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Social grants: What’s fair, right … and possible?

A look at the relationship between individual wealth and welfare on one hand, and a socially just society on the other – against the backdrop of the current economic reality.
Social grants are a burden on the fiscus, but does that make them ‘wrong’? Image: Moneyweb

In South Africa impoverishment coexists with great opulence and is generally outlined by class, gender and race.

The state of poverty, economic and social exclusion is a problem that can and should be solved. The government-distributed social grants have been shown to reduce poverty. However, the dilemmas of democratic society, of everyday life, are deeply paradoxical in that the welfare of an individual cannot be tied to that of another person, yet society is measured and judged on its collective wellbeing.

Furthermore, welfare economists acknowledge that the distributive outcomes of capitalism and markets are not always compatible with the rules of equality that society adopts for itself.

In reality, some will always be better off and some will be worse off, because this is the nature of the capitalist mode of production.

The reason for this column is to consider the recent court ruling not to extend the R500 top-up on social grants given to caregivers, while continuing with the more widely distributed temporary Covid-19 Social Relief of Distress grant of R350 a month.

Read: Court says no to extending top-up grants

Should the temporary pandemic-induced Social Relief of Distress grant continue?

Knowing the persistency of poverty, inequality and unemployment in South Africa and the changed realities caused by Covid-19 – the loss of income and subsequent rising hunger – the significance of the social grant is neither overstated nor can the little social safety net it provides for recipients be taken for granted.

However, concerns about the sustainability of the grants makes this a sizzling topic in the debate around whether or not they should continue to be disbursed.

Sustainability

The long and short of the social grants dilemma:

  • The argument for the continuation of the top-up is that it’s tied to the national state of disaster;
  • However, the hard lockdown has been relaxed and economic activity resumed in May; and
  • National Treasury has made it clear there are no additional funds to continue with the R500 top-up of social grants.

This has led me to ponder upon the relationship between individual wealth and welfare and a socially just society.

How can we know how things ought to be?

The debate has made me think of Scottish philosopher and historian David Hume (1711-1776) and his ‘Is-Ought’ problem on morality.

In this case: how can we know what ought to be about social grants, based on our knowledge of what is – bearing in mind that we cannot derive an ought from an is.

If the argument is that South Africa ought not to continue with social grants because of their presumed financial unsustainability, compounded by no additional funds being set aside and rising debt, then it is valid. In other words, no-moral facts such as government tightening its fiscal belt to reduce spending, then make this argument valid.

This can be done using readily available numerical data and statistics. For example, according to the 2020 Medium-Term Budget Policy Statement, South Africa’s gross debt will rise from roughly R4 trillion this year to R5.5 trillion in 2023/24 – and the government is borrowing at a rate of R2.1 billion per day.

Another example is that topping up caregiver grants will cost R10.9 billion if extended for three months, in addition to the R6.8 billion extended to Social Relief of Distress grant in the same period.

In the context of the is-ought problem, these figures reflect what ‘is’; they show what is happening and what can be measured.

However, we cannot measure the ‘wrongness’ or morality of discontinuing the social grants or our perception of them as a disadvantage on the economy based on these factual measures.

It must be recognisable by now that Hume’s argument was a utilitarianism problem or, in this case, that because government debt and spending is increasing, maintaining social grants is unaffordable and retaining them is an addition to the debt – therefore the government ought to do away with them or not extend them.

Linking the is-ought problem to South Africa’s social welfare and collective wellbeing and the moral arguments regarding grants, I am inclined to agree with Hume: it is not easy to make the connection between the world of values and the world where you and I don’t have an idea how life-changing and sustaining to the recipients those social grants may be.

Considering all of the above, I wonder – do we leap from observations about facts to judgement about values without minding the gap in our reasoning?

Especially the gap about why social grants are needed in the first place.

For many South Africans, even before the pandemic, being in work did not guarantee a comfortable standard of living or being able to put basic food on the table. The only social safety net keeping hunger at bay for some is the Social Relief of Distress grant … for now.

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How about : Don’t breed them if you can’t feed them ?

True!! My farm domestic took her daughters out of school to breed.

Her logic?? The government gives us money for children.

What is right? To care for those less fortunate than ourselves. What is fair? That beggars can’t be choosers. What is possible? That all South Africans can pull together in harmony, each contribute and earn his fair share, and pigs can fly.

This problem is compounded when there is no incentive to work. I am referring to Mike Schussler that said that the data from impact of lock-down contain people that simply stopped working and doing business in order to benefit from the hand-outs. Some of these people simply did not go back to work (paraphrasing, I can’t remember the exact quote).

I did not say that people do not want to work. I said they cannot work or even look for jobs during the Lockdown. (The Quarterly Labour force survey showed a drop in employed and unemployed which is why I said the above as to be unemployed you have to be actively looking for work but that is not possible during lockdown)

Paying people extra during the lockdown mega-crisis makes sense. It is now however getting to the end of the road of what can be done and what should be done.
The country has ever higher debt burden which eats ever more of our income and taxes. We have done a lot and we need to realise that. Nowhere I know of has more people of grants than get employment income. So if we want to succeed we need to have more thinking about jobs than welfare

@Mike Shussler I stand corrected with context. Thank you for your reply.

I cannot agree more with this statement.

Just STOP producing children who then become the responsibility of the tax payer. We just cannot continue to feed, clothe, house, educate, provide medical services to people who do not take responsibility for their actions.

Where are the “men” that make these women pregnant?

Banana republic SA will never win this challenge and this point because South Africans who want free lunchies and are proud to mention everything that the gov owes them makes some valid arguments. If non South Africans are entitled to all the free lunches from healthcare, schooling including now this unaffordable R350 there is no way we can convince SASSA families about the need to better themselves and try and move away from fully depending to Gov.

The big moral question is: what do the small minority of taxpayers, who are expected to carry this huge burden, get in return for the extortionate levels of taxes they pay? Why is it the minority’s problem when others do not act in a disciplined manner in terms of procreation?

Instead of philosophising, let’s look at facts. Yes, ‘some will always be better better off and some worse off, because this is the nature of the capitalist mode of production’. But under Communism, everyone is poor except the head honchos. Which is why Communism has destroyed and been kicked out of over 50 countries. (Google List of Former Communist Countries). Free enterprise is the only answer. Then regarding poverty in SA, a major reason is that our birthrate is far too high. Everyone cannot be paid grants. Finally, a previous SARS press release stated that ‘fewer then 3 million S. Africans pay 95% of ALL taxes. That’s income tax, VAT, corporate, CGT, estate duty, capital gains and the hundred other stealth taxes the ANC has foisted on us. There are 57 million people (at least) in SA. Now 3 million could live very well off 57 million, but 57 million simply cannot live off 3 million. The simple truth lies in the maths.

Dr Thomas Sowell, he advised the USA on policy several times over the years. Google him.

The answer is rather simple:
What is possible – Anything
What is right – the right for humans to exist in harmony with nature
What is fair – value for being part of a community and additional value for the contribution thereof.

Man created time to just his existence, created money to store his created value he earned from completing tasks and then created debt to suppress his citizens and then it just got nasty…

Globally we should consider Universal Basic Income and Debt Forgiveness for every citizen together with proper Democratic Election Process.

Why not approach the world bank for a 99 year loan of R10 Trillion, stop all forms of loans and then then implement UBI at R100 per day per Citizen whilst adopting Block Chain Crypto Curreny which is has a fixed transaction tax of 18% + 1%.
The 1% sent automatically to the world bank account for the Debt Forgiveness.

The only people that would excluded from UBI would those have lost their human rights by way of being incarcerated.

As a pilot project, try approaching your bank for a 99-year personal loan of R100m. The reaction will be a good guide to the World Bank’s likely response.

I do agree with you the chances are about 0.0001%
But coming up with ideas to solve the problem is better than sitting on your own thumb.

There is a humanitarian crisis in SA and the rest of the world which is being swept under the rug, politicians and bankers are sleeping in the bed all whilst the wave of poverty creeps up closer and closer.

Who knows maybe a few billion people need expire before Opinionators cast a vote.

One of the flaws of the democratic process is that every vote counts the same irrespective whether they have the capacity to understand the ramifications of their decision, or what the party they voted for failed to deliver over the last election cycle, or not.

Lets look at a scenario, Farmer sells his produce to a entrepreneur for R100, the merchant goes and sell it in the city for R200 to the grocer who sells it to you for R300, being taxed on profit as currently happens if we for simplicity sake assume 19% rate will mean that the farmer will pay say R19 (100*19), the entrepreneur will pay a tax of R19 ((200-100)*19%) and the grocer will pay a tax of R19 ((300-200)*19%, so in total you have tax of R57 (R19+R19+R19) on the R300 you pay for it, actually less as all the above will be able to deduct expense against their profit.

Under your proposed transaction tax it would be as follow, R19 (R100*19%) for the farmer, R38 (R200*19%) for the entrepreneur, and R57 (R300*19%), so total tax paid on your R300 purchase was R114 almost double the tax under the current scheme and that is with only two middle men (entrepreneur and grocer), as more and more parties are involved in the supply chain the more the tax will be as a portion of the total price.

But then you have the question, why use the crypto currency to pay at all? If you can avoid that 19% tax by bartering (give me x and I will give you y) then we are back to where we were before the invention of money.

You know what, PurgeCoin, maybe a few billion people need to expire, for the earth and humankind to survive. Maybe we should get down to “survival of the fittest”. Darwin predicted that the “sympathy gene” will be the downfall of mankind. Time to get real.

The only way is to make the cake (economy) bigger, not to cut the slices smaller and smaller.
Too many forks on the same plate leaves everyone hungry.

quite frankly, i believe that the only social grants that should be given are for disability and old age.

child support grants should be converted into payments for services rendered. mothers or fathers must work 2-3 days a month in order to receive the money.
there is a lot of cleaning and maintenance that they can do to earn their keep instead of burdening us

When a free-market entrepreneur invents a brilliant idea, he applies it to himself first. He guards his idea. He jealously protects his plan. He invokes patent law to prohibit other people from using his idea. People are free to benefit from this idea of his if they vote for it. His shares his idea in a democratic way. The way the consumer votes for a good idea, is by spending their money on it. The entrepreneur receives many votes if his idea adds value to society. The entrepreneur is rewarded for his contributions to society.

The socialist on the other hand refuses to apply his “brilliant ideas” to himself. Instead of having to protect his idea from others, he needs to make a law to force others to embrace his idea. People will not vote for this idea. They will not spend their money on this idea, so he has to force them to “buy” his idea. Malema will draft a law to force Johan Rupert to share his Rolexes, while Malema will never share his Rolex with anybody. The socialist politician is rewarded for his plunder and exploitation of society.

This is the coercion and abuse of socialism that leads to rising unemployment and poverty and eventually bankrupts the state. This popular move towards socialism is founded upon two destructive forces, namely stupid greed and false philanthropy. The road to hell is paved with the toxic combination of good intention and ignorance.

It is simple maths: It is ten times easier to lift 1 million people out of poverty than to lift 10 million people out of poverty. The SA population went from 15,2m in 1955 to 59m in 2020. That is a growth of 43,8m people or 288%. Why is it that nobody wants to talk about smaller families but just want to get more, more and more?

Just think of all those additional voters. Being main-problem for society but a bonus for politicians

address “the elephant in the room” STOP producing so many children especially if you cannot take care of them

Offer everyone R10, 000 each for a vasectomy, or to have their tubes tied. Period

Social Grants are just another form of Charity.

The world-view of Charitable Acts is that they “must” be a “good thing” (at least morally).

But this is NOT usually the case!

Charitable acts that cause the problem they purport to solve or alleviate, to increase, are in fact COUNTER-PRODUCTIVE to society.

And in many socially important cases, ultimately LETHAL to the continuation of a supportive society in the long run.

Charity MUST be applied with a quid-pro discipline in mind, else in the end, the whole pack of cards will collapse!

So… the desperate situation of the poor MUST be acknowledged AND alleviated.

But in return, the poor MUST be restrained from irresponsible behaviour that compounds the problem.

What would China do?

Exactly that!

And which is why they have risen from abject poverty, to being the next world leader (they are already there in my opinion).

The charity applied in a socialist state is by extortion of money from the taxpaying public. The consequences of not paying your taxes are worse than committing many other crimes.

The Chinese solution was to limit each household to only having one child as I understand it.

The problem in SA is that the ANC want the Chinese system without the harsh consequences for under performance – weren’t they executing managers who did not perform? Under that system, half or more of the ANC would have to be executed?

What do successful countries do:

Small families

Quality education

Strong economic growth.

That is exactly the type of reasoning which will get you in trouble with the Democrats in the USA. Apparently it is racist, sexisist and generally unacceptable. Open borders and globalism with never ending handouts is what is acceptable.

The widespread poverty must be addressed but:

First recognize where it comes from. With 8 million people unemployed it means the country has created 8 million people to many.

The UN declared family planning a human right in 1969. The academics here warned about the bad social circumstances that will result from population growth – and today it is reality.

The Apartheid government introduced family planning in the early 1970’S but it was opposed by black leaders. If that program was successful, people would have lived better today.

“In reality, some will always be better off and some will be worse off, because this is the nature of the capitalist mode of production.” I lost interest after that comment. The wellbeing of individuals has nothing to do with capitalism, it is a fact of life.

We all have different talents and those who develop those talents will be better off while those who don’t will not. Someone who spends the weekend getting drunk out of his mind is going to be less well off than someone who spends the weekend studying to improve his qualifications. Why should the hard working person give up the reward for his hard work so that the loafer should be equal? Why should someone work hard to improve himself if there is no possibility of doing so?

In a socialist society the leaders tend to be the ones with the wealth while the general wellbeing of the population declines. As Margaret Thatcher famously said, “The problem with socialism is that you eventually run out of other peoples’ money.”

A welfare system is not the solution as it leads to a decline in self respect. While it may be necessary in the short term the longer term solution is to grow the economy and that can only happen when the focus changes from trying to confiscate wealth, whether through tax or expropriation without compensation (including BEE), to recognising property rights of individuals and, generally, a more business friendly environment.

i am sorry.

self respecting people would not expect let alone demand handouts.
the time of self respect is long gone out the wonder and has been replaced with entitlement

“This can be done using readily available numerical data and statistics” – not where it counts, sis. The lack of spending transparency regarding all the grants was tackled by Dawie Roodt. He look at the increase in localised alcohol sales following a grant increase. He stated that both increases correlated 100%. So, who is fooling who here? Rather give the votas food under supervision, else they go and sell it to get money for their favourite liquid and/ or powder.

End of comments.

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