E-mail to the treasury – Covid 19 Demand Side Economic Response

Ladies and Gentlemen of the Treasury.

I head up a political party: Direct Democracy Forum Reg Number 936.

We have as cornerstone policies:

1) A Senate, drawn from the streets, 2) Tax Reform (Total Economic Activity Levy, Replaces all other taxes) (TEAL), 3) A Universal Basic Income (Including National Health Insurance Funding) (UBI), 4) An Advancement Grant (for tertiary education and other advancement activities) (AG), 5) A Sovereign Wealth Fund (SWF), 6) Banking and Monetary Reform

We suggest the last five items should be adopted to relieve the effects of the Covid 19 pandemic and any subsequent economic fall-out.

Assuming an adult population of 35 Million adult South Africans, a UBI of R5000 per month would deliver R175 Billion into the demand side of the economy, each month. Apart from the obvious economic stimulus this would bring to the economy it would also have the effect of empowering and uplifting every recipient in the economy, and to ‘challenge’ the supply side to claim their share of that stimulus through trade and industry. A UBI is intended to replace all other grants.

A UBI can be paid for by a 2%TEAL on all the money flowing through the banking system. You would not be printing money so much as re-purposing existing money. If you created or borrowed the money you might wish to recycle it using TEAL. A ½% TEAL could also fund the Fiscus.

You can ‘create’ the required money, if you wish (see below*). This is what the banks would do if you borrowed R175 Billion from them, at interest. They would create the money from nothing, as is their wont, then lend it to you at interest. If treasury themselves created the money from nothing instead of going to the banks, treasury would get the money and save the country and the taxpayers the interest.

The ANC are talking of a Sovereign Wealth Fund (SWF). If you stimulate the demand side of an economy without ensuring that the supply side keeps pace, you have a classic inflation/hyper-inflation situation. The SWF can be used to intervene in the supply side of the economy to help it maintain the required balance between demand and supply. This it does by investing in the supply side economy. This, however, would not be the SWF’s sole function. The SWF can be rapidly funded using TEAL and other mechanisms to become effective in this manner, inside of months, or even days (see below**).

Part of the supply side intervention would be for the SWF to own and run commercial, industrial and community banks alongside privately owned and run banks, thus influencing the financial services sector. We believe that the S A Reserve Bank (SARB) should be wholly owned by the SWF and operated for the benefit of the economy, regulating the money supply and interest rates to that end. Any money creation (see above *) would be under the auspices of such a SARB.

The rational for this is that a UBI is an intervention designed to fill the void left by the already existing 4th Industrial Revolution’s lack of formal sector employment opportunities. The Covid 19 pandemic seems just to have accelerated the onset of this dilemma. There is more to this (see below **).

** Further details are available at our web site, http://ddforum.co.za. If you wish to discuss any of this you may contact me on +27 76 060 1973 and or at

Thank you for your attention.

John Barrington.
Leader, DDF.
24/03/2020

The Third Economy

Jeremy Rifkin’s works, in particular ‘The End of Work’ and ‘The Zero Marginal Cost Society’ have had the world talking because they are a take on a very real problem, the decline of the (non-specialist) labour market which together with burgeoning population predicts huge proportions of the world’s populations facing unemployment and poverty while an ever diminishing proportion of specialists (the elite) are stunningly successful and affluent, all the time while capitalist productivity rises and demand falls. In short they are arguing that Capitalism will become the victim of its own success and end up producing large volumes of goods for which there are few markets and (presumably) capitalism will eventually implode.

Rifkin imagines that the employment slack will be taken up by the rise of a third economy (the first and second being the public sector and the private sector economies). This third being largely a social economy or a ‘social commons’, servicing diverse community needs through non-profit non government organisations powered largely by a low-paid, oft-times voluntary and probably relatively unskilled workforce. Rifkin imagines that the third economy will service the social needs of society which are not being met by a shrinking public sector economy, which is under constant budget constraints, nor being met by a disinterested private sector economy for which there is little profit in public service. Rifkin also envisages much shorter working weeks with more workers earning lower weekly wages, to try and help take up the employment slack.

Writing here in 1995, Lance A Compa, then of Cornell University, notes that in addition to the reduced working hours, Rifkin proposes a social wage funded by a value added tax (VAT) (in the USA) but excluding vat on basic necessities, along with defence spending budget cuts. Aronowitz and DiFazio in their book ‘The Jobless Future’ also propose reduced working hours but with more progressive income taxes instead of a VAT, along with a host of other measures, many of them in support of social welfare type expenditure along with infrastructure spends to help take up labour slack.

According to Compa, both books imply “a willing turn toward a shared genteel poverty”. However, Compa does not seem to share Rifkin’s nor Aronowitz and DiFazio’s sense of gloom regarding employment, and instead argues that history and the current experience suggests “that there is still plenty of work to be done and plenty of people wanting to work”. In short he is suggesting that while the mix of supply and demand for work is changing, it is not evaporating.

The Direct Democracy Forum (see DDF) have a slightly different take on these problems, agreeing in part with Rifkin et al’s perceptions, on the one hand, and in part with Compa’s contrary view, on the other.

We agree that three separate economies are emerging, the already existing public sector and formal private sector economies and a third economy that we would categorise as an informal private sector economy, an alternative to the formal sector economy of the Fortune 500 corporates and their ilk. We imagine this economy as being a merging of the formal and the commons economies of Rifkin’s imagining, but definitely not a second class economy of genteel poverty as Compa interpreted Rifkin et al to imply.

We do not believe a social wage will work as an adequate motivation for employment (as demonstrated by the failed Finnish so-called Basic Income Grant experiment), rather we see the need for a UBI or BIG (Universal Basic Income or Basic Income Grant) which, being universal and unconditional, goes to every adult citizen in an economy. We believe that an adequate UBI/BIG will to a large extent pay for the basic needs of most recipients. Those needs which cannot be met by a UBI/BIG we believe will motivate folk to trade with others in their communities and in this ‘third economy’, for mutual profit. Some may be content to seek low income service positions in NGOs and other service organisations but nothing will stop the more ambitious from exercising their entrepreneurial skills to rise above a mere survival level.

The DDF anticipate there could be significant movement between the formal and informal economies, of skills and labour and finance, as members of all three economies interact and move between the economies, as and when circumstances allow or dictate. So the DDF don’t see a rigid stratification where the ‘have-nots’ cannot or may not enter into the domains of the ‘haves’. Nor do we envisage the opposite.

Rather we see a more fluid society with movement between the different economies occurring more or less on a voluntary basis. Because whichever economy one occupies, the basic needs of everyone could be met from the UBI/BIG, there would be less importance attached to which economy one occupies at any point in time, and less stigma attached to not being a part of a formal economy if one is part of the informal third economy. That is not to say that one should lack ambition, just that it would not be a question of life or death, or survival or poverty, so much as to how one can move up (or down) in society, either within the economy one occupies or between economies, so as to improve one’s circumstances.

The question of how to pay for this UBI/BIG leads us to the topic of tax reform. A UBI/BIG in most economies would exceed the GDP. So, if one were to tax the GDP to pay for a UBI/BIG, that would be the same as having a higher tax than one earns, say a 120% tax on income. Clearly that would not work.

Before we look at an alternative to income tax, think of how iniquitous income tax is. What the tax authorities say, is, if you succeed, if you earn a wage or salary (you are one of the employed and therefore a success when compared to the unemployed), or if you trade at a profit (you are a success compared to those who trade at a loss), we will take from you, a part of that wage, salary or profit. Generally, the goal is to collect 30% or more of one’s income (or the GDP) in taxes. However, if you fail (do not earn an income or declare a real or concocted taxable loss,) you get off scot free, or tax free.

So what is the alternative? Both Rifkin and Aronowitz and DiFazio suggest that we add more and more complex taxes, when we should at least be trying to simplify taxes and make the collection process less complex and less expensive, even if we cannot actually reduce the taxes themselves. The DDF believe that is too complex and too costly and also believe they have a more effective and more economical alternative solution.

The DDF has a core policy to replace income tax and all other taxes, direct or indirect, with a Total Economic Activity Levy or TEAL. TEAL levies all the funds flowing through an economy’s banking system. In South Africa, where we have a good idea of what that amounts to, a ½% levy on all the transactions debited or credited to one’s bank account in all the bank accounts in the land, would collect about 30% of the GDP. This in effect reduces one’s tax payments from 30% or so of one’s income and profits, to 1% of one’s income or 1% of all of one’s trading activities (½% on all debits and ½% on all credits in your bank accounts). This presumes that you spend all that you earn. By comparison, banks in South Africa can charge more than ½% on all transactions for bank fees.

The DDF think TEAL is a far more equitable system than income and profits tax. Some of the advantages of TEAL are:

  • 1) All will pay the same low ½% TEAL.
  • 2) TEAL effectively works like a progressive tax, thus the more active you are in the economy the more TEAL you pay in absolute terms.
  • 3) TEAL is uncompromising and unconditional – all persons active in the economy’s banking system pay TEAL, so there are none who get away scot free (or tax free).
  • 4) TEAL broadens the tax base from the narrow GDP tax base to a much broader tax base, encompassing all economic activity in the economy. In South Africa this broader tax base is, on average, some 30 times the value of the GDP.
  • 5) TEAL can be thought of more as a rent that everyone pays rather than a tax that only some pay.
  • 6) The cost of collecting and administering TEAL is estimated to be some 10% of the costs of administering the conventional tax systems.
  • 7) The savings from implementing TEAL would more than pay for the costs of implementing and running a Senate, drawn from the streets rather than from a political party base, thus broadening and strengthening the reach of democracy at little or no extra cost.
  • 8) TEAL makes a UBI/BIG fiscally possible.

So how does TEAL make a UBI/BIG possible?

In South Africa’s economy, a 2.165% TEAL on all the economic activity, as measured by the flow of funds through the banking system, will pay for;

  • 1) the fiscus
  • 2) a moderately significant UBI/BIG
    • including funding for a National Health Insurance scheme,
  • 3) an Advancement Grant
    • to pay for Tertiary Education or any other advancement initiatives,
  • 4) help seed a Sovereign Wealth Fund.
  • 5) A UBI would effectively be an investment in the demand side of the economy, stimulating both the demand side and the supply side of the economy and both the formal and informal economies.

We believe the above makes TEAL an eminently more desirable alternative to income and profits taxes and makes a UBI/BIG and an informal third economy a viable and preferable alternative to genteel poverty in a social commons.

DDF : Overview

The Direct Democracy Forum (DDF) is a registered South African political party (IEC registration number 936). The DDF is a party of policies, not personalities.

The DDF believe in Capitalism (the private ownership of Capital, Property and the Means of Production and unrestricted access to the Market Place). The DDF believe in Democracy. But the DDF also believe that both systems need tweaking to benefit our society equitably. The DDF want both Capitalism and Democracy to succeed and to serve all in South Africa.

The DDF have five core policies which differentiates them from all other political parties. They are; 1) tax reform (TEAL or Total Economic Activity Levy), 2) Basic Income and Advancement Grants, 3) Sovereign Wealth Fund, 4) a People’s Senate and Municipal Forums and 5) Money and Banking Reform.

Central to DDF economic policies is the replacement of conventional taxes (30% or so of the GDP) with a single levy of 1/2% on the broader economy, to fund the fiscus. We call this Total Economic Activity Levy (TEAL). This is possible because there is a general relationship of 30 times (or more) of the value of the GDP flowing through the Banking System in any given year. Thus a R3 Trillion GDP will mean about 90 Trillion (or more) flows through the banks in that year. Each Rand is both a deposit and a payment which sums to R180 Trillion. 37% added for settlements within single banks pushes this to R246.6 Trillion.

OUT: 30% tax of the GDP of R3 Trillion (R0.9 Trillion).

IN:    1/2% TEAL on 246,6 Trillion (R1.233 Trillion).

This would effectively replace a 30% tax burden on profits and income (which penalises success) with a 1% TEAL on the economic activity (½% into + ½ % out of bank accounts) which is more like an economic rent than a tax. The 1% assumes you spend all that you earn. The banks collect TEAL from their clients and pay it to the revenue service, much like they do with VAT.

This same process can be used to fund a Basic Income Grant (BIG) (aka UBI or Universal Basic Income) of say R5000 per month for every adult South African Citizen, while a once in a lifetime Advancement Grant of about R200000 for each member of the same population can pay for tertiary education or other advancement expenditure. We see these grants as a joint investment in the demand side of the economy and in SA’s population, giving them opportunities and choices they would not otherwise have, which will also stimulate the supply side to pursue the increased demand. A BIG will also fund a National Health Insurance Scheme and help fund a Sovereign Wealth Fund in which every adult South African Citizen has an equal share (SWF). The BIG and the Fiscus can be funded from a 2.165% TEAL (see Teal the Big Picture ). The DDF expect the SWF will eventually fund the BIG from profits earned.

To help redress the problems of Democracy we propose a Senate, populated independently of party politics. This Senate has a rolling population (50% are replaced annually) drawn by a random process (called sortition) from a cross-section of a volunteer population, identified for example, by Age, Income, Education, Cultural Affiliation, Religion, Gender & etcetera, and arranged into peer groups. Thus far some 40 peer groups have been identified. At 10 senators per peer group this equals 400 senators. The legislative assembly and cabinet would legislate and regulate, and the Senate would approve or reject that legislation and regulation. This includes the possibility of a minority veto to block discriminatory legislation or regulation. The cost savings from replacing tax with TEAL will more than pay for the Senate. A similar structure and process is proposed on a smaller scale for Municipal Forums at local government levels. 

Money and Banking reforms (M&B) are proposed so our society as  whole benefits from the efforts of the financial services sector.  This will probably include the SWF wholly owning the South African Reserve Bank and entering the financial services marketplace through part or full ownership of some commercial banks and institutions spread across the entire financial sector, so as to introduce elements of competition which do not presently exist in that sector, with the SARB controlling the upper limits for rates of interest and other (non interest) charges levied by players in the financial services sector, and, importantly, directly controlling the money supply available to the economy.   The SARB is key to these reforms and it’s remit will be to benefit, through its actions, all of the economy, rather than just a thin slice of the economy. 

We do not think these proposals are a total solution for all SA’s woes. There needs to be a framework of sound government policy and administration. In that sense, Cabinet and the Executive will be the executors of the will of parliament and SA’s population, as delivered through the exercise of direct democracy in the Senate and Municipal Forums, but we think the proposals sketched above will contribute to a more prosperous and happy South Africa.

These are the core policies of the DDF.

TEAL – The Big Picture

TEAL: The Big Picture:

Direct Democracy Forum (DDF) Policies are heavily reliant on TEAL as an alternative way to tax an economy. We argue that we would rather tax the whole economy with very small levies than tax a small segment of the economy very heavily. The outcomes in terms of tax paid are very similar but the spread (of the burden) is very different.

TEAL will enable the funding not only of the conventional tax burden but also the funding of a Basic Income Grant and an Advancement Grant. The advancement grant is split into two components, the actual advancement grant and a left-behind grant, the latter to compensate all those who will have already missed the advancement grant per se. 

Not wishing to get too carried away without taking stock, this page summarises these applications and their cost, based on a very conservative estimation of the expected GDP for 2017.

TEAL is based on the GDP and it’s relationship with what we call the Total Economic Activity.

First, the flow of money through the banking system is about 30 times the GDP (see here).  If you have any doubt about this, the Payment Association of SA (PASA) estimated in or before 2017, that R350 Billion is settled EACH DAY through the National Payment System. That amounts to some R1 Trillion every three days.

Second, each Rand Passing through the banking system represents both a deposit and a withdrawal in and out of the banking system. We call this the doubling effect.

We expect the GDP for 2017 to be in the region of R2.8 Trillion. The flow of money through the banking system should be thirty times that amount 2.8 X 30 = R84 Trillion and the doubling effect would put the Tealable amount at R168 Trillion.

There is an additional factor which, to be conservative, we shall ignore for the purposes of this exercise, which is that an additional amount of about 37% of the settlement figures for which there is no inter-bank settlement, are settled in-bank, for example FNB clients will pay to FNB clients, and so on. So the R168 Trillion should actually be R168*1.37 or R230 Trillion.

TEAL , THE BIG PICTURE:

Application 

% of R168 Trillion

Teal Trillions of Rands

Target Trillions of Rands

Annual Target

Fiscus

0.50%

‘R0.840

‘R0.840

30% R2.8T

Basic Income Grant

1.25%

‘R2.100

‘R2.064

34.4MxR5kX12Months

Advancement Grant

0.09%

‘R0.1512

‘R0.150

750KX200k

Left Behind Grant

‘0.325%

‘R0.546

‘0.546

R10.92T/20

Totals

‘2.165%

‘R3.6372T

‘R3.600T

 

A TEAL of 2.165% will generate R3.6T which is considerably bigger than the GDP, which will have many economists throwing their hands up in horror as the conventional tax burden, it is said, should not exceed 30% of the GDP. The point is that the GDP is not a true measure of the economic activity of the country, merely a measure of the Gross Domestic Product. The level of economic activity needed to generate the GDP, on the one hand, and sundry other economic activity which does not classically fall within the scope of a GDP, is a great deal more than the GDP itself. How much more we were only able to extrapolate from a small economic history of some 5 years back (in 2011). Clearly we need more information to prove the extent of this relationship, in particular for the current economy, which is very different from that of 2011, when SA’s GDP peaked and then, in US$ terms, tanked, starting its slide into today’s abyss (yes, in US Dollar terms the GDP has been shrinking at about 5% pa over the past 5 years or so since 2011) . But we use what we have until we have better.

The fiscus component as above will totally replace the existing tax product of about the same amount. The additional amount collected by TEAL for non-fiscus purposes (BIG and Advancement Grant) will actually be a lot smaller than the gross, as follows: R3,672T less R840 Billion fiscus,  which nets out at R2.832 Trillion or only 1.686% of the TEA instead of the 2.165%.  By way of comparison, some faiths exhort their followers to give 2.5% of their wealth to needy causes every year. Some food for thought there.

The other thing to note is that while R2.832 Trillion seems a lot of money (and it is a lot of money), it is but a small percentage of the TEA (Total Economic Activity) (1,686% of R168T) which will do a great deal of good for South Africa and it’s economy and it’s citizens, enabling an economy built on general prosperity rather than an economy built on general poverty, which is what we presently have.

That is only part of the good news. The other part of the good news is that the big players in the economy (trade and industry) should also benefit from expanded economic activity. We at the DDF believe that the strategy inherent in adopting these policies is effectively an investment in the demand side of the economy and is a win-win strategy for all of us in South Africa.

The really big challenges are how to counteract inflationary pressures arising from that extra activity and how to build the GDP (as opposed to building imports) both of which pivot around turning South Africans into a nation of producers rather than a nation of consumers.

So we are not claiming that TEAL, the Basic Income Grant, the Advancement Grant and the proposed Sovereign Wealth Fund are some sort of all -encompassing panacea for SA’s economic woes. At best they can only help us along the path to economic recovery.

The rest is up to what we as South Africans do with these devices and the benefits which should flow from them.

How to pay for an annual Advancement Grant

An Advancement Grant is a once in a lifetime grant intended for every South African citizen to advance their lives through whatever means the grant can purchase. For example, education, training, travel, investment, opening a business, helping to purchase a home. There are no restrictions on how it can be used. It is intended to be the equivalent of paying for a professional tertiary degree (four years of university). In the post There is no such thing as a free lunch Part ll, we postulated an Advancement Grant to satisfy the Fees must fall demands. We indicated that we would sharpen our pencils to determine costs and the means of payment. This is it.

If one assumes an Adult Population of 35 million and a working life of say 47 years (18 to 65) and for the sake of simplicity assume that each year there would be 1/47th of 35 million school leavers qualifying for an advancement grant, that would be 745 000 (say 750 000) school leavers each year. Assuming an advancement grant of R200 000 each that would be R149 Billion a year.

TEAL can fund this as follows.

If we assume a R2.8 Trillion GDP for 2017 that would equal a Total Economic Activity of 2.8 X 30 or R84 Trillion flowing through the banking system. Each Rand of that flow represents both a deposit and a withdrawal from the banking system so the actual Tealable amount would be R168 Trillion. R149 Billion as a percentage of R168 Trillion = 0.089% or about 0.09% (=151.2 Billion)

So, an annual TEAL of about 0.09% on R168 Trillion will pay for a R149 Billion Advancement Grant granted to 750000 school leavers (each school leaver receiving R200 000) each and every successive year.

What of the 34 250 000 who will not receive the Advancement Grant in year one of the scheme (The Left Behinds)?

If each of these ‘Left Behinds’ received R200 000 that would cost R6.825 Trillion. If that were paid out to them evenly over 20 years at an interest rate of say 6% pa, that would be about R10.920 Trillion or R546 Billion per year. Paid out to 34.25 Million each month over 240 months would be 10.92T/240months/ 34.25 Million// per month, or R1328.47 per month per person left behind. R546 Billion as a percentage of R168 Trillion is 0.325% .

So the annual Advancement Grant of R149 Billion and the annual Left Behind Grant of R546 Billion (in total R695 Billion) could be paid annually by a TEAL of 0.09% + 0.325% or 0.415%.

0.415% of R168 Trillion is R697.2 Billion

In Table Form:

Grant

R168 Trillion TEALable amount

TEAL

Total Grant Amount pa

Advancement

‘0.090 % of R168T

R151.2 Billion

R149.00 Billion

Left Behind

‘0.325 % of R168T

R546.0 Billion

R546.00 Billion

Annual Total

‘0.415 % of R168T

R697.2 Billion

R695.00 Billion

NB: This is an exercise. The GDP and the Tealable amount will vary from year to year as will the number of persons qualifying as may the payouts as also will the population, so these numbers are not to be taken as absolutes, merely an indication of what is possible.

Have a look at DDF policy on the Basic Income Grant (BIG) and DDF policy on the Total Economic Activity Levy (TEAL).

Join with us.

See how you can benefit from DDF policies.
View videos on the main DDF policies.
Support the DDF.

There is No Such Thing as a Free Lunch. Part II

In my last post Is a Basic Income Grant Stealing from the Rich I referenced an article There is a problem with the way we define inequality.

This article made a number of interesting assertions about attitudes on inequality, the principle one to my mind being that we should stop obsessing with the rich and super rich and start obsessing with eliminating poverty, and also, importantly, the assertion that peoples’ attitudes were less angry about wealth and more angry about unfairness. As was stated the public perception of wealth inequality itself being aversive to most people is incorrect, and that instead, what people are truly concerned about is unfairness” and also that “People typically prefer fair inequality to unfair equality”, and, as we are beginning to see in South Africa, what really gets folk going is unfair inequality, a la the Zuptas state capture and wealth grabs.

So we all need the right to work harder and earn more and be wealthier than our neighbours, that is fair and acceptable. Just reward for just gainful employment is acceptable. But if you cheat in order to be wealthier, that is just not on.

This got me thinking about the Fees Must Fall movement and protests (see here) because it really is unfair that certain sectors of our society perhaps have little or no access to higher education. Let me be very clear, it is not the access of those who have access that is unfair, but the lack of access by those who don’t have access that is unfair. This is a major argument in the article There is a problem, the issue of unfairness.

A major conclusion of the article is that “the solution lies in addressing the fact that poverty and unfairness exist.”

This set me to thinking about the conflicting unfairness inherent in the fees must fall campaign; the unfairness of the poor being unable to access higher education just because they were poor, and the unfairness of the same poor, expecting those who do not benefit from higher education, to have to pay for the higher education of the same poor. Something simply does not add up.

You cannot fix a wrong inflicted on anyone or group by inflicting another wrong on another one or group. That is simply wrong and unfair and will be perceived as wrong and unfair and is probably why most people object to paying for the education of others who are seen to be unwilling to pay for their own education.

To reiterate, at the risk of being boring, “what people are truly concerned about is unfairness” and “People typically prefer fair inequality to unfair equality”.

So the problem is how to fix one wrong without creating another wrong?

The Direct Democracy Forum (DDF) believe that the Universal Basic Income Grant goes a long way to relieving poverty in a fair and equitable way, Thus all in society contribute to the system in an equally proportional manner and all benefit from the system equally. Is this fair and equitable? Some would say no and others, the DDF included, would argue that imperfect as it may be, it is fair and equitable, and is a lot better than what we have.

But, and here is the big BUT, could all higher education students afford to pay for their education (fees and accommodation) exclusively with a BIG? Of course, students can supplement their income by working full and part-time in internships or apprenticeships or articles, and there is nothing wrong about that, in fact many qualifications require it of you in order to qualify you as a professional fit to administer to (for example) your patients if you are a doctor or your clients if you are an accountant or lawyer. But what if a Basic Income Grant simply isn’t enough because fees and or accommodation have escalated out of all proportions.

Education throughout the world is becoming almost prohibitively expensive. Privatisation of funding is making it even more unaffordable and the level of debt that graduates are left with is making them wonder if education is even worth it, and some of the schemes are just there to make finance providers rich at the expense of society in general and the graduate population in particular. And yes, there are calls all over the world for fee free education, so South Africa is not alone. Indeed there are countries where tertiary education is free, but the much lauded fee free system of Germany is branded by some as being unsustainable. Others are saying the opposite, that fees are becoming, like the dinosaur, extinct, So everyone has a point of view and is looking for a solution.

Maybe then we need a different mechanism

The DDF believe that such a mechanism could exist which may be imperfect, but might none the less be better than what we have. But again there is the question of fairness..

But to address the issue of fairness, it would need to be a mechanism that benefits all equally, maybe a universal education grant. But what about those to whom a higher education is unsuited. How would they benefit from such a scheme? The short answer is that they would not benefit, and we would be back to a situation of unfairness.

Perhaps, as has been suggested about wealth and income inequalities taking our attention away from the real issue of poverty (see There is a problem), we are focussing on the wrong thing. Instead of just focussing on education for the poor we should instead be focussing on the bigger issue of how to better the lot of all. So what the DDF are now considering is the possibility of a once in a lifetime “Universal Advancement Grant”. I can hear the groans – “not another grant!” and “this is a slippery slope?” and “What a daft idea!” – I can just imagine the moans and groans and yes, you have a right to be sceptical. Indeed the DDF still rest on their assertion that there is no such thing as a free lunch so the means to pay for this needs to be found.

But consider this in the light of fees must fall and the issue of fairness; What if everyone had this once in a lifetime “Advancement Grant” and could use it to pay for their tertiary education or as a down-payment on a house or as a business investment or to travel abroad with, or indeed, just to fritter it away on trivia. What if?

And what if this could be substantially paid for by the savings made from shrinking the size and cost of government? What if?

Wouldn’t that solve the issue of fees must fall and fairness at the same time? It possibly would for this and future generations of beneficiaries, but those of us who have already missed that boat would not think of it as fair and to to pay such a grant to all the rest of the county’s citizens would probably be impossible, but could we compensate them somehow? Perhaps an enhanced BIG granted over time (say over 20 years) to compensate those who didn’t receive the advancement grant might work and be affordable?

So maybe a universal once In a lifetime “Advancement Grant” is not so daft an idea after all, and is worth considering.

The DDF have some pencil sharpening to do to figure out how to pay for it all. But that is part of the process.

Have a look at DDF policy on the Basic Income Grant (BIG) and DDF policy on the Total Economic Activity Levy (TEAL).

Join with us.

See how you can benefit from DDF policies.
View videos on the main DDF policies.
Support the DDF.