LETTER: Spirit of Institute for Economic Justice’s response to BIG critique is questionable

The bigger and more consequential the decision, the better the evidence we should require. The introduction of a basic income grant (BIG) in SA could absorb R60bn-R300bn (or even more, on some proposals) of public spending, more than the state currently spends on education and health combined. So, if we are serious about it as a policy option we should demand that much evidence is marshalled and thoroughly interrogated by those interested in establishing the facts.  

Gilad Isaacs, who takes issue with the detailed report Intellidex prepared on the funding options for a BIG, is director of the Institute for Economic Justice (IEJ), one of the most vigorous activists for a BIG (“Study’s conclusion that a BIG is more pain than gain is not credible”, August 7). Our report called for calm and rational debate with interlocutors. Indeed, since the release of our report we have had many constructive engagements regarding the evidence, including with activist proponents of a BIG. Unfortunately, the spirit with which Isaacs and the IEJ have responded has been anything but constructive.  

Isaacs takes umbrage at our suggestion that there are potential negative consequences from raising taxes to pay for a BIG (we won’t rehearse these here — readers are welcome to read our report on our website). In particular, the IEJ seems most resistant to a genuine discussion about tax multipliers versus spending multipliers (the negative economic impact of a tax versus the positive economic impact of increased spending). This, to our minds, is a critical area of evidence to examine.

Instead, the IEJ has openly spurned (on Twitter and elsewhere) our concerns about the behavioural consequences of tax increases after its main report on a BIG in effect assumed taxes can be increased and more revenue raised at any level of tax rate. Isaacs continues this theme in his piece by downplaying the complexity highlighted by the World Bank and Organisation for Economic Co-operation and Development (OECD) in the two examples he cites as evidence on SA’s tax levels and ability to raise more revenue. 

The purpose of our paper was to highlight the range of consequences that might flow from different funding mechanisms, including the behavioural and other unintended consequences the IEJ and others have ignored or have been highly selective in admitting. 

A BIG will ultimately — and rightly — be a political choice once the pros and cons are weighed. Such a choice requires an “eyes-open”, evidence-based approach from all perspectives and is not the “no-brainer” the IEJ seems to want it to be. Social science benefits from critique, which should be welcomed by all parties motivated by a genuine desire to deliver the best for SA. 

Peter Attard Montalto and Stuart Theobald
Directors, Intellidex 

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