The largest basic income program in Latin America is currently underway in Maricá, Brazil, a city of 158,000 near Rio de Janeiro. Mayor Fabiano Horta and fellow city officials are working to enroll thousands of residents in the Renda Básica da Cidadania (RBC), or Citizens’ Basic Income program.
By the end of the year, Maricá’s government officials expect an enrollment of approximately 50,000 of the city’s most in need residents, who will begin to receive a monthly benefit equivalent to 130 reais (approximately $30) per person, paid in mumbuca, Maricá’s local digital currency. In a country where the per-capita poverty line stands at 178 reais (roughly $42) per month, the program is poised to make a major difference in the lives of tens of thousands. What’s more, it may point the way to a more equitable distribution of income across Brazil, and bring important lessons to the debate on the long-term benefits of a Universal Basic Income policy. Here’s how.
A unique initiative
Maricá’s basic income program is unique in several critical ways. First, the benefit is big and unconditional. While 130 monthly reais may not sound like a lot of money, it adds up to $1,560 reais per person per year, equivalent to 4.8 percent of Brazil’s 2018 GDP per-capita. This is higher than other basic income programs distributed elsewhere. For instance, the Alaska Permanent Fund’s annual dividend payments to state residents typically represent about 2 percent of the state’s GDP per-capita.
RBC is also larger than other parallel initiatives in Brazil. The average household enrolled in Bolsa Família—Brazil’s celebrated conditional cash transfer program—receives R$186 on a monthly basis. A family of four will be paid nearly three times that amount under Maricá’s RBC.
Because RBC payments accrue on top of those received from other government sources, households will receive close to two-thirds of the R$998 average monthly minimum wage. Adding up the RBC and the Bolsa Família transfer program, our hypothetical four-person household would receive approximately R$700 per month
Additionally, while Bolsa Família payments require parents to vaccinate their children and enroll them in school, the RBC program demands no similar conditionalities. Anyone who has lived in Maricá for at least three years, and who makes less than three times the minimum wage, is eligible to receive the payment, and to spend it on whatever they choose.
However, while Maricá’s benefit can be used to purchase beans or baby powder, recipients do face one important constraint: their RBC payment can only be spent in the city of Maricá itself. That is because, rather than receiving reais, benefit recipients are paid in mumbucas, a digital currency administered by Maricá’s community bank, the Banco Mumbuca, ensuring this major cash infusion remains in Maricá to support local development. Beneficiaries will be able to spend mumbucas by card or a mobile app linked to a Banco Mumbuca family bank account.
Basic income and the solidarity economy
Maricá’s RBC program is also unique in the sense that it advances a vision of basic income as a collective right and makes progress toward a “solidarity economy.”
The basic income concept is coming to prominence in many parts of the world across the political spectrum—not least in the United States, where Democratic presidential candidate Andrew Yang has made it the centerpiece of his primary campaign. But although the concept has gained enthusiasts from both the left and the right, some view it as a tool to reduce inequality and advance social mobility, while others see basic income as a libertarian fantasy, a means to advance individual autonomy while eviscerating the social safety net.
In Maricá, the RBC program will be launched by the only municipality in the state of Rio de Janeiro governed by the left-leaning Workers’ Party—for whom income redistribution is a key pillar of what many on the left call the “solidarity economy.”
Theorists of the concept, like the late Brazilian economist Paul Singer, believe that community banks and currencies can help build a more inclusive and accountable local economy, far beyond focusing exclusively on drawing residents into the formal banking sector. For example, like the more than 100 other community banks in Brazil, Banco Mumbuca uses the revenue from the two percent fee charged to merchants who use its platform, to fund zero-interest loans for Maricá residents who want to grow small businesses or improve their homes. Similar funded initiatives at the city level include free public transportation, subsidies for university study, and individual savings accounts for secondary school students.
Maricá’s basic income program is funded by royalties paid to the city by Petrobras, Brazil’s state oil company. In addition to the basic income program and investment in critical infrastructure like roads and hospitals, the city is also using a portion of these oil revenues to create a sovereign wealth fund along the lines of the Alaska Permanent Fund. This move reflects a desire on the part of city leaders to use these exceptional resources to build a foundation for sustainable shared growth.
These initiatives could soon reverberate across Brazil. Maricá city officials have taken direct inspiration from a 2004 law—introduced by then-senator and Workers’ Party co-founder Eduardo Suplicy—that established basic income as a right of all Brazilians, though one to be guaranteed under strict budgetary constraints and starting with the country’s neediest citizens.
Maricá’s program has been designed along these same lines. The advocates and researchers who comprise the Brazilian Basic Income Network—a group that brings together academics, researchers, social activists, volunteers, enthusiasts and citizens for whom basic income programs are the most viable way to achieve social justice—believe that Maricá’s program will serve as a model for other municipalities to replicate, and ultimately for states and the federal government itself to adopt. The fact that Bolsa Familía itself followed a similar trajectory, growing out of smaller local initiatives across the country, makes these ambitions far more realistic than idle hopes.
An international partnership to study basic income at scale
Researchers based at the Jain Family Institute (JFI) in New York and the Universidade Federal Fluminense in Niterói, Brazil believe the Maricá’s RBC program can become a lodestar in the international discussion of basic income.
In July 2019, the international team launched a major longitudinal project to study the initiative—set to kick-off in the first quarter of 2020—using both qualitative and quantitative methods, offering numerous opportunities for students in Maricá and surrounding communities to participate in data collection and analysis.
Maricá’s RBC initiative coincides with rising academic and public enthusiasm for Universal Basic Income (UBI) and cash-transfer programs more broadly. Renewed interest in basic income has generated a wave of research projects seeking to quantify the impacts of unconditional cash transfers on the physical, mental and financial well-being of recipients, and to scrutinize concerns from critics who worry that the money will be spent unwisely and will lead to laziness—concerns that are not, in fact, supported by available data.
Recent studies on UBI initiatives include randomized controlled trials (RCTs) of smaller scale pilots in Stockton, California, Ontario, Canada, and Finland. The study in Maricá is not a small randomized controlled trial—JFI and Fluminense researchers see this as a benefit. While such studies can generate important findings, some critics have pointed out their limitations as a sound basis on the functioning of a truly universal, persistent program. And while RCTs are often labeled the “gold standard” of evidence, their use may require delaying the launch of policies that deliver aid to the communities in most need. Thus, some have questioned the need to subject basic income policies to RCTs, and pushed for ways to effectively study their impact without further implementation delays. (The latter criticism feeds into a larger debate among development economists recently reignited by the awarding of the Nobel Memorial Prize in Economic Sciences to Esther Duflo and Abhijit Banerjee).
The research on Maricá’s RBC, by contrast, will be able to answer questions on the impact of basic income on whole communities and on local economies without the need for random assignment. The research team will also leverage existing eligibility requirements (no eligible participant will be denied aid), and will use data from administrative sources to generate a comparison group and quasi-experimental methodology to estimate policy impacts. With roughly one third of Maricá residents expected to receive the RBC, the scale of the policy will allow to measure the effects on wages and prices over time, something that is typically done with computer simulations and estimations. And because the RBC is dispersed through a digital currency linked to a bank account, the study will provide detailed information on expenditures that otherwise wouldn’t be possible to obtain through surveys given both time constraints and recall issues.
The project will demonstrate the power of innovative, transnational and mixed research methods to bolster major social policies, not through abstract modeling but through real-time implementation. The scale and promise of Maricá’s basic income program demands nothing less.
Paul Katz (@paulryankatz) is a Research Fellow at the Jain Family Institute’s Guaranteed Income Initiative and a Ph.D. candidate in Latin American history at Columbia University. Stephen Nuñez is the Jain Family Institute’s Guaranteed Income Initiative Project Lead. Fábio Waltenberg is Associate Professor of Economics at the Universidade Federal Fluminense and Scientific Director of the Brazilian Basic Income Network.
The three researchers are members of the interdisciplinary group of social scientists at the Jain Family Institute in New York and the Universidade Federal Fluminense in Niterói, Brazil studying the Maricá Renda Básica da Cidadania (RBC) program. The Jain Family Institute is an applied research organization in the social sciences based in New York.