difficulty and costs of implementing the criteria used for identifying beneficiaries can also lead to merely token or discretionary application of the formal conditions, opening the field for corruption. This makes a means-tested system excessively expensive in administrative terms. Additionally, selection criteria often become more opaque for potential recipients, which can create confusion with regard to eligibility and feelings of incomprehension, and lead to incomplete coverage of the target population. This adds to poor evaluation of and very little feeling of ownership toward the program on behalf of local, incomprehensibly excluded communities. It can even create conflict between beneficiaries and nonbeneficiaries This way, means-tested programs do not reach the target population of the poorest quintiles, as in Costa Rican schemes where 20 percent of school feeding went to the upper two quintiles (Durán Valverde, 2002). Many programs focus their control efforts more on errors of inclusion, providing benefits to recipients outside the targeting criteria, than errors of exclusion, leaving parts of the entitled population without benefits. This counteracts the efforts of creating a minimum welfare base for the extremely poor, and leads to perverse use of financial means. For instance, in Panama 56 percent of the extremely poor are not covered by its CCT, while only 7 percent of transfers go to those not extremely poor (Cecchini and Madariaga, 2011). Likewise, Honduras only covered 15 percent of its extremely poor in 2007, and Nicaragua reached 9 percent with its RPS and 1 percent of the indigent with the short-lived Crisis Response System (CRS) in 2006. This means that, effectively, most of the poor and extremely poor continue to struggle without income support of any kind.

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Thus, in Central America little evidence of CCT-related poverty reduction can be observed. In Honduras, for instance, an impact of 0.02 percent has been measured (Cecchini and Madariaga, 2011). This is hardly surprising when existing transfer levels, which have not been adjusted in many years, cover less than 3.6 percent of family expenditure. Unfortunately, it is difficult to obtain and consequently compare trustworthy data for the individual programs and costs.15 However, even considering the highest declared level of transfer ($34 in MIFAPRO), only accounts for a personal daily transfer of $ 0.19, or 0.32 international dollar,16 which lies far below the international extreme poverty line of $1.25 PPP (per capita per day). Another problem with CCTs is conditionality. Almost one quarter of total CCT costs flow into conditionality monitoring (Bastagli, 2010). Empirically, however, it is difficult to differentiate between the effects of the actual transfer and the conditionality. Many examples raise doubts about the effectiveness of conditionality compliance to improve the “human capital.” For instance, in the closed Nicaraguan RPS program, overfeeding children before they were to be officially weighted and letting students advance to the next year without passing the academic requirements were not uncommon practices (Bastagli, 2010). These actions were frequently carried out by beneficiaries in order to satisfy the criteria (mostly misleading or misplaced) for keeping benefits. Indeed, accusations of clientelism have been brought forward by beneficiaries on Guatemala’s MIFAPRO program’s administration, pointing out that agents concede or threaten to withhold benefits in a discretionary manner (Acción Ciudadana, 2010). In rural areas with continuously low service infrastructure the compliance with conditionalities might be difficult to meet. Besides, poverty can hardly be sustainably reduced for Salvadorians who need to leave their program after a maximum of three years, or for Costa Rican noncontributive pensioners whose benefits expire automatically after five years unless a new judicial declaration of continued need is filed (Durán Valverde, 2002). This explains the puzzling fact that on the one hand children continued frequenting health services some time after the Nicaraguan RPS program concluded, while on the other hand school dropout rates soared again once the program ended (Moore, 2009). The above problems point toward the general weakness of the strategy of trying to fill the void of an integral public welfare system with CCTs. Limited coverage, inferior transfer levels, excessive monitoring and selection costs, duplicity of existing programs, and inability to lift people out of poverty in the long run are among the principle drawbacks of these income transfer programs. Additionally, constant monitoring by official bureaucracy causes the invasion of privacy on a micro sphere and paves the way for clientelism and corruption. Importantly, the division

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between the “official social security system” and the “poverty relief system” effectively creates two parallel welfare regimes accessible according to wealth and fundamental social cleavages and prejudices.

A Regional Citizen’s Income for Central America From the above review emerges a set of points that justify the opportunity and necessity of discussing alternative income transfer policies for the Central American countries, as well as the reasonableness for carrying out this discussion and strategy at a regional level. The following points stand out among this list: 1. Poverty levels are very high and can neither be sufficiently diminished with the fragmented and limited social security regimes, nor with the restricted and inefficient CCT programs currently in place. 2. National social security systems, with the exception of Costa Rica, are incomplete, fragmented, and leave great parts of the population unprotected. 3. CCT programs prove ineffective in terms of resolving the poverty problem, creating additional difficulties based on their focalized and conditional character, as well as on challenges related to the inefficient bureaucracy and the evident loss of personal autonomy for their beneficiaries. 4. Existing phenomena associated with the pressing social situation of the most vulnerable groups, such as migration, call for a regional strategy. 5. Fiscal systems are too weak to address these problems on a national level. 6. The need of integrated regional policies against poverty is increasingly acknowledged. All of the above points are distinctive justifications for proposing the implementation of a regional CI program in Central America as the most promising strategy to ensure a regional commitment to poverty eradication. The countries can thus benefit from an interstate project that would not only advance the claims of the SICA for a region-encompassing strategy and common project for development, but also improve their position vis-à-vis external partners and confront intraregional challenges transcending the power of national authorities. Migration is a clear example of an intraregional challenge. Most migrants in the region attempt to escape from the economic circumstances

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and lack of opportunities they face at home. Addressing local welfare conditions directly can create incentives for staying, instead of enforcing disincentives for leaving; the latter will never be effective considering the current push, no “future” at home, and pull factors, strong demand for immigrant labor in host countries. Even Costa Rica, the country with the region’s best social indicators, can benefit from this and other “externalities”. Taking into account these arguments, two alternative implementation schemes for the regional CI shall be forwarded here.17 These schemes should be understood as possible ways to conceptualize the issue rather than as a closed policy package. The setup of both schemes is grounded in particularities of the region, namely a demographic structure highly skewed toward the lower end (i.e., the population is extremely young), high levels of infant poverty, limited opportunities in “formal careers” for the young, in addition to exclusionary public welfare systems that leave large parts of vulnerable groups of society, such as the elderly, uncovered. Cost estimations made for illustrative purposes are based on calculations for a potential transfer level of 1.25 international dollars per day per capita, taking into account differences in national incomes and cost of living between the countries through the calculation of PPP. 18 This “equal but differentiated” cash transfer accounts for local differences in cost of living while simultaneously rising individuals’ purchasing power.19 Albeit such a level would arguably not suffice for an abundant lifestyle, the suggested numbers compare favorably to existing CCT levels as described above. Moreover, in contrast to CCT benefits, it should be kept in mind that a CI is meant to function as a basis, to which all other personal incomes can be added, rather than a description of actual “basic needs” of any notion. Two Possible Gradual Implementation Schemes The first possible scheme is based on five age groups that would be included consecutively. The first phase would grant the transfer to all children aged 0–14. The percentage share of the population in this age group is the largest for all countries, making it the most expensive phase. However, as is well documented, infant poverty as well as its effects on health, education, and levels of child labor, one of the most important factors of transmittance of intergenerational poverty, is a crucial argument for the priority of this age group. Costs for implementation of this phase would vary greatly among the countries: for the transfer level forwarded above, Costa Rica would face a cost of 1.13 percent of its GDP, while Nicaragua will confront 5.2 percent. Guatemala, for instance, could cover over 41 percent of the population in this phase, compared

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to Costa Rica’s 25.3 percent, naturally incrementing its costs (refer to Krozer, 2011: table 2). The second phase foresees the integration of youth between 15 and 24 years. All countries share a similar proportion of 15–24-year-old citizens (about 20 percent). Costs as percentage of GDP would range from 0.85 percent for Costa Rica to 3.23 percent for Nicaragua. This phase can be expected to bear considerable effects on factors related to youth unemployment, social exclusion, persistent poverty, and inequality as well as security and reduction of criminality, in view of it being the population group most vulnerable to organized crime recruitment and victimization (Cantón, 2010).20 Moreover, a regional CI could provide a reasonable alternative for young citizens considering migration, simultaneously buffering the impact of loss of remittances on the local economy. Besides, by taking over the role as seed money for rural and local economic development, such transfers would hold the distinct advantage of supplying households both with or without migrant workers (Howard, 2007). In the third phase, citizens aged 65 and above could be included. As stated above, social security programs are unable to cover this age group. However, it would be a mistake to see a CI for the elderly as an alternative to social insurance. The basic state pension should be complementary to social insurance schemes which of course need reform.21 Costs would be moderate in this phase, hovering between Costa Rica’s 0.29 percent and Nicaragua’s 0.69 percent of GDP. Upon conclusion of these three phases, between half and two-thirds of the population would be protected through the CI scheme for a cost equivalent to 4.8 percent of regional GDP (see Table 5.1). The fourth phase includes the 50–64-year-olds. Its costs could remain below 0.8 percent for all countries but Nicaragua. The rationale for continuing with this group is its increasing economic vulnerability on the basis of ever-fewer available jobs for this age group, especially considering better educated and prepared youth. The final fifth phase aims at the integration of the remainder of the population, those aged 25–49. Extreme poverty is also high in this category. Furthermore, a number of important benefits accrue from the coverage of this part of the population, including but not limited to changes in the labor market and private sector, augmentation of bargaining power of workers, enhancement of minimum wage, and likely changes to the migration patterns in the long run. Since this includes the second-largest group after the starting phase, it would also be one of the most expensive phases, consuming 2.34 percent of regional GDP. A complementary scheme attempts to solve one of the systemic drawbacks of the first alternative: what to do with those youngsters turning 15 before Phase Two is initiated? Would they lose their benefit again, as is the case in current CCTPs?

Table 5.1

Estimated costs of transfers for the Central American countries by age group (as %age of GDP) Country

Monthly transfer/person (dollars)

Costa Rica

El Salvador

Guatemala

Honduras

Nicaragua

27.00

18.75

21.66

17.22

13.67

Central Americaa

Phase 1

Age 0–14 % Cost % GDP

25.3 1.13

31.5 2

41.5 3.9

36.8 3.72

34.5 5.2

33.9 2.8

Phase 2

Age 15–24 % Cost % GDP

19 0.85

20.4 1.3

20.3 1.91

21.3 2.15

21.4 3.23

20.5 1.59

Phase 3

Age 65+ % Cost % GDP

6.5 0.29

7.3 0.46

4.4 0.41

4.3 0.43

4.6 0.69

5.4 0.4

Subtotal Phase 1–3

% Population Cost % GDP

50.8 2.27

59.2 3.76

66.2 6.22

62.4 6.3

60.5 9.12

59.8 4.8

Phase 4

Age 50–64 % Cost % GDP

12.5 0.56

10.2 0.65

7.2 0.68

7.7 0.78

8.2 1.24

9.2 0.68

Phase 5

Age 25–49 % Cost % GDP

36.7 1.64

30.6 1.95

26.6 2.5

29.9 3.02

31.3 4.72

31 2.34

4%

6.4%

9.2%

10.1%

15.2%

7.82%

Total costb Source : Krozer (2010). a b

Regional average in Central America. Includes all phases.

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Just as the above, the complementary strategy would start by covering children between 0 and 14 years. Thereafter, instead of providing benefits on the basis of age groups, the complementary scheme continues covering the original beneficiaries plus the newborn children. A remedy for the presumably delayed positive impact of this scheme compared to the Five Phases Model could be conceptualized in the form of a simultaneously implemented Elderly Component for citizens older than 65 years, much like Phase Three of the above model. These components are highly complementary, considering poverty is most pronounced among children and elderly (the economically dependent age groups). Besides, it could even be conceived that the 65 years age threshold would be lowered consecutively, parallel to the increase of the age limit for receiving the grant from the lower part of the demographic scale. This way, the pace for feeling the positive impacts of redistribution, increased productivity, and reduced poverty will accrue faster. It is difficult to estimate costs for such an alternative proposal, since assumptions need be made about population and economic growth dynamics in the coming decades. While no accurate data exists for the latter, fair predictions are available for the former.22 The Central American population will almost double between the years 2010 and 2050. Estimated growth rates peak for all countries considered (but El Salvador) around 2015, thereafter increases slow down again. Regarding economic growth, the cost estimation for the second alternative adopts a constant 3 percent annual growth.23 Two clear and contrasting trends can be deduced under a scheme of fixed age limits for elderly beneficiaries: after topping around 2015, costs for the youth component tend to decline, due to the slowing down of birthrates, and simultaneously costs for the elderly component start to rise, grounded in the eventual aging of the population. Under this scheme, in ten years half of the population would be covered by the CI, for less than 4 percent of the region’s GDP. By 2050, 70 percent of the population would enjoy its coverage, for slightly over 3 percent of GDP. 24 This compares favorably to existing programs that reach less than 2 percent of the population for a tenth part of the proposed costs. 25 If program generated growth and monies reallocated from existing programs are factored in, suggested costs would further decline. Even when costs of both alternative proposals appear comparatively competitive with respect to currently existing programs, a set of potentially complementary sources of finance should be explored. The need for additional sources of finance and a better tax system for countries in the region should not be taken as a mere result of the regional CI strategy. It is an essential part of any reform in social protection systems in the region.

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Financing a Regional Citizen’s Income First, it should be expected that the gradual implementation of a regional CI could partially create its own financing. For one, this will happen through program-generated growth: with a regional average in private household consumption levels at 84 percent, growth rates induced by additional disposable income would be considerable. Albeit numbers should be handled with caution due to their interdependence with numerous external factors, capitalizing on program-generated growth and governments’ increased VAT-related fiscal income thanks to consumption rises could cover a large part of the costs. The other endogenous source constitutes the monies freed by existing CCT schemes and some additional welfare programs becoming obsolete. Second, a CI could be financed through a more efficient and just tributary system. For instance, as mentioned above, tax evasion in Costa Rica exceeds the total cost of the CI system proposed to cover its entire population. Incidentally, the de facto subsidy of corporate tax exemption for El Salvador’s companies could be reallocated to a cash transfer to CI (del Val, 2007). Moreover, via income tax financing, citizens will be tax-registered when applying for the transfer, facilitating control of compliance with tax regimes. This could ameliorate the grave problem of limited tax enforcement procedures, which causes the enormous gap between nominal and effective tax rates in the region mentioned above.26 Besides, acting as a tax credit, a regional CI would help to improve progressivity and efficiency in income tax. Third, a regional CI program could also be co-financed with partner countries’ Official Development Aid and with international and intergovernmental organizations, such as the Inter-American Development Bank or World Bank. In the long run, in view of issues related to dependency and potential effects of global crises, international funds should be phased out to make room for full financing by the countries of the region. Another conceivable option for finance is the establishing of a regional fund, financed through a transaction, resource, or income tax (Krozer, 2010).27 This regional option could foster unification and a sense of commitment among the countries, while addressing intraregional inequality much more effectively. The substantial cost of nonimplementation needs to be considered for accurate cost estimation: current status imposes large financial burdens on the state because only a small part of the population in the formal sector is paying taxes. Simultaneously, social costs in terms of poverty, inequality, migration, lack of health, inadequate education and life options, and opportunity costs related to persistently low productivity

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and competitiveness, circumvent the countries’ attempts to improve the quality of life for their citizens. Concomitantly, these factors obscure the real costs of containing the status quo.

Final Remarks Among the distinct aspects of a CI policy, its likely positive impact on poverty reduction and the strengthening of personal autonomy for the most vulnerable population groups are particularly relevant for Latin America, and especially so for Central America. This is specially true when the diverse policies implemented throughout past decades have proven ineffective and insufficient even during periods of economic growth. Moreover, the simplicity of the operational rules defining a CI offers an unsurpassable opportunity for the shaping of a policy on the supranational level. Socio-demographic and economic particularities of the Central American region, as well as the need to strengthen political agreements between its countries, clearly speak to the reasonableness of studying a regional CI policy’s advantages. Besides its direct effects on poverty reduction, a CI’s positive impacts include issues of high relevance for the region, such as interstate migration, possible linkage of the countries’ fragmented and unequal social protection systems, significant improvement in inequality levels, increased efficiency in countries’ tax regimes, stable consumption levels among vulnerable income groups, probable strengthening of unified development strategies, better regional bargaining power toward international institutions, etc. The simulation exercises of alternative solutions mimicking gradual implementation schemes for a regional CI program suggest their viability and preferability vis-à-vis current policies. The maintenance of highly fragmented social security systems paired with CCT programs does not seem to be a suitable strategy for the resolution of the region’s complex social problems in the long term. Neither would it mark any progress toward the objective of achieving a unified regional antipoverty strategy, declared priority in terms of development and integration policies by the responsible organizations. A regional CI, on the contrary, will prove advantageous when shaping a common strategy for the Central American countries. Clearly, the marked differences in Costa Rica when compared to other countries indicates that it is a special region with issues requiring resolution, particularly upon the establishment of the program’s finance mechanisms and the proposal’s different implementation steps to be followed.

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Nonetheless, the common problems all of the countries face, as well as the benefits that would accrue from the application of a regional policy outweigh the differences. Either way, the proposal of a regional CI deserves serious analysis not only for Central America, but also for other experiences of country integration in Latin America. It becomes evermore clear that the regional integration processes cannot be narrowed down to the political and trade spheres only. A regional development strategy also demands highly effective social policies that guarantee legitimacy and support among its population, especially when this integration process aims to progress toward a conception of citizenship that transcends national borders. A regionally articulated CI should be considered a central element of any agenda that aspires progressing in this direction.

Notes 1. Justification includes its traditional conception as the (economically) integrated area of the former “Federal Republic of Central America,” a democratic sovereign republic whose regional coverage preceded the present day states of Guatemala, El Salvador, Honduras, Nicaragua, and Costa Rica, as well as the State of Chiapas (today Mexico). It was dissolved into its constituent parts in 1840. Additionally, article 1 of the modern “constituting” Protocol of Tegucigalpa states that “Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, and Panama are an economic and political community that aspires the integration of Central America,” qualifying that Panama never considered itself a member country (Guerra-Borges, 2009: 108). 2. For a general chronology and history of the integration process refer to the Sistema de la Integración Centroamericana. (Central American Integration System, SICA) webpage, or, e.g., Zapata and Pérez, 2001. For interpretations of the integration process see Guerra-Borges, 2009 and Pérez Gaitán, 2011. 3. Probably the most relevant arrangement in this context is the creation of DR-CAFTA (United States-Dominican Republic-Central America Free Trade Agreement), a contract Guatemala, El Salvador, Honduras, Nicaragua, Costa Rica, and the Dominican Republic signed with the United States in 2004. 4. El Salvador and Guatemala on the one hand concentrate more than one-third of their respective exports on the intraregional market, while Nicaragua on the other hand concentrates its exports on the US market. 5. Costa Rica pushes regional average with its 17.2% of GDP and Guatemala depresses it with a mere 7.4%, further cementing developmental gaps between the countries. 6. According to the UN (2009) migrants are positively selected in terms of education and skills, and they tend to be young, between 15 and 29. The level of educational attainment of migrants is often higher than that

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7.

8.

9. 10. 11.

12. 13.

14.

15.

16.

17. 18.

19.

133

of nonmigrants, even after controlling for age, childhood residence, and current residence. ICEFI estimates that in El Salvador and Guatemala evasion levels represent 3.2% and 5.4% of GDP, respectively, with levels of income tax evasion lying at 63.7% in Guatemala (Observatorio Fiscal no. 115). According to Mesa-Lago (2012), the average EAP coverage in 2006 was 14% in the poorest quintile, and 53% in the richest; it was 22% among those with primary education only, but 56% among the higher educated; 23% in rural and 38% in urban areas. Excluding Nicaragua for which data is unavailable. Additionally, teachers and employees at the justice department count with special systems (ISSA, 2010). In Nicaragua, 0.8% of the total insured population was voluntarily affiliated in 2008, of which only a small part were self-employed albeit their representing about one-third of urban EAP (Mesa-Lago, 2012). Central American transfer levels are significantly lower than their Brazilian or Mexican counterparts (Cecchini et al., 2009). Albeit the program in its totality was described as “exemplary” and internationally renowned, it was unable to gain sufficient domestic support for continuation, leading to a shortage in available finance eventually anticipating its closure (Moore, 2009). PR AF components furthermore include an unconditional in-kind benefit delivered annually to public school students up to third grade, as well as a bonus for poor women heads of households’ comprehensive development, coupled with a microfinance scheme and the unconditional “Friendly Hand Bonus,” aiming at young people living in areas of high social risk and adults who work in municipal landfills. Transparency International positions all countries considered in this proposal in the lower half of their public access to information assessment survey for Latin American countries with CCT programs. Costa Rica as the only country in the upper half holds position 7 out of 16, while Guatemala, El Salvador, Nicaragua, and Honduras are placed 9th, 12th, 14th, and 16th respectively (Acción Ciudadana, 2010). UNDP (2011) corroborates that, considering an average family size of six in the country, per capita transfers barely reach a monthly $ 6. It further comments on the program’s situation for 2011 with similar concerns: accordingly, the program counted with an approved budget of Q1,200 million for 2011, albeit the coverage of the 800,000 families envisaged as beneficiaries would require more than Q2,800 million, jeopardizing the complete and timely payment of the transfers (UNDP, 2011). For further details on the calculation methods and estimations of the proposals outlined here, see Krozer (2011). As of 2010, such considerations lead to individual transfer levels of a monthly $27 for Costa Rica, $18.75 for El Salvador, $21.66 for Guatemala, $17.22 for Honduras, and $13.67 for Nicaragua—or a regional monthly average of $20. Within-country differences surely exist in purchasing power and costs of living. However, considering the modest size of the included countries

134

20.

21.

22.

23.

24.

25.

26.

27.

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and for sake of simplicity, these differences are temporarily omitted. For similar transfer level differentiation on a regional scheme see for instance Schmitters and Bauer (2001), Van Parijs and Vanderborght (2010). Most of regional violence tends to be perpetrated and experienced among young men between 15 and 34 years (Rodgers, Muggah, and Stevenson, 2009). Social costs of organized crime have been estimated to exceed 14% of GDP (Acevedo, 2008). See Atkinson (1996). For a proposal of a pension reform including a universal and unconditional basic pension, see Goldberg and Lo Vuolo (2006: Chapter 9). Since CELADE/ECLAC only counts with population growth estimations up to the year 2050, costs are estimated until 40 years from date. For the actual numbers and a more detailed account refer to Krozer (2011), table 4. This rate is slightly below Economist’s Intelligence Unit world growth estimations, but far below average regional growth rates for the past half century oscillating around 4.8%. To estimate a “worst case” scenario calculations have also been run with 1% and 2% growth rates. In the former case, Costa Rica will face a cost of 1.29% for the inclusion of 63% of its population; in the latter case Nicaragua for instance confronts 4.94% of GDP for including 67% of its population. For instance, the present proposal offers to cover 6.5% of the population for 0.29% of GDP in the Costa Rican Elderly Component—compared to the 1.8% coverage of the population for 0.3% of GDP of Costa Rica’s existing RNC mentioned above. Although Régimen No Contributivo de Pensiones (RNC) offers a somewhat higher level than the CI considered here, this difference barely reaches 20%, compared to almost four times the amount of people covered. Gómez Sabaini (2005) indicates that effective tax rates lie at a regional average of 2%. Nominal rates oscillate between 25–30% and hence remain low in historical comparison: in the early 1980s they surpassed 50%. See Pereira (2009): 15 ff. for an overview over different countries’ funds and their input source. Bibliography

Acción Ciudadana/Transparency International. “Informe de auditoría social al Programa Mi Familia Progresa 2010—Percepciones Ciudadanas.” Public Perceptions and Assessment Report. Guatemala City: Acción Ciudadana, December 2010. Acevedo, Carlos. Los costos económicos de la violencia en Centroamérica. Consejo Nacional de Seguridad Pública. San Salvador: Presidencia de la República, 2008. Atkinson, Anthony B. “The Case of Participation Income.” The Political Quarterly 67 (1996): 67–70. Bastagli, Francesca. “Poverty, Inequality and Public Cash Transfers. Lessons from Latin America.” (draft). Paper presented at the ERD Conference on

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Experiences and Lessons from Social Protection Programmes across the Developing Word, Paris, June 17–18, 2010. Cantón, Santiago. “Seguridad, Estado y Democracia.” Paper presented at the Foro de la Democracia Latinoamericana, Mexico City, October 13, 2010. Cecchini, Simone, and Aldo Madariaga. Programas de Transferencias Condicionadas. Balance de la experiencia en América Latina y el Caribe. Santiago: ECLAC—Asdi, 2011. Cecchini, Simone, Alicia Leiva, Aldo Madariga, and Daniela Trucco. Desafíos de los programas de transferencia con corresponsabilidad: Los casos de Guatemala, Honduras y Nicaragua. Santiago: ECLAC—Asdi, 2009. del Val, Enrique. “Ingreso Ciudadano universal.” In Derecho a la existencia y libertad real para todos: Ingreso Ciudadano Universal; derechos humanos emergentes y nuevas políticas sociales, edited by Pablo Yanes, 171–178. Mexico City: Gobierno del Distrito Federal, 2007. Durán Valverde, Fabio. “Los Programas de Asistencia Social en Costa Rica: El régimen no contributivo de pensiones,” in Pensiones no contributivas y asistenciales. Argentina, Brasil, Chile, Costa Rica y Uruguay, edited by Fabio M. Bertranou, Carmen Solorio, and Wouter van Ginneken. Santiago de Chile: International Labor Organization, 2002. ECLAC (Economic Commission for Latin America and the Caribbean). Balance preliminar de las economías de América Latina y el Caribe 2010. Santiago de Chile: United Nations, December, 2010a. ———. Social Panorama of Latin America. Santiago de Chile: United Nations, November, 2010b. ———. Social Panorama of Latin America. Santiago de Chile: United Nations, November, 2009. ECLAC/UNICEF. “La pobreza infantil: Un desafío prioritario.” Desafíos, Boletín de la infancia y adolescencia sobre el avance de los objetivos de desarrollo del Milenio, No. 10, May 2010. Filgueira, Fernando. “Cohesión, riesgo y arquitectura de protección social en América Latina.” Serie Políticas sociales no. 135. Santiago de Chile: ECLAC, July 2007. Goldberg, Laura, and Rubén Lo Vuolo. Falsas Promesas. Sistema de Previsión Social y Régimen de Acumulación. Buenos Aires: Ciepp/ Miño y Dávila, 2006. Gómez Sabaini, Juan Carlos. “La tributación a la renta en el Istmo Centroamericano: Análisis comparativo y agenda de reformas.” Serie Macroeconomía del Desarrollo No. 37. Santiago de Chile: ECLAC, July 2005. Guerra-Borges, Alfredo. “La integración Centroamericana en los noventa.” In Fin de Época: De la integración tradicional al regionalismo estratégico, edited by Alfredo Guerra-Borges and Oscar Ugarteche, 108. Mexico: Siglo XXI, 2009. Howard, Michael W. “A NAFTA Dividend: A Guaranteed Minimum Income for North America.” Basic Income Studies 2, no. 1 (2007). IADB (Inter-American Development Bank). “High taxes and Evasion Eroding Economic Growth in Latin America and the Caribbean. New IDB Study Says Governments Must Simplify Tax Systems and Reduce Evasion,” March

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4, 2010. Accessed April 16, 2012. www.iadb.org/en/news/webstories/2010 –03–04/tax-burden-and-evasion-in-latin-america-idb-study, 6619.html ICEFI (Instituto Centroamericano de Estudios Fiscales). Observatorio Fiscal, Año V, no. 115. Guatemala: Instituto Centroamericano de Estudios Fiscales, 2010. ISSA . “Social Security Programs Throughout the World: The Americas, 2009.” SSA Publication No. 13–11804. Washington: ISSA, March 2010. Krozer, Alice. “A Basic Income For Central America: Towards the Eradication of Extreme Poverty in the Region,” Master’s Thesis, Copenhagen Business School, 2011. ———. “A Regional Basic Income: Towards the Eradication of Extreme Poverty in Central America.” Mexico City: United Nations, 2010. Martinez, Juliana Franzoni. Arañando Bienestar? Trabajo remunerado, protección social y familias en America Central. Buenos Aires: Colección CLACSO-CROP, 2008. Mesa-Lago, Carmelo. “The Performance of Social Security Contributory and Tax-Financed Pensions in Central America, and the Effects of the Global Crisis.” International Social Security Review 65, no. 1 (2012), 1–27. Moore, Charity. “Nicaragua’s Red de Protección Social.” Country Study 17. Brasilia: International Policy Center (IPC), 2009. Pereira, Richard. “Economic Security in the Twenty-First Century—Guaranteed Annual Income (GAI). An Ecological, Democratic, Justice and Food Security Imperative,” Athabasca University, October, 2009. Pérez Gaitán, Carlos Roberto. “Logros y desafíos pendientes de la integración centroamericana,” Presentation at ECLAC sub-regional headquarters, Mexico City, March 2, 2011. PEN (Programa Estado de la Nación). “Panorama Social,” Chapter 3 in Cuarto Informe del Estado de la Región. San José, Costa Rica, 2011. Raventós, Daniel. Basic Income: The Material Conditions of Freedom. London: Pluto Press, 2007. Rodgers, Dennis, Robert Muggah, and Chris Stevenson. “Gangs of Central America: Causes, Costs, and Interventions.” Small Arms Survey Occasional Paper 23. Geneva, May 2009. Schmitter, Philippe C., and Michael W. Bauer. “A (Modest) Proposal for Expanding Social Citizenship in the European Union.” Journal of European Social Policy 11 no. 1 (2001): 55–65. Trejos, Juan Diego, and Thomas H. Gindling. “Inequality in Central America in the 1990s.” CEPAL Review, no. 84. Santiago de Chile: ECLAC, December 2004, 175–196. UNDP. “Ejercicio de Apreciación Substantiva: Mi Familia Progresa/Guatemala.” UNDP Guatemala, July 2011. UNRISD (United Nations Research Institute for Social Development). Combating Poverty and Inequality. Structural Change, Social Policy and Politics. Paris: UNRISD, August 2010. Van Parijs, Philippe, and Yannik Vanderborght. “Basic Income, Globalization and Migration.” Revised version of a paper from Sustainable Utopia and Basic Income in a Global Era, Proceedings of the Basic Income International

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Conference, Seoul National University and South Korean Basic Income Network. Seoul: January 27–28, 2010. Zapata, Ricardo, and Esteban Pérez. “Pasado, presente y futuro del proceso de integración centroamericano.” Estudios y Perspectivas no. 6. Mexico City: United Nations, November 2001. Zapata, Willy. “Centroamérica: Avances en las últimas dos décadas y retos en la ruta al 2020.” Mexico City: ECLAC, unpublished, October 2011, forthcoming.

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PA R T

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Citizen’s Income and the Latin American Public Agenda

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CH A P T ER

6

Are Latin Americans—Brazilians in Particular—Willing to Support an Unconditional Citizen’s Income? * Fábio D. Waltenberg

Introduction When exposed for the first time to the idea of an unconditional Citizen’s Income (CI) the reaction of many people is to reject it, either as a senseless proposal or a utopian project. Some do change their minds, but there is no doubt that the CI is an intricate and counterintuitive policy not always enthusiastically adopted at the first glance. Yet many ordinary people, a few institutions, some politicians, and a certain number of bright researchers are convinced that CI offers many advantages over its alternatives, especially means-tested transfer schemes. CI has been well-justified by political philosophers on the basis of important principles of justice it promotes (esp. Van Parijs, 1995). While not tested widely (except in a few local experiments),1 from a theoretical viewpoint it seems indeed to be very wise. Although CI is costly due to the individualization of benefits and the possibility of accumulating it with other sources of income, it is very promising in its prospects of providing a minimal amount of (decommodified) economic security and freedom to individuals. That this can be achieved without the usual side-effects of conventional income transfer schemes, such as unemployment trap, poverty trap, or stigma (Vanderborght and Van Parijs, 2006) or even informality trap2 is the most attractive aspect of this scheme. Most—probably all—contributors to this volume share this sentiment. However, as pointed out by Vanderborght and Van Parijs (2006), CI has failed to become a central theme in the policy debate in most

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developed countries, let alone in developing countries. Even in Brazil, the only country where it has become part of the national legislation, it has never been actually implemented, and most of the country’s interest groups, political parties, and politicians do not consider implementing CI as a priority—with a few exceptions (Britto and Soares, 2011), the most noteworthy being Senator Eduardo Suplicy.3 One of the central features of CI is its redistributive nature. If we are interested in assessing the viability of CI, it is important to understand what generally drives support for redistribution and what obstructs it. Indeed among the many obstacles faced by redistributive policies, an important one is limited political support, which is arguably related to the individuals’ moral values, beliefs, perceptions, and preferences toward redistribution. Various studies indicate restrictions to the extent of support for redistribution which go beyond financial self-interest (e.g., as expressed by a negative correlation between income and support for redistribution). Instead, restrictions also stem from features of individuals’ normative preferences that are not completely determined by their social position, such as traditions, (mis)perceptions, emotions, habits, and the like.4 The hypothesis we maintain in this study is that limited support due to such intangible sentiments is likely to be a powerful obstacle in the path toward implementing CI. The question that needs to be answered is whether citizens of different countries—Latin Americans and Brazilians in particular—would be willing to support a CI policy, given their social position, but also their current moral sentiments, beliefs, perceptions, and commonsense normative views. We believe the analysis of such kind of obstacles has not yet received sufficient attention in the CI literature, possibly because the scarce time and effort of CI proponents and researchers have been focused on understanding and spelling out CI virtues in normative or cost-beneficial terms. Indeed, efforts have been made to uncover what hampers political support for CI at the level of interest groups, such as unions, NGOs, or political parties (e.g., Vanderborght and Van Parijs, 2006), but they do not focusing directly on individual preferences. Yet we believe the latter is crucial in the CI research agenda. Bowles and Gintis (1998), who worried about the reduction of public support for progressive policies in the developed countries in the 1990s, emphasized “the need to design egalitarian policies that affirm and evoke widely held moral sentiments” and “the difficulty of devising egalitarian principles that violate norms of reciprocity.” The critical point is that if CI is not compatible with moral sentiments many people embrace, its prospects of becoming a law—or to become an actual element of the welfare state where the law already exists—will be dwarfed. And this will be so, however convinced we as researchers might be about the uniqueness of CI and its numerous advantages over competitor policies.

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This chapter intends to examine the prospects of support for CI by ordinary people in an international perspective, with special attention to Latin Americans’ views, Brazilians’ in particular. In addition to this introduction and the conclusions, this chapter contains three sections. “The Determinants of the Support for Redistribution and Their Relation with Citizen’s Income” exposes a schematic model of the determinants of support for redistribution, followed by an account of what experiments and surveys have revealed about such determinants, as well as about other aspects which are presumably relevant for individuals’ opinion of CI. We conclude that ex-ante the prospects of support for CI do not seem to be particularly promising. In “Cross-Country Support for Citizen’s Income,” we examine that prediction empirically, employing international survey data. We introduce an “index of presumable support for CI,” constructed out of two building blocks: (i) demand for redistribution and (ii) support for mitigating the importance of (paid) work. A ranking of countries in terms of the presumable support for CI expressed by their citizens is followed by results of a simple statistical analysis, in which we point out some variables that correlate with the index in different countries, including a few Latin American ones. While there is a large cross-country heterogeneity, for instance, Uruguayans are on average much more enthusiastic than Peruvians, as well as within countries, we find out that overall Latin Americans are less willing to support CI than citizens of similar countries. “Support for Citizen’s Income in Brazil” is devoted to a more detailed analysis of Brazil, the only country where CI exists as a law since 2004, though it has not yet been actually implemented. We provide a brief analysis of an apparent tension between Brazilians’ views obtained from our scrutiny of WVS data and the recent evolution of Brazil’s legislation regarding income transfers, and we also report the main findings obtained from a questionnaire recently administered to economics’ students from a public university in Brazil, aiming at capturing in more detail the attitudes of supposedly well-informed individuals toward CI. We observe that both the average Brazilian and those Brazilians belonging to the ‘elite’ are by and large unwilling to support CI.

The Determinants of the Support for Redistribution and Their Relation with Citizen’s Income Theoretical Models and Empirical Studies on Demand for Redistribution In the past decade, a certain number of theoretical models have been proposed in the economic literature aimed at understanding the factors

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and mechanisms determining why an individual (or a group of individuals) is more or less willing to support redistributive policies.5 Parallel to that, other authors have employed national and international databases in order to investigate the consistence of the theoretical predictions. In these empirical studies, the dependent variable is typically some proxy for the support of redistribution—often labeled demand for redistribution. For example, employing the Swiss sample of the international database ISSP,6 Kuhn (2009) constructs his main measure of an individual’s demand for redistribution as the gap between each individual’s Gini index of perceived wages for different occupations and his or her Gini index of desirable wages for those same occupations. Alternatively, he investigates whether incomes should be made more equal, and whether it is the government’s responsibility to reduce income gaps. Fong (2001), in turn, employs US data and constructs her dependent variable as the sum of responses to five questions, such as: “Do you think the government should or should not redistribute wealth by levying heavy taxes on the rich?” Figure 6.1 contains a schematic representation of a model of the determinants of individual demand for redistribution. Variables such as those employed by Fong (2001), Kuhn (2009), and many others are summarized on the top right-hand side box (“individual demand for redistribution”). As for the independent variables, these studies incorporate at least some of those included in the left-hand side box of Figure 6.1 (“individual preferences”). Arrow A indicates the most commonly investigated causal relation, namely the effect of individual preferences on individual demand for redistribution. Though not abundant, these studies share some similarities in their results. They indicate, in accordance with conventional economic wisdom, that financial self-interest does affect the demand for redistribution (i.e., a negative correlation is observed between personal income or wealth and demand for redistribution). However, a handful of other motives prove to matter too. In particular, normative preferences about distributive justice appear to be important, and they are not perfectly correlated with the position individuals occupy in society. Beliefs held by individuals about the determinants of economic success or absence of it (e.g., poverty) also play a role in the support of redistribution. Even more scarce than the evidence concerning Arrow A in Figure 6.1 is the one regarding Arrow B, which represents a hypothetical causal link between individuals’ demand for redistribution and political outcomes. Kuhn (2009) provides indirect evidence for it, showing an individual’s demand for redistribution is a good predictor of her party identification in Switzerland. Arrow C stands for what is frequently called a feedback effect, through which characteristics of the current welfare state

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Individual preferences (possible independent variables in econometric studies) 1. Financial self-interest 2. Normative preferences (e.g., whether the person values more freedom or equality) 3. Perception of distributional parameters (e.g., subjective assessment of society’s level of income inequality and severity of poverty) 4. Beliefs about how wages–or more generally, economic success or its absence – are determined (e.g., by luck or effort? By skills obtained through effort? By choices or lack of opportunity?) 5. Incentive concerns and beliefs about the effectiveness of tax-and-transfer schemes 6. Controls for other characteristics of respondents (e.g., location, education level, civil status etc.)

A

Individual demand for redistribution (examples of dependent variable) 1. Gapbetween perceived and ideal inequality or poverty level 2. Answers to questions such as: “Should incomes be made more equal?” or “Is it the government’s responsibility to reduce income gaps?” 3. Composite variable built out of different questions 4. Etc.

B C

Political outcomes 1. The level of redistribution effectively observed 2. The actual implementation (or not) of more or less redistributive policies 3. Etc. 1

Figure 6.1 Schematic representation of models of the determinants of individual demand for redistribution Source: Elaborated by the author.

(e.g., prevalence of universal policies) might affect individual preferences (e.g., popularity of universal policies). As far as we know Arrow C remains at the level of a hypothesis and is yet to be tested.7 The schematic model represented in Figure 6.1 and the findings based on it are important for two reasons. On the one hand, as long as we view CI as a redistributive policy and are interested in evaluating the prospects of gathering support for it, it is important to understand what generally drives support for redistribution in the first place.8 On the other hand, it is clear that “demand for redistribution” is not synonymous with “support for Citizen’s Income.” For example, it is possible that a given individual supports redistribution in general, but rejects CI as the appropriate modality for doing so, while another one might be critical of the welfare state in general, but might favor CI, say, because of its freedom-enhancing facet. This implies the necessity of developing specific indicators, different from those found in the literature on demand for redistribution. Before doing so, we would like to take stock of the findings regarding attitudes toward redistribution obtained from experimental and survey evidence.

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Experimental and Survey Evidence and the Prospects of Support for Citizen’s Income Elsewhere9 we have pointed out that situations and individuals’ characteristics correlated with their propensity to show solidarity and empathy, and to support or object to redistributive policies. We have done so by means of a scrutiny of the evidence provided by two research devices where commonsense conceptions of justice play a central role: (i) experiments in which individuals play games involving distributional issues in the laboratory, with actual monetary rewards and (ii) studies based on surveys uncovering individuals’ opinions and attitudes regarding redistribution. In this subsection, we summarize the main findings. Based on findings 1 and 2 in Table 6.1, we conclude that some demand for redistribution is very likely to exist, since some degree of redistribution will always be viewed as legitimate. From that alone, not much can be said about the viability of a CI proposal. It might be the case that peoples’ customs and habits do not favor the support for an unconditional provision of cash to individuals. This is emphasized by Lavinas (2006), who identifies a “lack of tradition in policies of universal protection” in Brazil, but such attitudes depend upon a larger set of beliefs and perceptions of individuals. According to findings 3 and 4, the prospects of a wide support for a CI seem to be mild precisely because of the fear of an average citizen that (i) able-bodied adults who could otherwise make ends meet exclusively with their own labor income would choose not to work in the presence of a guaranteed income and (ii) equal amounts would be granted to people with very different living standards, many of whom are not particularly deprived or in need. In the view of an uninformed Table 6.1 A summary of experimental and survey evidence concerning attitudes toward redistribution Findings

Remarks

1

People exhibit “social preferences”

Individuals are not exclusively self-interested, show concern for others and are willing to share even with strangers. Altruism, generosity, solidarity—that is, “other-regarding behavior”—is frequently observed in lab experiments and answers in surveys.

2

Individuals’ actions are governed by social norms, including distributive justice concerns

Such norms comprise concerns for fairness and aversion to inequality. So contrary to conventional microeconomic assumptions, distributive justice considerations are a central element explaining behavior in general. Continued

Table 6.1 Continued Findings

Remarks

3

Cooperation is not unconditional, but offered only under appropriate circumstances.

Cooperation is provided if others are cooperative too. People are willing to contribute to the provision of public goods and to cooperate in setting up collective projects, but they are also ready to punish free-riders even at a cost for themselves. People do not like to have the impression that they are being misled or fooled, nor that others are being cheated.

4

People assign importance to processes and not only to outcomes.

Challenging consequentialism (conventionally assumed by economists), motives, intentions or reasons leading to an outcome do matter. Individuals’ aversion to what they view as unfair inequality is more powerful than aversion to inequality per se. Surveys confirm the relevance of factors conditioning the way an outcome (e.g., poverty) is evaluated (e.g., need, desert).

5

The perceived social distance among participants is a key variable in determining the intensity of other-regarding behavior.

When people consider themselves as equal or close enough to identify with each other, they tend ceteris paribus to be more willing to cooperate and redistribute. Van Parijs’s (2004) conjecture that “cultural diversity” might generally be in conflict with “income solidarity” seems to be supported by the evidence. Demand for redistribution is likely to be bounded or limited by emotional motives, such as identification between (perceived) contributors and (perceived) beneficiaries.

6

Choices and attitudes toward redistribution are context-dependent and strongly influenced by the way a situation is framed.

Confronted to two formally equal problems, people might make opposed choices, depending on the specific underlying “story” they are told (e.g., different normative choices when needs or tastes, in turn, are emphasized as sources of inequality in Yaari and Bar-Hillel, 1984). Schokkaert (1999b) ponders that “Mr. Fairmind has a context-dependent conception of justice. Depending on the concrete circumstances of the distributional problem, he will emphasize desert, need or simple equality”.

7

Individuals’ social preferences are based on (possibly imprecise) beliefs and perceptions, on habit, and are endogenous.

In general it is found that: (a) people show status quo bias, being averse to changes, (b) expected utility theory’s assumptions are violated in systematic ways (e.g., people overevaluate improbable events and discount the future hyperbolically), (c) people learn with experience and change preferences accordingly.

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observer the institution of a CI could violate intuitive principles of justice such as merit and need, and it could also prove to be too generous toward non-cooperative individuals. Of course alternative policies (e.g., means-tested schemes) present similar drawbacks as well as their own serious disadvantages. But as argued by Schokkaert (1999b: 22), even if the average person is “wrong from an ethical perspective,” she must be convinced of that.10,11 If people are averse to changes (point 7a), we should not expect them to be immediately enthusiastic about replacing current insurance and social assistance programs. As pointed out by Noguera and De Wispelaere (2006: 5), “A lack of endorsement for [CI] could equally well be explained by either a general reluctance to change current policy or a substantive aversion to [CI] itself.” Additionally, people may have serious deficiencies in calculating probabilities, as indicated in point 7b. Regarding redistributive policies, this feature might matter, for example, the estimation individuals make about the proportion of poor individuals who are “legitimately needy.” A single television report exposing a family which, without satisfying the eligibility criteria, somehow manages to be granted a benefit could have a considerable impact on the watchers’ beliefs about the proportion of legitimately needy in the population— even if such family is not at all representative of the country’s families— and erode support for that particular redistributive program. Finally, with regard to point 7c, it is possible that peoples’ preferences evolve over time, including those concerning the demand for redistribution or support for a specific policy. It should be noted here that point 7c reflects very closely what is meant by Arrow C in Figure 6.1. Points 5, 6, and 7 are interconnected. “Perceived social distance” is clearly not an immutable concept. It depends on a series of objective and subjective factors, and is certainly malleable by spontaneous forces and possibly alterable with policies. The way a social policy is framed—named, implemented, explained, and reformed—might have a considerable impact on its acceptability and legitimacy among different categories of individuals in a country.12 This third block of results (5–7) can be interpreted with somewhat more optimism by CI proponents. Their challenge is difficult, but not impossible. They have to find strategies to persuade people (most of whom can be convinced, but who hold deep-rooted principles, some of which clash with CI’s central features) that (i) they all belong to a single category of people—say, “a country’s citizens,” as opposed to the typical pattern of segregation that emerges where targeted programs exist: nonpoor, deserving poor, and undeserving poor; (ii) CI is a fair and wise policy; and (iii) a departure from status quo is worth it. Summing up, the results from experimental economics and from research collecting opinions on distributive justice lead us to conclude that there exists a general, primary (natural or socially determined) propensity

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for individuals to be cooperative and sensitive to the misfortunes of their fellow citizens, and thus to support redistribution. However, peoples’ intuitive demand for redistributive policies strongly depends on how they understand the causes of poverty and inequality, and whether they consider that beneficiaries are “deserving” or “undeserving,” casting doubts on the prospects of an intuitive, spontaneous endorsement of a CI policy. Finally, since people’s preferences are not immutable, since their cooperative behavior depends on the degree of perceived social proximity (which is alterable), and since the context and framing of details matter, there is scope for increasing the support for a specific redistributive policy such as CI. The challenge is then to persuade the average person that such a policy is indeed fair and wise. Overall the ex-ante prospects of support for CI do not seem to be particularly promising.

Cross-Country Support for Citizen’s Income In the previous section we concluded that the ex-ante prospects of support for CI do not seem to be particularly promising. In this one we examine that prediction empirically, employing international survey data, namely the fifth wave of the World Values Survey, conducted during the years 2005–2007.13 We first provide a ranking of countries in terms of their citizens’ “presumable support for CI,” followed by results of a simple statistical analysis, where we point out some variables that correlate with the index in different countries, especially Latin American ones.

Ranking the Countries According to Their (Presumable) Support for Citizen’s Income We qualify our index of support for CI with the word “presumable” because we do not have direct questions on the support for CI, so we need to infer it from indirect questions, divided into two dimensions. The first dimension has been inspired by the studies mentioned in “Theoretical Models and Empirical Studies on Demand for Redistribution”, namely the demand for redistribution, composed of four questions which admit responses on a scale that has been normalized to range from 0 to 1, and where an answer closer to zero indicates less demand for redistribution: 1. “Do we need larger income differences as incentives for individual effort or should incomes be made more equal?” 2. “Should people take more responsibility to provide for themselves or should the government take more responsibility to ensure that everyone is provided for?”

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3. “That governments tax the rich and subsidize the poor is not an essential characteristic of democracy. Or is it an essential characteristic of democracy?” 4. “That people receive state aid for unemployment is not an essential characteristic of democracy. Or is it an essential characteristic of democracy?” The studies mentioned in “Theoretical Models and Empirical Studies on Demand for Redistribution” examine support for redistributive policies in general, but ignore a constituent feature of CI that distinguishes it from other redistributive policies, which is the proposal of granting a cash benefit unconditionally. That is, the CI is granted regardless of whether, and how much, a person has worked or contributed. This is why we believe it is necessary to complement the first dimension of the index with a second one, which we call support for mitigating the importance of (paid) work. This dimension is composed of the appraisal of four statements, with possible answers ranging across five categories from “strong agreement” to “strong disagreement,” recoded in such a way that appraisals closer to zero (“strong agreement”) indicate more conventional views on work and the relationship between work and remuneration, likely to reflect a conflict with the CI proposal: 5. “To fully develop your talents you need to have a job.” 6. “It is humiliating to receive money without having to work for it.” 7. “People who do not work turn lazy.” 8. “Work is a duty toward society.” To compose an overall index of “presumable support for CI,” we have simply aggregated the two dimensions. The maximum support possible for CI is 8. That is, a person would have to provide the answer “1” to all the eight questions. Such a person would be extremely favorable to redistribution, and very open to downgrading the centrality of work, especially paid work. Because each dimension ranges up to 4, the relative weight attributed to each dimension is 50 percent.14 Turning to the fifth wave of WVS (2005–2007), we are capable of ranking 45 countries. In Table 6.2, we report a selection of results.15 Panel A shows scores for Latin American countries and Panel B shows those for a group of comparator countries. While all the members of the comparator group are developed countries that possess a mature welfare state, they are heterogeneous in many respects, including their welfare state regimes (cf. Esping-Andersen, 1990). Panel C, in turn, summarizes scores

Table 6.2 A ranking of selected countries and their index of presumable support for Citizen’s Income

Range

Dimension 1: Demand for redistribution

Dimension 2: Support for mitigating the importance of (paid) work

Overall: Index of presumable support for CI (*)

Position in a ranking of 45 countries

0–4

0–4

0–8

1–45

3.17 3.48 3.57 n.a. n.a. 3.28 3.10 3.66

36 24 21 n.a. n.a. 33 38 14

PANEL A—Latin America Argentina Brazil Chile Colombia Guatemala Mexico Peru Uruguay

2.21 2.22 2.45 n.a. n.a. 1.96 1.89 2.30

0.97 1.25 1.14 n.a. 0.98 1.31 1.22 1.35

PANEL B—Selected comparator countries Australia Canada France Germany Spain Sweden Great Britain USA

2.11 2.21 2.24 2.71 2.47 2.09 2.13 1.83

1.59 1.68 n.a. 1.44 1.50 1.87 n.a. 1.61

3.70 3.89 n.a. 4.15 3.97 3.97 n.a. 3.45

11 7 n.a. 1 4 5 n.a. 25

PANEL C—Latin America versus World (with standard errors) Latin American citizens pooled together

2.14 (0.78)

1.19 (0.68)

3.36 (1.02)

Non-Latin American citizens pooled together

2.35 (0.74)

1.15 (0.75)

3.47 (1.05)

Source : 5th wave of W VS. Data collected during the period 2005–2007. (*) The column “overall” does not always equal the sum of dimensions 1 and 2 because of possible missing data for some individuals in only one of the two dimensions.

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for Latin American citizens pooled together versus non-Latin American citizens pooled together. Focusing on the far-right column, and comparing Panel A with Panel B, we observe that most Latin American countries rank below most comparator countries, suggesting at first sight that the prospects of support for CI are not particularly strong in Latin America. But which of the two dimensions of the index is driving the results? The answer can be found in Panel C. In fact, it is mainly in terms of the first dimension of the index that Latin Americans lag behind. In short, Latin Americans’ demand for redistribution is on average lower (2.14) than in the rest of the world (2.35). When it comes to the second dimension, Latin Americans tend to hold views regarding work and remuneration that are almost as conventional as those of non-Latin-Americans (1.19 versus 1.15, respectively). As a result of the combination of the two dimensions, Latin Americans would presumably be less supportive of CI (3.36) than citizens of other countries (3.47). There are also contrasting results within each group. This becomes clear from inspection of Panels A and B. In Latin America, while Mexico, Argentina, and Peru occupy, respectively, the 33rd, 36th, and 38th positions in the 45-country ranking, a country like Uruguay occupies the 14th position, well above the overall average and 22 positions above Peru. Chile and Brazil occupy intermediate positions (21st and 24th, respectively). Among comparator countries, whilst most of them are placed in the first positions in the ranking, including Germany (1st) or Sweden (5th), there is the notable exception of the United States, which ranks 25th with an index virtually equal to that of Brazil. We observe substantial intragroup heterogeneity along both dimensions that compose the index. In terms of demand for redistribution, while Peruvians score 1.89 (with notably low support for equalization of incomes), Chileans reach 2.45 (with high scores in the four variables that compose that dimension), analogously, US citizens score 1.83 and Germans reach 2.71. When it comes to attitudes toward work, the average Argentine holds the most traditional view in Latin America (0.97) and the average Uruguayan citizen holds the least one (1.35). As compared to other peoples, Argentines express particularly strong agreements with the statements “to fully develop your talents you need to have a job”, and “it is humiliating to receive money without having to work for it,” reflecting a presumable unwillingness to support CI. Uruguayans show above-average results in all four variables that compose the second dimension, but still remain below all comparator countries’ citizens. Among the group of comparator countries, contrast is also to be found, with a minimum in Germany (1.44) and a maximum in Sweden (1.87), which is the country whose citizens show less reticence toward a less conventional approach to work and remuneration.

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Factors Correlated with More (or Less) Support for Citizen’s Income In addition to establishing a ranking of countries based on the citizens’ support for CI, we would like to unveil the determinants of the support (or lack of) for CI. However, obtaining a credible causal relation between different variables and the level of support for CI is out of the scope of this study, for two reasons. First, it would require the use of complex econometric techniques, which are inappropriate here. Second, the WVS dataset is limited in a particular sense: if we include many regressors, the number of missing observations increases dramatically. So the compromise we have adopted has been to undertake an exploratory statistical exercise, examining: a small number of factors, that might be correlated with more (or less) support for CI, employing ordinary least squares. Neither do we assert that our set of regressors is exhaustive, nor do we claim we are able to establish causal effects. Yet we believe the exercise is useful as a preliminary quantitative assessment of the support for CI. The dependent variable is the index of presumable support for CI. The inspiration for our choice of regressors comes from the literature on demand for redistribution (cf. “Theoretical Models and Empirical Studies on Demand for Redistribution”). Indeed we have been able to employ interesting variables expressing self-interest, normative preferences, and beliefs and perceptions (inter alia about processes and cooperation). We have also included controls for personal characteristics, a dummy variable for Latin America, and country fixed effects. The main results are reported in Factors correlated with the index of presumable support for Citizen’s Income Table 6.3, where we verify that the more satisfied (overall and financially) a person is, the lower will be her support for CI. The same is true for happiness and educational level. In short, being well-off correlates negatively with support for CI. But self-interest is not the only element that matters. Normative preferences are important too. Those who greatly value “merit” tend to be less favorable to CI, which is hardly surprising. More unexpectedly, a social-preference variable correlates negatively with CI. Given the specific content of the question, “Is it important to care for the well-being of people nearby?”, we tentatively interpret, in line with the finding from “Theoretical Models and Empirical Studies on Demand for Redistribution,” the occurrence of a negative sign as follows: The more individuals care about people nearby (i.e., social proximity), the less sensitive they are to an institutionalized—and thus impersonal and distant—version of solidarity represented by CI. Expected results come out of “beliefs and perceptions” variables too. Those who tend to believe more resolutely that effort brings success will

Table 6.3 Factors correlated with the index of presumable support for Citizen’s Income Dependent variable: index of presumable support for citizen’s income Regressors (*)

Sign of coefficient

Statistically significant?

Negative

Yes

Negative Negative Negative Positive

Yes Yes Yes Yes

Negative

Yes

Negative

Yes

Negative

Yes

Negative

Yes

Positive

Yes

Negative Negative Negative Positive Negative

Yes Yes Yes No Yes

Negative

Yes

Self-interest Degree of satisfaction with financial situation of household Degree of satisfaction with life Degree of happiness Educational level Educational level squared Normative preferences Merit: Is it fair to pay a higher wage to a more competent secretary? Social preference + social distance: Is it important to care for the well-being of people nearby? Beliefs and perceptions Process (success): In the long run, does hard work bring a better life? Process (incentives): Does competition stimulate hard work and new ideas? Cooperation: Can most people be trusted? Controls: personal traits How important is religion? Married/living together (versus single/divorced) Male? (versus female) Age Age squared Fixed effects Whether lives in a Latin American country (versus non-Latin American) Country fixed effects # of observations: 48,830 R squared: 0.1464 Estimation method: ordinary least squares, with robust standard errors.

Included

Source : 5th wave of W VS. Data collected during the period 2005–07. (*) The following W VS variables have been employed: (i) “self-interest”: V68, V22, V10, and V238; (ii) “normative preferences”: V84 and V115; (iii) “beliefs and perceptions”: V120, V119, V23.

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be less inclined to support CI, and the same is true for those who believe in the benefits of competition. Regarding cooperation, we observe that people who trust other people the most tend to be more favorable to CI. When it comes to controls for personal traits, we observe notably that men tend to be less enthusiastic about CI than women, just as more religious people when compared with less religious individuals. Summing up, by and large the results of this exploratory statistical exercise corroborate much of what has been found in the literature on demand for redistribution (cf. Table 6.1 in “Theoretical Models and Empirical Studies on Demand for Redistribution”). This is reassuring in the sense that such literature might lend further insights in the future for the literature on support for CI. It should be added, however, that even including a considerable number of regressors plus country fixed effects, the dummy variable for Latin America remains negative and statistically significant. This reinforces the concern, expressed in previous subsections, that citizens of this region of the world are not particularly willing to support CI.

Support for Citizen’s Income in Brazil Brazil is important when examining support for CI, due to three main reasons. First, as mentioned before, this is the only country where CI is part of the national legislation. Second, paradoxically, CI has never been actually implemented and not many interest groups, political parties, or politicians have been pushing it forward (Ivo and Exaltação, 2010; Britto and Soares, 2011). Third, while CI has not been put into operation, a large-scale conditional cash transfer (CCT) counterpart of CI (the Bolsa Família program [BF]) has been operating, benefiting more than fifty million individuals. The next section contains a brief analysis of an apparent tension between Brazilians’ views obtained from our scrutiny of WVS data and the recent evolution of Brazil’s legislation regarding income transfers. We then report results of the analysis of primary data, obtained from the administration of a questionnaire to a small sample of economics students at a Brazilian public university (“Support for Citizen’s Income among a Sample of Brazilian Students”).

Brazilians’ Reluctance with Regard to Citizen’s Income and the Recent Evolution of Brazil’s Legislation Regarding Income Transfers: Is There a Tension? As compared to citizens of other countries in 2005–2007, the average Brazilian at the same time was neither particularly supportive of

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redistributive policies (especially reluctant with respect to progressive tax-and-transfer), nor particularly unsympathetic to them (28th position in the first dimension). And while not extremely attached to traditional attitudes toward work and pay, the average Brazilian did not hold views that reflect a widespread rejection of those traditional values either (19th in the second dimension). As a consequence, Brazil occupies an intermediate position (24th) in the overall index of support for CI. In order to put Brazil’s results into perspective, we would like to mention the main finding of a recent poll conducted among US citizens by Rasmussen Reports, which explicitly asked whether respondents would favor a basic income (BI) grant financed by the federal government.16 While substantial heterogeneity has been observed in the answers (e.g., according to the political preferences of respondents), overall only 11 percent of the respondents have actually declared they would support a BI proposal. Rasmussen results showing a very low support for CI in the United States, together with the similarity between Brazilians’ and US citizens’ support for CI, reinforces the fear of low prospects of a bright future for CI in Brazil. However, interestingly and importantly, Brazil occupies such modest 24th position in our ranking of presumable support for CI based on data which were collected in 2006, not much later from when CI became a national law (January 2004). If we consider that the index and the ranking presented here are meaningful, it is remarkable to observe the discrepancy between ordinary Brazilians’ expressed indifference, or even reluctance, with regard to CI and the almost simultaneous sanction of the CI Act. Yet, while approved of, four facts regarding the law need to be mentioned: (i) the bill includes a proviso that reads: “The benefit shall be extended to all citizens by stages, upon criteria established by the Executive, and priority shall be given to the poorest segment of the population,”17 that is, it introduces conditions that drive it away from a true CI; (ii) CI has never been actually implemented, and has not become a major policy issue in the country; (iii) the day after the CI Act was approved of, another one gave birth to the CCT program BF and the latter has been actually implemented; and (iv) the federal bureau created in 2004 to manage the BF was called National Citizens’ Income Bureau.18 An optimistic reading of those four facts would be as follows. Since the laws establishing CI and BF have been signed almost simultaneously and since the federal bureau that manages BF has since then been carrying the label “Citizen’s Income,” it is clear that BF will evolve to become CI in the future. That CI has not been implemented (yet) and the existence of a proviso in the law which refrains CI from being actually universal and unconditional are not worrying. The proviso was just necessary as a realistic first step, and the delay is simply a consequence of the proviso.

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Since BF is thriving, and given the willingness of convergence of the two programs, CI will soon come true. A more pessimistic reading of this conundrum would emphasize the serious inconsistency between the nature of CI and the proviso included in Brazil’s CI Act. That it was backed up by most political parties in both houses of the Parliament would be interpreted as the consequence of two elements: first, as the result of a colossal personal commitment and ingenious political effort of Senator Eduardo Suplicy19 and second, due to the very existence of the aforementioned proviso, which made it possible for lawmakers to comfortably back the CI Act without having to commit to actually implementing CI. Finally, by giving the bureau aimed at managing BF a name similar to CI, a further ambiguity between the two programs has been created, increasing the odds that CI will never be actually pursued. Based on the hypothesis that lies in the heart of the approach adopted here—that if a given policy is not compatible with moral sentiments many people embrace, its prospects of becoming a law or becoming an actual element of the welfare state where the law already exists will be limited. And given the lack of genuine support for CI by Brazilians, as exposed by the reluctance that is gleaned from the analysis of the WVS dataset, we tend to think the pessimistic reading is more realistic. In other words, in the light of the data employed here and in our view, in the early-2000s Brazilians were simply not prepared to support CI. Until this moment—eight years later—CI has not yet become a reality in Brazil and it does not seem possible in the immediate future. Britto and Soares (2011) describe in detail all the 34 bills presented in the Parliament in the last eight years regarding income transfers, and perhaps it is symptomatical that none of them is related to the CI Act, but rather to BF. But is not there an inconsistency? If Brazilians do not support CI, why would they support BF? Our answer is twofold. First, it seems to be the case that, once a redistributive policy has been actually implemented, it gathers so much support that it becomes politically difficult to get rid of it. After being put into operation on a large scale, BF has now become part of Brazilians’ reality and it is supported by most Brazilian individuals and political parties (Castro et al., 2009; Ivo and Exaltação, 2010). “Path-dependence” might be in action, or in terms of Figure 6.1, a “feedback effect” (Arrow C). But why has BF been implemented in the first place, while CI has not? This brings us to the second part of our answer: ceteris paribus, CCT programs might indeed sound more plausible to the average citizen than CI for reasons explained in “The Determinants of the Support for Redistribution and Their Relation with Citizen’s Income” (particularly findings 3, 4 and 6), this explains why BF rather than CI has been triggered to become an actual policy.

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Support for Citizen’s Income among a Sample of Brazilian Students We now report results of an analysis of primary data obtained from the administration of a questionnaire to a small sample of economics students from a Brazilian public university at Niterói, a city located in the metropolitan area of Rio de Janeiro, southwest of Brazil. We are well aware that economics’ students from a specific university are not representative of the Brazilian population. Still, we believe our study of that particular group of students is useful. First of all, by focusing on a small group of people, we are capable of administering a more detailed questionnaire, allowing us to deepen our inquiry on the support for CI and BF. Second, however selective and small the group might be, it does have important characteristics. It is composed of privileged individuals, because in the Brazilian context only a few people have the opportunity to attend a public university. Further, the members of this group either belong to the Brazilian economic/political elite, or will belong to it in the future. This has two implications: in the present they are (relatively) well-informed individuals, who (in principle) are able to evaluate the pros and cons of complex policies; in the future they will belong to the group of people who have economic and political power.20 Under our supervision, an undergraduate student has devoted her dissertation to the research topic of this subsection. She designed a questionnaire aimed at capturing in detail students’ attitudes toward redistribution in general and CI in particular. The questionnaire was answered by a sample of economics students at Universidade Federal Fluminense in July 2011. It was administered to 87 enrollees in Microeconomics III (mandatory course; 32 respondents) and Game Theory (optional course; 55 respondents). They were informed that their answers would be used in an undergraduate dissertation and in a research paper, and no further information was provided. The questionnaire was divided in four blocks, collecting information on: (1) students’ demographic and socioeconomic profile, (2) their knowledge of distributional parameters (e.g., the degree of inequality and the incidence of poverty), (3) their ideological/normative preferences regarding redistributive issues, (4) their beliefs in the effects of public policies. The final database provides plenty of information regarding individuals’ attitude toward redistribution. According to several results (not reported here), the students do not seem to be, on average, either particularly supportive of redistributive policies, or ferociously opposed to any modality of redistribution. Various direct questions were asked in order to assess respondents’ view on BF: whether it is a fair program, whether beneficiaries tend to refrain from attempting to “leave the program,” and whether it should be extended to more families. Moreover, in order to test one of the

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lessons exposed in “The Determinants of the Support for Redistribution and Their Relation with Citizen’s Income”—namely lesson 5, that perceived social distance matters—students were asked whether they knew a beneficiary of the program. It should be mentioned that a brief explanation of the program was provided in a few lines. On average, even people who did not know a beneficiary tended to agree that the program was fair. As expected, the (few) students who knew a beneficiary were more supportive of BF, although slightly. Both groups agreed in their suspicion that beneficiaries do not intend to leave the program, with surprisingly stronger agreement among students who knew a beneficiary. They also agreed in their opposition to an extension of the program to more families. Here we must specify that: (i) opposition was more pronounced among those who did not know a beneficiary, and (ii) answers were quite heterogeneous for both groups, with large standard errors. Another set of questions attempted to reveal students’ attitudes toward CI. Once again, a brief explanation of the policy proposal was provided in a few lines before the questions themselves. Main results are reported in Table 6.4. On average, students are reticent with respect to CI on the basis of (un)fairness, with an average of 2.7, above the mid-point of 2.5 (closer to Table 6.4 Students’ views on unconditional Citizen’s Income Statement

Possible answers

Averages (standard errors)

It is fair that everybody receives a CI grant as a fraction of the country’s riches

2.7 (0.8)

In the presence of a CI many people would refrain from working

2.1 (0.8)

CI is overall worth it because of the economic security it would provide “To develop her talent, a person needs to have a job” “It is not reasonable to provide income only to those who have jobs, when full employment does not exist“ If new sources of revenues are found, such as Brazil’s pre-salt oil, a fraction should be used to fund CI in Brazil Observations: 87 Source : Elaborated by the author.

1: Strongly agree 2: Agree 3: Disagree 4: Strongly disagree

2.6 (0.8) 2.0 (0.8) 2.2 (0.8) 2.7 (1.0)

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choice 3-“disagree” than to choice 2-“agree”). They also tend to reject the proposal of devoting oil revenues to funding a CI program in the country (again, 2.7). The reserve people express might be based on: (i) their suspicion that people would refrain from working (2.1, close to 2-“agree”) and (ii) their attachment to a society where working is central, as expressed by their agreement with the statement that associates the development of talents with having a job (2.0, close to 2-“agree”). On the worthiness of CI as a device for providing economic security, the answers are very close to the mid-point, with a slight bias toward disagreement (2.6). The only exception to the generally antagonist view toward CI comes from the answer to the question that suggested a dissociation between income and jobs (2.2), which included however the proviso of absence of full employment. We conclude that while this small group of well-informed, well-off Brazilians does not strongly favor BF, they are much less reluctant with respect to BF than they are with respect to CI. They are prima facie clearly unwilling to support CI.

Conclusions CI has countless virtues. Yet, it has failed to become a central theme in the policy debate in both developed and developing countries. Even in the country where it has taken the form of actual legislation, it has never been actually implemented. While this state of affairs is certainly explained by various factors, in this essay we have emphasized the possibility that a serious drawback of CI is the reluctance of an average citizen to support it spontaneously, given her moral beliefs, perceptions, and normative views. That reluctance might undermine the legitimacy of CI, as well as the prospects that a viable political coalition sustains it vigorously. Our point of departure has been the literature on the “demand for redistribution,” attempting to draw from it useful lessons for a research agenda of what we could label “support for Citizen’s Income”. From that literature we first retain that individuals’ preferences affect their support for redistribution, and that the latter might shape political outcomes (arrows A and B in Figure 6.1). We also retain that individuals tend to support redistribution, but conditionally on what is viewed as admissible causes of fortunes and misfortunes, and on the perceived behavior of potential beneficiaries. No matter how “misplaced,” “wrong,” or “conservative” that might sound to us, advocates of CI, it is important to take this viewpoint into account. In addition to that, we learn that individuals’ cooperative behavior depends on perceived social proximity between perceived donors and perceived contributors. Since it would be shared by all citizens universally, CI would arguably contribute to shortening

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perceived social distance. But the relevant question might be another one: would current perceived social proximity permit the implementation of CI somewhere? Finally, we learn that there is scope for increasing the support for specific redistributive policies, that is, that distributional preferences are alterable, for example, through a “feedback effect” (arrow C in Figure 6.1). Had CI been implemented, new generations of citizens probably would never choose to eliminate it (which occured with the Alaskan dividend, as explained by Baert 2011). But, again, the crucial question is—how to have it implemented in the first place? Over and above fruitful speculations about the ex-ante prospects of endorsement of CI, the same literature serves as a motivation to design appropriate quantitative indicators. We have taken a first step in that direction here, by employing WVS data and constructing an “index of presumable support for Citizen’s Income,” which aggregates two dimensions, and according to which a ranking of 45 countries has been set up. Although there is a large heterogeneity across countries (e.g., Uruguayans are on average much more enthusiastic than Peruvian), as well as within countries, we find out that overall Latin Americans are less supportive of CI than citizens of comparator countries, a result which is reinforced in the regression analysis. The results of the exploratory statistical exercise (section “Factors Correlated with More (or Less) Support for Citizen’s Income”) by and large corroborate much of what has been found in the literature on demand for redistribution, strengthening the possibilities of cross-fertilization between these two streams of research. For a number of reasons, specified earlier, Brazil is important when it comes to CI. However, an analysis of WVS data reveals that the average Brazilian is quite unwilling to support CI, as unwilling as the citizens of United States, where only 11 percent of the citizens explicitly support CI. Moreover, young, well-off Brazilians generally tend to: (i) show reluctance to accept CI on the basis of fairness, (ii) dislike the idea of devoting new revenues (from oil) to funding a CI program, (iii) suspect people would refrain from working if CI existed, (iv) attribute a central role to paid work, (v) diminish the worthiness of CI as a device for providing economic security, and (vi) accept to some extent a dissociation between income and formal jobs, when given the proviso of absence of full employment. These students are less reluctant with respect to BF than they are with respect to CI. If CI is incompatible with individuals’ widely held moral sentiments, its prospects of becoming an important piece of the welfare state will be dwarfed. This conclusion neither reveals pessimism, nor fatalism. Rather, we think such a systematic understanding of the actual, deep-rooted, opposition to CI is useful. It can help in creating successful strategies by which an ingenious and promising policy like CI could be made attractive

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to the average citizen and to the most powerful and influential groups of individuals in the country. For example, in a given country, it might be clever to pursue a strategy consisting of enhancing the demand-forredistribution dimension of CI; in another one, it might be more advantageous to make clear the failure of the conventional mode of thinking about work and remuneration; elsewhere, presenting CI as a right might be the way to go. We expect a quantitative study such as this one might be a helpful contribution in that attempt.

Appendix Table 6.5 A ranking of countries according to an “index of presumable support for Citizen’s Income” Rank

Country

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

Germany Andorra Switzerland Spain Sweden Finland Canada Norway Serbia Moldova Australia Ukraine Japan Uruguay South Africa Slovenia China India Cyprus Morocco Chile Zambia Romania Brazil USA Georgia South Korea Trinidad and Tobago

Dimension 1: Demand for redistribution

2.71 2.38 2.53 2.47 2.09 2.39 2.21 2.38 2.36 2.33 2.11 2.43 2.36 2.30 2.39 2.40 2.53 2.74 (max.) 2.48 2.69 2.45 2.15 2.63 2.22 1.83 (min.) 2.41 2.45 2.08

Dimension 2: Support for mitigating the importance of (paid) work 1.44 1.66 1.45 1.50 1.87 (max.) 1.56 1.68 1.39 1.42 1.39 1.59 1.29 1.32 1.35 1.25 1.21 1.08 0.97 1.10 0.85 1.14 1.43 0.93 1.25 1.61 1.02 0.97 1.32

Overall: “Index of presumable support for CI” (*) 4.15 4.05 3.99 3.97 3.97 3.96 3.89 3.77 3.76 3.71 3.70 3.68 3.67 3.66 3.65 3.59 3.59 3.59 3.58 3.57 3.57 3.54 3.52 3.48 3.45 3.41 3.41 3.40 Continued

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Table 6.5 Continued Rank

Country

29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45

Turkey Egypt Bulgaria Poland Mexico Jordania Vietnam Argentina Ethiopia Peru Indonesia Malaysia Ghana Thailand Burkina-Faso Rwanda Mali

Dimension 1: Demand for redistribution

2.60 2.61 2.28 2.20 1.96 2.60 2.48 2.21 2.40 1.89 1.92 2.02 2.01 1.86 2.01 1.91 1.97

Dimension 2: Support for mitigating the importance of (paid) work

Overall: “Index of presumable support for CI” (*)

0.75 0.70 1.07 1.09 1.31 0.68 0.74 0.97 0.73 1.22 1.17 1.04 1.01 1.06 0.93 0.78 0.65 (min.)

3.35 3.30 3.30 3.29 3.28 3.27 3.20 3.17 3.12 3.10 3.08 3.06 3.01 2.92 2.89 2.70 2.61

Source of data: 5th wave of W VS. Data collected during the period 2005–2007. Do not appear in the ranking the following countries, for which at least one dimension is missing: Russian Federation Iran, The Netherlands, Taiwan, France, Great Britain, Italy, Guatemala, Hong Kong, Colombia, Iraq and New Zealand. (*) The column “overall” does not always equal the sum of dimensions 1 and 2 because of possible missing data for some individuals in only one of the two dimensions.

Notes * The author would like to thank Marcelo Melo and Michelle Parente for their valuable research assistance. 1. The experiments in the US State of Alaska, in a rural village in Namibia, as well as in a rural village and in a small town in Brazil have been carefully described and analyzed in detail by Baert (2011). 2. “Informality trap” means here a situation where incentives exist for people to prefer informal to formal labor market relations. 3. Eduardo Suplicy was the first senator elected by Brazil’s Workers’ Party (PT). He has devoted the bulk of his parliamentary activity over the last 20 years to introducing a guaranteed minimum income in Brazil. While the first bill he presented in 1991 favored a negative income tax, the one he introduced in 2001, and which was signed into ordinary law in 2004, consisted of an unconditional CI. He is honorary copresident of the Basic Income Earth Network (BIEN).

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4. On those issues, see: Miller (1992), Van Parijs (2004), Fong, Bowles, and Gintis (2005), Lavinas (2006), Kerstenetzky (2009), Kuhn (2009), Bamfield and Horton (2009). 5. See Korpi and Palme (1998), Alesina and Angeletos (2005), Bénabou and Tirole (2006). 6. The International Social Survey Programme (ISSP): www.issp.org. 7. A question that might arise is what place interest groups would occupy in such a schematic model. Unions, NGOs, political parties, religious associations and other groups try to impose their preferred normative views in a given society by influencing individuals’ views and political outcomes. They act thus as a further determinant in the three processes represented by arrows A, B, and C in Figure 6.1. Having said that, what we emphasize in this study (and test, to a certain extent) is the role played by individual preferences in determining preferences for policies, CI in particular. In the subsection “Support for Citizen’s Income among a Sample of Brazilian Students,” while a particular kind of group identity (i.e., belonging to the “elite”) is acknowledged, the analysis still focuses on (a subsample of) individuals. 8. Even if redistribution might not be an explicit objective of each particular CI policy proposal, it might well be: (i) a likely “side-effect” of CI if it were implemented, and (ii) perceived as a redistributive policy. 9. Our sources are experimental studies reported mainly in Bowles and Gintis (1998), Bowles (2004), Fong, Bowles, and Gintis (2005), Falk and Heckman (2009), and studies using surveys on opinions about distributive justice reported among others in Schokkaert (1999a), Fong (2001), Kuhn (2009). For a longer analysis see Waltenberg (2011), which also contains brief methodological discussions of both experimental settings and surveys, as well as examples of experiments and survey questions. 10. “Mr. Fairmind [that is, an average citizen] has strong feelings about the relationship between inequality and efficiency or about the remuneration of effort. It is possible that he is wrong from an ethical perspective. But in that case, economists have to convince him if they want to implement their “correct” conception of justice” (Schokkaert, 1999b: 22). 11. The claim that a policy violating the intuitive principles of justice such as desertion or need—for example, because it is too generous toward noncooperative individuals—will not be supported occurs recurrently in the literature. Bowles and Gintis (1998) argue, on the one hand, that the extensive support for Social Security and Medicare in the United States is due to the public perception that “the recipients are ‘deserving’”. But on the other hand, as expressed by Fong, Bowles, and Gintis “people are willing to help the poor, but they withdraw support when they perceive that the poor may cheat or fail to cooperate by not trying hard enough to be self-sufficient and morally upstanding” (2005: 286). Notice the similarity with Schokkaert’s (1999b) claim, according to which questionnaire studies reveal that the typical individual “wants to check whether the needy are really needy and is not eager to guarantee an unconditional grant to those able-bodied persons who simply choose not to work.”

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12. Such line of reasoning is developed by Kerstenetzky (2009) in her critical analysis of recent poverty relief policies in Brazil. 13. World Values Survey (WVS, www.worldvaluessurvey.org) is an international network of social scientists who investigate values and their impacts on political and social life. The databases are composed out of surveys collected from representative samples of citizens of almost 100 countries, accounting for more than 90% of the world population. Until now, six surveys have been organized, in the period 1981–2009, but only the data for the first five are available as we write. 14. The WVS questions used to compose the index of support for CI are: V116, V118, V152, V155, V50, V51, V52, V53, and V54. Clearly, countries could change their positions had we employed different weights. It is, however, out of the scope of this study to discuss such measurement issues, a task that shall be undertaken in our future research. 15. Although there are more countries in the sample, for 45 of them information was available regarding the eight questions that compose the index of support for CI. The overall ranking is presented in the appendix (Table 6.5). 16. The results are mentioned in a BIEN newsletter at: www.basicincome.org /bien/pdf/Flash65.pdf. The report is available at: www.rasmussenreports. com/public_content/politics/general_politics/august_2011/11_think _government_should_provide_basic_income_grant_for_all. 17. Translation is published in the website of the 13th BIEN Congress (www .bien2010brasil.com). 18. In Portuguese, Secretaria Nacional de Renda de Cidadania. 19. About Eduardo Suplicy, see note 3. 20. Notice that we acknowledge here that: (i) individual preferences might be influenced by group identity and (ii) some individuals (e.g., belonging to the “elite”) might be more powerful and influential than others (“non-elite”). Yet, this does not imply we pursue a full-fledged group-based analysis. We observe preferences of individuals belonging to a particular group. Bibliography Alberto Alesina and George-Marios Angeletos,. “Fairness and Redistribution,” American Economic Review, American Economic Association, 95 no. 4 (2005): 960–980 Baert, Anthony. “Experiências de transferência de renda universal e recomendações para o projeto de Renda Básica de Cidadania em Santo Antônio do Pinhal.” CEDE-UFF, Discussion Paper #54, Niterói, Brazil, 2011. Bamfield, Louise, and Tim Horton. Understanding Attitudes to Tackling Economic Inequality.” York, UK: Joseph Rowntree Foundation, 2009. Barr, Nicholas. Economics of the Welfare State. 5th ed. Oxford: Oxford University Press, 2012. Bénabou, Roland and Jean Tirole. “Belief in a Just World and Redistributive Politics,” The Quarterly Journal of Economics, 121 no. 2 ( 2006): pages 699–746.

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Bianchi, Ana Maria, and Geraldo Andrade da Silva Filho. “Economistas de avental branco: Uma defesa do método experimental na economia.” Revista de Economia Contemporânea, Rio de Janeiro 5, no. 2 (2001): 129–154. Bowles, Samuel. Microeconomics: Behavior, Institutions and Evolution. Princeton: Princeton University Press, 2004. Bowles, Samuel, and Herbert Gintis. “Recasting Egalitarianism.” In Recasting Egalitarianism: New Rules for Communities, States and Markets, edited by Samuel Bowles and Herbert Gintis. London and New York: Verso, 1998. Britto, Tatiana, and Fabio Veras Soares. “Bolsa Família and the Citizen’s Basic Income: A Misstep?” International Policy Center for Inclusive Growth, Working Paper #77, January 2011. Camerer, Colin F. , and Richard H. Thaler. “Ultimatums, Dictators and Manners.” Journal of Economic Perspectives 9, no. 2 (1995): 209–219. Castro, Henrique Carlos de Oliveira, Maria Inez Machado Telles Walter, Cora Maria Bender de Santana, and Michelle Conceição Stephanou. “Percepções sobre o Programa Bolsa Família na sociedade brasileira.” Opinião Pública, Campinas-Brazil 15, no. 2 (2009): 333–355. Eber, Nicolas. Théorie des jeux, 2nd ed. Paris: Dunod, 2007. Esping-Andersen, Gøsta. The Three Worlds of Welfare Capitalism. New Jersey: Princeton University Press, 1990. Falk, Armin, and James Heckman. “Lab Experiments Are a Major Source of Knowledge in the Social Sciences.” Science 326, no. 5952 (2009), 535–538. Fong, Christina M. “Social Preferences, Self-Interest, and the Demand for Redistribution.” Journal of Public Economics 82 (2001): 225–246. Fong, Christina M. , Samuel Bowles, and Herbert Gintis. “Behavioral Motives for Income Redistribution.” The Australian Economic Review 38, no. 3 (2005): 285–297. ———. “Strong Reciprocity and the Welfare State.” In Handbook of the Economics of Giving, Altruism and Reciprocity, Vol 2, edited by Serge-Christophe Kolm and Jean-Mercier Ythie. North-Holland: Elsevier, chap. 23, 2006. Ivo, Anete Brito Leal, and José Exaltação. “O Programa Bolsa Família na arena política.” Paper presented at the XIII BIEN Congress, São Paulo, Brazil, July 2010. Kerstenetzky, Celia. “Redistribuição e desenvolvimento? A economia política do programa bolsa família.” Dados 52, no. 1 (2009): 53–83. Korpi, Walter and Joakim Palme. “The Paradox of Redistribution and the Strategy of Equality: Welfare State Institutions, Inequality and Poverty in the Western Countries.” American Sociological Review 63 no. 5 (1998): 661–87. Kuhn, Andreas. “In the Eye of the Beholder: Subjective Inequality Measures and the Demand for Redistribution.” IZA Discussion Paper N° 4360, 2009. Lavinas, Lena. “From Means-Test Schemes to Basic Income in Brazil: Exceptionality and Paradox.” International Social Security Review 59, no. 3 (2006): 103–125. Levitt, Steven D. , and John A. List. “What Do Laboratory Experiments Measuring Social Preferences Reveal about the Real World?” Journal of Economic Perspectives 21, no. 2 (2007): 153–174.

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Miller, David. “Distributive Justice: What the People Think.” Ethics 102 (1992): 555–593. Noguera, José A . , and Jurgen De Wispelaere. “A Plea for the Use of Laboratory Experiments in Basic Income Research.” Basic Income Studies 1, no. 2 (2006): 1–8. Reis, Elisa. “Percepções da elite sobre pobreza e desigualdade.” Revista Brasileira de Ciências Sociais 15, no. 42 (2000): 143–152. Rocha, Rudi, and André Urani. “Posicionamento social e a hipótese da distribuição de renda desconhecida no Brasil: Quão pobres, quão ricos e quão desiguais nos percebemos?” Revista de Economia Política 27, no. 4 (2007): 595–615. Scalon, Celi. “Justiça como igualdade? A percepção da elite e do povo brasileiro.” Sociologias, Porto Alegre 9, no. 18 (2007): 126–149. Schokkaert, Erik. “M. Tout-le-monde est ‘post-welfariste’: Opinions sur la justice redistributive.” Revue économique 50, no. 4 (1999a): 811–831. ———. “Mr. Fairmind is Post-Welfaristic: Opinions on Distributive Justice.” Discussion Paper Series 98/09—Katholieke Universiteit Leuven, Belgium, Center for Economic Studies, 1999b. Sen, Amartya K . Inequality Reexamined. Oxford: Oxford University Press, 1992. Vanderborght, Yannick, and Philippe Van Parijs. Renda Básica de Cidadania: Argumentos éticos e econômicos. Rio de Janeiro: Civilização Brasileira, 2006. Van Parijs, Philippe, ed. Cultural Diversity versus Economic Solidarity. Brussels: De Boeck Université, 2004. ———. Real Freedom for All: What (If Anything) Can Justify Capitalism? Oxford University Press, 1995. Waltenberg, Fábio D. “Can We Expect Brazilians to Endorse an Unconditional Basic Income Policy? An Analysis Based on Experiments and Questionnaires.” Discussion Paper Series 33, Centro de Estudos sobre Desigualdade e Desenvolvimento, Universidade Federal Fluminense, 2011. Yaari, M. E. and M. Bar-Hillel. “On Dividing Justly.” Social Choice and Welfare 1 (1984): 1–24.

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CH A P T ER

7

The Politics of Citizen’s Income Programs in Latin America: Policy Legacies and Party Character Jennifer Pribble

Despite significant consensus within technocratic circles that Citizen’s Income (CI) provides an effective tool for combating poverty and addressing Latin America’s high levels of income inequality, governments in the region have been slow to push for such reforms. While resource constraints are often cited as a core obstacle to the formulation of wide-reaching income-support programs, proponents of CI schemes also face significant political obstacles. This raises an important and pressing question: what are the political conditions that facilitate the adoption of CI schemes in Latin America? This chapter seeks to address this question, paying close attention to factors that support the formation of a political coalition capable of promoting and passing CI policy. In particular, I argue that the design of previous policies, or policy legacies, and the character of political parties influence the ability of Latin American states to reform income assistance policy so as to expand coverage and standardize benefits across different sectors of society. The findings presented in this chapter underscore the important role of politics in facilitating or inhibiting the creation of CI. Specifically, I contend that reforms aimed at expanding access to income transfers and standardizing the size of benefits are more likely to be initiated in states where the government is headed by a left-leaning political party1 and where such parties enjoy significant power in the legislative branch. While ideology is important, I argue that two other characteristics of parties—internal organization and external linkage mechanism—also influence the likelihood that a government will pursue policy reforms

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that expand access and standardize benefit values. In particular, among left-leaning parties, those that rely on a programmatic linkage mechanism are more likely to carry out progressive policy reforms than those that employ clientelism or charisma to link with voters. In the pages that follow, I present a typology of distinct party types and explore how each type influences reform. I also highlight the important role of previous policy design in shaping reform outputs. In particular, policies that create salient coverage gaps or which place a fiscal strain on the state can help to motivate reform, while policies that provide special privileges to powerful groups may inhibit reform efforts. CI programs are often considered a state’s most direct tool for reducing poverty. In Latin America, income supplements have traditionally been provided via three contributory social insurance programs: family allowances, unemployment insurance, and old-age pensions. Among these three programs, the overwhelming bulk of state spending has focused on pensions (Mesa-Lago, 1989). Countries in the region vary with regard to the presence and size of noncontributory social assistance programs. While many states have some form of noncontributory pension benefit, the same is not true for family assistance. During the late 1990s and early 2000s, the need for noncontributory income assistance for working-aged individuals became increasingly clear and several countries in the region adopted the conditional cash transfer (CCT) model to meet this need. While CCTs do break with the logic of a contributory social protection system, they do not constitute a CI program because the benefits are typically targeted—they require that participants comply with a set of conditions such as ensuring that children attend school and have regular health checkups, and they are generally provided to the family rather than to individual citizens. In this way, there is no pure example of a CI program in Latin America. Still, countries in the region vary with regard to the scope of targeting, the nature of the conditionality, and the overall qualifying conditions imposed for accessing cash transfers. Thus, while no Latin American state has adopted a fully universal CI scheme, there is significant variation in the extent to which income transfer policy has increased coverage and standardized benefit levels across different categories of workers. Latin America’s contributory social insurance programs have always offered imperfect coverage, but following the collapse of the Import Substitution Industrialization (ISI) model, these policies became increasingly ineffective at reaching large sectors of the population, namely those outside the formal labor market. Indeed, as industrial employment declined and informal sector work grew as a share of total employment, a large share of Latin American families found themselves uncovered by the existing network of social policies. As a result, social insurance in Latin America has struggled to reduce poverty and income inequality

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(Lindert, Skoufias, and Shapiro, 2006; ECLAC (Economic Commission on Latin America and the Caribbean), 2005; Uthoff, 2006). In an effort to extend protection to excluded sectors and bolster the level of state-provided social protection, many countries in the region reformed existing income support policies or created new programs during the 1990s and early 2000s. This chapter seeks to understand why some of these initiatives moved more decisively in the direction of CI schemes, while others involved narrow targeting or the expansion of contributory systems of protection. It is important to stress that none of the Latin American initiatives generated CI in the traditional sense. Indeed, all of the programs discussed in this chapter are provided to families with children and include some form of conditionality. Despite this shortcoming, these reforms constitute progress relative to the segmented systems that previously excluded large sectors of the population. In the next section of this chapter, I provide an overview of the existing literature about the political determinants of social policy reform in Latin America. I then outline my own explanation about the political factors that influence the ability of governments to reform income transfer programs in a manner that expands coverage and equalizes benefit size. In the final section, I analyze two cases of “successful” reform and one case of nonreform to assess the explanatory capacity of this framework.

Extant Literature on the Politics of “Universalizing” Social Policy Existing studies of the determinants of social policy reform in Latin America have largely considered why countries vary with regard to levels of social spending (Huber, Mustillo, and Stephens, 2008; Kaufman and Segura-Ubiergo, 2001; Segura-Ubiergo, 2007; Haggard and Kaufman, 2008) and why some countries have maintained more state involvement in the provision of social services and transfers than other countries (Madrid, 2003; Dion, 2010; Brooks, 2009; Castiglioni, 2005; Haggard and Kaufman, 2008). Very few studies, however, have contemplated the question of why some states have been successful at expanding the coverage of income transfer programs and creating more equitable benefits, while others have maintained the status quo, and yet others have increased segmentation in the system. The literature on advanced industrialized democracies, by contrast, has paid significant attention to this issue, providing multiple studies aimed at assessing what factors permitted the creation of the universalistic Nordic welfare states, or contributed to the adoption of the more segmented Bismarckian system of social protection in the Continental welfare regimes. These studies focus on the importance of broad political coalitions sustained by social democratic leadership (Huber and Stephens, 2001; Esping-Andersen, 1990; Korpi,

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1983) as well as the presence of political institutions that centralized power and limited the ability of antiwelfare groups to veto the expansion of social protection programs (Pierson, 1995; Immergut, 1992; Huber and Stephens, 2001). Analyses of the potential adoption of a CI policy in advanced industrialized democracies have paid relatively little attention to the role of political parties in promoting the programs, focusing instead on the impact of labor unions. For example, Sacconi (1992) argues that Italian trade unions have been supportive of the creation of a CI scheme. Other studies find that trade unions play a neutral role, neither actively opposing nor rallying behind the measures (Moynihan, 1973; Ziegler, 2001). Yet others, however, have found that unions proved to be an obstacle in the formation of CI policy (Vanderborght, 2006). In Latin America, similar disagreements exist about whether center-left parties have differed in meaningful ways from their conservative counterparts when it comes to the issue of social policy design.2 Scholars also differ with regard to their take on unions, with some studies finding that unions pose an obstacle to universalizing reforms because of their desire to protect existing privileges (Carnes and Mares, 2010). Other research, however, stresses that many of Latin America’s most innovative social policy reforms have been supported and even advanced by unions, thus suggesting that the so-called insider-outsider divide is not significant (Huber and Stephens, 2012; Niedzwiecki, 2010).

Explaining Latin American Social Policy Reforms: Party Character and Policy Legacies In the context of advanced industrialized democracies, the formation of prowelfare coalitions that advanced and sustained calls for more universalistic social policies was led by left-leaning Social Democratic political parties (Hicks, 1999; Esping-Andersen, 1990; Huber and Stephens, 2001; Korpi, 1989). The role of left-leaning parties in the construction of the Latin American welfare state, however, has not been nearly as clear-cut. First, Latin America’s center-left parties have been weaker than their European counterparts. Moreover, some scholars have questioned whether ideological commitments are an important dimension of Latin American parties, particularly since the 1980s, as economic liberalization and globalization have limited the ability of actors to pursue outright “leftist” aims (Weyland, 2004; Madrid, 2003; Brooks, 2009; Kaufman and Nelson, 2004). Still, a large body of research has uncovered important differences in the character of regulatory, labor, and social policies adopted by left-leaning and right-leaning governments (Huber et al., 2006; Pribble, Huber, and Stephens, Forthcoming; Castiglioni, 2005; Murillo, 2005, 2002; Kaufman and Segura-Ubiergo, 2001).

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I contend that existing disagreement about the role of political parties in building more equitable social policy in Latin America results from an inadequate conceptualization of political party. Indeed, most studies that seek to assess the impact of parties on policy outputs consider only the ideological color of the party in question. Parties, though, vary in other ways as well. In particular, political parties exhibit diversity with regard to their internal organization and the extent to which decision making is centralized among a small group of political elites, or dispersed and shared with the party base. Parties also vary with regard to the type of linkage mechanism used to appeal to their core constituency. While some parties rely on programmatic appeals, others employ clientelism or charisma to secure support. I contend that these two dimensions of political party (internal organization and external linkage mechanism) mediate the extent to which ideology is effectively translated into policy outputs, and therefore, must be incorporated into an adequate conceptualization of party. I, therefore, propose a new classification of political parties that combines ideology with the internal organization of parties (the strength of ties between elites and the base) and the predominant linkage mechanism employed by the party.3 This classification of party character identifies four party types: “constituency-coordinating,” “electoral-professional,” “charismatic-movement,” and “nonprogrammatic-electoral,” which exist on both sides of the ideological spectrum. Constituency-coordinating parties are characterized by strong ties between elites and the voting base and a programmatic linkage mechanism. Electoral-professional parties, by contrast, have much weaker ties, thereby permitting elites greater leeway in the design of policy. This type of party also relies on programmatic appeals to secure electoral support. Charismatic-movement parties exhibit strong ties between elites and the base, but these organizations rely on the appeal of a charismatic leader to maintain voter loyalty. Finally, non-programmatic-electoral parties exhibit weak ties between elites and the voting base, but they also rely on nonprogrammatic appeals to win elections, namely the direct exchange of goods and services via clientelist networks or the appeal of key charismatic personality (Pribble, 2012). Table 7.1 presents a summary of this framework with examples from the region. I expect that each of these party types influences the content of social policy reform by determining the distribution of power inside the party and shaping what kinds of policy initiatives are likely to be pursued. At the most basic level, I expect that CI policies will be advanced primarily by left-leaning political parties. This is because leftist ideology prioritizes concerns related to social justice and equality, calling for state intervention to remedy market inequalities. By contrast, the ideology of right-leaning parties focuses on the role of private initiative and the market. For this reason, it is unlikely that parties of the right will promote state-funded

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Table 7.1 Eight party types with examples from Latin America Center-left ideology

Center-right ideology

Constituency-coordinating

Uruguay’s Frente-Amplio

Chile’s UDI and RN

Electoral-professional

Chile’s Socialist Party and Christian Democratic Party

Uruguay’s Colorado and Blanco Parties

Charismatic movement

Bolivia’s MAS

No example

Non-programmatic-electoral

Venezuela’s MVR and PSUV

Peru (Fujimori)

Source : Elaborated by the author.

CI programs. While these parties might not actively oppose such measures, I do not expect them to initiate policy reform. I code the ideological orientation of a party by looking at its program and the positions of key actors inside the organization. In the context of contemporary Latin America, it is rare to find a party that advocates full state control of the economy, but there are parties that stress the limits of the market and the need for state provision of social services and transfers. These parties also advocate greater state regulation and tend to stress issues of equality and social justice. For the purpose of this study, I code Brazil’s Workers’ Party (PT), Uruguay’s Frente Amplio (FA), and Venezuela’s Socialist Party (PSUV) as left leaning. All three parties are focused on concerns about poverty and inequality. Additionally, in all three parties, elites inclined to regulate markets and ensure state provision of a core set of services. While the intensity of this commitment varies across the three parties, with the PT and FA sustaining more orthodox economic policies than Venezuela, I contend that they are all located on the left side of the political spectrum. A quick glace across the region of Latin America reveals that left-leaning parties do not always expand access to income support programs. Similarly, not all center-left governments have sought to equalize the value of benefits received by distinct groups. I contend that this is because of variation in the internal organization and external linkage mechanism of the parties. Specifically, the internal organization of a party shapes the distribution of power among distinct actors inside the organization and determines which voices have weight when contemplating distinct policy initiatives. Strong ties between party elites and base organizations will allow the party’s core constituency to weigh in more effectively on the design of policy, pushing the organizations to pursue reforms that more neatly align with the interests of base groups. By contrast, weak vertical ties will grant political elites more leeway in the formation of policy, which could allow reform initiatives to drift away from the demands of base organizations.

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In the context of left-leaning parties, this means that unions are likely to have more voice in “constituency- coordinating ” parties than in electoral-professional organizations. The effect that this has on the adoption of CI programs will, therefore, depend in large part on the nature of those unions and the types of demands they are mobilizing. For this reason, party character on its own cannot explain the nature of social policy reform. Instead, one must consider the character of parties in combination with the design of previous policy. Where previous policy has granted unions generous family assistance or unemployment benefits, those groups are likely to be less interested in CI policies. Where, by contrast, family assistance and unemployment insurance is of a low level, such groups are more likely to support CI policies. Policy legacies also interact with electoral-professional parties as well. Since reform is more driven by political elites in these parties, the impetus for reform will be different in nature. Specifically, elites in left-leaning electoral-professional parties are likely to find CI programs appealing if the design of previous income assistance policies place a fiscal strain on the state or if previous policies have generated large coverage gaps that are politically salient. Party character also shapes policy outputs by determining what types of policy elites will find useful for winning electoral contests. In particular, programmatic parties compete for electoral support on the basis of policy content. For this reason, they are likely to pursue reform in policy sectors that have electoral appeal with broad sectors of the population. By contrast, clientelist and charismatic parties compete on a different basis. Clientelist parties rely on the direct exchange of goods or services to secure electoral support. This linkage mechanism requires that the party be able to discriminate against groups that do not provide electoral support. For such parties, CI policy will be less appealing than other forms of income subsidies that allow politicians to selectively award benefits. Similarly, charismatic parties compete on the basis of an individual leader’s personalistic appeal. To sustain such support, these movements must carry out policies that help consolidate the influence of that individual. Sustaining citizen support for a charismatic personality requires the creation of programs and institutional infrastructure that are exclusively associated with the leader. For this reason, the kinds of policy initiatives pursued by parties that rely on a charismatic appeal will vary considerably based on previous policy design. Specifically, if previous governments have not introduced any form of income supplement, a charismatic party may find a CI policy appealing. If, however, some income subsidies already exist, thus making it hard for the charismatic leader to claim credit, they will likely pursue reform in other areas. Finally, it is worth considering the ways that different party types can facilitate or inhibit the formation of multiclass political coalitions capable of promoting and defending universal flat-rate benefits such as

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CI. To fully assess this question, it is first important to specify what such a broad cross-class coalition might look like in the structural context of Latin America. Since the 1970s, Latin America’s class structure has shifted significantly with a decline in the size of the blue-collar working class and growth in the size of the informal sector (Portes and Hoffman, 2003). Importantly, the informal sector in Latin America is characterized by significant heterogeneity, ranging from low-skill service jobs to high-skill forms of self-employment. Still, most estimates suggest that the bulk of informal sector activity is concentrated in low-skill, low-wage work (Portes and Hoffman, 2003). In this way, a crucial element of any cross-class coalition aimed at promoting the adoption of CI would combine low-skill / low-wage formal sector workers and low-skill / low-wage informal sector workers. The ability to forge such a coalition, however, will depend largely on the capacity of a given party to integrate both groups and on policy legacies, which will determine the extent to which those two groups find overlapping areas of interest. The distinct types of political parties outlined above will likely vary systematically in their ability to forge a multiclass coalition and appeal to both low-income informal and low-income formal sector workers. Specifically, constituency- coordinating parties of the center-left provide the best infrastructure for the creation of such a coalition. This is because these parties have strong ties to base groups and can attempt to incorporate both sectors and negotiate a new distributive coalition between these groups. By contrast, in electoral-professional parties there is an explicit effort to downplay mobilization and participation, and therefore, the creation of a politicized cross-class coalition is unlikely. Clientelist and charismatic parties may very well exhibit multiclass coalitions, but the basis for this coalition is not programmatic in nature and thus the political effects of such a coalition are likely to be weakened. Having now established my theoretical expectations, I turn to an analysis of social assistance policy reforms in Brazil, Uruguay, and Venezuela to assess the explanatory capacity of this framework.

Income Support Policies in Brazil, Uruguay, and Venezuela No country in Latin America has created a full-fledged CI policy, but several states have carried out reforms to family assistance policies that move in the direction of greater access to benefits. Brazil and Uruguay are among this group. In the case of Brazil, the administration of President Luiz Inácio Lula da Silva passed a basic income law4 and created a new family assistance program that extended benefits to poor workers, while in Uruguay a series of reforms passed in the early- to mid-2000s have unified the family allowance system, providing a standard benefit to all

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recipients regardless of their labor market status. By contrast, in Venezuela, virtually no progress has been made in the domain of income support. Instead, the governments of President Hugo Chávez have focused policy initiatives in healthcare and education. Brazil: Progress in Family Support Upon arriving in government in 2003, the center-left PT administration of President da Silva, best known as “Lula,” set its primary social policy goal in the domain of family assistance. Specifically, one of the administration’s first policy initiatives was the “Zero Hunger” program, which sought to provide assistance to families living in extreme poverty and eliminate the problem of hunger in Brazil. The program, however, faced significant implementation problems and the initiative was soon abandoned in favor of a broader CCT program called Bolsa Familia. Bolsa Familia consolidated a number of existing social protection programs under one umbrella, providing a small cash stipend to participating families (Huber and Stephens, 2012). The program requires that families meet a series of conditions in order to qualify for the benefit, namely that children under the age of seven undergo regular health checkups and that all children attend school (Huber and Stephens, 2012). While a similar version of this program had been created during the administration of President Fernando Henrique Cardoso, Bolsa Familia significantly expanded the coverage of the benefit, reaching nearly 22 percent of households by 2009 (Huber and Stephens, 2012). Moreover, the Lula administration altered the way the cash benefit was paid to recipients, creating national registry and a cash card system that allowed the government to bypass local political brokers and virtually eliminate clientelistic use of the funds (Hunter and Borges Sugiyama, 2010). While Bolsa Familia cannot be classified as a CI program, due to its incomplete coverage and conditionality, it does represent an effort to expand social protection to excluded sectors, thereby boosting coverage of Brazil’s income support system. Uruguay: Progress in Family Support A series of important reforms to Uruguay’s family allowance system were enacted in the mid-1990s through the early 2000s.5 These changes, which sought to expand access to the system, were passed in three separate laws. The first law, approved in 1995, increased the value of family allowances and created a progressive system of payment (Vigorito, 2006; Bucheli, 1997). It also eliminated payment of the family allowance benefit to households that earn more than ten times the minimum wage (Vigorito, 2006). In 1999, the administration of President Julio

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Sanguinetti created a noncontributory version of the family allowance for individuals outside the formal labor market. The 1999 reform prioritized the extension of this benefit to families who were not receiving unemployment insurance and households headed by women (Vigorito, 2006). Finally, in 2004, President Jorge Batlle approved a law that extended family allowances to all poor households not yet covered by the system. By 2004, therefore, Uruguay’s family allowance system provided access to all families living in poverty regardless of their labor market status. Still, the value of the benefit remained small relative to other transfer policies and differentiated across distinct families. In 2007, the left-leaning FA administration of President Tabaré Vázquez passed the “Equity Plan,” which increased the value of the family allowance and created a standardized benefit that was paid to all recipients (Republic of Uruguay, 2007; Amarante et al., 2009). The FA initiative does not provide universal coverage, but does ensure that families with children in the bottom 50 percent of the income distribution receive income support regardless of the adults’ contributory status (Amarante et al., 2009: 4). While Uruguay’s progress in the domain of family assistance cannot be classified as a CI program, due to the limited coverage and to the presence of conditionality, it does represent progress because it provides a standardized benefit to all recipients regardless of labor market status. Indeed, the fact that the system is unified (treating formal and informal sector workers equally) marks a notable improvement over other countries in the region. Venezuela: No Progress in Family Support Since arriving in government, Venezuelan President Chávez has initiated a series of social policy initiatives commonly known as the “Misiones.”6 Chávez’s misiones have received extensive funding and are both praised and criticized for their peculiar design. The government’s two most extensive social programs are in the field of education and healthcare. In the domain of education, the “Robinson” missions7 are focused on the eradication of illiteracy and seek to provide access to tertiary education for low-income individuals. To address growing health concerns, the Chávez administration introduced the “Barrio Adentro” mission in 2003. In its initial phase, the program sought to provide access to basic primary care services for low-income individuals, but the policy was later extended to finance the creation of treatment and diagnostic centers. Interestingly, President Chávez has not yet introduced initiatives in the domain of family assistance and pension policy. Since 2006, he introduced a handful of small-scale missions, such as “Negra Hipólita” and the “Niños y Niñas del Barrio” programs, which provide cash assistance to target populations. In the case of Negra Hipólita, the state provides

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benefits to homeless children and adults, while the Niños y Niñas mission was created to provide assistance to high-risk children. Both of the programs, however, are limited in coverage and there is no information available about uptake levels (Pribble, 2012). Venezuela, therefore, is an instance of failure to move in the direction of a more universalistic system of family income support. Case Analysis The performance of these three cases raises an interesting question: What accounts for the ability of Brazil and Uruguay to make progress toward increasing access to family allowances, while Venezuela has made no progress? I contend that the answer lies in the nature of political parties and the character of policy legacies. At the most basic level, evidence from the past ten years reveals that instances of expanding access to family assistance policy have largely occurred under the leadership of left-leaning governments. Indeed, as discussed in the introduction to this volume, the most notable progress toward greater coverage has been seen in Argentina, Bolivia, Brazil, Chile, Uruguay, and Mexico’s Federal District (DF). In all of these instances, left-leaning parties held power. Specifically, the administrations were: Argentina (Peronist Party, President Cristina Fernández de Kirchner), Bolivia (Movement for Socialism [MAS Party], President Evo Morales), Brazil (Workers Party, President Lula), Chile (Socialist Party Presidents Ricardo Lagos and Michelle Bachelet), Uruguay (FA Party President Vázquez), and Mexico’s DF Head of Government (Party for the Democratic Revolution [PRD] Andrés Manuel López Obrador)). Moreover, while there are instances of right-leaning parties creating noncontributory income assistance programs, it has been the center-left that expanded the coverage of those systems. Still, while it is true that universalizing initiatives have been primarily spearheaded by left-leaning administrations, it is clear that not all center-left parties and governments have sought to reform family assistance so as to increase coverage and standardize benefit levels. Indeed, the lack of progress in Venezuela under President Chávez, or in Ecuador during President Rafael Correa’s administration suggests that ideology alone cannot explain policy outcomes. However, a more precise conceptualization of political party—one that considers ideology in combination with internal organization and external linkage mechanism—does shed light on variation across the Brazilian, Uruguayan, and Venezuelan cases. Brazil’s center-left political party, the PT, represents a party in transition from a constituency-coordinating organization toward an electoral-professional party. At the national level, the party behaves much like an electoral-professional party, exhibiting weak ties between the base

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and elites, but with a programmatic linkage structure (Hunter, 2010). At the local (state) level, by contrast, the party appears to have maintained some of its original constituency-coordinating characteristics, exhibiting systems of consultation and mobilization (Hunter, 2010). My framework contends that electoral-professional parties are likely to carry out universalizing reform when fiscal pressures are present or when policy legacies have generated a situation in which there are electoral incentives to pursue such an initiative. In the case of Brazil, the design of previous policy had systematically excluded the informal poor from the country’s system of family support. There was, therefore, an electoral incentive to expand protection to this sector of the population and it is estimated that as many as two-thirds of recipients live in extreme poverty (Hunter, 2010: 154). Moreover, the creation of Bolsa Familia was achieved at a relatively low cost, with spending consuming only 1.83 percent of the federal budget (Hunter, 2010: 152). In this way, the design of the program also responded to concerns among more elite sectors of the party about maintaining fiscal equilibrium. In this way, the design of Bolsa Familia, which expands coverage of social assistance to the Brazil’s informal poor, but does not create a universal system of protection, reflects the increasingly electoral-professional character of the PT. Uruguay’s center-left FA party is a constituency-coordinating organization, which means that it is characterized by strong links between the voting base and party elites.8 Moreover, the nature of the link is programmatic. The framework presented in this chapter predicts that such parties will go the furthest toward universalizing access to social programs so long as policy legacies have not generated a situation in which a strong and powerful group of corporatist stakeholders enjoys a special privilege that they seek to defend. The Uruguayan case of family allowance reform confirms this expectation. Policy legacies in the domain of family assistance were helpful in prompting a universalizing reform because the value of family allowances, even for formal sector workers, had declined precipitously during the 1990s. Thus, all workers, both formal and informal were invested in the creation of a new and more generous system (Pribble, 2012). As a result, divergent sectors within the FA party, both those that represented more traditional formal sector interests and those that represented excluded groups, were able to agree upon the need for a new system. As a result of the base’s commitment to state intervention to subsidize incomes for all needy families, the party pursued a unified system that provides identical benefits to formal and informal sector workers that qualify for assistance. Moreover, the size of the benefits is not differentiated across occupational categories or income groups, thereby moving in the direction of CI, suggesting that center-left constituency coordinating parties may be capable of creating CI programs in a setting of favorable policy legacies.

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While Brazil and Uruguay both made advancement in expanding access to family assistance policy, Venezuela has lagged behind. The reason for the lack of progress in Venezuela can be understood by the character of the country’s left-leaning party, which is a charismatic-electoral organization.9 This means that the party exhibits weak ties between political elites and the base and that the nature of the link between politicians and supporters is nonprogrammatic. Indeed, rather than competing for political support on the basis of policy initiatives, the PSUV relies on the charismatic appeal of President Chávez. As a result, the PSUV has tended to pursue policy that can be closely associated with Chávez, thereby strengthening his charismatic appeal. This has been accomplished through the creation of an entirely new institutional framework, known as the “Misiones.” In general, the misiones are funded through petroleum revenue and are administered by a presidential commission. This design grants Chávez a great deal of control over the nature of the programs. Moreover, the fact that the misiones exist outside the traditional infrastructure of the state ensures that the initiatives are tightly associated with the president and the Chavista movement, and therefore, work to sustain his charismatic appeal. The creation of a CI program, however, would be difficult to build as a parallel institution and would likely require the direct involvement of the Venezuelan state. Such a design runs counter to the PSUV’s approach to social policy, and therefore, has not proven to be a top policy priority of the left-leaning administration.

Conclusion Latin America’s social protection systems, even in the most advanced countries, have historically suffered from problems of segmentation (Filgueira, 2005; Pribble, 2011; Huber et al., 2006). One clear solution to the problem of coverage gaps and uneven benefit levels would be to adopt a CI policy. Such programs ensure that all citizens, regardless of labor market status, region, or household characteristics, have access to a minimum income. These policies have been pursued successfully in other parts of the world, but have not gained traction in Latin America. Still, several Latin American states have carried out significant reforms to family assistance policy during the past 10–15 years. These initiatives have, in some cases, expanded access to cash transfers for previously marginalized groups. In the case of Uruguay, the reform also served to standardize the value of benefits across all recipients. The scope of these initiatives has varied significantly across countries. While some countries, such as Uruguay, have unified the system of family assistance, others, such as Brazil, have introduced new noncontributory benefits. In many cases, receipt of these benefits has been made conditional upon upholding a set of minimum requirements.

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This chapter seeks to explain why Latin American states have varied with regard to their ability to move family assistance policy in a more universal direction, paying special attention to the impact of political parties and policy legacies. The findings presented in the chapter suggest that progress toward greater universalism has been made largely by left-leaning political parties. Still, not all left-leaning parties have pursued such initiatives. The chapter reveals that this variation among center-left parties can be explained by considering a party’s overall character, or the ideological orientation of the party in combination with the strength of ties between elites and base groups and the character of those ties (i.e., whether they are programmatic or nonprogrammatic). The framework presented in this chapter highlights the existence of four distinct party types that exist on both the left and right of the political spectrum. These types include electoral-professional parties, constituencycoordinating organizations, non-programmatic-electoral groups, and charismatic-movement parties. The findings presented in this chapter reveal that two of these party types, namely left-leaning electoral-professional and left-leaning constituency-coordinating parties, are likely to pursue universalizing reforms to family assistance policy. However, where policy legacies serve to incentivize reform, left-leaning constituency- coordinating parties, like Uruguay’s FA, are likely to make greater progress than left-leaning electoral-professional parties. This is because the strong ties between base organizations and party elites put greater pressure on policy makers to expand coverage and provide a framework for the creation of a more powerful political coalition. Additionally, the findings reveal that a third party type, non-programmatic-electoral parties of the center-left, such as President Chávez’s PSUV, are less predictable with regard to the character of social assistance policy reforms. The PSUV relies on the charismatic appeal of President Chávez to win votes, and therefore, pursues policies that help bolster that appeal. In the case of Venezuela, this has been achieved by constructing a parallel set of institutions. Since it would be difficult to administer a CI program through such a parallel institution, the administration has neglected the issue of family assistance, favoring instead education and health policy reforms. This chapter also underscores the central importance of policy legacies in shaping the character of reform to family assistance programs. The design of previous policy can incentivize reform by generating salient coverage gaps or by placing an unsustainable fiscal burden on the state. In the case of Brazil, the design of policies that preceded Bolsa Familia had generated a notable lack of coverage among the country’s neediest sectors. This fact became politically charged as the PT worked its way from opposition to government, creating a setting that was conducive to the creation and expansion of Bolsa Familia. In Uruguay, the design of

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previous family assistance policy also incentivized reform by contributing to general discontent with the system. Indeed, the precipitous decline in the value of contributory family allowances pushed formal sector workers (and the country’s unions) to support the creation of an entirely new system. This, in turn, granted policy makers leeway to unify the system, providing benefits to needy families regardless of their labor market status. In this way, policy legacies worked in combination with party character to explain Brazil and Uruguay’s successful reforms. The importance of policy legacies and party character in determining the scope and character of reforms to family assistance programs in Latin America has theoretical and practical implications. In theoretical terms, the findings help clarify a long-standing debate among scholars of Latin American politics regarding the impact of parties on policy output. Studies about the effect of parties in the policy making process has generally focused on only one dimension of a party: ideology. This chapter suggests that to fully capture the influence of political parties, one must also consider the internal organization and the character of a party’s linkage mechanism. This new conceptualization of political parties is likely to shed light on divergent findings about the relevance of parties in determining policy outputs. The findings also have practical implications. Specifically, practitioners interested in pursuing the creation of CI programs in the Latin American context must consider the extent to which the character of parties in a given country are conducive to the formation of a new distributive coalitions. Whereas center-left constituency- coordinating parties provide an excellent infrastructure for forging new coalitions, they can also put up roadblocks to progress if certain sectors inside the party enjoy “special privileges” inside the existing policy framework. Center-left electoralprofessional parties, by contrast, may provide a relatively easy vehicle for the passage of noncontributory assistance programs, but the weak links between elites and base organizations make it difficult to forge a strong coalition capable of achieving a full-fledged CI program. Finally, nonprogrammatic-electoral parties, even those of the center-left, can pose significant obstacles to constructing universalistic systems of social protection. All of this suggests that reformers cannot expect that a good policy proposal will, on its own, come to fruition. Instead, reformers must consider how the existing policy framework and the character of political parties can be harnessed to help a reform gain traction. Notes 1. Throughout the chapter, I use the terms “center-left” and “left-leaning” to make reference to parties that are found on the left side of the political spectrum. While some of these parties are located further to the left than

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2. 3. 4.

5. 6. 7.

8. 9.

others, I group them into the category of center-left because they share a general orientation. For an overview of this debate, see Pribble (2012). This framework is presented in its original form in Pribble (2012). As noted by Lavinas in this volume, Brazil is the only country in Latin America to have adopted a basic income law. The statute, however, allows for a gradual implementation (at the discretion of the executive) and is not funded, thereby limiting its effect. I, therefore, focus my analysis on Bolsa Familia. This section draws on Pribble (2012). This section draws heavily on Pribble (2012). The Chávez administration introduced four education missions in total: Robinson I, Robinson II, Ribas, and Sucre. Robinson I seeks to end illiteracy, while Robinson II provides remedial elementary education services to individuals who did not complete primary school. The Ribas mission provides secondary education training to individuals who did not complete secondary school, while Sucre seeks to expand access to university education for marginalized groups (Pribble, 2012). This section draws on Pribble (2012). This section draws on Pribble (2012). Bibliography

Amarante, Verónica, Rodrigo Arim, Gioia de Melo, and Andrea Vigorito. “Family Allowances and Child School Attendance. An ex-ante Evaluation of Alternative Schemes in Uruguay.” Montevideo: Universidad de la Republica, 2009. Brooks, Sarah M. Social Protection and the Market in Latin America: The Transformation of Social Security Institutions. New York: Cambridge University Press, 2009. Bucheli, Marisa. “Equidad en las Asignaciones Familiares de Uruguay.” In CEPAL Working Papers. Montevideo, 1997. Carnes, Matthew, and Isabella Mares. “Desindustrialization and the Rise of Non-Contributory Social Programs in Latin America.” In Duke Workshop on Social Policy in Developing Countries. Duke University, 2010. Castiglioni, Rossana. The Politics of Social Policy Change in Chile and Uruguay : Retrenchment versus Maintenance, 1973–1998. New York: Routledge, 2005. Dion, Michelle. Workers and Welfare Comparative Institutional Change in Twentieth Century Mexico. Pittsburgh: University of Pittsburgh Press, 2010. ECLAC (Economic Commission on Latin America and the Caribbean). Social Panorama. Santiago: United Nations, 2005. Esping-Andersen, Gøsta. The Three Worlds of Welfare Capitalism. Princeton, NJ: Princeton University Press, 1990. Filgueira, Fernando. “Past, Present and Future of the Latin American Social State: Critical Junctures and Critical Choices.” In UNRISD Working Paper. Geneva, 2005.

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Haggard, Stephan, and Robert R. Kaufman. Development, Democracy and Welfare States. Princeton: Princeton University Press, 2008. Hicks, Alexander. Social Democracy and Welfare Capitalism. Ithaca: Cornell University Press, 1999. Huber, Evelyne, and John D. Stephens. Development and Crisis of the Welfare State: Parties and Policies in Global Markets. Chicago: University of Chicago Press, 2001. ———. Politics, Development, Social Policy, and Poverty and Inequality in Latin America. Chicago: University of Chicago Press, 2012. Huber, Evelyne, Thomas Mustillo, and John D. Stephens. “Politics and Social Spending Latin America.” Journal of Politics 70 (2008): 420–436. Huber, Evelyne, Francois Nielsen, Jenny Pribble, and John D. Stephens. “Politics and Inequality in Latin America and the Caribbean.” American Sociological Review 71, no. 6 (2006): 943–963. Hunter, Wendy. The Transformation of the Workers’ Party in Brazil, 1989–2009. New York: Cambridge University Press, 2010. Hunter, Wendy, and Natasha Borges Sugiyama. “Building Citizenship or Reinforcing Clientelism?: Contributions of Brazil’s Bolsa Familia.” Workshop on Social Policy in the Developing World. Durham, NC, 2010. Immergut, Ellen. “The Rules of the Game: The Logic of Health Policy Making in France, Switzerland, and Sweden.” In Structuring Politics: Historical Institutionalism in Comparative Analysis, edited by Steinmo Sven, Kathleen Thelen, and Frank Longstreth, 75–89. New York: Cambridge University Press, 1992. Kaufman, Robert R ., and Joan M. Nelson. “Introduction: The Political Challenges of Social Sector Reform.” In Crucial Needs Weak Incentives, edited by R. R. Kaufman and J. M. Nelson. Washington DC: Woodrow Wilson Center Press, 2004. Kaufman, Robert R ., and Alex Segura-Ubiergo. “Globalization, Domestic Politics, and Social Spending in Latin America.” World Politics 53 (July 2001):553–87. Korpi, Walter. The Democratic Class Struggle. London: Routledge, 1983. ———. “Power, Politics, and State Autonomy in the Development of Social Citizenship: Social Rigths during Sickness in Eighteen OECD Countries since 1930.” American Sociological Review 54 (1989): 309–29. Lindert, Kathy, Emmanuel Skoufias, and Joseph Shapiro. Redistributing Income to the Poor and the Rich: Public Transfers in Latin America and the Caribbean. Washington DC: World Bank, 2006. Madrid, Raul. Retiring the State. Stanford: Stanford University Press, 2003. Mesa-Lago, Carmelo. Ascent to Bankruptcy: Financing Social Security in Latin America. Pittsburgh: University of Pittsburgh Press, 1989. Moynihan, Daniel. The Politics of a Guaranteed Income: The Nixon Administration and the Family Assistance Plan. New York: Random House, 1973. Murillo, Maria Victoria. “Partisanship amidst Convergence: The Politics of Labor Reform in Latin America.” Comparative Politics 37, no. 4 (2005): 441–58. ———. “Political Bias in Policy Convergence: Privatization Choices in Latin America.” World Politics 54 (July 2002): 462–493.

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Niedzwiecki, Sara J. “Commitment to Social Policy in South America, Political Science.” University of North Carolina at Chapel Hill, Chapel Hill, 2010. Pierson, Paul. “Fragmented Welfare States: Federal Institutions and the Development of Social Policy.” Governance 8, no. 4 (1995): 449–78. Portes, Alejandro, and Kelly Hoffman. “Latin American Class Structures.” Latin American Research Review 38, no. 1 (2003): 41–82. Pribble, Jennifer. Forthcoming. Welfare and Party Politics in Latin America. New York: Cambridge University Press. ———. “Worlds Apart: Social Policy Regimes in Latin America.” Studies in Comparative International Development 46 (2011): 191–216. Pribble, Jennifer, Evelyne Huber, and John D. Stephens. “Politics, Policies and Poverty in Latin America. Comparative Politics. 41, no. 4 (2009): 387–407 Republic of Uruguay. “Asignaciones Familiares.” Uruguay, 2007. Sacconi, Stefano. “An Outline of the Debate in Italy on the Hypothesis of a Basic Income.” Mimeographed conference paper, Rome, 1992. Segura-Ubiergo, Alex. The Political Economy of the Welfare State in Latin America. Cambridge: Cambridge University Press, 2007. Uthoff, Andras. “Brechas del estado de bienestar y reformas.” Revista Cepal 89 (August 2006): 9–37. Vanderborght, Yannick. “Why Trade Unions Oppose Basic Income.” Basic Income Studies 1, no 1 (2006):1–20. Vigorito, Andrea. “Macroeconomic Shocks and Social Protection Response: The Case of Uruguay.” In Shocks and Social Protection Systems in Latin America and Caribbean Countries. Montevideo, 2006. Weyland, Kurt. “Neoliberalism and Democracy in Latin America: A Mixed Record.” Latin American Politics and Society 46, no. 1 (2004): 135–157. Ziegler, Rafael, and Bill Jordan. “The Trade Unions, Tax-Benefit Reform and Basic Income: Stumbling towards a Policy?” Citizens Income Newsletter, 2001, 2–4.

CH A P T ER

8

Should Citizen’s Income Become a Goal for Feminism in Latin America? Corina Rodríguez Enríquez

In feminist academic circles (and to a lesser degree in the environment of feminist activism) the pertinence of supporting a universal Citizen’s Income (CI) has been discussed.1 Two main positions can be distilled from the hitherto open-ended debate. These can be roughly summarized as follows. On the one side are those that maintain that a CI in practice would function just like pin money for women, keeping them from joining the labor market, and confining their work to care responsibilities in the home.2 The other side unites defenders of the opposite opinion: CI would give women a minimal economic autonomythat would strengthen their position in other spheres, including the home, where they would be able to negotiate the distribution of care-related responsibilities more equally, and the labor market. The objective of this chapter is to take up this debate and place it in the specific context of Latin America, where the discussion might assume special characteristics for several reasons. First, women’s participation in the labor market, albeit markedly increasing, remains relatively low in the region. Second, the region’s weak social protection systems have historically failed to guarantee basic levels of income to the population. Third, the ways that care is socially organized concentrates most responsibilities on the unpaid care work exercised by women (effectively one of the main determinants of their weaker employment records). Fourth, the spread of conditional income transfer programs targeting women with dependent under-age children that can be observed in Latin America, and could provide useful lessons for this discussion.3 This chapter is organized as follows. In the first section, “The Economic Situation of Women in Latin America,” the economic situation of women

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in Latin America is reviewed, focusing on their participation in the labor market, the use of their time for care work, and their access and control over economic resources. The second section, “Can a Citizen’s Income Help in Fomenting Women’s Economic Autonomy? Some Observations Coming from a Feminist Analysis,” outlines the assumptions regarding the implications of a CI on every one of these areas. In the third section, “What Can We Learn from Conditional Cash Transfer Programs about the Potential of a Citizen’s Income to Improve the Situation of Women and Further Gender Equality?” and based on the main lessons emerging from the existing literature on this topic, the special case of the Conditional Cash Transfer (CCT) programs (as a test in the direction of a CI) and their impacts on women’s lives will be analyzed. The fourth section, “The Citizen’s Income as An Option to Exceed Conditional Cash Transfer Programs in Terms of Gender Equality,” synthesizes the conclusions with respect to the discussion of the pertinence of CI for feminist aspirations that can be derived from this analysis.4 The fifth section, “Conclusion,” presents the main conclusions.

The Economic Situation of Women in Latin America Access and control of economic resources is a crucial element to guarantee economic autonomy to women.5 The latter in turn is indispensable if gender relations are to be moved in a more equal direction. In Latin America, women participate less in the labor market, and worse, they are relatively excluded from the social protection systems; in some cases they are discriminated against by the norms governing the issues of property and heritage. All of these points undermine their economic autonomy. During the last two decades, women’s participation rate in the labor market grew continuously, reaching an average of almost 55 percent in most countries of the region in 2010.6 In spite of this growth, its value remains about 20 percentage points below the respective rate for men. Moreover, while the ratio of participation for women with higher educational attainment surpasses 70 percent, that of less-educated women with more children and from from lower socioeconomic backgrounds, is only 40 percent. Besides lower participation in the labor market, women face poor work conditions as well.. For one, they are more likely to be unemployed in times of economic expansion and crisis alike. The respective unemployment rates in 2010 stood at 8.6 percent for women and 6.7 percent for men. Second, women are overrepresented in the more precarious occupations—those that demand less qualification, are more unstable, and have

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less social security coverage. The concentration of women in domestic service, in the less-protected jobs in the trade and services sector, and in self-employment that demands little qualification, explains their relatively higher participation in low-productivity employment. Indeed, 43.1 percent of active male labor is employed in this category in 2010, while the figure is 51.4 percent for women. Third, women in the weaker and more precarious employment trajectories are directly linked to the persistently unequal distribution of the domestic chores. This limits their possibilities of participating fully in remunerated employment and intensifies the use of available time. The Time Use Surveys available for some countries in the region highlights the latter point. For instance, in Mexico women devote, on an average, 54 hours a week to unpaid work, while men contribute but 17 hours. In Uruguay, the same indicator marks 41 hours per week for women and 11 for men. Ecuador accounts for 33 hours per week for women and 8 for men. In Colombia, it is 31 hours a week for women versus 7 for men. Finally, in Brazil, women spend 26 hours each week doing unpaid work and men 6 hours. The fourth point, resultant from all the above, signals a weak income situation for women. On the one hand, almost 32 percent of working-age women claim that they do not receive any income of their own as against 12 percent of men. On the other hand, although decreasing, the average labor income continues to show a gender gapthat places women’s income at 70 percent of male income. As a consequence of the above, women face higher risk of falling into income poverty, and indeed suffer this condition more often than their male peers. The femininity poverty index reveals increasing figures; in 2010 there were 118 women for every 100 men living in poverty.7 In this context, every alternative or proposal that allows for an improvement in women’s access and control over monetary resources, that guarantees a certain threshold in their consumption of goods and services, and that offers a minimum term of security and sustainability, deserves the attention of those who promote women’s economic autonomy.

Can a Citizen’s Income Help in Fomenting Women’s Economic Autonomy? Some Observations Coming from a Feminist Analysis Does a CI prove to be an adequate initiative to further women’s economic autonomy in the described context? To answer this claim it is necessary to analyze: (i) the degree to which a CI could incentivize women’s participation in the labor market; (ii) to what extent it

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could promote the improvement of employment conditions for women; and (iii) how it could manage the redistribution of time and the care responsibilities.8 Citizen’s Income and Labor Market Participation One of the recurrent objections to a CI proposal states that it disincentivizes labor supply. Such a situation could occur when opportunity costs of joining the labor market are higher than the benefit imparted by a CI program. This can happen for two reasons. One, because the cost of abandoning inactivity could is too high (this would be the case, for instance, for women with high care responsibilities, in a context lacking a system of care services that could be derived at zero or very low cost). Two, if the marginal benefits obtained from a potential labor market income would be inferior to those of the CI (this would describe the case of women with low educational attainment, whose average labor income is relatively low). From this perspective, a CI would not be appropriate if the aim is to incentivize women’s participation in the labor market as a means of strengthening their autonomy. However, other presumptions also exist on this terrain. A CI can help access care services provided by the market, which would free working time for women. A CI could finance vocational training time, thereby improving women’s skill sets for labor. A CI could improve women’s position within the home, and thus encourage more democratic decision-making processes, which again increase the chances of women joining the labor market. Citizen’s Income and Employment Conditions The presumptions about the impact of a CI on employment conditions also appear to be divided. On the one side are those that hold a CI to represent the ground for (female) workers to demand better labor conditions. On the other side are those who claim that a CI could increase the margin for accepting poor labor conditions, insofar as a it would already guarantee the basic floor that is required (chiefly in terms of income). This discussion is relevant for women to the degree that, as indicated above, they are overrepresented in the numerous manifestations of labor precariousness. Following the arguments, women in low-quality employment conditions (such as can occur in domestic services, in self-employed street vending, in paid work outsourced to the home, part-time jobs, etc.) could choose to turn down these kinds of employment if they are guaranteed a basic minimum income through a CI. Or, they could add the CI to their low labor incomes in order to improve their already minimum

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living standards, which would take away the need to demand better labor conditions.

Citizen’s Income and the Distribution of Care Work Another common argument used in the context of a CI proposal is that it could be understood as a compensation for socially useful activities that are not remunerated due to the market logic that regulates society. This perspective relates to the space the CI debate opens for the possibility of a broader conception of work. The proposal aims to recover the very notion of occupation, referring to the activities that people realize. Thereby it promotes the right to live according to the proper meaning of occupation, rather than pursue the right to employment, which under other institutional arrangements adopts the form of an obligation to work in any kind of job. The notion of recognizing and appreciating other activities besides those that are exercised in a strictly market environment goes hand-inhand with the necessity of discussing new forms of organization of social time.9 Thus the potential of a CI increases when it is combined with distinct mechanisms to distribute working time. Taking the economic security provided by a CI as the starting point, people could choose different, less restricted occupational arrangements, including full or part-time employment in the marketplace, domestic or care work, training activities, and even leisure. According to this point of view, a CI could lead to a more equal distribution of income, paid work, care work, and leisure time, between men and women. This perspective suggests that a CI would function like an “emancipation allowance,” which would improve especially poor or scarcely qualified women’s bargaining power vis-à-vis their employers and spouses, encouraging the latter to procure part-time jobs and dedicate some of their time to household chores instead. However, in contexts where care responsibilities are very demanding (for instance, due to the presence of many dependents in the household), or where the symbolism attributed to productive and reproductive tasks by male and female perception is deeply rooted, a CI could indeed lead to a consolidation of the traditional gendered division of work. The CI would then function as a “housewife salary” that would permit women to fulfill their “natural” care responsibilities under less economically restricting conditions. Which one of the two perspectives described will prevail in reality in labor participation, employment quality, and distribution of unpaid work depends on a number of factors: (i) the CI transfer level compared to the level of salaries, both in general and for the more specific

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occupational sectors; (ii) the general labor market conditions; (iii) the particular conditions in certain specific occupations, some of which are especially feminized; (iv) the existence of additional policies enabling control of gender discrimination mechanisms in the labor market; (v) cultural values concerning gender roles in productive and reproductive work spheres; (vi) the availability of accessible care services. The nonexistence of a pure CI scheme in reality impedes the testing of these dilemmas empirically. Nonetheless, there exist a few experiences that can, on the basis of their characteristics, extension, and the discourse promoting them, offer some indications to forward this reflection. This is the case of the CCT programs in Latin America, which is analyzed in the following section.

What Can We Learn from Conditional Cash Transfer Programs about the Potential of a Citizen’s Income to Improve the Situation of Women and Further Gender Equality?10 As mentioned in the introductory chapter, CCT programs have spread heavily in Latin America in the past 15 years. Currently, around 40 CCT programs exist in the region.11 They operate in 18 countries and reach more than 25 million households, or close to 113 million people (19 percent of the region’s population). On an average, the resources they use are equivalent to 0.4 percent of GDP, although both the magnitude and the coverage of the individual programs differ substantially between countries.12 Most Latin American CCTs reflect the typical aspects of these kinds of programs: (i) the transfer is monetary, in a few cases complemented by in-kind transfers; (ii) the target population consists of the poor and extremely poor; (iii) households with children and adolescents have priority, but once they are covered other household categories without children are permitted as well; (iv) conditionalities concerning children’s school assistance, and health checks and nutrition control for children and pregnant women have to be fulfilled; and (v) preference for granting the transfer to mothers. The last aspect entails the importance of this kind of programs for the economic situation of women: their salient feature is the concentration of the distributed benefits in the homes of women living in poverty and extreme poverty. Additionally, these programs assume characteristics that bring them close to the CI proposal. Namely, they feature basic level income transfers with extensive coverage that can approach universal coverage—at least within the totality of certain population groups as, for instance, households living in extreme poverty, or children.13

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The investigation thus proceeds to note the strengths and weaknesses that CCT programs present for the attempt to improve women’s autonomy and further gender equality, and which of those conditions derive from characteristics that increase or decrease the conceptual distance to a CI proposal. On the basis of this analysis, conclusions can be drawn about the strengths and weaknesses of a CI with respect to its positive impact on women. The features that we are interested in, keeping in mind the discussion of the previous section, are the implications of CCT programs on the following: (i) addition of women’s in the workplace; (ii) access to a basic, stable, and sustainable income; (iii) women’s position in the decision-making process within the household; and (iv) the distribution of paid work and care responsibilities.14 Conditional Cash Transfer Programs and Women’s Income Existing CCT programs in the region diverge in terms of the level of their benefits and how they are determined. According to the existing analyses, some benefits are the same for every household (ie, regardless household composition) and established according to some arbitrary treshold or some baseline/ reference standard by the implementing authority.15 by the implementing authority. Others feature levels that are adjustable according to the composition of households. In yet others, the amount is determined in relation to certain thresholds, as, for example, the indigence or poverty line. In all cases, and despite the substantial variation in terms of their coverage and extent, the CCT programs have a positive impact on household income, thus improving the material conditions not only for children and adolescents but also for women and the remainder of the household.16 For the women, who constitute the functional beneficiaries of these programs, CCTs represent a source of income they would otherwise lack. In most cases, the women receiving these transfers come from weak and unstable work trajectories with recurrent situations of inactivity and unemployment, combined with participation in diverse forms of precarious employment. Therefore, CCTs grant them the first stable and predictable income of their lives. Considering that in most cases the women receive this income in the name of their children who are the actual right-holders to the benefit, and that there exists some proof that the mothers indeed spend the transfers on their children, it can be established that the predominant part of the resources are utilized to attend the needs of the children and adolescents. In many cases, they are used to cover strictly basic needs, but in others they serve to strengthen household savings, support the acquisition of assets otherwise unattainable (such as more expensive clothing,

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household appliances/domestic equipment, and improvements inthe conditions at home). Albeit they improve material conditions of the households and can have an impact on the incidence of poverty and indigence, both the way in which CCT programs are financed and the relatively moderate amount they distribute, allow for the conclusion that they do not produce important redistributive effects. Summarizing, the monetary transfers granted by CCT programs prove positive for women, insofar as they provide a regular and stable incomethat they would not receive otherwise. This strengthens their material living conditions and consolidates the management of household resources according to longer term perspectives. These positive impacts are stronger the larger the benefits are, and the more their levels are determined relative to the composition of the household where the women live, increasing the relevance of considering per capita benefits. Conditional Cash Transfer Programs and Women’s Role in the Decision-Making Process The implications of CCT programs for the relative position of women within the household and in the process deciding the use of resources present ambiguous angles. First, the conditionalities imposed by most CCTs relating to dependent children imply the ingrained symbolic valuation that the money should be used in support of these children and adolescents. As mentioned above, this happens in most cases. In this sense, CCTs impose certain paternalism17 by guiding the usage possibilities of the distributed resources18 and suggesting specific behavioral patterns, as evidenced in the imposition of conditionalities. Second, since women are the functional beneficiaries of the programs, in practice they become the recipients of the monetary benefits. Consequently, CCT benefits are also perceived as income by these women. Surveys among the programs’ beneficiaries attest to a sense of appropriation of the income among participating women, an income they consider rightly earned in return for assuring compliance with the imposed conditionalities (Espinosa, 2006). Therefore, they use the resources not only for the needs of their children but also to buy what they want to; they feel empowered to take the decisions on how to use this money. Third, and related to the preceding point, evidence shows that CCT programs have not significantly changed the decision-making process within the households. Women continue taking mainly the decisions relating to the use of resources for “domestic” expenses, while men keep responsibility for decisions concerning larger scale or “more important”

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expenses.19 Moreover, it can be observed that the existence of additional resources for household expenses seem to weaken the men’s sense of obligation toward contributing to the family budget, thus unlocking resources for other purposes they deem a priority. In summary, the conditionalities imposed by these programs and the consensus that the benefits have to be used in favor of the children, restrict women’s liberty to decide autonomously over the usage of the resources. Furthermore, these factors can debilitate men’s contribution to the family budget. Nevertheless, the receiving women actually feel that they are the “owners” of these resources, which improves their self-esteem and can help place them in more advantageous positions within the framework of family relations. This means that the symbolic force of accessing resources that are considered their own compensates for the existing weakness over women’s control of these resources, subject to the socially and institutionally imposed obligation of spending them on their children rather than in their own interests. Conditional Cash Transfer Programs and Unpaid Care Work The care dimension is deeply ingrained in the CCT programs in the region. The conditionalities imposed by these programs are linked to care activities (education and health care), and there is a clear transfer to women of the responsibility to safeguard these dimensions. It is interesting to observe the evolution in the terminology used in this regard. In the discourse surrounding the CCT programs, conditionalities mutated into co-responsibilities, signifying that the beneficiaries themselves are (co-)responsible for breaking out of the situation in which they find themselves in. The responsibility of mothers in particular to correctly invest the monetary transfers in their children’s human capital has to be highlighted here. An increase in such capital would thereforeallow breaking out of the vicious circle of intergenerational poverty transmission in the medium term. This is one of the CCT’s most controversial implications when analyzed from the point of view of women’s autonomy, because the co-responsibilities reinforce women’s role as caregiver. In this vein, the first objection to the implication refers to the symbolic and subjective weight of the conditionalities, which reproduce the notion of women being the ones responsible for childcare. Such an assertion is problematic since it reinforces the traditional gendered division of care, one of the terrains most resistant to a transformation toward greater equality between the sexes. Adding to the symbolic and cultural reinforcement of women’s caregiver role, CCT programs can moreover inflict increased pressure on

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women’s use of their time. This occurs when compliance with the conditionalities in fact requires additional efforts, for instance, due to previously inexistent travel and waiting time necessary to procure school assistance certificates or for health checks for their children. Increasing this problematic are situations where the systems of benefit collection impose additional time-consuming bureaucratic tasks. It spirals if additional activities are proposed for the income recipients as well, such as assistance at informative sessions, awareness-raising workshops, and the like. Women can become even more busy when the implementation of a CCT program shifts care responsibilities away from older daughters who previously assumed them, but have to decline them now in order to be able to comply with the condition of school assistance. Although this is a genuinely positive effect of CCTs benefiting adolescent women especially, the lack of existence of care services that could resolve these conflicts further adds to the pressure on the time of adult women who are the functional beneficiaries of the program. This pressure on women’s time and workload increases with the persistence of the traditional gender roles, and the tension that any kind of questioning of these produces. In fact, some qualitative evaluations present testimonies of women who confront inconvenience on a daily basis in order to comply with their program obligations, while spurring the discontent of the husbands about their wives spending too much time outside their homes. The women try to solve this conflict by “making sure to comply with the domestic responsibilities before leaving their house” (Rodríguez Enríquez, 2011: 27). As Martínez Franzoni and Voorend (2008) point out, the CCT paradigm does not aim at transforming the sexual division of labor, but rather at taking advantage of it. This fact is furthermore accompanied by certain maternalism in the social services, which address women in their reproductive and caregiver role. In sum, the conditionalities established by CCT programs prove to be a regression for women’s autonomy, because they consolidate women’s role as carer, perceive them as subjects only insofar as they constitute the persons responsible for reproduction and care, and impose pressure on their use of time. All of this will be exacerbated by a more punitive character of the conditionalities, which they adopt when they become a measure of the worthiness of beneficiaries receiving the transfer. The punitive character of the conditionalities can be mitigated when they are used to point out difficulties in access to social services (such as children’s absence from school, or their noncompliance with vaccination schemes), and consequently to attend to the underlying reasons for their occurrence.

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Conditional Cash Transfer Programs and Women’s Labor Market Participation CCT programs are not designed to promote the participation of women in the labor market. However, it is necessary to analyze whether they could carry elements that would generate disincentives for the labor supply. In other words, while not expecting CCTs to promote women’s entry into the labor market, it is a feminist aspiration that they would not obstruct it at the very least. The analyses of existing evidence in this regard are not conclusive. The main point to emphasize here is the fact that beneficiaries of these programs stem from weak labor trajectories, which often combine episodes of unemployment with placement in precarious work situations. This incites low work motivation from the outset. In this regard, it can be observed that in the cases of women with a track record of unemployment, the programs generate an “unemployment trap” that evokes the figure of the discouraged worker who does not offer her skills in the market since she cannot find any worthwhile opportunities, and because the costs of labor insertion are very high, principally due to the above-mentioned difficulties of reconciliation between working life and family and the low compensation for remunerated work. Where receiving the benefit is not incompatible with working, CCT programs do not seem to promote the abandonment of economic activity. Rather, it is presumed that the resources granted by CCTs would be incorporated into the totality of survival strategies adopted by the receiving households. When the access conditions to the program are strict in terms of income threshold or unemployment, CCTs can encourage the continuance in unregistered occupations and the high level of employment in the informal sector. The tension between CCT and working life also expresses itself in the difficulties these programs encounter in the development of exit strategies toward employment. This is an important point, since it reveals that nonparticipation in the labor market can resort from the trap the conditionalities impose, but would also occur if these did not exist. This holds true especially for the population group that is benefitted by these programs, whose profiles present determinants for weak insertion into the labor market: low educational attainments, limited work experience, low qualifications, and high levels of domestic responsibilities. Rather than the CCT programs’ own characteristics, it is the limitations imposed by the labor marketfor people with the above characteristics that explain the disincentives of the labor supply. In summary, the analysis of the implication of CCT programs on women’s lives show that conditional income transfer programs have their

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strengths and weaknesses. Among the former, the allocation of a stable and permanent income can be highlighted, as well as the improvement of material living conditions, the perception of some kind of independent income that improves women’s self-esteem and their relative position in the decision-making process concerning the use of resources. Among the weaknesses, the consolidation of the caregiver role for women has to be emphasized, and the related traditional gendered division of labor that constrains women’s participation in the labor market and their access to additional income. Additionally, depending on the context in which they operate, CCTs can generate unemployment traps, unemployment, and informal employment. Likewise, they strengthen a meritocratic and paternalistic vision that predetermines the usage of resources symbolically and practically. Can a CI maximize the positive potential of the CCT programs while simultaneously overcoming their weaknesses? The following section reflects on this question.

The Citizen’s Income as an Option to Exceed Conditional Cash Transfer Programs in Terms of Gender Equality What would we expect from a CI if it was to impact favorably on gender equality? The challenge would lie in its ability to act at the very roots of this inequality, which relate to the persistence of gender relations that make women subordinate and limit their possibilities of exercising their political, social, cultural, and economic rights fully and with respect to the principle of parity. As an income transfer proposal, a CI can act especially in the field of promoting women’s economic autonomy, which would allow for the dismantlement of the current reproduction of economic subordination. As has been pointed out at the beginning of this chapter, the latter expresses itself in (i) a lesser and worse participation than men in the labor market; (ii) a limited access to economic assets that derives from discriminating practices in the realms of property and heritage regulation; (iii) an unjust social organization of carethat concentrates most of the domestic responsibilities on the shoulders of women; (iv) increased difficulties in accessing and controlling economic resources deriving from the previous point; and (v) consequently, a subordinated position in the process of decision-making concerning the allocation of resources within the household and in collective decisions. Therefore, it can be expected that a CI would contribute to improving women’s labor market participation, redistribute care work, and facilitate and strengthen access and control over economic resources for women.

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CCT programs turn out to be a good test for the potential and deficiencies of a CI in terms of promoting women’s economic autonomy and gender equality in the Latin American context. Through the review in the preceding section, we noted that the CCTs count with certain characteristics that can be associated with the CI proposal, some of which would potentially impact women’s situation positively, while others, on the contrary, could create weaknesses that would have to be addressed if the CI became a truly liberating proposal promoting an egalitarian society. Monetary Income, Material Living Conditions, and Distributive Justice On the basis of the lessons learned from the CCT programs, the monetary transfer component of a CI seems to be able to potentially improve the position of women. Besides its intrinsic potential, this relates to the particular context of the region, where women face relatively more access restrictions to an independent income. In this sense, CCT programs display the capacity to provide this section of the population with a permanent and stable income that many of them would otherwise lack. Moreover, in many cases, this income represents the first opportunity of a resource flow that not only guarantees a certain basic consumption level but also permits planning for the future by promoting a small-scale saving capacity. As has been discussed, it holds true that the more extensive the program’s coverage, the higher the amount of the allocated benefits. Can a CI exploit and boost this characteristic? The answer is yes. On the basis of its very definition as a monetary transfer, a CI would in fact function like a stable and permanent income. Since a CI, as opposed to the CCT benefits, would be transferred to every citizen (and hence to all women), its impact would be larger on those women who historically present more obstacles to access an independent income (women with low education levels, weak labor insertion, high domestic burden, and living in poor households). A CI would furthermore present two relative advantages as compared to current CCTs. First, the nominal right-holders of the benefits would be the women themselves, who would cease to be mere functional beneficiaries. This is not a minor issue in terms of promoting women’s citizenry. A CI would benefit them in their capacity as citizens, and would not depend on their capacity as mothers or on any particular situation of poverty or unemployment. Second, as has been mentioned, the proposals for a CI in Latin America 20 suggest its implementation within the framework of a comprehensive reform of fiscal transfers. This would guarantee a sustainable source of funding for the proposal, based on a progressive tax regime.

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Under such circumstances, the redistributive potential of a CI would widely exceed the capacity of current CCT programs in this matter, which, as has been pointed out as well, only display a moderate impact on the distribution. This proves important particularly for women, to the extent that they are overrepresented in the lowest income strata (expressed, for instance, in the indicators of feminization of poverty) and among the population without income of their own.

The Control over Resources and Decision-Making Processes The other component analyzed relates to the implications of CCT programs on women’s position in the decision-making process concerning the use of resources. It was shown that the implications of CCT programs on this aspect are ambiguous. On the one hand, they strengthen women’s self-esteem and their subjective feeling of ownership over the benefits they receive. On the other hand, they restrict the uses that the resources must be destined to. This occurs both symbolically (to the degree that mothers receive an income for their children) and operationally (in cases that administratively restrict the access to certain products through the transfer’s delivery mechanisms). Can a CI maximize the effect the transfer would have on women’s relative position and overcome the restrictions on the control of the resources? Yes, it can. Owing to its strictly individual nature, the CI benefit would be able to overcome the obstacles for a free usage of resources put up by social or family “supervision.” The CI that women would receive would be for themselves and the remaining members of the family would receive their own CI. Therefore, a CI would also reduce competition for this income within the family, strengthening thereby women’s autonomy in the management of these resources. Furthermore, the proposal of a CI emphasizes the objective of absolutely autonomous usage of the resources (which is why one of its principles insists that the transfer be monetary rather than of another type). The fact that a CI would be a strictly individual benefit independent of any associated determinants linked to household composition or situation reinforces this component. Clearly, the level of the benefit will determine the potentiality of these impacts. In households with no or very low incomes besides the monetary transfer schemes, a pooling of the received transfers, in order to attend to basic needs, by all household members can be expected. The smaller the transfer level of the CI, the more important will it become to pool resources. Within this conception, intrafamily competition might prevail. It is thus conceivable that situations such as those observed in current programs could also arise under a CI scheme, including a

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decreasing contribution to the family income by the male members due to the additional resources provided by the transfer scheme. Either way, a CI would significantly reduce the probability of this occurring (relative to that of the CCT programs), insofar as it grants resources to all family members alike without imposing explicit or implicit directions regarding the use of these resources.

The Division of Labor and Care Responsibilities Another aspect analyzed refers to the transfer’s implications on the distribution of care work and related responsibilities. In this realm, the evaluation of CCT programs has brought up a clearly negative impact on the situation of women and gender equality. The existence of conditionalities linked to childcare perpetuates the caregiver role of women, which presents one of the most durable obstacles to women’s autonomous development in other dimensions of life (especially with regard to the sphere of remunerated work). Can a CI overcome this restriction of the CCT programs? Yes, it can. A point in favor of the CI in this respect is that it does not impose any kind of conditionality, thereby avoiding the explicit reproduction of the socially determined roles.21 Thus, a CI would neither reinforce women’s role as carer nor would it induce a particular type of family behavior. In short, a CI would eliminate the meritocratic and paternalistic components of current CCTs. A CI is received on the basis of existing, for being a citizen. It is independent of any individual conduct, family arrangement, or decision taken—individually or as a family—concerning the participation in paid or unpaid work. Notwithstanding, the contexts in which Latin American women from socioeconomically low households live, can in practice bring about the reinforcement of women’s role as carers. This occurs due to the restrictions of referring care work to institutions outside the home, as well as the limitations existing in labor market dynamics. In fact, part of the virtues attributed to the CI proposal refers to the possibility of understanding it as a remuneration for socially valuable activities. Caretaking is a socially enormously relevant activity. Thus, a CI could be perceived as remuneration for unpaid care work. While there is nothing wrong with this perception, but given the context, it could be that women would be pushed into unpaid care workthat now would be paid for by a CI. This entails various problematic aspects. First, it can exacerbate a situation where women face a false choice about care work. In contexts like the above, it seems like a reasonable “choice” for women of low education, weak employment records, and high levels of care responsibilities

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to remain in charge of care work and be excluded from participation in remunerated labor. This does not relate to an intrinsic preference by women for carrying out care work, but rather occurs due to circumstances imposing it as the only choice. These circumstances include the high costs of outsourcing care in a context characterized by the absence of public and free-of-charge care options, and the low return of incorporation into a labor market of low wages, which they presume that the socio-labor population segment would confront. Second, if a CI grants relatively modest benefit levels (as can be expected to occur in Latin America, at least in principle) this would imply acceptance of a low remuneration for care services. Under such circumstance, a CI would carry the negative connotation of cementing the low valuation that these kinds of activities experience today. This would contribute to a situation where most care work is unpaid but where caring activities if they were to fall under labor relations, would attract very low wages. Third, interpreting a CI as remuneration for socially valued care does not contribute at all to challenging the current social organization of care and the unequal distribution of domestic responsibilities between men and women. Challenging this situation, however, constitutes a key aspect in the promotion of women’s autonomy and gender equality. Consequently, it is necessary for a CI proposal to go hand-in-hand with other strategies that encourage the reorganization of care to avoid the risk of a CI contribution to the reproduction of current circumstances. The broader conception of work that the CI debate supports would be a fruitful ground for this discussion, but it needs to be strengthened. The question is not only to acknowledge and pay for care work but also to reach a more just distribution of these responsibilities. Ultimately, it is necessary to accompany a CI proposal with a set of recommendations concerning the redistribution of the totality of work and the implementation of mechanisms supporting a work–family balance with shared social responsibilities.22 Labor Market Participation Finally, what lessons can a CI deduce from CCT programs’ experience of the potential impact of people’s (and particularly women’s) labor market participation? As has been analyzed previously, CCT programs do not encourage labor market participation. While in the best cases they do not downright impede it, they do disincentivize it directly in many others due to the conditionalities related to income and employment poverty. Could a CI overcome this obstacle? The answer is yes, with conditions. A main point in favor is that the CI removes all types of conditionalities. This avoids any sort of trap that would occur and permits compatibility

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of the monetary transfer with all other types of income, including labor income. This is positive and marks a significant difference for women that receive CCT benefits today and find themselves discouraged from looking for other personal incomes outside of the program. Nonetheless, the elimination of conditionalities alone does not guarantee overcoming the discouragement that the transfer can create for labor insertion. In fact, if labor conditions are very adverse, for instance, when barriers to participation in the labor market are very high, the perception of an income that guarantees a certain basic threshold of consumption and satisfaction of needs outside of market mechanisms could disincentivize the job search. This applies particularly to women with low educational records, weak labor qualifications, and high domestic workload. That women under a CI scheme could avoid precarious and poorly paid job situations is good. On the contrary, it is positive that this segment of population would be able to satisfy basic needs without being overexploited by the labor market. The problem, however, is that employment is not only a means to obtain income but in fact functions also as a central structural pillar of life in the setting of present-day societies. Employment is a lifetime organizer, providing access to social services beyond income, grants the possibility of receiving acknowledgement for the social utility of one’s activities, and constitutes one of the main paths for the development of social interaction networks. Therefore, to exclude people from employment does not only deprive them from an income but also withholds all these elements that allow for social inclusion. Thus, if a CI in practice comes to foster women’s (certain groups of women particularly) exclusion of the labor market, it would have negative implications for women’s autonomy, their social position, and the objective of gender equality. Consequently, concrete CI proposals need to be constructed to attend to this situation by incorporating elements that encourage equal participation of men and women in employment. These should include at least the following: (i) mechanisms that redistribute paid and unpaid work time; (ii) strategies of appraisal for all types of work in order to proceed toward egalitarian conceptions of productive and reproductive work; (iii) concrete actions to eliminate discrimination mechanisms in the labor market; and (iv) specific policies that guarantee equal access to care services.

Conclusion Returning to the question that we began with: Should a CI be an objective for Latin American feminism? The analysis based on lessons provided

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by CCT programs in the region that was carried out here allows for an affirmation: yes, indeed, a CI proposal would improve women’s lives, considering that it is a means of income distribution and that it possesses elements that allow for the strengthening of the virtues of CCT programs, while overcoming some of their weaknesses. The CI characteristics of universality and unconditionality override the paternalistic constraints of CCT programs and simultaneously strengthen the perception of income as a citizen’s right. Moreover, it promotes autonomy not only in terms of the access to resources but also in its control. A CI is also a better platform for an improved position of women in the labor market. Nonetheless, for this to occur, complementary actions are required. Thus, in the particular context of Latin America where wage levels are low (especially for some kinds of occupations) and informality and precarious employment conditions form a significant proportion of all occupations available, specific actions to address these labor market conditions are pertinent. This is particularly true for women, who are overrepresented in these areas. Furthermore, measures aiming at the elimination of the various mechanisms of gender discrimination that persist in the workplace are required. A CI could also be a better platform with regard to the redistribution of care responsibilities. Again, however, complementary initiatives are needed. They would be especially important for Latin America, where the social organization of care still leaves the main responsibilities as the unpaid work of women. A CI’s potential to visualize and value this work is undeniable. It must, however, also help to challenge the status quo of the work distribution. It is thus necessary to place the CI proposal within a framework of a national care system with universal access possibility as well as a set of actions improving the reconciliation of working and family life. In the end, this is about a CI that would level the possibilities of all people, women and men, to choose the lives they wish to lead. This will only be achieved if the contextual restrictions are addressed, and the proposal is enriched with elements that maximize its liberating capacity.

Notes 1. A good synthesis of this debate can be found in the special issue of Basic Income Studies (Baker 2008), “Debate: Should Feminists Endorse Basic Income?” BIS 3(3), December 2008. In fact the title of the present essay takes up the question of that debate, placing it into the Latin American context.

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2. The concept of care refers to the set of activities, goods and services that are necessary to satisfy basic needs of people’s existence and reproduction, “nurturing” in the sense of providing physical and symbolic elements that allow for survival in society. The delimitations of this concept are debated; consensus exists though that at least feeding, hygiene, and maintenance of the home and basic health care are included. The debate also considers whether care should only denominate the protection granted to dependent persons (for instance, children, the elderly, sick, or handicapped), or whether it would include the nurturing of those that in fact could be self-sufficient in this regard (such as male spouses). For an overview over this conceptual debate refer to Esquivel (2011). In Latin America, the social organization of care relies fundamentally on the unpaid care work of women within their homes. It is in this understanding that I will use the generic term care throughout this text. 3. For an overview of the extension of conditional income transfer programs in Latin America, see Cecchini and Madariaga (2011). 4. In Latin America, the following feminist aspirations in relation to those aspects of women’s lives that could be affected by a CI emerge: (i) the increment in economic autonomy, (ii) increased and improved participation in the labor market, (iii) a more just distribution of those responsibilities associated with care, and (iv) in general terms, the increase in opportunities to choose the kind of life that one wishes to live. 5. Economic autonomy also enhances other dimensions of personal autonomy, for instance that of physical and political spheres. On this matter see the periodic reports of ECLAC’s Gender Equality Observatory (www. cepal.org/oig/). 6. The quantitative information utilized in this section is taken from the Gender Statistics provided by ECLAC’s Division of Gender Issues. On the matter, see www.cepal.org/cgi-bin/getProd.asp?xml=/mujer/noticias /paginas/3/29273/P29273.xml&xsl=/mujer/tpl/p18f-st.xsl&base= /mujer/tpl/top-bottom-estadistica.xsl 7. In the 1990s, this indicator stood at an average of 110 women for every 100 men. 8. This section is informed by Baker (2008), Bergman (2002, 2008), Elgarte (2006, 2008), Ghiollagáin (2008), Gheaus (2008), Katada (2010), Murphy and O´Connor (2008), O´Reilly (2008), Pateman (2004), Robeyns (2007, 2008) and Zellecke (2008). 9. Here I refer to the totality of time that people utilize to realize their multiple activities. 10. The analysis of CCT programs’ implications on gender synthesized in this section is inspired by Rodríguez Enríquez (2011). 11. The vagueness of this assertion stems from the fact that cases of new programs arising and older ones being terminated or merged into others coexist in the region. 12. As mentioned above, Cecchini and Madariaga (2011) provide a complete and updated panorama of the CCT programs in Latin America. 13. As it has been mentioned in the introductory chapter, in fact a debate exists in the region as to the degree to which CCT programs could lead

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15.

16. 17. 18.

19.

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the way toward strategies of a more universal coverage. One of the main differences between the CCTs and a CI is that the former demands compliance with conditionalities in order to access it, both in terms of being able to prove some kind of need and in the commitment to realize a form of compensation in return for the benefits granted. The following analysis is based on the examination of a number of existing CCT programs in the region, based on the works of Goldberg and Rodríguez Enríquez (2011) for the case of Argentina; Adato (2000), Arriagada and Mathivet (2007) and López and Salles (2006) for the case of Mexico; Armas Dávila (2004) for the case of Ecuador; Arriagada and Mathivet (2007) and Martínez Franzoni and Voorend (2008) for the case of Chile; Cecchini et al. (2009), Martínez Franzoni and Voorend (2008) and Moore (2009) for the Central American case; and Draibe (2006), Evangelista da Cunha and Cámara Pinto (2008) and Suárez and Libardoni (2007) for Brazil. For instance, the Asignación Universal por Hijo (AUH) in Argentina established a benefit level referencing the amount granted by the Family Allowance Social Security, which covers workers registered in paid employment. However, it should be noted that AUH is a special case among conditional income support programs, because it is not conceptualized as a welfare/social assistance program but rather as an amendment to the social protection system that covers paid workers in registered employment. Indeed, AUH attempts to cover children of unemployed workers and/or those in unregistered employment who earn less than an established income threshold. Additionally, AUH does not distinguish whether it is the mother or father who receives the benefit in the name of their children. Notwithstanding, empirical evidence shows that AUH is a highly feminized program, like the rest of CCT in the region. See Lo Vuolo´s chapter regarding AUH in this book. This holds true even though the limited level of the transfers often does not allow benefitted families to exit poverty. The World Bank (2009) clearly describes the paternalistic content of these programs. In some cases, the consumption feasible with the CCT income is externally conditioned to a specific type of consumption. For example, when the income is distributed via banking cards, the use of these is electronically restricted to allow only for the purchase of certain types of goods. Notwithstanding, in some cases it has been found that reception of the benefit can in fact increase women’s self-esteem, reducing thus the dependency on their spouses and thereby minimizing domestic conflicts (Evangelista da Cunha and Cámara Pinto, 2008). Here I refer particularly to the proposals discussed in Argentina, of which the most concrete is that promoting the implementation of a Childhood CI (ingreso ciudadano para la niñez, INCINI), among other resources financed with the expected income from a progressive income tax reform. For a theoretical exercise about the integration of fiscal transfer systems in Argentina see Barbeito (1995) and Lo Vuolo et al. (1999: chap. IX).

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21. It should be noted that in some proposals discussed in the region, like in the already mentioned case of an Argentinean childhood CI, the possibility of linking the benefit to school assistance and health checks has been included as well. Nonetheless, in these cases this component was not proposed to contain a punitive character, but rather as a mechanism that on the one side could promote education and health of the children, and on the other would be used to identify situations in which these rights (to education and health) were violated. Additionally, the inclusion of this prerequisites links to a strategy of achieving social consensus on the proposal. 22. For a set of related recommendations refer to OIT-PNUD (2009). Bibliography Adato, Michelle. “The Impact of PROGRESA on Community Social Relationships.” Retrieved from: www.ifpri.org/themes/progresa/pdf/Adato _community.pdf, 2000. Armas Dávila, Amparo. “La equidad de género y el programa del Bono de Desarrollo Humano.” ECLAC/Women and Development Unit—CONAMU. Ecuador, 2004. Arriagada, Irma, and Charlotte Mathivet. “Los programas de alivio a la pobreza Puente y Oportunidades. Una mirada desde los actores.” Santiago: ECLAC. Serie Políticas Sociales 134 (2007). Baker, John. “All Things Considered, Should Feminists Embrace Basic Income?” Basic Income Studies 3, no. 3 (2008). Barbeito, Alberto. “La integración de los sistemas de transferencias fiscales como instrumento de integración social.” In Contra la exclusión. La propuesta del ingreso ciudadano, comp. Rubén Lo Vuolo. Buenos Aires: Ciepp—Miño y Dávila Editores, 1995. Bergmann, Barbara. “A Swedish-Style Welfare State or Basic Income: Which Should Have Priority?” Paper presented at the Real Utopias Project conference on Rethinking Redistribution. University of Wisconsin, Madison, 2002. Bergmann, Barbara. “Basic Income Grants or the Welfare State: Which Better Promotes Gender Equality?” Basic Income Studies 3, no. 3 (2008). Cecchini, Simone, and Aldo Madariaga. Programas de Transferencias Condicionadas. Balance de la experiencia en América Latina y el Caribe. Santiago: ECLAC—Asdi, 2011. Cecchini, Simone, Alicia Leiva, Aldo Madariga, and Daniela Trucco. Desafíos de los programas de transferencia con corresponsabilidad: Los casos de Guatemala, Honduras y Nicaragua. Santiago: ECLAC—Asdi, 2009. Draibe, Sonia. “Brasil: Bolsa Escola y Bolsa Familia.” In Transferencias con corresponsabilidad. Una mirada latinoamericana,” comp. Rolando Franco and Ernesto Cohen. Mexico: FLACSO—SEDESOL, 2006. Elgarte, Julieta. “Basic Income and the Gendered Division of Labour.” Basic Income Studies 3, no. 3 (2008). ———. “Good for Women? Advantages and Risks of a Basic Income from a Gender Perspective.” Paper presented at BIEN Congress, Cape Town, 2006.

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Espinosa, Guadalupe. “La participación de la actividad económica de las mujeres del Programa Oportunidades y su relación con la corresponsabilidad de éste y otros programas sociales.” In El Programa Oportunidades examinado desde el género, María de la Paz López y Vania Salles (coords). Mexico: Unifem—El Colegio de México, 2006. Esquivel, Valeria. La Economía del Cuidado en América Latina: Poniendo a los cuidados en el centro de la agenda. Panama: UNDP, 2011. Evangelista da Cunha, Rosani, and Bruno Benfica da Cámara Pinto. “O Programa Bolsa Familia como estrategia para reducao da pobreza e da desigualdade no Brasil e os processos de cooperacao e coordenacao intergovernamental n asua implementacao.” Mimeo, 2008. Gheaus, Anca. “Basic Income, Gender Justice and the Costs of Gender-Symmetrical Lifestyle.” Basic Income Studies 3, no. 3 (2008). Ghiollagáin, Aine. “Basic Income and Caring: Why Aren’t All Caregivers Interested in Basic Income?” Paper presented at BIEN Congress, Dublin, 2008. Goldberg, Laura, and Corina Rodríguez Enríquez. “La AUH y la igualdad de género ¿avance o retroceso para las mujeres?” Buenos Aires: Mimeo, 2011. Katada, Kaori. “Basic Income and Feminist Citizenship(s): In Terms of De-Commodification and De-Familialization.” Paper presented at BIEN Congress, Sao Paulo, 2010. Lo Vuolo, Ruben, Alberto Barbeito, Laura Pautassi, and Corina Rodríguez Enríquez. La pobreza . . . de la política contra la pobreza. Buenos Aires: Ciepp and Miño y Dávila Editores, 1999. López, María de la Paz, and Vania Salles (coords). El Programa Oportunidades examinado desde el género. Mexico: Unifem—El Colegio de México, 2006. Martínez Franzoni, Juliana, and Koen Voorend. “Transferencias condicionadas, regímenes de bienestar e igualdad de género: ¿Blancos, negros o grises?” Miami: Centre for Latin American Studies. Working Paper Series 15, 2008. Moore, Charity. “Nicaragua’s Red de Protección Social.” Brasilia: International Policy Center (IPC). Country Study 17, 2009. Murphy, Mary, and Orla O’Connor. “Reflections on the BI Debate from an Irish Feminist Perspective: A Feminist Alternative to Basic Income.” Paper presented at BIEN Congress, Dublin, 2008. O’ Reilly, Jacquelina. “Can a Basic Income Lead to a More Gender Equal Society?” Basic Income Studies 3, no. 3 (2008). OIT (Organización Internacional del Trabajo —PNUD (Programa de Naciones Unidas para el Desarrollo). Trabajo y Familia: Hacia nuevas formas de conciliación con corresponsabilidad social. Santiago: OIT-PNUD, 2009. Pateman, Carole. Democratizing Citizenship: Some Advantages of a Basic Income. Politics & Society 32, no. 1 (2004): 89–105. Robeyns, Ingrid. “Introduction: Revisiting the Feminism and Basic Income Debates”. Basic Income Studies 3, no. 3 (2008). ———. “Some Thoughts on Basic Income from a Feminist Perspective.” Paper presented at a workshop at the Heinrich Böll Stiftung, Berlin, 2007. Rodríguez Enríquez, Corina. “Programas de transferencias condicionadas de ingreso e igualdad de género ¿Por dónde anda América Latina?” Santiago: Cepal: Serie Mujer y Desarrollo 109, 2011.

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Suárez, Mireya, and Marlene Libardoni. “O impacto do programa Bolsa Familia; mudanzas e continuidades na condicao social da mulheres.” In Avaliacao de Políticas e Programas do MDS , org. J. Vaitsman and R.Paes-Sousa. Brasilia: Ministry of Social Development and Fight against Hunger, 2007. World Bank. Transferencias monetarias condicionadas. Reducción de la pobreza actual y futura. Washington: World Bank, 2009. Zellecke, Almaz. “Institutionalizing the Universal Caretaker Through a Basic Income?” Basic Income Studies 3, no. 3 (2008).

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CH A P T ER

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Citizen’s Income and Democratization in Latin America—A Multi-Institutional Perspective Louise Haagh

Introduction This chapter links democratization to the extension of real opportunity freedom through equal and multiple memberships of core institutions. In Latin America today there is broad recognition that inequality as well as poverty poses problems for both democracy and development (Zepeda et al. 2007). However it is not quite clear in what sense inequality matters and what in this context comprises the problem of public reform. In one perspective the problem of inequality is broadly of an institutional and political nature. It is argued that at the heart of the weak extension of political democracy into the social and economic domains lies a basic inequality of citizen status (Haagh, 1999; O’Donnell, 2001; Whitehead, 2007; Haagh, 2002a, b). Expanding on this perspective, this chapter explores how far the institutional foundation of citizen status is relevant to the realization in practice of opportunity freedoms. Can policy judgments be usefully informed by an institutional prism and help explain how for instance major advances in educational coverage have so little impact on relative incomes and social equality? (Bonelli, Gonzaga, and Veiga, 2008: 47–48). It is argued that an institutional perspective can offer at least an overview of the long-run challenges faced by public reform. It suggests for example that social guarantees would be relevant in so far as they extend beyond an absolute conception of opportunity poverty, to include a

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Citizen’s Income (CI) and a more equal quality of education and other entitlements across populations. The cultural shift that this would involve on a continent where the sense of entitlement is shaped by regional and racial bias is necessarily complex. However, from an institutional perspective at least, it will hinge on reforms that equalize citizens’ status in practice. On the assumption then that institutions are shaping values, the discussion to follow sets out a possible direction of travel in the form of a multi-institutional framework of democratization. Key elements include the entitlement to income and reproductive assets as independent of earnings, and the entitlement to opportunity assets as independent of wealth. It is hypothesized that this differentiation of basic entitlements from economic status is a core condition for the integration of institutions that sustain equal opportunity in actual fact and hence that deepen the socioeconomic aspects of democratization. Specifically, the key propositions and policy implications of this chapter are: (a) that social integration requires a determined effort to lower relative inequality as generated by high levels of wealth-based access to private provision, in particular schooling; (b) that public action and insurance need to be coordinated across a range of arenas to ensure inclusion in citizenship understood as an institutional set; and (c) that effective social policy needs to address fairness in “opportunity assets” as well as “reproductive assets,” but to do so in such a way that the rights of access are secured independently. In this regard CI plays a key role. By guaranteeing the individual’s subsistence for life, it enables a form of equal standing between persons that is central to secure the economic basis for a deepening of democracy: At the individual level it separates essential reproduction from enterprise and in doing so enables the sense of personal stability that survey work has found is central to basic well-being and self-motivation (Haagh, 2011b). At the social level—as it is a universal right that binds citizens together—CI creates public demand for equality of opportunity, for instance through the public investment that a more equal quality of schooling demands, and in turn is a basis for the formalization of work. In short, CI is a central instrument to create the positive complementarity between individual liberty and social integration on which sustained democracy rests. In Latin America where institutions of shared security are weak and inequality is especially high, a CI is arguably more critical than elsewhere for initiating the process of forging demands for active policies to support inclusion in more institutions. Accordingly, there follows first a discussion of the problem of citizenship as an institutional set. The next two sections discuss in a global context two elements of social and economic democracy respectively that are of particular relevance in Latin America: the first pertaining to the

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consolidation of a core reproductive asset, income security; and the second to the consolidation of more equal opportunity assets, in particular schooling. This section will show how inclusion within this institution relates to the inclusiveness of other institutions including in the areas of work and welfare, and how these multiple memberships shape dimensions of opportunity, democratization, and social mobility.

Democratization and Institution-Building in Latin America—Citizenship as an Institutional Set Our conception of the problem of equal status, and hence of democracy, has to be revised to accommodate modern, more dynamic, problems of individual freedom. To that end the notion of citizenship as an institutional set develops a recent emphasis in liberal egalitarian writing on dynamic forms of unequal advantage. For Barry, for instance, cumulative disadvantage is a social injustice given the way some individuals, for reasons remote to their efforts, experience declining fortunes and are unable to retain acquired gains through difficult times (Barry, 2005: 14–26, 44–45). Barry thus captured in a general way the problems of public reform that arise from the greater complexity and uncertainty of modern economies. But what are the implications in structural terms? How do relevant programs and services shape the social value of assets, such as education or income security, and in turn affect individuals’ ability to attain control of their lives? Moreover, how do sets of institutions—for example, schooling, the labor market, or income security—connect in both their immediate impact on individuals in this sense and in their long-term effect on relative mobility and democratic consent? The particular relevance of institutional analysis to answer these questions is that institutions arise, in North’s (2005: 7, 13–19) definition, as a rational effort to enable calculated risk in response to uncertainty. The enabling of calculated risk is important to democracy then in so far as its extension would entail a broadening of the access to secure opportunity and hence an abatement of the cumulative disadvantage highlighted by Barry. The difficulty of institutional reform today however is that the rapidity and dispersion of economic change demands a more concerted effort to enable the diffusion of calculated risk, and hence secure opportunity, across the economy. In this context in turn it is more pressing to understand the systemic links between institutions in so far as even poorly designed institutions may impact on each other in ways that are not immediately visible. In turn this conception of public reform as the erasing of invisible barriers provides a slightly different perspective on the relation between

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equality and democratization than that offered by an influential recent study of this relationship offered by Tilly (2007). To Tilly, categorical divisions in society are relevant for democracy primarily when they generate political conflicts, whereas what I want to suggest is that divisions arising from uneven advantage are relevant because of the way they undermine citizen status discretely. In other words we can understand cumulative disadvantages as being especially corrosive of citizen equality and of values of justice, by virtue of their being both more dynamic and less politically visible, compared to other inequalities, highlighted by Tilly (2007: 110–111), that emerge from race, religion, or the political expressions of class. Accordingly Figure 9.1 presents the problem of democratization as the building of institutional sets in which the inclusiveness of each institution shapes inclusiveness in the others. Involved is a developmental and institutionally based conception of equal freedom (Haagh, 2007, 2011a, b), starting with the universal access to basic security as a basis for the attainment of equal education opportunity and control of occupational life. Compared with the study of welfare states under more stable conditions, this framework then explicitly highlights the connection between reproductive and opportunity assets. A focus on reproductive assets in the form of the degree of de-commodified income support (as untied to production) has dominated the study of welfare states in the implicit understanding that de-commodification occurs outside of production. Examples of well-known studies that have mainly prioritized the former include Esping-Andersen’s (1990, 1999) analysis of social democratization as

BASIC SECURITY

CAPABILITY

HEALTH/SUBSISTENCE

EQUAL QUALITY SCHOOLING

1

2

SOCIAL INSURANCE COMMITMENT 5

OPPORTUNITY ORGANISED OCCUPATIONS

SECURE TRANSITIONS

3

TRAINING UNEMPLOYMENT INSURANCE

4 Inclusiveness of each institution depends on inclusiveness in the others • Institutions to support mobility (4) will not be inclusive without occupational choices • Young people’s choices (3) depend on equal quality shooling (2) • Equal quality schooling is only effective in conditions of basic material security (1)

Figure 9.1

Citizenship as an institutional set.

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de-commodification, and van Parijs’s (1995) emphasis on basic income as enabling the relative freedom from work. Other scholarship, in particular recent work on Latin America, highlights instead as ‘bad’ inequalities (Ferreira, 2007) uneven returns to productive endeavor, and in doing so captures problems in the realm of economic democracy that arise from fragmented education and working itself. Therefore whilst the social aspect of citizenship is critically important, including in particular CI, it is best understood when analyzed in the systemic context that shapes the way this right relates with economic rights or rights in production. Critically this includes education that impacts on individuals’ relative standing in the occupational realm and hence the overall level of control of one’s life—one’s control of time and activities—that one can hope to enjoy (Haagh, 2011a, 2012). Moreover, under the uncertain economic conditions as characterized in Latin American countries, the concurrent significance of reproductive and opportunity assets, and hence of social and economic democracy, grows. In this context a too narrow focus on passive support leaves out the problem of unevenness of dynamic returns. On the other hand, a too exclusive focus on uneven returns leaves out what both Esping-Andersen and van Parijs (1995) rightly understood as the importance of autonomy as a basis for liberty. The role of autonomy in relation to liberty here resides in the individual’s ability to withdraw from and thereby shape the relation with work, which is in turn more prescient where earning and bargaining power is either uncertain and/or very depressed. In short, although conditional income support is always undermining of liberty— as it involves official discretion in occupational choice—the infringement of liberty is more pronounced under uncertainty and more unevenly so in unequal societies. In turn, there follows two important implications for how Figure 9.1 should be read and for how we should understand how equal membership of institutions early in life supports equal and multiple memberships later. The first is that inclusiveness or equal membership entails not just access to services, but access to equal quality services. In other words, where access to institution 2 (schooling in Figure 9.1), is unequal in quality, inequality of stable access to other institutions, in particular the labor market, follows later in life. At stake is a value of freedom as enjoying effective property rights in stability (Haagh, 2012). Following from this, the second implication then concerns the connection between memberships and the meaning of multiple memberships. The correct reading of Figure 9.1 accordingly would be one in which membership of institutions is seen as cumulative and essentially stable. For instance one can envisage that individuals retain rights to a social income (through basic allowances of non-taxed income or a CI) even as they acquire the ability to support participation in unemployment

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insurance (and of course in taxation). The first provides a basic income guarantee or supplement whereas the second protects ongoing commitments and grants additional time for relevant job search (Haagh, 2011a). Exchanging one right for another would diminish the positive effect of each on individual autonomy as well as on social mobility. Likewise, individuals may retain rights to re-education and training under specific conditions, even where their initial education supported the early stages of their occupational life. A wrong reading of Figure 9.1, therefore, would be one that sees temporary or partial inclusion in individual institutions as a springboard for individual autonomy. For instance, Figure 9.1 should not be read to suggest that initial subsistence security generates capability, which in turn generates occupational life such that the further need for subsistence security or capability withers away. This interpretation would overdraw the individual’s capacity to control the impact on her life of modern complexity. Note however that this (very partial) reading of Figure 9.1 is the basis for much of current antipoverty policy, which, as examined below, provides targeted and temporary relief on the assumption that economic autonomy is generally possible, and that public spending can improve opportunity outcomes irrespective of education’s relative value. The worrying trend in Latin America then is that governments may spend significant amounts on programs to target absolute income and/or opportunity poverty, and yet may fail to address relative opportunity poverty. In turn, the challenge arising from this is how to avoid the immediate temptation from a static perspective of distributive justice to entrench separate programs for different communities. It is true that in conditions of insecure and informalized work the expanded membership of multiple institutions can only be gradual. But equally plain is the importance to the long-run efficacy of public expenditure of an approach to the design of core institutions (education, income security, unemployment insurance, occupation support) that is broad enough that steadily expanded inclusion is possible. In the case of income security, as we pursue below, this entails a broadening of the bases of cash grants combined with a policy of flexible rules in contributory systems such as unemployment insurance. For instance, as imperfect but more developed examples of flexible rules are Brazil’s and Barbados’ systems of unemployment insurance, which include allowance for intermittent payment and even payment in cash or kind without loss of entitlement—in both cases in pragmatic recognition of the seasonal and/or precarious nature of work (Haagh, 2006). The schemes are imperfect in their implementation and coverage but they still offer significant income protection (Rawlings, 2005; Chahad, 2004; Haagh, 2011b). Notably, flexible contributory schemes combined with

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more efforts to generate formal work are now advocated by initiators of conditional cash transfers (CCTs) in Latin America (Levy, 2008) in recognition of the poverty of CCT schemes alone in terms of generating either sustained security or real work opportunity. The case made here is for a more complete transformation, building on what is already there: turning CCTs into CI and expanding and perfecting other complementary systems of income security and work opportunity, starting with investment in more equal quality of schooling and creating public support for more sustained employment at all levels of skill. In education this means facing up to the problems that arise from the gap in quality between state and wealth-based provisions. Indeed although inequality in public spending—the concentration on privileged groups—is rightly highlighted as critical in Latin America (Graham,2002; Schwartzman, 2001:11; Tokman, 2007; Hoffman and Centeno, 2003), the value of public goods is also affected by inequalities with respect to wealth-based provision. In fact, it is logical for public inequality itself to increase when the distance to private provision is great: In both the United Kingdom and Chile, internal markets are justified as a means to drive state schools to compete with (better-funded) fee-paying schools. In both countries, state schools try to hit league table standards through admissions procedures (Helgø, 2002).1 In this light, the politicization in Chile of school inequality must be seen as a response to the state’s support for privately managed schools (45 percent of pupils in primary schools) against a background of a growing resource distance to fee-paying pupils. In other words, with competitive standards set by fee-paying schools, the state can only attempt to provide commensurate opportunity outcomes by giving incentives for some state schools to outperform others through de-selection rather than teaching 2: The institutional generation of school inequality is exported from the public–private relation to the public sector itself. In conclusion, the problem of membership of institutions advanced in Figure 9.1 is both one of equal membership (access to equal quality services) and one of multiple memberships. A key argument of this chapter is that these two dimensions of membership are mutually linked: Equal membership of individual institutions, in particular institutions that grant protection and opportunity early in life, tend to promote equally multiple memberships too. In turn, this connection between equal and multiple memberships has a bearing on the way in which distributive dynamics between the institutions in Figure 9.1 become self-reinforcing. In other words, we can envisage that there will be a tendency toward formation of more and less redistributive patterns across institutions. In both cases, considering the contemporary scenario, what we observe are forms of universalism, but of

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different types. The first form of universalism involves a kind of minimalist public directed at discrete needs as identified through select programs with multiple goals targeted at individual groups and the eradication of absolute poverty. It is universal in the minimal sense that everyone in a given situation has access. By contrast a more comprehensive universalism or public is concerned with a broader and more stable notion of social justice, which ultimately results in a wider extension to individuals of real opportunity freedom through access to stable and continuous entitlements. As will be further explored, opportunity equality leads to opportunity freedom because equal quality opportunities maximizes the flourishing of individual interest and efforts in an institutional context of diverse opportunity. Conceptually this understanding of the public sphere has affinities with the postwar tradition, in particular the Marshallian vision of citizenship as membership of the community, in which payment for welfare goods is reserved for ‘frills and luxuries’ (Marshall, 1949: 34), and hence, as in Esping-Andersen’s work, the principle of social insurance predominates. However it differs in visualizing the function of social insurance as shaped, in a more dynamic economy, by the deliberate integration of persons across a range of institutions that affect opportunity both initially and later in life. The idea of institutional sets also by extension differs from Marshall’s, and from Tilly’s, accounts of institutional change. It accepts (from Marshall) that dimensions of citizenship are tendentially linked. However where Marshall saw citizenship as a stable sequence (O’Donnell, 2001; Haagh, 1999, 2002a, b), in which civil led to political and finally social dimensions, the present framework allows for the complexity of institutions and political actors and hence is open, drawing on Tilly (2007), to the possibility of fragmentation or reversal of democratization. As distinct from Tilly, on the other hand, democratization is here defined as real equality of opportunity and not as the dilution of organized interests, as already explained. In short, state action and interest group politics should be seen as forces that, depending on their particular role in shaping opportunity patterns, may advance or retard democracy under different constraints, but not as in themselves defining elements of a state of democracy. In turn, this understanding of the merely intermediary role of the state and of other actors allows us to see how in Latin America uneven asset distribution and growing economic uncertainty have in practice curtailed the state’s effectiveness and its capacity to generate democratic consent, despite the greater autonomy that it has today in some dimensions of policy. In fact, it is striking not only that there is low (if gradually rising) support for democracy in Latin America (averaging at less than 40 percent,

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“Latinobarometro,” Economist, November 17, 2007), but that there seems to be no direct link to the level of support for the market economy. If anything the relation is tending in the other direction. Most Latin Americans (59 percent, “Latinobarometro,” Economist, November 17, 2007) do not believe that equal opportunity obtains in their country. In this context, we can hypothesize that a passive receipt of welfare goods at an absolute poverty line is a necessary but not sufficient source—in the long run—of legitimate governance. The importance then of a study of institutional sets is that it allows us to look beyond actual levels of public spending to the effectiveness— and ultimately the legitimacy—of this spending in the context of the rationality to individual progress of different institutionally shaped constraints and resources: The returns to reproductive assets depend on the development of opportunity assets and vice versa, and the returns to public investment in both depend on a weakening of the factor of relative wealth. Below accordingly are discussed, first, the problems that inform a gradual broadening of reproductive assets, through the extension of cash grants into a Citizen’s Income; and, second, the way opportunity assets, starting with schooling, affect institutional memberships is assessed through a comparative prism.

Reproductive Assets and Income Security in Latin America Conditional cash grants schemes are undoubtedly the most important recent attempt to strengthen reproductive assets in Latin America. Although varying in design and scope, all CCTs are means-tested schemes with conditions relating to school attendance of children. In countries like Brazil and Mexico, grants have expanded in a decade-and-a half from being isolated, regional schemes to covering upwards of a quarter of the population at any one time (Barrientos, 2006; Rawlings, 2005; Hall, 2006; Haagh, 2006: 7 and 2011b; Veras Soares et al., 2006). By allocating resources to the poor population as distinct from more privileged groups, CCTs thus represent a progressive development. They are also, however, taking a broader perspective, a good example of how existing divisions often legitimate an absolute conception of poverty and as a consequence narrowly targeted policies. Indeed, although unstable work in the region makes a strong case for more universal and more stable grants, the prevailing diagnosis of poverty and of incentives to work, point in a different direction. Reinforced by a lack of institutions to integrate the poor and by fiscal constraints, this diagnosis has strengthened the preference for short-term and highly targeted help.

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As an example, most CCTs were premised, at least originally, on the idea that the causes of poverty could be removed over time. Mexico’s PRONASOL was begun in this way and Chile’s Solidario was planned for five years. Even where schemes have gone beyond providing support for children in school, the core objective is usually to make beneficiaries grant- independent in future. This is in sharp contrast to thinking in Europe where by the 1970s it was clear to most people that full employment was an unrealizable goal. The problem became how to avoid the same groups relying on income support and later how to use income support (or tax systems) to supplement low-earning jobs (Atkinson, 2004). The thought that unemployment was primarily due to family behavior was not very popular. If paradoxically it has become current today in countries with high and intermittent unemployment, extensive underemployment, and informalized work, where constraints not personality dominate in the set of incentives, the explanation lies in the greater importance of the moral hazard assumption in conditions of high inequality (Haagh, 2011b). Indeed combined with the constraints set by limited funds, a view of the poor as potentially slovenly has continued to bolster attempts to control their behavior by limiting aid. In extreme cases, time-limits and caps on grants have neutralized the key intended impacts of antipoverty schemes on health and nutrition, as in Honduras, where grants were set at less than 4 percent of household expenditures to avert disincentives (Moore, 2008: 14). In fact, by in practice accepting that poor people work, programs of conditional cash grants have in the region avoided the key moral hazard that arises from traditions (of developed economies) where employment triggers an end to assistance (Page, 2004; Alstott, 1999). Therefore, given that CCTs allow individuals to earn, the concern in Latin America should not be with presumed disincentives, but rather with the way a lack of stability of, and differentiation between, policy goals may limit the potential effect of grants on entrepreneurial behavior. Prevailing conditions of low and uncertain income suggest that grants are needed on a stable basis not only to support education but also other forms of productive behavior. In Honduras, for instance, transport costs, not child labor, as generally thought, were found to be the key cause of low attendance at school (Moore, 2008: 19). Relevant studies have shown that cash grants make a very small difference to adult-labor supply, and if anything have a positive impact (Gertler, 2006; Sharif, 2003; Lavinas, Barbosa, and Tourinho, 2001; Parker and Skoufias, 2001; Samson, 2007; Seekings, 2007; Haagh, 2007, 2011b). CCTs only aim to secure a part of household expenditures, in Brazil to a maximum of about 50 percent, in Mexico 20 percent, and Nicaragua 18 percent. At this or

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even considerably higher levels, it is hard to see how cash grants could have disincentive effects. Adding to this, however, is the way unstable labor market conditions make heavily means-tested income support systems, especially short-term support, more difficult to implement and render compatible with a narrow conception of entitlement based on immediate need. Hence a more stable and simplified framework of income support is undoubtedly a long-term goal for Latin America, although it is only one component in supporting a real extension of opportunity freedom. The lack of structured work in Latin America is also a barrier to entrepreneurial risk and work motivation. Surveys suggest, not surprisingly, that grants are unlikely to have positive impacts on labor supply where services are weak or spatial marginality is very severe (Haagh, 2011b). In short, on the whole it seems that work motivation and access are best understood through the way in which a number of institutions relate and contribute to stable autonomy. This is broadly as we would expect in light of the way it was hypothesized that the codependence of reproductive and opportunity assets would rise in complex economies. The microevidence of the effects of these distributions on social behavior is also broadly in line with evidence of the longer-term impact on opportunity outcomes of institutional sets, as we examine below.

Opportunity Assets and Institutional Sets Opportunity Equality and Social Inclusion Notably the primary goal of cash grants in Latin America has been the improvement of opportunity assets, as noted, to which reproductive security has generally been seen as an instrumental condition.3 Certainly, more universal and stable cash grants can be defended simply on the grounds, as argued, that they are needed to dampen the pecuniary effects of uncertainty, and hence the defence on opportunity grounds is not strictly necessary. However, it is obviously, and certainly officially, desirable that cash grants should raise opportunity outcomes as well. But this is a far more ambitious goal than the discourse allows. For the link between cash grants and opportunity outcomes to hold, governments will need to pay attention to relative as well as absolute forms of opportunity poverty. In Latin America, income returns to education are extremely uneven (IADB, 1998, 2004; Haagh, 2007; Kakwani, Neri, and Son, 2006; Corak, 2006, 2004; Bourguignon, Ferreira, and Menéndez, 2004, 2007; Dureya, Jaramillo, and Pagés, 2002; Bouillon, Legovini, and Lustig, 2001) due to the high inequality of attainment at school. In this context, the scarcity of good education confers superior advantage, somewhat

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irrespective of effort (beyond education). Recent years moreover have seen a weakened relation—at low-to-intermediate levels of schooling— between education and (income) returns, despite growing completion and public investment (Kakwani, Neri, and Son, 2006; Soares et al., 2006, 2007). In this context uneven quality of schooling is likely to dampen pressures to generate formal opportunities across populations, and in turn this weakens the returns on income support. Indeed, when looking at country comparisons what appears to matter most to overall opportunity outcomes is the balance between public and private spending, more so than the level of spending itself. Note for instance that South Korea spends less on education in GDP than Mexico, whilst Brazil or Chile spend more than Japan. Meanwhile the resource difference between public and private schools is much lower in Japan and Korea. In teacher to student resources, the difference in South Korea is nil, whereas in Chile, Mexico, and Brazil students only have 63, 66, and 58 percent of the teacher resources of fee-paying students (Haagh, 2010, 2012). Globally, there is a clear link between the level of schooling completion and the relation of public to private funding of students (Graph 9.1). A similar link across countries can be ascertained by looking at the relation between unequal education and the relative employment integration of those with lower secondary schooling (Graph 9.2). The measure used here for relative employment integration is a composite of five elements, including the actual and relative income and employment returns to middle range schooling and female employment. The relationship of these outcomes to schooling equality will be explained by a number

SCHOOLING Level of Completion 102 Hungary

Sweden DK

100

Germany S. Korea Holland Finland Ireland

98 OECD

96

SCHOOLING Spain

Publicly funded (state and private school) students

94

UK

Chile Portugal

92

US

90

Brazil Mexico

Source: Elaborated from OECD 2007

88 86 20

30

X: 1. Population attained upper secondary + (25-34 pop)

Graph 9.1

40

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Denmark Finland Sweden S. Korea Germany Brazil Holland Austria Spain Portugal Hungary Ireland UK US OECD Mexico Chile

Y: 1. Index of change in public/private funding 1995-2004. Primary, secondary and post-secondary non-tertiary. (For Mexico, private funding based on tertiary)

Public sector growth and schooling completion

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SCHOOLING RESOURCES EQUALITY (public/private) Denmark

365

Finland

Sweden S. Korea

345

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Sweden S. Korea Germany

325 EMPLOYMENT INTEGRATION

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Hungary

Portugal

New Zea.

New Zealand

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Spain

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Mexico

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US

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Poland Chile

Poland

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Portugal Ireland

Ireland

185

205

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Mexico

X: Overall Private/public schooling resources inequality: Ratio of techer to pupil in state over private schools plus state pupils’ share of total resources (per student). Higher score = greater equality in resources (financial and direct teacher resources) to state schools. 200 = perfect equality. Over 200 = resources favouring state pupils. Under 200 = resources favouring private pupils. Y: Level, equality and quality of employment integration: 1. Lower secondary education employment rate; 2. Lower secondary employment rate as percentage of tertiary education employment rate; 3. Female employment rate at all levels of education; 4. Lower secondary income return rate; and 5. 4 relative to tertiary income return rate *10. For 4 and 5 figures are not available for Chile and Mexico. An estimate of 61 was made for both countries (relevant figures for comparison, being 92, for Finland, 91 for South Korea, 80 for Denmark, 76 for Ireland, 65 for the UK, 63 for the US, and 61 for Portugal), and 0.34 for the relative income return rate (5), with relevant comparisions being 0.65 for Finland and Denmark, 0.47 for South Korea, 0,43 for Ireland, 0.36 for the UK, 0.37 for the US, and 0.34 for Portugal).

Graph 9.2 Schooling resources and employment equalities

of factors, but entering into it is the fact that educational inequalities diminish both the incentives in the private sector and pressures on governments to develop structured opportunities to different forms and different levels of skill. Note here that there is also a tendency, as in line with the theory of institutional sets, for more redistributive and inclusive systems of (contributory) social insurance to coincide with more generous and redistributive cash grants. Brazil for instance has a far more generous and extensive system of cash grants and a more redistributive and inclusive unemployment insurance—even if by European standards coverage is low, as compared, in both cases, with Chile (on this see further Haagh, 2006). On the other hand, some contributory systems actually pay out to non-contributors, as in the case of the United Kingdom’s low flat rate income support, which in this case however coincides with a virtual absence of income-related support (Clasen, 2001; Haagh, 2006). This shows that the design of unemployment insurance is generally a good indicator of the level of social justice, of broadly inclusive redistribution, of the overall system of income security, and hence of the distribution of reproductive assets, in particular countries. And therefore to present basic and added income support systems as alternatives is to disregard the political reality of the progressive forces that tend to push particular societies in the direction of more inclusive forms of economic security across

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institutions—in Brazil for instance, there is a for the region more extensive system of cash grants, a more inclusive unemployment insurance, and a law to implement a CI when Brazil can afford it (Suplicy, 2007). Moreover, inclusiveness in the institution of unemployment insurance will be affected by other institutional memberships from education through to different forms of income assistance: This is because the structure of employment, including its regularity and pay differential, make more or less inclusive designs of income support easier to defend and finance. So for instance where unequal education has contributed to a segmentation of labor markets or greater uncertainty at the lower end of the scale, there is an obvious incentive for public protection to narrow in one of the following ways. The first is separate provision for different constituencies. Brazil as other countries in Latin America is still struggling with this inherited stratification. The second is by means of a single flat rate protection system (as in the United Kingdom) where income-related protection disappears altogether (Chile approaches a similar minimalist model but through a UI scheme premised on private savings, Haagh, 2004, 2006). In neither case is there sufficient public support for a common pool to finance the protection of life style. But if equality of opportunity assets produces more even outcomes, is it necessarily the case that these outcomes reflect productive endeavor and individual effort? Are they just even for evenness sake or are they also just and efficient by, in effect, maximizing social support for individual effort and for effort’s reward? This is a relevant question if our conception of democratization is tied to an equal opportunity for individuals not only to feel secure but to be able to shape the relation between effort and outcome. A relevant way to answer this question and show how relative opportunity and mobility assets (institutional sets) define tendencies of democratization and de-democratization, is to look at the significance of relative opportunity assets for social mobility, defined in the conventional way as the intergenerational income elasticity between fathers and sons. This measure provides a strong overall indication of the probability that individuals can enjoy return to effort independent of their social condition. Although social mobility is a long-run measure, and therefore not affected by immediate policies, it is reasonable to assume that structural features of membership of institutions, like schooling inequality as defined (here) in the broadest terms, as well as established traditions of income support for individual mobility, will have a strong impact on social mobility (D’Addio, 2007; Corak, 2006; Solon, 2004). In Graph 9.3 we can see a direct link between schooling equality and social mobility, with Brazil and Chile at one extreme alongside the United Kingdom. Taken together then the trends recounted here broadly suggest that equal opportunity assets as a general rule contribute not only to social

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SCHOOLING RESOURCES EQUALITY (public/private) 90

Denmark DK

85

Finland

80

Sweden Sweden

75 SOCIAL MOBILITY

Finland

Germany

70

Germany

Brazil

65 Canada 60 France

US

55 UK

50 45

UK

Chile

US

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40

Chile 120

140

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200

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X: Overall Private/public schooling resources inequality: Ratio of techer to pupil in state over private schools plus state pupils’ share of total resources (per student). Higher score = greater equality in resources (financial and direct teacher resources) to state schools. 200 = perfect equality. Over 200 = resources favouring state pupils. Under 200 = resources favouring private pupils.Source: OECD 2007 - as above. Y: Social mobility (Intergenerational income elasiticity) 100 - (eranings elasticities * 100). Sources of raw date: Corak 2006, and IADB 2008 (for Chile, Brazil and Peru),

Graph 9.3 Schooling—employment equality of opportunity

equality and social stability but also to social justice in the form of equal opportunity for individuals to take charge of their lives. However, on a scale of such positive complementarities Latin American countries have a long way to go. Even in the better case of Brazil, inherited inequalities of education and wealth continue to retard the significant efforts to extend income support. In turn this is quite significant to a discussion of the problem of democratic consent and to the political bases of social insurance in so far as this particular aspect of social justice represents a social state in which individual progress is perceptively aligned with social community.

Summary If, then, in conclusion, democratization depends, as Tilly suggests, on the dilution of social divisions, this essay has attempted to show what this dilution entails in a more constructive sense. At the heart of it, I have argued, is still a proper regard for democracy’s socioeconomic foundation, understood historically as the ability of each member of a community to develop and retain control of her station. Whether interpreted in elitist terms as the holding of office, as in classical Greece, or the ability to command an income and property, during Europe’s Renaissance, the idea that democracy depends on material freedom has persisted in time. Today what is at stake is more dynamic and complex, as Barry surmised, and yet this complexity reinforces

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the importance of national politics, and of our remaining mindful, for instance, when making the leap to global conceptions of justice, of the importance to citizen status of the way in which opportunities are institutionally structured in individual publics. This is more important as the premise of antipoverty policy today is to enhance opportunity freedom. In this context, it is imperative to look at how broader asset distributions are likely to affect public spending returns. Specifically this essay has argued that as economic life has grown more complex and uncertain, the state’s broader role in securing access to stable assets has grown both in scope and complexity. Educational, income, or labor market outcomes do not need to be comprehensively equal, but the access, both initially and later, to equal quality opportunities and to reproductive security, including a Citizen’s Income, is vital to everyone’s freedom. It is important not only to sustain the bases of passive security in the form of productive engagement but also to support freedom in productive activity, because more equal education tends to diversify opportunities as well as sources of protection of occupational choice. Hence a theory of democratization as membership of institutional sets is empirically relevant to the challenge of public reform in the following ways: First, in showing how labor market outcomes and social mobility are consistently shaped by institutional membership as defined by access to stable reproductive and equal mobility assets; second, in indicating how policy depends on institutions as sets. Where inequality is high within one institution, it is less likely that other institutions will be inclusive, as inequalities are difficult to absorb or correct. This broader perspective colors the assessment of policy trends. The expansion of cash grants in Latin America has been historically significant by for the first time supporting the material security of many poor families and their children’s attendance at school. The style of progress however has also been shaped by the nature of social divisions: targeting has reinforced the distinction between social constituents and the low value of grants and behavior-testing have reinforced outdated notions of the deserving poor. In turn this has rendered cash grants less conducive to meeting the growing development challenges arising from the way uncertainty and uneven opportunity are undermining the social mobility and opportunity freedoms of all. Hence a downside of the strong reliance on CCTs is that it has concentrated a number of separate challenges in one single instrument. It has sought to expand human capital by targeting cash grants, when income poverty and uncertain work is a more general condition, and when more equally resourced education is the key to the expansion of occupational choice. One of the pitfalls therefore of income security in its targeted and temporary form—even when pursued through super programs in the

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form of CCTs—is that it mistakes coordinated policy action for real integration. For all its good intentions, it is wrong to assume that targeted and temporary security that checks the behavior of individual groups can produce integration. Both the micro- and the international comparative evidence point in another direction. They suggest that in fact integration where it matters, in individual lives and in employment trajectories, is better facilitated when more individuals have stable and equal access to different resources. Critically for Latin America this must include and possibly even commence with a transition to a truly universal form of Citizen’s Income, for both political and economic reasons, to do with raising the legitimacy of public welfare and with the greater enterprise incentives involve. The high levels of precariousness and informality of work in Latin America means that individuals need multiple sources of economic security and incentives in different forms: The CI is a basic reproductive asset—an elementary source of security in contexts where it is shown that individuals who strategize to attain economic stability as a source of more intrinsic motivation to work cannot attain this on their own (Haagh, 2011b). However beyond this basic floor, and public support of equal quality of schooling and diverse occupations, contributory systems need to be designed in a way that they can accommodate at times infrequent contributions—for instance to unemployment insurance— without diminishing the savings and insurance elements involved. This combination will create more flexibility for both individuals and enterprises in the circumstances as they are in labor markets in Latin America and support individuals during a—realistically gradual— transformation of the productive economy. Hence it is wrong to see the CI and contributory schemes as alternatives, for instance, on the grounds that one belongs to the informal and the other the formal economy. Bar a few exceptions, all forms of work have become more informal to different degrees and therefore rebuilding security in a way that does not recreate labor market dualities and hierarchy depends on integrating universal basic security of income (CI) and of opportunity (equality of initial schooling) with dynamic systems to support mobility and savings (training opportunities, unemployment insurance). In summary, the key concern for the region today is the incentive given weak fiscal capacity to pursue integration by the side door, through unstable programs with multiple aims, and in the process losing sight of the wider picture, which concerns the twin need to provide basic security and to improve education’s relative value and hence lower the systemic aspects of poverty. The broader danger is that without this systemic focus even a significant increase in social spending will fail to challenge the essence of Latin America’s social divisions and in the

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process undermine the faith in the relevance to individuals of democratic reform. Notes 1. In Britain this occurs mainly at the secondary level, where schools can set internal admissions criteria between the compulsory and non-compulsory phases. 2. In Chile in June 2007, 2008, and 2011 there were strong student demonstrations against unequal schooling, on a scale quite unusual both for Chile and Latin America (on this particular issue). 3. The assumption is still is that schooling requirements will improve dynamic advantage.

Bibliography Alstott, Anne A . “Work vs. Freedom: A Liberal Challenge to Employment Subsidies,” Yale Law Journal 108 (1999): 967–1058. Atkinson, Anthony B. “How Basic Income Is Moving Up the Policy Agenda News from the Future.” Paper presented at the 9th Congress of the Basic Income Earth Network, International Labour Office, Geneva, September 12–14, 2004. Barrientos, Armando. “Protecting Capability, Eradicating Extreme Poverty: The Future of Social Protection?’ Paper presented at the Workshop on Social Protection in Latin America, Birkbeck College, University of London, May 2006. Barry, Brian. Why Social Justice Matters. Cambridge: Polity, 2005. Bonelli, Regis, Gustavo Gonzaga and Alinne Veiga. “Social Exclusion and Poverty Dynamics.” In Social Exclusion and Mobility in Brazil, edited by Estanislao Gacitúa Marió and Michael Woolcock, 35–80. Washington, DC: World Bank, 2008. Bouillon, César, Arianna Legovini, and Nora Lustig. “Can Education Explain Changes in Income Inequality in Mexico?” IADB Working Paper No. 12/01, Inter-American Development Bank, Washington, DC, 2001. Bourguignon, François, Francisco de Hollanda G. Ferreira, and Marta Menéndez. “Inequality of Opportunity in Brazil.” Review of Income and Wealth 53, no. 4 (2007): 585–618. ———. The Microeconomics of Income Distribution Dynamics in East Asia and Latin America. Washington, DC: World Bank, 2004. Chahad, José P. Zeetano. “Foreign Models in the Adoption of Unemployment Insurance in Brazil.” In Learning from Foreign Models in Latin American Policy Reform, edited by Kurt Weyland. Baltimore and London: Johns Hopkins University Press, 2004. Clasen, Jochen. “Social Insurance and the Contributory Principle: A Paradox in Contemporary British Social Policy.” Social Policy and Administration 35, no. 6 (2001): 641–657.

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Corak, Miles. “Do Poor Children Become Poor Adults? Lessons from a Cross Country Comparison of Generational Earnings Mobility.” Institute for the Study of Labor, IZA Discussion Paper Series, No. 1993, Bonn, 2006. Corak, Miles. “Generational Income Mobility in North America and Europe: An Introduction” In Generational Income Mobility In North America and Europe, edited by Miles Corakl. Cambridge: Cambridge University Press, 2004. D’ Addio, Anna Cristina. “Intergenerational Transmission of Disadvantage: Mobility or Immobility across Generations? A Review of the Evidence for OECD Countries” OECD Social, Employment and Migration Working Papers No.52, Paris, OECD, 2007. Duryea, Suzanne, Olga Jaramillo, and Carmen Pagés. “Latin American Labor Markets in the 1990s: Deciphering the Decade.” Stanford University Working Paper No.137, Stanford, June 2002. Esping-Andersen, Gøsta. The Three Worlds of Welfare Capitalism Cambridge: Polity Press, 1990. ———. The Social Foundations of Postindustrial Economies. Oxford University Press, 1999. Ferreira, Francisco de Hollanda G. “Inequality as Cholesterol.” In Poverty In Focus: The Challenge of Inequality. Brasília: International Poverty Centre, June 2007. Financial Times. June 24, 2005, June 17, 2005. Gertler, P., Martinez, S., and Rubio, M. “Investing Cash Transfers to Raise Long-Term Living Standards.” World Bank Policy Research Working Paper No. 3994. Washington: World Bank. 2006. Graham, Carol. “Public Attitudes Matter: A Conceptual Frame for Accounting for Political Economy in Safety Nets and Social Assistance Policies.” Social Protection Discussion Paper Series, No.0233, Social Protection Unit, Human Development Network, The World Bank, Washington, 2002. Gonzaga, Gustavo. “Labor Turnover and Labor Legislation in Brazil.” Texto para Discussão, No.475, Departamento de Economia, PUC-RIO, Río, 2003. Haagh, Louise. “Basic Income, Social Democracy and Control over Time.” Policy and Politics 39, no. 1 (2011a): 41–64. ———. Citizenship, Labor Markets and Democratization: Chile and the Modern Sequence. Houndsmills, UK: Palgrave, 2002a. ———. “Democracy, Public Finance and Property Rights in Economic Stability: How More Horizontal Capitalism Upscales Freedom for All.” Polity (Autumn, 2012), forthcoming. ———. “Developmental Freedom and Social Order: Rethinking the Relation between Work and Equality.” Journal of Philosophical Economics 1 no. 1 (2007): 119–160. ———. “Developmental Freedom, Unemployment and Poverty—Restating the Centrality of Institutions to Agency.” In Perspectives on Work: Problems, Insights, Challenges, edited by Otto Neumaier, Gottfried Schweiger, and Clemens Sedmak. Berlin and New Jersey: LIT Verlag and Transaction Publishers, Rutgers University, 2008.

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———. “The Emperor’s New Clothes—Labour Reform and Social Democratization in Chile.” Studies in Comparative International Development 37, no. 1 (2002b): 86–113. ———. “Equal Freedom and Social Democracy: Decent Work as a Distributional Good.” In Decent Work and Unemployment, Vol. 3 of Perspective on Social Ethics, edited by Cristina Bausat, William J. F. Keenan, and Clemens Sedmak. Berlin and New Jersey: LIT Verlag and Transaction Publishers, Rutgers University, 2010. ———. “Equality and Income Security in Market Economies: What’s Wrong with Insurance?” Social Policy and Administration 40, no. 4 (2006): 385–424. ———. “Ideological Marketization and Policy Learning in Chile: The Case of Unemployment Insurance.” In Learning from Foreign Models in Latin American Policy Reform, edited by Kurt Weyland. Baltimore and London: The Johns Hopkins University Press, 2004. ———. “Training Policy and the Property Rights of Labour in Chile: Social Citizenship in the Atomised Market Regime.” Journal of Latin American Studies 31, no. 2 (1999): 429–472. ———. “Working Life, Well-Being and Welfare Reform: Motivation and Institutions Revisited.” World Development 39, no. 3 (March 2011b): 450–473. Hall, Anthony. “From Fome Zero to Bolsa Família: Social Policies and Poverty Alleviation under Lula.” Journal of Latin American Studies, 38, no. 4 (2006): 689–709. Helgø, Camilla. “Market-Oriented Education Reforms and Social Inequalities among the Young Population in Chile.” Social Policy Reform and Market Governance in Latin America, edited by Louise Haagh and Camilla Helgø. Basingstoke and New York: Palgrave-St. Antony’s, 2002. Hoffman, Kelly, and Migeul Angel Centeno. “The Lop-Sided Continent: Inequality in Latin America.” Annual Rev. Sociol. 29 (2003): 363–390. Hüber Stephens, Evelyn. “Options for Social Policy in Latin America: Neo-Liberal versus Social Democratic Models.” In Welfare States in Transition, edited by Gøsta Esping-Andersen, 141–191. London: Sage, 1996. IADB. Facing up to Inequality in Latin America, Washington: Inter-American Development Bank, 2008. ———. Outsiders? The Changing Patterns of Exclusion in Latin America and the Caribbean, Economic and Social Progress in Latin America IPES. Washington: Inter-American Development Bank, 2008. ———. Social and Economic Progress in Latin America and the Caribbean, Reports, 1998, 2004. Washington: Inter-American Development Bank. International Labour Office. Economic Security for a Better World. Geneva: International Labour Office, 2004. ———. World Employment Report 2004–05: Employment, Productivity and Poverty Reduction. Geneva: International Labour Office, 2005. Jäntti, M., K. Røed, R. Naylor, A. Björklund, B. Bratsberg, O. Raaum, E. Österbacka, and T. Eriksson. “American Exceptionalism in New Light: A Comparison of Intergenerational Earnings Mobility in the Nordic Countries, the United Kingdom and the United States.” Discussion Paper Series, IZA DP, NO 1938, Institute for the Study of Labor, Germany, 2006.

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Janvry, Alain, Solomon P. Sadoulet, and R. Vakis, “Uninsured Risk and Asset Protection: Can Conditional Cash Transfer Programs Serve as Safety Nets?” Social Protection Discussion Paper No. 0604, World Bank, Washington, June 2006. Kakwani, Nanak, Marcelo M. Neri, and Hyun H. Son. “Linkages between Pro-Poor Growth, Social Programmes and Labour Market: The Recent Brazilian Experience.” International Poverty Centre Working Paper 26, IPC, Brazília, August 2006. Lavinas, Lena, María Lígia Barbosa, and Octavio Tourinho. “Assessing Local Minimum Income Programmes in Brazil.” SES Papers, Socio-Economic Programme on Socio-Economic Security, ILO, Brazil Regional Office, 2001. Levy, Santiago. Good Intentions, Bad Outcomes. Washington: Brookings Institution, 2008. Marshall, Thomas Humphrey. Citizenship and Social Class. Cambridge: Cambridge University Press, 1949. Moore, Charity. “Assessing Honduras’ CCT Programme PR AF, Programa de Asignación Familiar: Expected and Unexpected Realities.” IPC Country Study No. 15, International Poverty Centre, Brazília, April 2008. North, D. C. Understanding the Process of Economic Change. New York: Princeton University Press, 2005. O’ Donnell, Guillermo. “Reflections on Contemporary South American Democracies.” Journal of Latin American Studies 33, no. 3 (2001): 599–609. OECD. Education at a Glance. Paris: OECD, 2007. ———. Employment Outlook. Paris: OECD, 2004, 2005, 2006. Page, Marianne E. “New Evidence on the Intergenerational Correlation in Welfare Participation.” In Generational Income Mobility in North America and Europe, edited by Miles Corak. Cambridge: Cambridge University Press, 2004. Parker, Susan W., and Emmanuel Skoufias. The Impact of PROGRESA on Work, Leisure, and Time Allocation. Washington: International Food Policy Research Institute, 2001. Rawlings, Laura B. “A New Approach to Social Assistance: Latin America’s Experience with Conditional Cash Transfer Programmes.” International Social Security Review 58 nos. 2–3 (2005): 133–161. Samson, M. (2006). “Universalism Promotes Development.” Paper presented at the 11th BIEN Conference, 2–4 November 2006 at the University of Cape Town, South Africa Schwartzman, Simon. The Future of Education in Latin America and the Caribbean, UNESCO and World Bank, Washington: World Bank, 2001. Seekings, Jeremy. “The Inconsequentiality of Employment Disincentives: Basic Income in South Africa.” Basic Income Studies 2, no. 1 (2007): 1–6. Sharif, Mohammed. Work Behaviour of the World’s Poor: Theory, Evidence and Policy Abingdon: Ashgate, 2003. Soares, Sergei, Rafael Gerreiro Osorio, Fábio Veras Soares, Marcelo Medeiros, and Eduardo Zepeda. “Conditional Cash Transfers in Brazil, Chile and Mexico: Impacts Upon Inequality.” International Poverty Centre Working Paper no. 35, Brazília, April 2007.

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Soares, F. V, Soares, S., Medeiros, M., and Oso´ rio, R. G. “Cash Transfer Programmes in Brazil.” International Poverty Centre Working Paper 21. Brası´lia: IPC, 2006. Solon, Gary. “A Model of Intergenerational Mobility Variation over Time and Place.” In Generational Income Mobility in North America and Europe, edited by Miles Corak. Cambridge: Cambridge University Press, 2004. Suplicy, Eduardo. “Basic Income and Employment in Brazil.” Basic Income Studies 2, no. 1 (2007): 1–6. Tatsiramos, Konstantinos. “Unemployment Insurance in Europe: Unemployment Duration and Subsequent Employment Stability.” Discussion Paper Series No 1163, IZA, Forchungsinstitut zur Zukunft der Arbeit—Institute for the Study of Labor, Bonn, 2006. Tilly, Charles. Democracy. Cambridge: Cambridge University Press, 2007. Tokman, Victor. “The Informal Economy, Insecurity and Social Cohesion in Latin America.” International Labour Review (March 2007): 81–108. UNICEF. An Overview of Child Well-Being in Rich Countries. Florence: UNICEF 2007. Van Parijs, P. Real Freedom for All – What (If Anything) Can Justify Capitalism?. Oxford: Clarendon Press, 1995. Veras Soares, Fábio, Sergio Soares, Marcelo Medeiros, and Rafael Gerreiro Osorio. “Cash Transfer Programmes in Brazil: Impacts on Inequality and Poverty.” International Poverty Centre Working Paper No.21, International Poverty Centre, Brazília, 2006. Whitehead, Laurence. “Democracia/Estado/Ciudadania Hacia un Estado de y para la Democracia en America Latina’—Democracia y Estado.” In Variabilidad en la Aplicación de Derechos: Una perspectiva comparada’ PNUD, Vol. 2, edited by Laurence Whitehead, 65–78. Lima, Perú: 2007. World Bank, World Development Report. Oxford: Oxford University Press, 2005. Zepeda, E., Alarco´n, D., Soares, F. V., and Oso´ rio, G. “Growth, Poverty and Employment in Brazil, Chile and Mexico.” International Poverty Centre Working Paper 42. Brası´lia: IPC 2007.

CH A P T ER

10

Citizen’s Income and the Material Basis of the Constitution Roberto Gargarella

Introduction In this chapter, I shall try to show how the proposal of Citizen’s Income (CI) may be inscribed within an egalitarian constitutional tradition in Latin America. For that purpose, I shall present, describe, and place that egalitarian tradition within the context of the constitutional debates that took place in the region since the years of independence. This egalitarian tradition—I shall claim—was defeated during the ¨founding period¨ of Latin American countries, that is, its main proposals were not incorporated in the main constitutions that emerged during the mid-nineteenth century. The constitutions that were then created tended to reflect, by contrast, ideas and principles related to its two main rival positions, namely liberalism and conservatism. In order to present this picture, in what follows I shall explore the different debates that were promoted then by the egalitarian view, and examine the place that an idea such as the CI actually occupied—and could still occupy—within that legal framework.

Law and Economics The critique to the economic legacy of the colony—a legacy that was characterized by its profound, still untouched injustices—was widely shared within the Latin American political elite. Of course, not all of them concentrated their attention on the same aspects of the crisis. Among the different responses that became dominant at the time, we

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shall particularly highlight two. On the one hand, we find the denouncement of multiple, still dominant, injustices, which had became more obvious, and which resulted from decades of exclusionary governments that worked against the interests of the most disadvantaged sectors of society. On the other hand, we find the criticisms that were directed against a state that, according to many, had been captured by a few who favored only particular, partial interests. The main foundation of the first position was simple: the community had to organize itself in a more egalitarian way because that was what social justice required. The dominant state of affairs was, in this respect, totally unjustified. It was for that very reason that different political groups, related to a radical-republican tradition, defended the urgent need of attacking the material basis of society. In other words, for them, society had to be re-created from its foundations, so as to make a different constitutional life possible. It was necessary—they believed—to obtain a different type of society, more respectful of the needs and interests of the worst off. A fundamental key of that re-creation of society would reside—radicals assumed—in a reconceptualization of the right to property. As the Colombian Camacho Roldán put it, in his memoirs, the most crucial aspect of a “republic life” consisted in putting an end to the big property (by opening the “door of property . . . to the peasants”). Only in that way—he claimed—it would be possible to prevent “the creation of a new Feudal class and . . . the destruction of the Republic” (Camacho Roldán, 1946: 293). In only a few cases, such as Mexico, the dominant political elite went so far in their criticisms of the injustices of the prevalent economic system (a system that left the majority of Mexicans in situations of indigence). Their criticisms appeared properly articulated in the 1857 constitutional debates. At that time, many of the radical members of the convention maintained that in Mexico there existed enough land for all the members of society, and that, for that motive, there was no reason to keep the constitution committed to those injustices;1 others criticized the attitudes of the upper classes, which in a context of poverty continued with the accumulation of property; 2 still others resorted to Christian piety, and maintained that nobody could deny the provision of basic goods (such as water or wood) to those who were in need of them;3 some pointed to the persistent presence of situations of exploitation and oppression toward the most disadvantaged;4 some others maintained that the unjust organization of property was directly linked to the existing illegal occupations;5 there were references to the level of inhumanity that characterized the prevailing social organization; and some denounced the situation of slavery that affected large masses of poor workers. The other common approach to the social crisis—most prevalent among the political elite—reflected the repudiation and fatigue before

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the old conservative, corporatist, monopolist, authoritarian model that was inherited from the colonial period. The liberal response appeared, then, as the main alternative, as the way out from the conservative trap. As a consequence of that approach, many began to concentrate their criticisms in the omnipresent state, and its regulative anxieties. The state was then seen as the main source of individual oppression, and its limitation as a necessary condition for the expansion of individual liberties. By contrast, an individual’s free initiatives were conceived of as a safe road to personal and collective progress. According to Alberdi, for example, “private initiative” was primarily responsible for all the relevant economic advances of society: it was due to these initiatives—he claimed—that society had exploited mines, built routes, opened channels, invented technical novelties, and so on (Alberdi, 1920: 159). For those reasons, he concluded, it was imperative to protect individual initiatives. The state was then simply seen as a threat to individual freedom. “Private initiatives have done a great deal, and a great deal of good, as Spencer [stated] . . . [They have] fertilized our soils and built our cities, discovered and exploited mines, created routes, opened channels.” The actions of the state, and never those of the individuals, brought poverty to the country, he claimed (Alberdi, 1920: 159). In similar terms, the Peruvian Tejada objected to the public authority that pretended to know it all and, for that reason, pretended to decide it all: it prescribed the selection of raw materials, prohibited certain procedures, fixed the quality of our products, its form . . . its color . . . The State was the merchant who traded tobacco, salt, coffee, sugar, snow, cards, explosives, paper . . . the exclusive manager of banks, channels, bridges, routes, mines and everything else. Its regulations . . . defined the laws of offer and supply while economic law was silent. (Tejeda, 1947; Químper, 1948; Leguía, 1939: 137)6

The liberal economist Miguel Samper, in Colombia, maintained a similar position, for example, in his noted polemic with Manuel Murillo Toro, who had objected to the views presented by Samper in his work Dejad hacer.7 These are only a few relevant illustrations of the liberal approach to the prevalent state of affairs in America, in the first decades of the nineteenth century. These answers demonstrate, at least, the potency of the liberal thought, in spite of the many inconsistencies and failures that could distinguish the thought of Latin American liberals. At this point, however, it will be enough for us to emphasize that the liberal doctrine, as formulated in America, required a tremendous reconstructive effort led by the state, and also a fundamental reorganization of the existing social structure.8

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The Material Basis of Constitutionalism The fact that there existed different diagnostics and responses in the face of the critical economic situation does not deny what is more important here, namely the presence of certain basic, shared agreements regarding the relationship between the economy and the constitution. In what follows, we shall examine two of these fundamental agreements (which, one should add, are not easily recognizable in our time). The first shared assumption said that the constitution had something relevant to say in relation to the existing economic difficulties. At the beginning of his famous book Bases, Alberdi reflected upon this issue. He first claimed that Latin American constitutionalism had quite successfully concluded its first period of reforms—reforms that, in his opinion, had sometimes served to strengthen power in favor of order, and sometimes weaken power in favor of liberties. For that reason, he added, it was now time to initiate a new legal epoch, where “constitutional law” had to work for “the aggrandizement and progress of the new States” (Alberdi, 1981: 25–26). The second shared assumption was more specific, and was related to the conviction that, in that crucial juncture, it was crucial to reflect upon the relationship between economic independence and political independence: there was something there that seemed crucial for constitutionalism, and it was worth examining. Of course, not all of them considered that economic independence was a necessary condition for making political independence possible. However, this fact does not deny that they all understood that there was something to say and do about this connection. In what follows, we shall explore the first of the shared assumptions, and then we shall proceed to the second debate, with more detail.

An Economic Reform for the Political Reform The constitution—it was assumed—exercised a direct impact on the extra-constitutional world, in the same way that that world had a direct impact upon the constitution. This is why the most lucid constitutional thinkers in America, in the nineteenth century, recognized that it was necessary to develop certain reforms that transcended the mere internal, legal structure of the constitution, in order to properly ensure the reform of the constitution. In other terms, they recognized that, in order to adequately think about the constitution, its content, its stability, its final goal, it was necessary to go far beyond the (mere text of the) constitution. For instance, in the introduction of the important work Sistema Económico y Rentístico de la Confederación Argentina, Juan Bautista

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Alberdi made explicit reference to the numerous links existing between the constitution and the national economic structure. Alberdi tried to demonstrate that the success of the constitution was clearly dependent on the economic system, which the same constitution helped to set in motion. If one forgot about the economic structure that surrounded the constitution, one would act irresponsibly, incoherently, with regard to that document. In a similar manner, the Mexican jurist Mariano Otero published his well-known Ensayo sobre el verdadero estado de la cuestión social y política, where he reflected upon the material basis of constitutionalism, in order to try to think better about the constitution. Like Alberdi, Otero was well aware about the need to go beyond the text of the constitution in order to take the constitution seriously. For him, if constitutional problems were so intimately linked with the distribution of property, then solutions to those problems could not merely ignore changes in the distribution of property. Also, the Colombian politician Murillo Toro always tried to connect issues of constitutional and legal reform with issues of economic reforms. For him, it was simply unreasonable to think about one reform without the other. In his words: Every political reform has to have as its object an economic reform. If we did the former without the latter, we would not only run the risk of doing an unfertile work, but also to discredit the reform in the eyes of the people . . . political forms are worthless if they do not come together with a radical reconstruction of the social structure, through taxes and (reforms in the system of property). What would universal and direct suffrage mean (even if secret) in a society where the majority had no guaranteed subsistence . . . ? (Murillo Toro, 1979: 70)

In sum, these testimonies allow us to recognize that different influential legal thinkers of the time, coming from very different extractions, shared fundamental assumptions regarding the material conditions of constitutionalism. This fact seems remarkable, particularly when we look at it from the present: in fact, it seems that we presently tend to disregard the existing connections between the different spheres of the public (political, economic, and legal). In fact, we tend to act as if they were separated spheres, with complete autonomy one from the others. All the quoted legal thinkers assumed that the project of transforming existing societies required the promotion of radical, extended, profound transformations in the basic structure of society. As Mariano Otero put it: “What we need, then, is a general change, and this change has to begin with a change in the material relations of society, because these same material

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basis have defined, until today, our situation, and the situation of all peoples in the world” (quoted in Noriega, 1972: 59). It was time, then, to begin acting upon the material conditions of society.

Economic Independence and Political Independence in the Liberal-Conservative Tradition: Tying Rights and Interests Together Let us now explore the other shared political assumption, related to the existing links between economic independence and political independence. The first thing that is worth highlighting in this respect is that conservative, liberal, and republican voices all assumed that there existed a strong connection in this respect. In this section, we shall pay attention to the liberal-conservative approach to this issue, and in the next we shall explore the republican view. Liberals and conservatives tended to defend what we shall call the independence thesis, that is, the thesis according to which it was necessary to have economic independence in order to have political independence. During the Founding Period of Latin American constitutionalism, liberals and conservatives tended to defend the most extreme version of the independence thesis. The main idea was the following: in contexts that were marked by strong inequalities between proprietors and non-proprietors (or between big and small proprietors), the latter had enormous difficulties for acting freely. This was a consequence of many possible reasons. According to some, only those who had property had a direct and strong link with the interests of the country. Others took into account the extortive capacities of the proprietors, which made it very difficult for non-proprietors to decide freely. Still others considered that there was an important correlation among property, wealth, and intellectual capacities (Wood, 1969). For reasons as such, many among the members of the dominant political elite assumed that only those who were economically independent could enjoy political rights. In the context of extremely unequal societies, this claim implied to put the institutional system at the service of the existing social relationships. The law, in this way, was used to enforce and provide stability to those relationships. How to do it? How to adjust the institutional system so as to honor those initial assumptions? The solutions that were then imagined were many, the first and most important being that of restricting political rights to those who were assumed to have economic independence. The idea of limiting political rights was widely shared in the continent, among liberals and conservatives. In Argentina’s 1826 Assembly, for example,

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many proposed the creation of a senate against those who had “tried to equalize everything, without recognizing the existing hierarchies,” without ensuring a proper place to those who occupied a special place in the social scale (Ravignani, 1926, vol. 1: 293). This was also the view of the liberal Mexican José María Mora, who maintained that “general Congress has to define the conditions for exercising the rights of citizenship in the entire Republic” and also that the legislature had to ensure that “those who cannot inspire confidence, this is to say non-proprietors, remained excluded from those rights” (Mora, 1963: 630–631). Mora’s extreme views, in the end, did nothing but reflect what the common assumptions among Mexican political leaders of the time were. For people like Mora, non-proprietors were not reliable, because their will could be manipulated by those who enjoyed a privileged economic situation: it was that very material condition (of economic affluence) what ensured political independence. Mora openly defended that view. For him “only this class of citizens (property-owners)” was truly independent and capable of inspiring confidence to the legislator and also to the mass of the Nation. Their decisions would never be the result of intrigues, nor be motivated by principles that are foreign to reason and to the natural sentiments of justice that accompany men in their whole life. By contrast, the destitute, the day laborer, the debtor cannot be but subject to the bribes of others, when his subsistence, which is the first need of men, depends precisely on those who have an interest in corrupting him. (ibid., 529)

Assuming a stronger and more conservative view on the subject, Lucas Alamán went beyond Mora’s concerns and suggested more extreme institutional solutions. Alamán was a ferrous supporter of the idea of economic independence, assuming that big landowners were those who were more functional to the nation’s economic growth. It was indispensable, for him, to link rights with interests, democracy with property (Lira, 1997: 45). For that reason, in many different opportunities, Alamán proposed to reserve a specific political room for the big interests, and particularly to the big landowners of his country. He then referred to the “importance of giving property, and particularly territorial property, which is the more stable and more intimately linked with the prosperity of the nation, a direct influence in legislation” (Alamán, 2008: 214). In other words, for him, it was clear that the decision-making process had to ensure a special place to property. In that way, Alamán established a direct and strong link between democracy and property –the only way, in his view, to give sense and reality to democracy. In his words: “The only positive quality that may exist in a democracy, and the only one that can offers us some security for a moderate exercise of such enormous power, is property” (Alamán, 2008: 212).

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Alamán’s justification revisited all the most important topics of conservative political thought. In his words: Nobody should think that we are here closing the doors of the legislative bodies to those who are not property-owners. It has nothing to do with that . . . but it would also be a mistake to go to the opposite extreme and think that a low level of education, a limited view of things . . . could authorize someone to rule . . . the essential character of property . . . resides in inequality. The big landowners are the object of envy, their presence generates rapacity in others, and this is why they have to be protected. . . . I have tried to demonstrate that the restrictions established by our Constitutions for the composition of our legislative bodies are still insufficient, which tells us about the importance of giving property, and particularly territorial property, which is the more stable and more intimately linked with the prosperity of the nation, a direct influence in legislation . . . the division of General Congress into two Chambers is never enough to fulfill that purpose, because the two only differ by the way in which their members are elected, and for some accident by their duration in office, but they do not represent essentially different interests so as to ensure that their combination helped to the production of laws for the general convenience . . . and this is why different nations have limited the right to suffrage only to property owners . . . These and other restriction are always more important when the system changes from one without popular elections to another where everything is dependent on popular elections, when the people is endowed with that faculty, when they have no idea about the object of elections, their consequences or their importance. In the civil order, more than in the natural order, everything is gradual, because the civil is nothing more than the natural order modified . . . we never see the nature acting for sudden motives, but in cases of earthquakes, and these are occasions of ruin rather than creativity. In order to avoid this inconvenience and forever save the metaphysical fiction of the general will, elections have become not direct, and through different graduations and reelections, the appointment of deputies results from the work of only a few. (Alamán, 1997: 187–192)9

Even though Alamán’s project was undoubtedly extreme, the fact is that many other constitutional programs of the time went in similar direction, following in part the British monarchical example. One of these cases is that of Simón Bolívar, who advocated for a quasi-monarchical regime both in his famous Carta de Jamaica, from 1815, or in his Discurso de Angostura, from 1819. We find a similar case, for instance, in the Argentine 1819 constitution, which was written by the local, liberal elite, and which reproduced some of the more exclusionary features of the British model, which were translated into a corporatist organization of society.10 The Argentinean elite wanted to ensure that all relevant, powerful sections of society found a place in the constitutional scheme.11

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Indirect elections (which came to prevent the most disadvantaged from interfering with the selection of the most important public officers); property qualifications; the exclusion of the illiterate; the establishment of certain economic conditions as a prerequisite for the enjoyment of political rights; were only some among many different routes explored for guaranteeing the triumph of elitist constitutionalism.

Objections to the Independence Thesis The serious and exclusionary consequences that followed from the independent thesis generated immediate responses and strong reactions. Republicans, in general, challenged them in different ways. Herein we shall mention two of the main republican reactions to the independence thesis. The first response was to challenge the connection between economic independence and political independence, by claiming, for instance, that economic dependence did not necessarily cloud judgment, in the same way that economic independence necessarily illuminated it. Other people, instead, radicalized the republican view and claimed that, in case it were true that only economic independence guaranteed political independence, then it was necessary to ensure economic independence to all. Among those who followed the first route, many tried to demonstrate that, in fact, all (no matter his social position) were dependent on some other. The question was, then, why to deny political rights only to some of them (say, the most disadvantaged, the poor)? Others preferred to challenge the dominant approach to property; objected to the moral and political qualities of property owners; and highlighted the anti-republican character of the criticized view. Still others defied the independence thesis in a more direct way, and maintained that economic independence did not guarantee political independence, in the same way that economic dependency did not necessarily imply political dependence. The Argentinean Manuel Dorrego—one of the few interesting representatives of Argentinean republicanism—offers an excellent example of these criticisms. In one of the first relevant constitutional discussions in the country, Dorrego objected to the idea of severely restricting political rights. Dorrego made an attempt to show the inconsistencies and contradictions that characterized the views of those who advocated for the restrictive position. In his words: I find no reason to think that domestic servants lack independence, which could not be applied to the rest of society. I wonder why . . . employers of any kind do have the right to vote? . . . Is it not the case that employers of any condition receive their subsistence from the Government? . . . However, these employers are not excluded from vote. Why, then, to exclude domestic

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servants? . . . What results from here is an aristocracy, the worst aristocracy, because it is the aristocracy of money. (In that way) the representative system is undermined, because the representative system is based on equal rights. (Ravignani, 1926, vol. 3: 118)

Dorrego accused those who defended the status quo, claiming that in such a way they put the entire political system in the hands of a small elite (118–119). Then, he directly asked about the meaning and sense of such an approach to the idea of independence: What kind of independence do we need? . . . Is it the case that the capitalist does not depend on others? By contrary, it may be the case that he is more, rather than less dependent of others. . . . What is important is to find out whether there is a level of coercion that prevents someone to vote freely. (ibid., 119)

The Mexican Mariano Otero was a liberal politician who was, at the same time, politically moderate and close, in affection and in some of his main ideas, to radicals leaders such as Melchor Ocampo. The fact is that Otero articulated one of the strongest criticisms against the independence thesis. First of all, Otero objected to the anti-republican character of such views (Otero 1967, vol. 1: 367). In addition, Otero maintained that the solution that his adversaries advanced was impossible to apply in actual practice. The idea was—he claimed–“inconvenient,” because any alleged reason to exclude some from the vote required, in the end, to exclude many others. Moreover, Otero suggested that it was difficult to demonstrate that a certain economic level would be correlated to “morality and independence.” For him, every imagined number would have to vary according to different professions and according to different sections of the country, which would make the whole system “embarrassing, and finally impossible” (ibid., 362). This is why he proposed to adopt a different rule, which implied to concede citizen’s rights to all Mexicans who had reached 20 years of age, who had not been condemned in a legal process for a defamatory crime, who had an honest way of living. In such a way, he assumed, the “democratic principle” would be distributed “in the frankest way” (ibid.).

Republicanism and Non–Dependency Probably, the most interesting challenge to the independence thesis came from those that accepted the conservatives’ invitation, but only in order to radicalize their claim. Republicans, in this case, began from the conservative claim, according to which there existed a correlation between economic independence and political independence, and took

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the consequences of that claim to its extreme: if it were true that such a connection existed between political and economic independence, then it was necessary to radically change the dominant state of affairs: what was then necessary was to “free” the majority of the people from their situation of economic anguish, instead of simply closing the door of politics in their face. A particularly interesting expression of this debate appeared in a dispute about universal suffrage in Colombia. The radical politician Manuel Murillo Toro had led a successful campaign in defense of universal suffrage. However, the fact is that the first elections with universal suffrage favored the conservative group, which provoked many, among the liberal-radical camp, and they began to question the proposed strategy and criticize the use of universal suffrage, which seemingly allowed conservatives to use its extortive capacities in defense of their candidates. In that occasion, the future Colombian president, Murillo, was one of the few who kept a firm position in favor of universal suffrage. When most of his peers seemed to renounce the principle and explore new limitations on the right to vote, Murillo Toro opted for radicalizing his position. In effect, he then maintained that the political democratization of society had to come together with a process of economic democratization.12 In other words, instead of renouncing the defense of expanding political rights, he claimed that that expansion could only be based on the economic democratization of society: a proper exercise of the right to suffrage required the economic independence of the voters. The basic question, he asserted, “is to ensure the purity of the suffrage through the independence of the voters. We will never obtain independence or education but by ensuring the independent subsistence of individuals through their liberty and the security of work” (Murillo Toro, 1979: 70). For Murillo Toro, the economy had to be at the service of politics, so as to ensure the free election of the majority.13 This was also the remarkable conclusion of his polemic with the liberal Miguel Samper. According to the radical politician, the notion of “laissez faire,” which Samper proclaimed, denied the essential principles of “association and fraternity” (Murillo Toro, 1979: 79). And he stated: “every portion of land represents an equivalent portion of sovereignty ” (ibid., italics added). The message could not be clearer: political independence had a strong, direct, intrinsic connection with economic independence.14

Discussing State Neutrality: The Endogenous Formation of Character The previous discussion invites us to think about the existing connection between the institutional system and the qualities of character of those

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who are part of it. And in this way we are driven to reflect on the notion of state neutrality, which political philosophy has normally examined through a discussion confronting liberals and republicans (Pettit, 1997, 2001, 2002; Skinner, 1983, 1984, 1990, 1998). This reflection about neutrality includes questions such as the following: Should the state try to identify what qualities of character are necessary to be active in politics? Should the state use its coercive powers to support the development of certain moral dispositions? Has the state the right to discourage some types of ideals about the good life? More or less explicitly, the idea of neutrality occupied an important place in the nineteenth-century political debate, particularly as a consequence of the weight of the church and religious ideals in Latin America during the colonial period. The grave excesses committed by the state, in the name of religion and against individuals’ personal convictions, made it clear that there was some sense in the idea of taking the state away from the sphere of the personal. Most people understood the importance of putting an end to the inquisitive, theocratic state, which they perceived as a threat: liberals and radicals, in particular, coincided in their common rejection of religious-conservative perfectionism, imposed through the use of the state’s coercive powers. Beyond this basic agreement, however, their views tended to differ. We should recall at this point that, for republicans, the achievement of a self-governed society required the presence of citizens who were identified with the destiny of their community. Moreover, in this view, the state could not be indifferent regarding citizens’ character or political commitments: if people were not actively engaged in politics, the entire self-governing project came under risk. Liberals, by contrast, tended to reject the two premises that guided the reasoning of their adversaries. On the one hand, they assumed that citizens were fundamentally egoist and self-centered. On the other hand, they assumed that people’s basic moral features were fundamentally unchangeable. For those reasons, republicans and liberals tended in the end to strongly differ with regard to institutional questions—particularly with regard to what could be expected from the institutional system. Putting it synthetically, while the former tried to put the institutional system at the service of creating a more robust and civically active citizenry; for the latter the institutional system had to be designed by taking as a given certain dominant motivational qualities (say, self-interest, ambition). In other terms, for liberals, the institutional system had to function through the impulse of self-interest: self-interest would then be, for them, the “fuel” that would set the institutional system in motion and keep it functioning. Republicans, by contrast, seemed to focus their attention on what we could call the endogenous formation of character, that is, on

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the impact that the institutional system had or could have in the forging of character. We shall explore both these contrasting views: republicanism, which promoted the construction of character through the institutional system (and also, in particular, through the economic system), and liberalism, which tried to organize the institutional system by taking the dominant motivational characteristics as a given. Before doing so, however, we shall pause for an instant so as to highlight the importance of this coincidence; the fact that both views reflected on the relationship between character and institutions. From both views it seemed clear that the institutional system could open the door to the people’s intervention in politics, or not; it could favor collective action, or not; it could foster a close relationship between representatives and the citizenry, or not. In sum, it was clear that the institutional system was always in dialogue with the people’s motivations—either because it tended to changed them or because it worked as a consequence of those impulses. The point is important when we discuss the scope of state neutrality, among other reasons, because it allows us to see how liberalism was essentially committed with a certain moral model, which became explicit through the institutional arrangements that it defended. Clearly, it was not simply the fact that the liberal institutional system would “function” by having self-interest as its “fuel.” More important was the fact that the system would thus reproduce and reaffirm those features that were necessary for its proper functioning. From this point we do not want to derive any substantive conclusion regarding state neutrality. In fact, neutrality may be achieved or defended in different degrees, and may be analyzed in different levels of abstraction. However, the previous discussion may help us to clarify something that is crucial at the time of comparing different institutional models. The fact is that all the different constitutional models appeared to be committed to a certain view of the citizen, which they took as their basic anthropological assumption. Moreover, in one way or another, admitting it or not, they always tried to foster or discourage certain features of the people’s character. Liberalism, for example, could be in principle compatible with any plan of life. However, at the same time, liberalism better accommodated some plans of life rather than others. Probably, and as a consequence of reasons that are easy to understand (e.g., the conviction that representatives had to be able to change their viewpoints, once elected; or the fear of having a too active citizenry, which could affect the stability of a fragile institutional system), liberalism seemed to be more at home with a particular institutional system: one that ensures a strong separation between the representatives and the people; one that favored apathetic

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rather than activist citizens. The institutions that they created tended to reflect these convictions. The situation was the opposite in the case of republicanism. Republicans seemed to favor a more participative citizenry, which was not only politically conscious but also active in the community’s own affairs. In what follows, we shall explore both views in some detail.

The Economy and the Creation of a Politically Committed Citizenry As we know, radicals rejected the idea of having a nonactive, neutral, noninterventionist state—the idea that the state had to simply “let people alone.” If they arrived at this conclusion, it was due to the fact that they had a starting point that differed from the one shared by liberals. Radicals, in particular, had a different approach to the idea of liberty: rather than defending an idea of “laissez faire”—the liberal view—they advanced a different one, based on the idea of nondependency (similar to the one that is defended in contemporary political philosophy, see, e.g., Skinner, 1988). One of the most significant expressions of this view was the one advanced by Francisco Bilbao, for example, in his work El gobierno de la libertad. Bilbao published that document in Lima, during his exile, in 1855, and there he exposed an articulated understanding of constitutionalism, which then found expression in his proposal for a constitution. Assuming a republican approach to the law, he wrote, in a section dedicated to “the institution of liberty”: “Every man is free. No man can depend on another man. The freedom that makes a person sovereign prevents him to violate or establish the dependency of another man. Liberty is thus the idea that presides and legislates all other actions” (Bilbao, 1886, vol. 1: 278). What Bilbao said was, in the end, similar to what we find in the writings of other republican thinkers of the time, which also recognized the problems derived from oppression or exploitation as the most significant of the time. One interesting example of this view appears, for instance, in the writings of the Mexican politician and constitutional thinker Ignacio Ramírez. Ramírez was the editor of the satiric newspaper Don Simplicio, in which he used to engage in polemics with the conservative writer Lucas Alamán, who expressed his political views in the newspaper El Tiempo. Through his articles, Ramírez denounced, once again, the abuses that affected a majority of his contemporaries.15 For Ramírez, the situation of economic dependence that affected large parts of the population prevented them from enjoying full citizenship. He then criticized the “wise economists” that worked in the convention, who had “proclaimed the sovereignty of the people in vain,” while they deprived

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the labourer of the “fruits of their labour, and forced them to consume their own capital.”16 The Colombian Murillo Toro reached basically identical conclusions.17 For him, “each person should have guaranteed the fruits of his labor” (Murillo Toro, 1979: 78–79). “If a tenth part of society kept the land only for themselves”—he added—then the rest would die or “live in absolute dependency.” In such a society, he concluded, there would be “no political equality” but only “aristocratic domination” (ibid.). If the dominant economic system generated economic dependency, and economic dependency alienated people from politics, then radicalism required the introduction of substantive changes in the organization of the economic structure, so as to make political changes possible. The introduction of these changes was seen, then, as a way of integrating the vast majority of people in politics, a way of building citizenry. This was, perhaps, the most important contribution of republicanism to public discussion: the idea that the basic structure of society was crucial in the forge of character, and could thus contribute to the strengthening of the public sphere (Sandel, 1998).

An Antimarket Economic Program: From the Redistribution of Lands to Citizen’s Income The idea of employing the institutional system in order to build better citizens, or citizens of a certain type, appeared to be particularly attractive at a time when the new societies appeared to confront historical decisions regarding how and where to go. In fact, many among the most important political leaders of the time, including Benjamin Franklyn, Thomas Paine, or Thomas Jefferson, posed fundamental questions on how to reorganize the new societies. In particular, all of them questioned whether it was reasonable to base society on commerce. Against that alternative, they advocated for an agrarian republic (see, in particular, the “agrarian writings” of both Jefferson and Paine), and they grounded that claim on a clear concern for the construction of citizenship. In effect, the utopian idea of an agrarian republic—the utopia of “40 acres and a mule”—in a country that still had plenty of rich and unexploited land, promised a world of equality. In that world, everyone would have enough to live on and also the chance to actively participate in decisions to do with common affairs. By contrast, an economy organized according to the needs of commerce promised just the opposite, particularly in terms of the formation of character. The commercial society, in fact, promised a group of self-interested, greedy citizens, only interested in defending their own affairs, who looked at the rest as potential competitors. This is why so many republicans established a strong link among commerce, vices, and corruption.18 Contrary to this picture, the

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production of manufactures in a small scale, appeared to be much more attractive because it was a horizon that did not seem to come together with the concentration of wealth and power (Sandel, 1998: 144).19 In the case of Paine, in particular, those concerns were soon translated into proposals that were directly related to what we presently call CI. First, Paine approached the idea of the property of land in ways that clearly differed from the dominant liberal approach to the topic. While— typically—authors such as John Locke reflected upon the way in which to justify the development of property rights (and the unequal distribution of property rights prevalent at that time), Paine saw in that development the essence of a grave injustice. According to Paine, that injustice had to be necessarily remediated—or at least compensated—because this kind of appropriation of land left large portions of society without their equal right to the free use of land. For this reason, and as a way to compensate for the loss of that original right, Paine proposed in his Agrarian Justice that proprietors of land contribute to a collective national fund. The fund would be employed to ensure each individual an unconditional income, and would imply an equal portion to each. The idea was, in his words: To create a national fund, out of which there shall be paid to every person, when arrived at the age of twenty-one years, the sum of fifteen pounds sterling, as a compensation in part, for the loss of his or her natural inheritance, by the introduction of the system of landed property: And also, the sum of ten pounds per annum, during life, to every person now living, of the age of fifty years, and to all others as they shall arrive at that age.20

This kind of CI came together with other egalitarian initiatives, from the abolition of slavery and something like what we presently call social security, to a scheme of free public education, which were not obvious at that time. Paine’s reasoning, expressed in a particularly sophisticated way, was not foreign to Latin American constitutional thought. In effect, in Latin America, and in different forms, many authors and politicians defended a different economic organization, particularly in favor of the most disadvantaged. And they also invoked, in support of those views, principles of justice similar to those that were present in the argumentation of Anglo-American thinkers such as Thomas Paine. Their proposals included: redistribution of land in defence of the worst off; cooperative and communitarian arrangements; and also initiatives that were very close to what we presently call CI. There are numerous examples that demonstrate that claim, beginning with the leader of the Banda Oriental, José Gervasio Artigas, and his Reglamento Provisorio, which was directed at ensuring distribution of

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land in favor of the worst off and continuing with the egalitarian politics of the Sociedad de la Igualdad, in Chile, or the work of the agrarian egalitarians, in Mexico (e.g., Francisco Severo Maldonado).21 One could also mention the lucid writings of the Peruvian radical José Carlos Mariátegui, who properly advocated for institutional changes and, at the same time, linked these proposals with other concerns, related to the economic and personal conditions necessary for operating those institutional changes. For instance, in his studies of cooperative economies, in 1928, he claimed that “without cooperators there is no cooperation” and also highlighted the importance of “community” and trade-unionism in order to make cooperation possible (Mariátegui, 2006: 197–199). He concluded that this is why “indigenous communities had the best social and personal conditions for integrating into a cooperative world, which was not the case with respect to urban and rural workers, who lacked a trade-unionist culture” (ibid., 199). In the same way that Paine´s work, within the Anglo-American republican tradition, shines as a result of its consistency, continuity, and deepness, in Latin America we could for example mention Ignacio Ramírez´ work as particularly salient. Ramirez was a Mexican journalist and politician who systematically defended the right of the most disadvantaged, and proposed advanced social reforms. Moreover, and what is most significant in the context of this essay, Ramírez—like Paine— also proposed an egalitarian arrangement such as the CI. The Mexican politician advanced some of these initiatives at the 1857 constitutional convention, where he became famous for criticizing the prevalent project. For him, the project was a failure because it ignored the rights of the orphans, the elderly, the women, and the weakest of society. In order to remedy these problems, he advocated for the participation of workers in the profits of the corporations where they labored; also—most notably—a guaranteed basic salary to all. The idea was to ensure the subsistence of all. In that sense, he defended the “emancipation of all workers from the capitalists,” the need to “transform work into capital,” and the need to ensure “the subsistence of workers” by giving each of them “the right to share the profits of the capitalists” (Sayeg Helú, 1972: 92–93).

Final Comments In this chapter, we contrasted two opposite constitutional traditions. The first was the one that became dominant since the mid-nineteenth century, namely the liberal-conservative tradition; while the alternative—the one that was defeated—was a more egalitarian tradition, which can be associated with republican thought. The dominant model was properly summarized by the Argentinean jurist Juan Bautista Alberdi,

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who described it as one of limited political liberties and ample economic liberties. Politically, the prevalence of the liberal-conservative model implied the concentration of powers in the executive branch, a centralist regime, and limited opportunities for popular participation in the public sphere. Economically, this model came to ensure strong protection for property rights, which in a context marked by profound inequalities and limited opportunities for political participation implied the consecration of existing injustices. Here we paid special attention to the alternative egalitarian tradition that, in contrast to the former, advocated for the expansion of political liberties and the limitation of economic rights. Members of this tradition asked for a different political organization (including a limited executive and more opportunities for popular participation), and also for a radically different, much more egalitarian, economic organization. For most of them, it seemed clear that political independence required economic independence, and that economic dependence, exploitation, or domination made the expansion of political liberties virtually impossible. It is my conviction that that old, in part forgotten, egalitarian tradition has still many things to teach us, particularly at a time when we encounter many reformist initiatives, but not always a genuine commitment to what those reforms may imply. For those of us who are still interested in socio-legal reforms, those old egalitarians of republican origin came to tell us, among other things, that we should not neglect the material conditions of the desired reforms; that we should not treat the political, legal, and economic domains as separate, unrelated domains; that collective self-government required committed citizens, identified with their fellow citizens and endowed with certain moral dispositions; that political democracy may need economic democracy; that the political independence of the voter may also require their economic independence—or, as it is sometimes referred today, a politics of nondomination. For those reasons—republicans taught us—proposals such as the redistribution of land, public education, social security, and what we presently call a CI should be certainly welcome. In particular, we could add, the alternative of the CI may, in our time, be particularly attractive for those of us who still want to take seriously the republican ideal of nondependence. Notes 1. According to Castillo Velasco: “Out of gratitude, public convenience, let us save (indigenous groups) from their present situation, let us provide them with the means they need for their subsistence and illustration” (Zarco, 1957: 364).

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2. For Arriaga: “Society, in what regards its material organization, is still the same as before: the land is concentrated in a few hands; capital is accumulated by only a few” (Zarco, 1957: 389). 3. For Olvera: “These lazy people should have been . . . corrected, in attention to religious principles of charity and fraternity . . . but instead they were obliged to work and they punished them as a consequence of their laziness and their vices” (Zarco, 1957: 692). 4. Arriaga maintained, “Despotism came together with absolute exploitation, based on the ignorance of the masses. It material basis was the appropriation of the soil” (Zarco, 1957: 392). And also: “Society (has been based on) the principle of appropriation, by a few, of the work of other individuals; this is to say on a principle of exploitation of the work of the majority, by the privileged minority” (401). 5. In Olvera’s opinión, “It is enough to compare what the peoples have with what they had, according to tradition, after the conquest, for concluding that we have had a scandalous usurpation” (Zarco, 1957:). 6. We see similar liberal ideas and motivations in General Soublette, in Venezuela (where the defense of economic liberalism remained in the hands of conservative groups); or in General Linares, in Bolivia; or—at least during an important part of his life—in the work of Vicente Rocafuerte, in Ecuador. 7. Close to the progressive “gólgotas” movement, during his youth, Murillo Toro defended what he called “socialist” ideas, against a type of individualism that he identified with the ideas of Adam Smith. In his opinion, socialism was worth defending in the face of “the selfish doctrines coming from the Smith-school, which only focuses on material interests and considers society as a mere aggregation of speculators. That school was only interested in the creation of wealth, and not in its distribution. It seemed indifferent to the destiny of the majority and accepted the right of a class to engulf the other” (Molina, 1973: 72). In his well-known work Dejad Hacer, Murillo Toro objected to the “selfish doctrine promoted by Juan Bautista Say and his school, which was summarized in the simple formula of laissez faire or, what is actually the same, let them rob, let them oppress, let the wolves to eat the lambs.” 8. In fact, it is quite remarkable to see how much the liberal antistate, anti-interventionist position depended on state interventionism. In the name of nonintervention, liberals demanded a fabulous activism that included the state enacting long legal codes in the areas of property and contract; a state that was tough in disciplining society; a state that contributed in the formation of a working class and took side with the private sector. This is to say, with independence of our evaluation of the substance of their view, what is clear is that liberalism came together with a titanic effort for the reconstruction of society. It completely changed the rules of the game and the level field, and always did so in the name of noninterference and individual initiatives. Just to mention a few concrete examples, remember how the state intervened in order to reorganize the distribution of property, in New Granada, during the government of liberal José Hilario López; or how it contributed to the concentration of

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9.

10.

11.

12.

property in Argentina, through the law of enfiteusis (during Bernardino Rivadavia’s administration); or how it intervened for putting an end to collective properties in Mexico; or how it changed the labor market, when it forced into it indigenous people and former slaves (by denying them any social protection or compensation for the former abuses they suffered); or how the state reacted against the first workers’ organizations, in Peru, Chile, or New Granada. Shortly after, and as an advisor of the authoritarian general Paredes, Alamán made his project to organize an elitist, corporatist institutional system, visible. In a proposal written in 1834, Alamán suggested the creation of a senate that included, among its members, representation of “rustic, urban, industrial, and agricultural property (38 deputies); mining interests (14 deputies); liberal professions (14 deputies); the magistrature (10 deputies); literary professions (14 deputies); manufacturing industries (14 deputies); the public administration (10 deputies); the clergy (20 deputies); and the military (20 deputies).” (ver prólogo de A. Lira, en Alamán, 1997: 53). Paredes y Arrillaga adopted such a view of the constitution as his own, radicalizing in that way what General Bustamante had done in the 1830s. We find a similar approach to the constitution in Sánchez de Tagle, and his defense of a right to suffrage that was fully dependent on the economic capacities of each person. In his view, large sectors of society were not supposed to take part in politics, including servants, the unemployed, the illiterate, and those who could not demonstrate to have an “honest” work. Politics, in the end, was reserved for property owners and the professional classes (Noriega, 1972: 65). In that sense, the constitution established a bicameral legislative system, which in part copied the British system (that tried to ensure the representation of the nobility, the Anglican Church, and the Universities of Oxford and Cambridge). In that sense, the Argentinean conservative senate tried to establish a wall of separation between the law and the majoritarian power. According to article 10, the senate would include members of the Army; representatives of the Church; delegates from the different universities; etc. In addition, the constitution imposed strict economic conditions for becoming a member of Parliament (article 11). Even in spite of the resistance that it generated, such an idea remained present in the mind of many conservatives. On many occasions they tried to secure that the “real power” coincided with the institutional order. Delegate Pérez, for example, went back to such proposals during the crucial constitutional debates of 1853 and suggested to ensure representation to “the rich, the industry, the Army, the Church and all other (fundamental) elements of society” (Ravignani, 1886: 429). Against those who accused him, by making reference to the bad results of the first open elections, Murillo Toro argued: “We have proclaimed every person’s exclusive right to regulate his own affairs . . . we have assumed as our first dogma a principle according to which every person is the best judge of his own affairs.” And also: “Those who attack universal suffrage maintain that [such a right is only indisputable] when [individuals] have the capacity to exercise that right in a convenient way.” Against that view,

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14.

15.

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he maintained that “the idea of making the right to vote dependent on the person’s capacity is the most arbitrary and vague claim one can hear, and would allow more frauds than the ones we have today. In effect, what is the measure of an individual’s capacity to use the suffrage? Nobody can define it . . . there are too many graduations and differences with respect to intellectual capacities that if we wanted to regulated them we would only make things more difficult.” And he concluded claiming that there was no better way to “ensure the political education of the people” than by allowing them to participate in politics through the suffrage: “No people educate itself in abstract. It is only in practice that the people learn. Suffrage educate peoples, and the abuses of the clergy and the landowners only accelerate that independence and instruction” (Murillo Toro, 1979: 95). This also explains why, when he was General López’s secretary of finance, he paid particular attention to the problem of land and its unequal distribution. According to Gerardo Molina, “Murillo proponed that nobody had more land than the amount necessary for his own subsistence.” For that reason, Murillo did not authorize transfer of lands that surpassed certain limits; or make domain depend on the cultivation of land. “All this,”—Molina concluded—“was too much for the epoch” (Molina, 1987: 124). In a similar way, the Ecuadorian liberal José Peralta defended the importance of redistributing property with an argument that was clearly liberal in its foundations: the right to property was valuable, but valuable for all and not only for a few (El Problema Obrero, quoted in Ortega, 2011). Ramírez’s views were exceptional in the way in which he connected the state of affairs, characterized by profound economic injustices, and the situation of vulnerability that affected most of the Mexican people. This is why he insisted on the importance of political emancipation, and conceived of constitutionalism as a tool necessary for achieving that goal. In his words, “The real social problem” consisted of “the emancipation of day laborers from capitalists. . . . This is an imperative of justice” (Ramírez, 1994: 40). If that did not occur—he claimed—workers would be “unable to exercise their rights as citizens, unable to get educated, unable to educate his family, and thus die in a situation of misery” (ibid., 40–41). And he concluded by defining the way in which the constitution could help in achieving this process: It was necessary to write a constitution that was directed in defense of “the privilege of those who live in misery, the ignorants, the feeble” (ibid., 41). For him, the possession of land (the main capital of the time) came hand in hand with political liberty: the “subsistence of the masses” was in that way directly linked to “the preservation of political liberty” (Murillo Toro, 1979: 79). Meanwhile, the lack of economic liberty tended to imply lack of personal independence. For that reason, he proposed to prevent the accumulation of lands in a few hands: that decision was indispensable for the preservation of liberty and the prevention of “aristocratic dominance.”

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18. Pedro De Ángelis, a peculiar Italian republican who worked for Juan Manuel de Rosas in Argentina, made reference to the “commercial spirit . . . which provoked the ruin of the Ancient institutions” and “completely corrupted public morality, as a consequence of their numerous injustices, its disastrous expeditions, its unacceptable wars, its immorality and perfidy” (De Ángelis, 1946: 284). 19. For reasons as such, many among the most relevant leaders of the antifederalist movement, like George Mason, from Virginia, rejected the project of concentrating international commerce in the coastal cities. By acting in that way, he claimed, one would end up undermining the civic virtues that were necessary for republican government. Virtue, he stated, required “frugality, probity and a strict morality,” and the proposal of having super-populated commercial cities in the coast contradicted the achievement of those objectives (ibid., 125–126). 20. See www.cooperativeindividualism.org/paine_agrarianjustice_02.htm and http://geolib.com/essays/paine.tom/agjst.html. 21. Some claimed, for example, that social reformers had misunderstood the way in which to promote social change: they wrongly believed that “it was possible to destroy the tree of evil by attacking its fruits but leaving its roots untouched.” (Noriega, 1980: 196). In contrast with this position, it was maintained that “[the only possible way] for restoring the lost social equilibrium and securing the triumph of democracy” was that of redistributing all the national goods” (ibid., 198–199). Bibliography Aguilar R., José Antonio. En pos de la quimera. Reflexiones sobre el experimento constitucional atlántico. México: Fondo de Cultura Económica, 2000. Aguilar R., José Antonio and Negretto, Gabriel. “Rethinking the Legacy of the Liberal State in Latin America: The Cases of Argentina (1853–1916) and Mexico (1857–1910).” Journal of Latin American Studies 32 (2000), 361–397. Alamán, Lucas. Los imprescindibles. México: Mazatlán, 1997. ———. Lucas Alamán, Examen Imparcial de la Administración de Bustamante, edited by J. A. Aguilar Rivera. México: Conaculta, 2008. Alberdi, Juan B. Bases y puntos de partida para la organización política de la República Argentina. Buenos Aires: Plus Ultra, 1981. ———. “Elementos del derecho público provincial argentino.” In Obras Completas, vol. 5. Buenos Aires: La Tribuna Nacional, 1886. ———. Obras selectas, vol. 14. Buenos Aires: Librería La Facultad, 1920. Bailyn, Bernard. The Ideological Origins of the American Revolution. Cambridge: Harvard University Press, 1967. Barrón, Luis. Liberales y conservadores: Republicanismo e ideas republicanas en el siglo XIX en América Latina. Washington: Latin American Studies Association, 2001. Basadre, Jorge. Historia de la república del Perú. Lima: Editorial Cultura Antártica, 1949.

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Bazant, Jan. A Concise History of México: From Hidalgo to Cárdenas, 1805–1940. Cambridge: Cambridge University Press, 1977. ———. “From Independence to the Liberal Republic, 1821–1867.” In Mexico since Independence, edited by Leslie Bethell, 1–49. Cambridge: Cambridge University Press, 1991. Bilbao, Francisco. “El gobierno de la libertad.” En Obras Completas, vol. 1, edited by Manuel Bilbao Buenos Aires: Imprenta de Buenos Aires, 1866. Bolívar, Simon. Selected Writings of Bolívar. New York: Colonial Press, 1951. Botana, Natalio. La tradición republicana. Alberdi, Sarmiento y las ideas políticas de su tiempo. Buenos Aires: Sudamericana, 1997. ———. “La transformación del credo constitucional.” Estudios Sociales. Universidad Nacional del Litoral, 23–48, 1996. Bushnell, David, and MacAulay, Nelson. The Emergence of Latin America in the Nineteenth Century. Oxford: Oxford University Press, 1994. Camacho Roldán, Rubén. Memorias. Bogotá: Biblioteca Popular de Cultura Colombiana, 1946. Churruca, Pedro. El pensamiento insurgente de Morelos. México: Editor Porrúa, 1983. Collier, Simon. Ideas and Politics of Chilean Independence. Cambridge: Cambridge University Press, 1967. De Ángelis, Pedro. Acusación y Defensa de Rosas. Buenos Aires: Editorial La Facultad, 1946. Echeverría, Esteban. Dogma socialista de la Asociación de Mayo, precedido de una ojeada retrospectiva sobre el movimiento intelectual en el Plata desde el año 37. Buenos Aires: Librería La Facultad, 1915. González V., Fernando. Importancia de las asociaciones. Importancia de la educación popular. Lima: Ediciones Hora del Hombre, 1948. Gootenberg, Paul. “Imagining Development: Economic Ideas in Peru’s ‘Fictious Prosperity’ of Guano, 1840–1880.” In Guiding the Invisible Hand: Economic Liberalism and the State in Latin American History, edited by J. Love and N. Jacobsen. New York: Praeger, 1993. Halperín D., Tulio. The Aftermath of Revolution in Latin America. New York: Harper and Row, 1973. ———. Historia contemporánea de América Latina. Madrid: Alianza, 1985. Jaramillo U., Jaime. El pensamiento colombiano en el siglo XIX. Bogotá: Editorial Temis, 1964. Jefferson, Thomas. Political Writings. Cambridge: Cambridge University Press, 1999. Jordán de Albarracín, Betty. Documentos para la historia del derecho constitucional boliviano. La Paz, Bolivia: Talleres Gráficos San Antonio, 1978. Leguía, José, Estudios históricos. Santiago de Chile: Biblioteca América, 1939. Lira, Andrés. “Lucas Alamán y la organización política de México.” In Lucas Alamán. México: Ediciones Cal y Arena, 1997. Loveman, Brian. The Constitution of Tyranny. Pennsylvania: University of Pittsburgh Press, 1993. McEvoy, Carmen. La utopía republicana. Lima: Pontificia Universidad Católica del Perú, 1997.

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Manin, Bernanrd. The Principles of Representative Government. Cambridge: Cambridge University Press, 1997. Mariátegui, Juan C. Ideología y política. Ministerio de Comunicación, Caracas, 2006. Michelman, Frank. “Law’s Republic.” Yale Law Journal 98, no. 8 (1988): 1493–1538. ———. “Traces of Self-Government.” Harvard Law Review 100, no. 4 (1986). Molina, Guillermo. Las ideas liberales en Colombia, 1849–1914. Bogotá: Colección Manuales Universitarios, Tercer Mundo, 1973. ———. Las ideas socialistas en Colombia. Bogotá: Ediciones Tercer Mundo, 1987. Montalvo, Juan. Selections from Juan Montalvo, edited by Frank MacDonald Spindler and Nancy Cook Brooks. Tempe: Center for Latin American Studies, Arizona State University, 1984. Mora, José M. Obras sueltas. México: Porrúa, 1963. Moreno, Mariano. Escritos políticos y económicos : Ordenado y con un prólogo por Norberto Piñeiro. Buenos Aires: Talleres Gráficos Argentinos de L. J. Rosso, 1937. Murillo Toro, Manuel. Obras selectas. Bogotá: Cámara de Representantes, 1979. Noriega, Andrés. El pensamiento conservador y el conservadurismo mexicano. México: Universidad Nacional Autónoma, 1972. ———. Los derechos sociales creación de la Revolución de 1910 y de la Constitución de 1917. México: Universidad Nacional Autónoma de México, 1988. Noriega, Arturo. “Francisco Severo Maldonado, el precursor”, Mexico: UNAM, 1980. Ortega, Guillermo. Vida y obra de José Peralta, http://www.afese.com/img /revistas/revista40/artGermanOrtega.pdf, 2011. Otero, Mariano. Obras, edited by por J. Reyes Heroles. México: Editorial Porrúa, 1967. Pangle, Thomas. The Spirit of Modern Republicanism. Chicago: University of Chicago Press, 1988. Pérez G., Dardo. El pensamiento conservador de Alberdi y la Constitución de 1853. Buenos Aires: Depalma, 1984. ———. Sarmiento y la Constitución. Mendoza: Fundación Banco de Crédito Argentino, 1989. Pettit, Philippe. “Keeping Republican Freedom Simple. On a Difference with Quentin Skinner.” Political Theory 30, no. 3 (junio 2002), 339–356. ———. Republicanism. Oxford: Oxford University Press, 1999. ———. Republicanism. A Theory of Freedom and Government. Oxford: Oxford University Press, 1997. ———. A Theory of Freedom. From the Psychology to the Politics of Agency. Cambridge, UK: Polity Press, 2001. Pocock, James. The Machiavellian Moment. New Jersey: Princeton University Press, 1975. Químper, Jose M. El principio de la libertad. Lima: Ediciones Hora del Hombre, 1948. Rama, Carlos. Utopismo socialista. Caracas: Biblioteca de Ayacucho, 1987.

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Ramírez, Ignacio. Escritos periodísticos. México: Centro de Investigación Científica, 1984. ———. Ensayos. México: Universidad Nacional Autónoma de México, 1994. Ravignani, Emilio. Asambleas Constituyentes Argentinas, 6 vols. Buenos Aires: Casa Jacobo Peuser, 1886. ———. Historia Constitucional de la República Argentina, 3 vols. Buenos Aires: Talleres Jacobo Peuser, 1926. Reyes Andrés Washington, OscarBruschera, and Melogno Oscar. El ciclo artiguista. Montevideo: Universidad de la República, 1968. Reyes H., Jaime. El liberalismo mexicano. México: Universidad Nacional de México, 1957. Roig, Andrés. El pensamiento social de Montalvo. Quito: Editorial Tercer Mundo, 1984. Romero, Luis. A . La Sociedad de la Igualdad. Los artesanos de Santiago de Chile y sus primeras experiencias políticas, 180–1851. Buenos Aires: Instituto Torcuato Di Tella, 1978. Rossiter, Charles. Conservatism in America. Cambridge: Harvard University Press, 1982. Safford, Frank. “Politics, Ideology and Society in Post-Independence Spanish America.” In Cambridge History of Latin America, vol. 3, chap. 9, edited by L. Bethell. Cambridge: Cambridge University Press, 1985. Samper, José. M. Historia de una alma. Memorias íntimas y de historia contemporánea. Bogotá: Imprenta de Zalamea Hnos, 1881. Sandel, Michael. Democracy’s Discontent. Cambridge: Harvard University Press, 1998. Sayeg Helú, Jorge. El constitucionalismo social mexicano. México: Cultura y Ciencia Política, 1972. Shumway, Nicholas. The Invention of Argentina. California: University of California Press, 1993. Skinner, Quentin. The Foundations of Modern Political Thought. Cambridge: Cambridge University Press, 1978. ———. “The Idea of Negative Liberty: Philosophical and Historical Perspectives.” In Philosophy in History, compiled by Richard Rorty, J. B. Schneewind, and Quentin Skinner. Cambridge: Cambridge University Press, 1984. ———. Liberty Before Liberalism. Cambridge: Cambridge University Press, 1998. ———. “Machiavelli on the Maintenance of Liberty.” Politics 18 (1983): 3–15. ———. “The Republican Ideal of Political Liberty.” In Machiavelli and Republicanism, edited by G. Bock, Q. Skinner, and M. Viroli. Cambridge: Cambridge University Press, 1990. Sunstein, Cass. “Beyond the Republican Revival.” Yale Law Journal 97 (1988):1539–1590. Tejeda, José. Libertad de la industria. Lima: Ediciones Hora del Hombre, 1947. Vile, Maurice. Constitutionalism and the Separation of Powers. Oxford: Clarendon Press, 1967. Wills, Gary, ed. The Federalist Papers. New York: Bantam Books, 1988.

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Wood, Gordon. The American Revolution: A History. New York: Modern Library, 2002. ———. The Creation of the American Republic. North Carolina: University of North Carolina Press, 1969. ———. The Radicalism of the American Revolution. New York: Alfred Knopf, 1992. Zarco, Francisco. Historia del congreso constitucional de 1857. México: Instituto Nacional de Estudios Históricos, 1957. Zevada, Ricardo. La lucha por la libertad en el congreso constituyente de 1857: El pensamiento de Ponciano Arriaga. México: Editorial Nuestro Tiempo, 1972.

Epilogue Rubén Lo Vuolo

Social protection systems in Latin America developed in a fragmented manner, offering varying access to benefits and benefit levels to population groups. In the context of widespread informal and precarious work, social insurance institutions could only provide limited coverage. As a result, there exists a striking tension between universalistic discourse acknowledging “equal social rights” on the one hand, and particularistic practice, which segments the population into unequally treated social groups on the other. Partly, this tension arises from the fact that the region was never able to emulate the forms of economic and social organization that countries with mature welfare states achieved. Latin American countries neither have comparable urbanization and industrialization processes nor did they assimilate the “traditional” nuclear family model and formal labor markets. Nevertheless, albeit they never completed industrialization or the first demographic transition, at the outset of the new millennium a large part of Latin America is embarking on its own processes of postindustrial society and second demographic transition. However, public policies and welfare regimes in the region are not organized to process these complexities, which weaken the social protection systems’ efficiency and equity. The vast presence of an informal economy favors these weaknesses. Informality reflects a particular way of regulating the economy and politically managing the population. Informality, precarious labor conditions, and wage differentials are structural elements that characterize the region, and that are not overcome in times of economic growth such as those experienced by a number of countries in recent years. In Latin America, the labor market is a domain that generates social inequalities. From there, inequalities spread to other social spheres and to the social protection system. Despite this fact, the social protection system continues organizing around rules that attempt to preserve the labor market’s distributive primacy.

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The persistence of high poverty levels in the region acknowledges these structural and long-lasting problems. Far from being a phenomenon that derives from the circumstantial loss of incomes generated by crises or adjustments in the productive system, poverty in the region is a structural phenomenon consistent with the way in which labor markets function and the way in which social protection systems, and fiscal transfer programs in particular, are organized.

Citizen’s Income and Cash Transfers In Latin America it is still assumed that the purpose of fiscal income transfer policies is merely compensatory, and that they should be managed via targeting, punitive conditionalities and a careful selection of beneficiaries. This way, it is believed, people’s incentives to work in the labor market are not undermined, and the distributive function of the latter is preserved. This conception explains the dissemination of different conditional cash transfer (CCT) programs. While these assistance programs do help the poorest segments of the population by alleviating the intensity of their poverty, they prove ineffective at preventing poverty, covering all vulnerable groups, and constructing channels for social mobility (even though programs such as the CCT are presented as instruments capable of breaking inherited poverty cycles and encouraging intergenerational mobility). These weaknesses are not grounded in management problems, but in the very conception of the role to be played by fiscal income transfer policies toward people. The conception currently prevailing in Latin America has relegated two central and necessary functions for social protection systems: (1) its preventive and insuring role vis-à-vis the contingencies that affect the population as a whole; and (2) its role in unifying different social groups in egalitarian institutions. These functions are consistent with a conception of social vulnerability as distributed across the entire population, a vision which understands that resources have to reach the poorest groups, including them in universal institutions. This universality in preventive protection is what guarantees that the interests of the most vulnerable are collectively represented, together with those of other societal groups. The conceptual differences translate into diverging policies and help explain their outcomes. As is argued in several of the chapters in this volume, even the most far-reaching of targeted and conditional programs do not solve the lack of universal coverage; they fail to promote social mobility, and are not able to overcome the unequal segmentation in public policies, among other drawbacks. For these and other reasons, the Latin American experience shows that the objective of guaranteeing a stable

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and permanent basic income in the region, which would act as a poverty prevention policy, cannot be achieved with focalized techniques. Current conceptions and existing programs cannot guarantee the effective realization of social rights formally enshrined in the law and constitution of the region’s countries. This occurs because social rights are collective rights that to a large degree become effective as the individual’s right to access goods and services (health, education, cash transfers, etc.). Being collective rights, they cannot be operated as rights that depend on certain individual characteristics and conditions, such as being poor, old, a mother with dependent children, formal or informal worker, etc. In short, it is not possible to exercise collective rights via programs that are organized around people’s individual characteristics. The coverage of “risks” of particular groups identified by their personal characteristics cannot reach the status of a “social right.” The responsibility for social risk coverage lies with all of society. On the contrary, when these risks are individualized the door opens for coverage to become an individual responsibility as well. Among other things, this means that when, in the eyes of the political authorities, these risks are circumstantially covered by primary solidarity of family or markets, they may assert that there is no need for coverage by public institutions. In contrast, under a social rights conception, while the opportunity and place where social risks may manifest themselves are contingent, every person’s right to have a public coverage against them is not. What differentiates the vision of individual risks from that based on social rights is not the domain of coverage (health, education, income), rather, it is the way in which the right to obtain protection is recognized. Social rights are the collective rights to society’s common resources. Individual risks do not grant rights over these collective resources, but instead put up one personal situation against another, leaving to the political authorities the decision of who deserves public assistance In the former case, the power lies with the people as members of an entity that claims its rights; in the latter, it is the state that holds the power and acts in the way it deems adequate. These conceptual and instrumental differences can be clearly observed, for instance, in the tension that exists in Brazil between the implementation of the Lei de Renda Básica de Cidadanía and the Bolsa Familia programs. The former formally establishes a social right while in practice political support goes to the CCT program. The targeted and conditioned program’s legitimacy matches the lack of universality in other policies of the social protection system, and the temporality of the benefit in view of the expected “exit” through the labor market, its punitive conditionalities, etc. None of these elements constitute social rights. The above cautions about the following: an eventual support of the population toward redistributive income policies does not automatically

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translate into a support of a Citizen’s Income (CI), but rather of other policies disputing a similar domain of state action. The experience of Mexico (Oportunidades) and Argentina (Asignación por Hijo), among multiples programs of the same kind, also supports this conviction. Targeting and punitive conditionalities are defended even in situations of extreme need among groups that objectively are not in any condition to comply with them. Either way, the region’s fiscal income transfer programs are an inevitable reference when thinking about ways of incorporating the proposal of a CI into the public agenda. Some issues seem clear in this respect. First, non-contributive transfers to children without access to contributive family allowances are legitimate in the region. Second, these transfers are conditioned to distinct ways of evaluating personal and family income levels. Third, the benefits granted are smaller and eligibility conditions are stricter than those applied to other population groups with better income and welfare protection. This conception of the objective and operating rules that the income transfer program recipients need to satisfy are not consistent with those corresponding to the CI proposal. This conceptual and operative confrontation can be clearly observed in Mexico, where very different programs coexist. Here, albeit the experience of the Universal Pension in Mexico City approximates a CI policy, its well-earned legitimacy has not yet become a solid argument in favor of such policy. Nonetheless, its presence has generated diffusion effects toward spreading the coverage of other national income transfer programs for the elderly. It seems that policies under CI rules could be accepted in the region if they are for adults who are no longer in the working age bracket, but not for people who can work and earn their living in the market. In fact, a tendency toward the expansion of non-contributive or semi-contributive pension programs can be noted in the region. In some countries, this has generated substantial improvement in coverage for this social policy area. Differences between these programs are considerable, also with regard to the diverse institutional trajectories, traditional policies, and conceptions of rights. In spite of this expansion, however, these programs do not guarantee a road toward a right to a universal and unconditional pension in the region, being the experience of Mexico’s city and of Bolivia’s Renta Dignidad— the ones closest to the CI principles. On this issue, it is worth recalling that a universal and unconditional pension does not attempt to substitute other contributive benefits, as do non-contributive pensions. The best way of conceptualizing a universal and unconditional pension in line with the principles of a CI is like a floor above which the other pillars of the pension system would be built. This way, universal coverage of minimum income levels would be

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guaranteed, while at the same time the welfare system as a mechanism of replacement for employment income is maintained. The debate about transfer policies in the region can also be carried out beyond national borders. Conditional programs with different rules and different selection criteria are difficult to articulate as a transnational policy. On this matter, the distinct advantage of CI is the possibility of tightening regional agreements for the gradual implementation of income transfer programs. This becomes particularly important in countries known for their fiscal weaknesses and where external support is indispensable. The simplicity of the proposal permits conceptualizing mechanisms of transnational coordination and strategies of gradual incorporation of population groups in a way that effectively includes the issues of poverty and migration in the agenda of regional development programs. Although Latin America is one of the most unequal regions in the world and the CI proposal is held to be more egalitarian than other programs, there are no solid foundations to believe that the policy is gaining legitimacy. Indeed, many existing transfer programs ‘compete’ with the CI proposal insofar as they present themselves as directed toward similar objectives, but are organized under opposing principles: focalization versus universalization, conditionality versus inconditionality, fiscal disintegration versus fiscal integration.

Citizen’s Income and the Latin American Public Agenda The explanation for why a policy such as CI has serious problems to find broader support to be included in Latin America’s public agenda can be found partly in the moral conceptions of both its citizenry in general and its political elites in particular. Preferences for a meritocracy that allegedly expresses itself in terms of success in the labor market, in the punitive conditions that the counterparts demand beneficiaries to comply with, and through the institutional separation between contributive and non-contributive policies are some strong elements among them. These preferences vary between countries, as do institutional configurations of their welfare regimes, but generally they are present in all cases. The currently implemented CCT programs described earlier have added a new ingredient to this conception: the perception that the problem “is already being attended” and that it would hence be best to put resources to use in different areas. The legacy of these policies thus becomes relevant in the construction of a system of preferences on the basis of which alternative policies are accepted or dismissed. The eventual endorsement of policies such as the CI by political parties is also permeated by these preferences. Over and above this, their

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ideological profile needs to be added, as well as the parties’ internal dynamics and their patterns of relationship with the elites and with their own voting constituencies. All indications seem to point to the fact that those of the region’s parties labeled “left-leaning” generally prove more accessible to the idea of expanding coverage for income transfer policies. Nonetheless, as has also been indicated previously with regard to the population’s preferences, this does not necessarily mean that they would support those proposals grouped together under the organizing principles of a CI. In general, it can be observed that policies with the largest margins for exercising clientelism tend to be preferred by political elites. Also, it is worth considering the ways in which different party types can facilitate or inhibit the formation of multi-class political coalitions, capable of promoting and defending universal flat-rate benefits such as CI. The social actors representing those groups that would benefit from a policy such as CI do not display much conviction for their support as of yet. In the case of labor unions, the proposal does not get fully accepted by a corporate tradition inclined to sustain the institutional fragmentation that arises from the labor market. The idea that the right to a universal and unconditional income could erode the institutional structure constructed around the defense of labor rights, the individualized benefit that foregoes union intermediation, and the preoccupation with equality between formal and informal workers rights are the factors explaining the reluctance of traditional unions. However, even when there are elements to argue that unions pose an obstacle to universalizing reforms because of their desire to protect existing privileges, many of Latin America’s most innovative social policy reforms have been supported and even advanced by unions. Among other things, unions’ support of programs in line with CI will depend on their relation with political parties and the types of demands that they are mobilizing. In the case of the feminist movement both support and objection to CI can be observed. From one perspective, it is recognized that such a policy could improve welfare and strengthen women’s autonomy, especially compared to existing CCT programs that keep them trapped in a position as intermediate operators in a paternalistic context. Indeed, the CCT paradigm does not aim at transforming the sexual division of labor but rather at taking advantage of it, addressing women in their reproductive and caregiver roles. The impacts of CI on women’s labor performance, however, are observed with caution. On the one hand, it is understood that the policy could be a better platform for female job insertion, encouraging a more equal and rational distribution of work time between men and women. On the other, complementary action will be necessary for this to happen, especially in a context marked by persistent labor precariousness. Consequently, concrete CI proposals need to be constructed to attend

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to this situation by incorporating elements that encourage the equal participation of men and women in employment. It becomes clear at this point that CI policy invariably requires the cooperation of other consistent policies: elimination of diverse mechanisms of gender discrimination in the labor market, implementation of policies that favor a more equal distribution of care responsibilities within the family domain are some such policies. For instance, the absence of a national care system in the region’s countries constitutes a void that needs to be filled urgently in order to guarantee that such policy would have positive impacts on women’s welfare and would improve gender inequality in the region. It can also be observed that the issue of institutions and the problems that the countries’ social protection systems face supporting the proper functioning of democracy in the region surges time and again. If the institutional system reproduces inequalities, institutions end up being at the service of maintaining the social divisions. The improvement of the quality of democracy requires egalitarian institutions. This cannot be obtained through isolated programs that reproduce existing social inequality in both their conception and functioning but, rather, demands institutional systems that reverse social divisions. This is a criterion for the evaluation of public policies that needs to be revitalized in the region. The possibility of automatically exercising political and social rights depends on the egalitarian access to resources, which, however, can only be guaranteed in an institutional system that is also egalitarian. If one institution in a society is profoundly unequal, this inequality passes to other institutions as well. While the clearest example of this observation is the labor market, the same effect can be observed in most economic and social policies that are structured along the demarcation lines of social divisions, and which serve state paternalism and political clientelism. This is the case with the CCT programs, which select people from those groups that are worst-off, pay smaller benefits, demand stricter conditions, and are temporary only. These programs do not encourage social integration, let alone social mobility. Social integration is facilitated when access to social resources is universal, stable, egalitarian, and expressed under the same logic throughout the institutional system. Conditional programs exemplify the opposite when they demand conditions that cannot be complied with due to the absence of health and educational services, or because access to these services is very restrictive. Institutional memberships are mutually linked; segmenting people through targeted and temporary benefits will not contribute to social integration. The need to integrate egalitarian institutions also includes political institutions. Dominant conceptions in the constitutional order of Latin American countries do not reflect egalitarian traditions, inherent to republican thought, but rather liberal-conservative viewpoints. These

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conceptions do not favor the citizenry’s participation or the necessary personal autonomy that this would require. The political organization of the region’s countries does not incorporate the idea that the political independence of people requires also economic independence. Quite to the contrary, systems function on the basis of a strong concentration of power, little citizen scrutiny and auditing, and strong dependence on the lives of some people in the vicissitudes of the political system. Latin American democracies, even those in which an improvement in the welfare indicators of the population groups left farthest behind can be observed, continue operating under conceptions and public policies that concentrate power and social control. A policy such as CI would oblige change in many political-institutional elements that today enable this dynamic, including the constitutionally recognized notions of liberty and autonomy of the citizenry, the links between the leading elites and the population (both clientelistic and programmatic), social relations in the family spheres, etc. Social integration is better facilitated when more individuals have stable and equal access to a variety of income sources. Citizen’s Income is a powerful tool to construct political independence through the institutional system in a region with high levels of inequality. It is not just another cash transfer policy. Therefore, not any other income transfer policy should be viewed as a progression in the direction of CI. This confusion is preventing discussions of the proposal in the region by confining it to a narrow space of administrative management of economic and social marginality. Progress toward a CI policy in Latin America depends on the possibility of reappraising its importance for an integrated institutional system that promotes the empowerment and economic independence of people. A CI policy is not only a cash transfer to alleviate poverty or a basic income for food. It is a basic right to improve democracy and encourage a more autonomous development of people living in profoundly unequal societies.

C on tr ibu t or s

Camila Arza is a researcher at the Consejo Nacional de Investigaciones Científicas y Técnicas (Conicet) [National Council of Scientific and Technical Research] and the Facultad Latinoamericana de Ciencias Sociales (Flacso) [Latin American School of Social Sciences] in Buenos Aires, Argentina. She specializes in comparative social welfare and social security policy in Europe and Latin America. She holds a PhD from the London School of Economics, and has conducted research projects on comparative social policy funded by several local and international research agencies. Corina Rodríguez Enríquez is a researcher at the Consejo Nacional de Investigaciones Científicas y Técnicas (Conicet) [National Council of Scientific and Technical Research] and at the Centro Interdisciplinario para el Estudio de Políticas Públicas (Ciepp) [Interdisciplinary Centre for the Study of Public Policy] in Buenos Aires, Argentina. She is coordinator of the Grupo de Género y Macroeconomía de América Latina (Gem-Lac) [Latin American Gender and Macroeconomic Group]. Roberto Gargarella is professor of Constitutional Theory and Political Philosophy (Universidad de Buenos Aires [UBA]/ Di Tella) and researcher at the Consejo Nacional de Investigaciones Científicas y Técnicas (Conicet) [National Council of Scientific and Technical Research] in Buenos Aires, Argentina. He is a lawyer and sociologist (UBA, 1990), Master in Political Science (Flacso, 1990), Doctor in Law (UBA, 1991), LLM (University of Chicago, 1992), Jurisprudence Doctor (University of Chicago, 1993), J. S. Guggenheim Fellow (2000), and H. F. Guggenheim Fellow (2003–2004). Louise Haagh is senior lecturer of Politics at the Department of Politics at the University of York. She previously held a British Academy post-doctoral Fellowship at and obtained her DPhil from St. Antony’s College, University of Oxford. She has done extensive research and published on matters of economic security, citizenship, and democratization in developing and OECD countries. She is a member of the executive committee of the Basic Income Earth Network (BIEN). Alice Krozer obtained her masters degrees at the Copenhagen Business School and the London School of Economics and Political Sciences. She

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CONTRIBUTORS

has been a consultant for ECLAC (United Nations Economic Commission for Latin America and the Caribbean) (ECLAC, México) in Central American economic development. Lena Lavinas is professor of Welfare Economics at the Institute of Economics at the Federal University of Rio de Janeiro, Brazil. She holds a PhD from the University of Paris. Most of her research focuses on assessing social protection schemes and comparing welfare regimes notably in Latin America. Rubén Lo Vuolo is academic director and researcher at the Centro Interdisciplinario para el Estudio de Políticas Públicas (Ciepp) [Interdisciplinary Centre for the Study of Public Policy] in Buenos Aires, Argentina. He is president of the Red Argentina de Ingreso Ciudadano (Redaic) [Argentine Network of Citizen’s Income]. He has published widely on comparative social welfare and economic and social policy in Latin America. Jennifer Pribble is assistant professor of Political Science and International Studies at the University of Richmond, United States of America. Her research focuses on issues of Latin American political economy and comparative social policy. She is currently completing a book about the politics of universalizing social policy in Latin America. Fábio D. Waltenberg has received his PhD in Economics in 2007 from the Université Catholique de Louvain, Belgium. In the same year, he won the Haralambos Simeonidis prize awarded by the Brazilian Economists’ Association (ANPEC) to the best doctoral dissertation of the year in Economics written by a Brazilian scholar. He is now associate professor and a researcher at the Centro de Estudos sobre Desigualdade e Desenvolvimento (CEDE) at the Universidade Federal Fluminense in Niterói, Brazil. His research concentrates on economics of education and economics of the welfare state, with emphasis on unfair inequality issues. Pablo Yanes is economist and master in government and public affairs from the National Autonomous University of Mexico. Since February 2008, he has been the general director of the Social Development Evaluation Council of Mexico City. He is member of the executive committee of the Basic Income Earth Network (BIEN) and president of the Mexican chapter of BIEN (Ingreso Ciudadano Universal-Mexico). He has worked in the social development field in Mexico for the last 20 years.

Inde x

Aging of the population, 12, 129 Agrarian republic, 247 Alaska Permanent Fund, 30, 42, 46 Permanent Fund dividend, 161, 163 Argentina, 53, 54, 99–100, 104, 151, 163, 238, 251 Asignación Universal por Hijo para la Protección Social program (AUH, Argentina), 19, 53–56, 60–62, 206 AUH coverage, 56–58 AUH operational rules, 54–55 and citizen’s income, 62–63 and punitive conditionalities, 58–59 Assets, 37, 39, 59, 90, 198 opportunity and reproductive, 212–213, 219, 221 Autonomy, 2, 7, 17, 21, 62, 75–77, 91–92, 105, 125, 131, 215–216 economic autonomy (women), 188–190, 198 Avancemos program (Costa Rica), 121 Beliefs, 144, 145, 153–155, 158, 160 Bolivia, 95–97, 103, 105, 171, 251, 262 Bolsa Escola, 41 Bolsa Família Program, 35–36, 38–39, 43–44, 155, 158, 177 and Citizen’s Income, 156 law, 30 support for among a sample of Brazilian students, 158–160, 161

Brazil, 17, 29–31, 40–42, 97–98, 103, 105, 143, 151, 155–159, 162, 176–177, 180, 222, 224–225, 261 Central America, 113–116, 120, 128 Central American Integration System Integration System/ Sistema para la Integración Centroamericana (SICA), 115, 125 Central American Common Market, 114, 115 Central American Customs Union, 115 Secretary of Social Integration, 115 Social Integration Council, 115 coverage, 89, 93, 94, 95, 96, 97, 98, 99 crime organized crime recruitment and victimization, 127 rates, 117 reduction of criminality, 127 violence, 117 exports of labor, 116 (see also Migration) to the US, 115 Foreign Direct Investment, 118 Regional Citizen’s Income, 113 financing, 130–131 five phases implementation scheme, 126–128 gradual implementation scheme, 129

270

INDEX

Central America—Continued elderly component, 129 implementation scheme for, 126–130 regional fund, 130 Central America Welfare Regimes, see Welfare Regimes Chile, 6, 93–95, 103, 104, 105, 151, 162, 174, 217, 220, 222, 223, 225 Citizen’s Income (Basic Income) concept, 1–2 and economic incentives, 212 and employment, 3–4 and feminism, 187, 203–204 and theory of institutional sets, 219, 226–227 Citizen’s income in Brazil, 29–49, 155–160, 161, 163. impediments in implementation, 30, 43 inconsistencies in, 156–157, 161 law, 29–30, 40–43 Citizenship, 1–2, 18, 43, 73, 76–77, 132, 212, 213–215, 218, 246, 247 dimensions, 2–3 Clientelism, 2, 7, 17, 59, 124, 170, 173, 264, 265 clientelistic manipulation, 91 Collective capitalization fund, 96 Comunidades Solidarias program (El Salvador), 121 Conditional Cash Transfers (CCT), 5–7, 114, 120–124, 192–198 costs of, 121–122 donditionalities, 30, 34, 36–40, 68–72, 75, 79, 124 and finance, 59–60 and gender equality, 192–198 and incentives, 220–221 limited coverage, 124, 129 (proxy) means test, 9, 34, 89–92, 121, 123, 219

(flat) transfer level, 121, 124 and vocational training components, 122 Conservatism, 238–241 Constitution, 233, 234, 236–237, 246, 252, 253 Argentina (1819), 240 Bolivia, 95 Brazil, 31, 33, 35, 97, 98, 105 de-constitutionalization of social rights basic pensions, 33–34 health, 31–33 social assistance, 34–35 The Material Basis of Constitutionalism, 236 Continuous Cash Benefit program (Brazil), 98, 103, 104, 105 Contributory pensions, 89, 93, 102 Contributory social insurance, see Contributory pensions Decommodify, 92 Defamiliarize, 92 Demand for redistribution, 142, 143–152, 153, 160–162, 164 in Brazil, 156, 158–160 experiments on, 146–149, 164 intuitive, 146–147, 149, 157, 164 and political outcomes, 144–145, 160 survey evidence, 146–149, 158–160, 164 Democracy, 11, 22, 150, 239, 265 democratization, 225–226 and cumulative disadvantage, 223 de-democratisation, 224 relation between social and economic aspects, 211 and social mobility, 216, 224 as theory of institutional sets, 211–212, 214, 218–219, 221, 226 public support of, 218–219

INDEX

Demographics, 10, 12, 259 “demographic bonus”, 116 dependency ratios, 116, 119 estimated future growth rates, 129 skewed demographic structure, 126 structure, 116 Developmental freedom, 214 Discretionary power, 101, 104, 105 Dissociation of work and pay, 150–151, 152 in Brazil, 156, 158–160, 161, 162 Earnings-related benefits, 92–93 Economic incentives, 91, 212 Economic security, 100–101 Eduardo Suplicy (Brazilian Senator), 142, 157, 163, 165 Employment-related pensions, see Social policy, social insurance Entitlements, 22, 34, 89, 212 rights demandability, 73–75, 82 stability of, 57, 212 Equality, 73, 74, 173–174, 214, 247 and gender, see Gender (in) equality of opportunities, 73, 218, 221–225 European Union, 113, 115 Expected utility theory, 147–149 Family, 6–8, 12, 18, 55, 170, 176–179 allowance schemes, 6–8, 53, 120 neutrality, 101, 104 Family Grant Program, see Bolsa Família Program Framing effect, 147, 148 GDP APF, as percent of Alaska GDP, 45 Argentina AUH program as percent of, 64 Brazil BF program as percent of, 43 BPC program as percent of, 34 health expenditures as percent of, 32

271

rural pensions program as a percent of, 45 Central America estimated costs of transfers as percent of, 128 GDP related to Latin America GDP, 114 regional CI as percent of, 129 social spending as a percent of, 118 remittances as percentage of, 118 Gender, 36, 92, 101, 188–189 care work, 191–192, 201 gender (in) equality, 94–95, 101–102, 188, 192–193, 198–199, 201–203, 265 Governance legitimacy, 218–219 Hambre Cero program (Nicaragua), 121 Household consumption levels, 130 Indigenous peoples, 70 Individual accounts, 89, 93, 94, 95, 99 Industrialization, 118, 259 and substitution of imports, 170 Inequality, 10–11, 116–117, 211 aversion to, 146 decrease in inequality, 126, 131 and demands for redistribution, 149 of employment opportunities, 223 gender inequality, see Gender (in) equality Gini coefficient, 117 income distribution, 113 incrementing inequality, 118 intraregional inequality, 130 of opportunity, 212–213, 219 redistribution, 129 of schooling, 217, 221–223 skewed income distribution, 119 and social mobility, 216, 224

272

INDEX

Informal sector, 16, 52, 116, 170, 176 dual society, 116 ever-fewer available jobs, 127 informal protection structures, 117 informality, 3, 11, 93, 102, 117, 259 informality trap, 3, 7, 58, 61, 163 social insurance for informal workers, 120 In-kind transfers, 121 school feeding, 123 Institutions, 11, 14, 22, 172, 212–213 institutional sets, and opportunity assets, 221 institutionalization, 104–105 theory of institutional sets, 214, 223–224 Interamerican Development Bank, 130 International Social Survey Programme, 144, 164 ISSP, see International Social Survey Programme Lifelong Monthly Benefit (Brazil), 98 Malnutrition, 37, 116 chronic hunger, 121 Means tested pensions, 90, 94, 98, 102 Mexico, 67–68, 74, 151, 163, 189, 220, 222, 223, 234, 262 City Government, 73–74 Federal Government, 5, 73–74, 78 Mi Familia Progresa program (Guatemala), 121 Microcredits, 121 Migration, 115, 118–119, 125 brain drain, 119 economic mass migration, 114, 119 “export” of labor, 115, 127 illegal, 116 as intraregional challenge, 125–126, 131 migrant remittances, 118–119, 127 migration pressures, 117, 125

Minimum pension, 94 Minimum wage, 33–35, 54, 127 Moratorium, see Pension moratorium Noncontributory pensions, 89, 90, 94, 100, 102 Basic Solidarity Pension (Chile), 94, 103, 104, 105 Beneficio de Prestacao Continuada (Brazil), see Continuous cash benefit program (Brazil) Bonosol (Bolivia), 95, 96, 103, 104, 105 Pension moratorium (Argentina), 7, 99, 100, 103, 104, 106 Renta Dignidad (Bolivia), 95, 96, 103, 104–106 Rural Pension (Brazil), 33, 34, 97, 98, 103, 104–106 Social Assistance Pension (Argentina), 103, 105, 106 Solidarity Pension Contribution (Chile), 94 Solidarity Pillar (Chile), 94, 95, 100 Official Development Aid, 130 Operational rules, 71, 79–80, 131 Oportunidades program (Mexico), 20, 67–69, 81, 82 Party character, 172–176 charismatic-movement, 173 constituency-coordinating, 173 electoral-professional, 173, 180 nonprogrammatic-electoral, 173 PASIS, see Social assistance pension Chile Paternalism, 101, 103, 104, 194, 265 Pensión Ciudadana Universal program (Distrito Federal), 20, 74–75 Pension schemes basic state pension, 127 contributory, 120 (see also Contributory pensions)

INDEX

coverage, 89, 93, 94, 95, 96, 97, 98, 99, 119–120 (see also Social protection) Elderly Pension in El Salvador, 122 (see also Conditional Cash Transfers) political sustainability of, 91–92 tax-financed/noncontributive, 120, 124 (see also Noncontributory pensions) Pension moratorium, 99, 100, 103, 104 Pension reform, 92, 94 Perceptions, 144, 145, 153–155, 158, 160 Poverty antipoverty measure scheme, 113, 122 conditional cash transfer programs to curb poverty, 114, 124 (see also Conditional Cash Transfers) extreme poverty, 35, 115–119, 121, 180, 192 infantilization of poverty, 114, 116, 120, 126 international extreme poverty line, 124 measurement, 72 poverty rates, 116 poverty reduction, 122, 131 poverty trap, 35, 58, 61, 68, 123, 141 structural, 114 transmittance of intergenerational poverty, 126 as transnational problem, 115 PR AF (Honduras’s Family Allocation Program), 121 Preferences, 144–148, 153–154, 164, 263–264 effect of welfare state over, 145, 148, 157 endogenous, 145, 147, 149, 157, 161 individual, 144, 145, 158–160, 164, 165

273

normative, 144, 145, 153–155, 158–160 social, 146–149, 153–155 Public social expenditure, 114 efficacy of, 216, 219 minimalist social pro-poor policies, 118 social spending as percentage of GDP, see GDP, social spending as a percent of Purchasing Power Parity, 114, 124, 126 Radicalism, 247 Red de Protección Social programa (Nicaragua), 121 Redistributive budget, 92 Regional integration free trade area, 115 General Integration Treaty, 115 monetary union, 115 regional comptroller entity, 115 social, 114 strategic, 113, 114 transnational conception of citizenship, 132 unified poverty eradication strategy, 117, 125 Remittances, 118, 119, 127 (see also GDP, Remittances as percentage of) Renda Mensal Vitalicia (Brazil), see Lifelong Monthly Benefit (Brazil) Renta Dignidad (Bolivia), 95, 96, 103, 104, 105 Republicanism, 241, 242, 245–247 Rural Pension (Brazil), 97, 103, 104, 105 Schooling and employment integration, 222–225 returns to in Latin America, 221–222

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INDEX

Self-interest, 144, 145, 153–155, 158 Setenta y Más Program (Mexico), 6, 78–79 Social Assistance Pension Argentina, 100, 103, 104, 105 Chile, 94, 103, 104 Social distance, 153–155 perceived, 147–149, 160–161 in Brazil, 158–160 Social mobility, 216, 224 Social Policy, 75–77, 171 a nd income support policies, 176 in Brazil, 177 in Uruguay, 177–178 in Venezuela, 178–179 legacies, 172–176 reform in Latin America, 172, 176 social insurance, 89, 92, 102 Social protection, 10, 11, 14, 15, 30, 40, 52, 171, 172, 259–260 dual impact on, 119 exclusionary schemes, 114 fragmented social protection systems, 119, 131, 259–260 “informal-familiaristic”, 117 rural basic pensions, 33 security shared, 212 social proximity, see Social distance social security, 31, 33, 42, 117, 125 Status quo bias, 147–149 Stigma (stigmatization), 7, 43, 91, 92, 141 Support for citizen’s income, 141–167 factors correlated to, 153–155 index of, 143, 149–152, 161 prospects of, 142, 149–155, 161–163 in Brazil, 152, 155–160, 161 in Latin America, 149–155, 161 among a sample of Brazilian students, 158–160, 161 in the USA, 156, 161 Support for redistribution, see Demand for redistribution

Take-up problem, 91 Targeting, 30, 33, 38–39, 41, 68, 74, 121, 123, 260 errors of inclusion, exclusion, 123 selection criteria/costs, 123, 124 targeting, “double selectivity”, 121, 123 Taxation, taxes, 8–9, 13, 32, 44, 56, 59 efficiency, progressivity, 9, 130 on hydrocarbons, 96 income tax, 8, 9, 32, 41, 119, 130 nominal tax levels, 119 regressive tax system, 119 tax evasion, 119 Unconditionality, 2, 19, 30, 34, 39, 79, 204 Unemployment insurance, 3, 4, 34, 52, 55, 216, 223–224, 227 structurally unemployed, 118 trap, 61, 91, 141, 197 Universal Pension, 90, 92 Universality, 2, 7, 9, 29–34, 37, 43–44, 62, 73–74, 82, 89, 105–106, 204, 260–261 Usura Cero program (Nicaragua), 121 Washington Consensus, 12, 115 Welfare Benefício de Prestacao Continuada, 34–36, 88 Central America welfare state, see Welfare Regimes exclusionary regimes, 117, 126 Means-test, 34–35 minimum welfare base for the extremely poor, 123 remittances as substitute for public welfare, 118 safety nets, 30, 34–35, 43 “welfare mimicry”, 122

INDEX

Welfare Regimes, 14–16, 117–119, 171, 259 Women labor participation of, 190, 197–198, 202–203 unpaid care work, 187, 195–196, 201–202

Work motivation, 212, 220–221 Workfare, 39–40, 52, 53 World Bank, 64, 130 World Values Survey, 143, 149–157, 161, 165 WVS, see World Values Survey

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