On distribution day for the Marshall Islands’ universal Enra payment, the sun-bleached shops, offices and 101-bed hospital on the main atoll of Majuro emptied. Rust-spotted cars and barefoot people queued outside the national gymnasium for their US$200 cheques, instead.
This new quarterly payment may not sound like much, but it’s being made to every one of the 41,000 resident men, women and children on the Pacific archipelago, in what is believed to be the first national roll-out of a universal basic income.
And in a country where the most workers’ are on the minimum wage, earning barely US$8000 a year, this payment means a lot to households. “If I have if I have six kids and my wife and me, that’s US$1600 per quarter as a household,” says Giff Johnson. “With that kind of money, you can buy an air conditioner, or you can get a lawnmower, or you can buy a washing machine, or you can get a bunch of food you need.”
So, for the retailers, the distribution day lull in business was blessedly short-lived. So too for the traditional chiefs, who have begun aligning the dates they demand tribute payments with the dates the Enra is paid out. The next payment is this month, and anticipation is again building.
The implementation of Marshall Islands’ universal basic income is being watched with curiosity and some concern around the world – and nowhere more so than in New Zealand, where the Opportunity party has put it on the political agenda for this year’s election.
Opportunity calls its proposal a ‘citizens’ income’; $370 a week to almost every adult New Zealander, with top-up support available for superannuitants, parents and others. It would be funded from an additional land tax, on top of existing council rates.
The Marshall Islands government calls its payment the Enra Jen Lale Rara – ‘sharing plates to care for those around us’ – and is funding it from an endowment fund set up by the United States.
“Of course it’s popular and injects about $30 million a year into the economy,” says Jerry Kramer, the founder of the country’s largest construction and engineering company.
There have been some limited problems with distribution, he adds. Citizens, especially those living in the outer islands, are being encouraged to open bank accounts or subscribe to a digital online system known as Lomalo. Lomalo is similar to a bank debit card but has the added benefit of earning a little interest, and can pay and receive funds peer to peer.
“On distribution day there are lines of people and cars,” Kramer tells Newsroom. “It’s expected when either bank accounts or Lomalo accounts become more popular, that problem will be solved.”
The country has a complicated land ownership system with Iroij (tribal chiefs) and at least three or four more people having rights to every parcel of land. The Iroij has traditional authority over the population in their domain.
“I understand the chiefs have taken advantage of the Enra, demanding tribute just at the time the payments are made,” Kramer says. “The archaic traditional chief system where no individual has real ownership of land is the countries main deterrent and inhibitor of economic development. It’s also a primary reason so many of our productive aged citizens migrate to the US.”
According to MISSA, one-third of all adult Marshallese have emigrated to the United States.
Lockwood Smith valedictory, 13/2/2013: “Not many would know that I put 7 years’ work into a project to redevelop New Zealand’s income tax, benefit, and tax credit systems. The work started on trying to find a way round the massive churning involved in employers deducting PAYE, only for the Government to pay it all back to some employees in family tax credits. My research unravelling that interface soon got into the challenging area of effective marginal tax rates. At the time, a single parent with three dependent children seeking to work their way off the domestic purposes benefit and trying to get from $10,000 of earned income a year to $25,000 would have had to work an extra 20 hours a week at, say, $15 an hour. The problem was the effective tax on that extra $15,000 of earned income was about $13,300, meaning that even though the parent was paid $15 an hour, their take-home pay would have been little over $1.50 an hour. Things have improved somewhat since then, but high effective marginal tax rates still remain a significant disincentive for many people. I developed a model that completely integrated those three components: income tax, benefits, and family tax credits. It was a model that had tax-free zones for low-income earners only, managed and declining effective marginal tax rates until a flat top tax rate was reached, and all family configurations covered. I was invited to present the work to a round table of tax experts in Melbourne. The Centre for Independent Studies in Australia asked me to prepare a paper for it to publish. At the last minute it was pulled, for fear it might be seen as official National Party policy, and it was not. Seven years’ work and, even if I do say so myself, some pretty good ideas that could have perhaps gained me another PhD had it been done in a university environment—now no more than spam. I cannot even claim it made it to the trash bin of political history. But that is politics, where you take success and failure on the chin.”
