Mongolia to introduce national basic income


10:54 am - December 3rd 2009

by Don Paskini    


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The US Basic Income Group reports that Mongolia is to become the first country in the world to introduce a basic income for all its citizens:

The Mongolian government has taken the initial steps to create a basic income in the form of an Alaskan-style resource dividend. That would make it only the second regular basic income in the world and the first on a national level.

Bloomberg News reports that the Mongolian government has pledged to set up a “sovereign wealth fund” using mining royalties from new gold and copper mines, which are expected to begin generating large tax revenues within the next three to five years. The fund is expected to distribute part of its revenue as an annual income to every Mongolian.

Although the government has not yet published estimates of how large the annual income might turn out to be, this program could eventually make a large impact on Mongolians, because Mongolia is a small, poor country with a large amount of newly discovered resource wealth. During the elections this year, both parties discussed distributing as much as $1000US to each citizen. Although the government might not follow through with such a large grant, the size of the new mines brings this size of a dividend into the realm of possibility.

A $1000 dividend might not seem terribly significant, but the potential impact of the dividend has to be looked at in relation to how wealthy the citizens already are. According to Bloomberg, per capita income in Mongolia is only $1,680US. A dividend of only $50 per year would have the same relative impact on the average Mongolian’s budget as Alaska’s $1300 dividend has on the average Alaskan’s budget. The impact of a dividend of $500 or $1000 could be astounding, but we should be cautious about expecting anything like this in the short run.

Whatever happens, basic income supporters will probably want to keep an eye on developments in Mongolia.

More information here

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About the author
Don Paskini is deputy-editor of LC. He also blogs at donpaskini. He is on twitter as @donpaskini
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Reader comments


Fantastic news!

Blimey.

It’s not a small country though; it’s a big country, with a small population mostly living in one smallish city.

It’s an appealing idea. Instead of governments of countries with natural resources taking income directly into government coffers, they should distribute the money directly to citizens and then raise government revenue through taxation. Because this doesn’t bypass the people, in theory this ought to make governments more accountable to their citizens, who will care more if the taxes taken out of their hands is wasted, and gives people the choice of where to spend their money, rather than relying on expenditure decisions made by central government. This might not appeal to some lefties, but once people have money, it makes it more feasible for some things to be provided by the private sector (say, water, power, transportation) and a bit of competition could help. There are even examples of low-cost local private eduction in third-world shanty towns.

I wonder if this lot are involved:

http://eitransparency.org/

Ummm, Luis… How does the government “distribute the money directly to citizens” without first “taking income directly into government coffers”? Where does the money come from?

Dunc,

OK I see what you’re getting at, but you’re also being a bit obtuse – there’s an obvious difference between the government taking in money and then just distributing it equally to every citizen, and a government taking the money and thinking “right, how shall we spend this big pile of cash – I know, let’s build some futuristic palatial government offices

“The fund is expected to distribute part of its revenue as an annual income to every Mongolian.”

So basically, they’re taking in revenue through taxation and using some of it to fund a social program. It’s not really different to what happens anywhere else in that regard.

7. Luis Enrique

oh come on Dunc – we’re talking about revenues from natural resources, and while you could call giving an equal amount of money to each citizen in the country just “funding a social program” it’s absurd to say “it’s not very different to what happens anywhere else in that regard. I suggest you familiarize yourself with what happens to natural resource revenues in most countries that have got them – if what Mongolia is doing could be adopted by places like Nigeria, Iran, Venezuela, Sudan etc. it would be an incredible, radical change.

Sorry, I was referring to it not being significantly different from how other countries fund social programs, not how other resource-rich nations usually spend the money.

However, I will note that there are plenty of countries with significant revenues from natural resources which are not kleptocracies. There’s us, for a start, although whether we can truly claim to not being a kleptocracy is perhaps less clear-cut than one might like these days… Then there’s Australia, Canada, the US, Norway, etc, etc…

What I was objecting to was your apparent notion that the government was somehow out of the loop, and that the money was going directly from resource extraction into people’s pockets, without passing through government coffers first.

I recently spent 6 months in Mongolia and always trying to understand the economic and political dynamics of this country that now has nearly 20 years experience with ‘free ‘market capitalism. The need for development of national resources in the mining sector is clear and the government took a long time to legislate the laws and agreements to encourage this crucial source of income.

The distribution of an income to every Mongolian has its pros and cons, especially in a country rapidly embracing a consumer economy. But from my perspective, the country could be best helped in the long run by improving the education system.

Under Russian occupation, a creditable national education system was developed and a literacy rate of over 90% was achieved. But it is a rote learning system that does not encourage individual analysis, critical or creative thinking. Mongolian young people who attend schools in the West describe being astounded to hear classroom discussions where all opinions are allowed and encouraged. For Mongolians to realize a strong position in the global economy, qualities of individual self expression and creative thinking will be crucial.

This deficiency is acknowledged by both the Mongolian government and many international development agencies, but so far, there has not been enough money to pay teachers decently and to educate teachers and students toward a more open, intellectually vigorous style of learning. I hope the Mongolian government will balance these national institutional needs with the goal of giving each Mongolian an annual leg-up.

10. Luis Enrique

Nancy,

It’s interesting you think education is the priority; happily the government can tax the income it distributes as people spend it, hence raise revenues to pay for education. So rather than having to balance the need for education against redistribution, the two can be complements.

Hi Nancy,

Thanks for your comment – very interesting to hear from someone who has recently been in Mongolia.

12. domesticextremist

@ Luis Enrique: once people have money, it makes it more feasible for some things to be provided by the private sector

Feasible, but not necessarily desirable. The private sector provides nothing except at a price which is inflated by the pursuit of profits, which in their turn are maximised by exploiting the labour-power of the workforce.

I’ll watch with interest to see how this works out over time.

This is terrible news. Why waste such money on give aways when it could be spent on improving the roads, infrastructures and etc. Specially in Ulaanbaatar where air pollution is very high and toxic. I for one would gladly refuse my share if it meant to improve the air in UB. Clean air is most important and urgent issue in Ulaanbaatar.

I bloody hate these so called politicians who cant do their jobs properly and try to buy their next election’s vote from the people. They are all bunch of **sholes.

There’s one more thing that I would like to mention to all. All of you dont know Mongolia and its situation.

What we’ve got here are corrupt politicians who are only thinking of increasing their coffers. To be honest, democracy has its pros but in Mongolia it is not working. We Mongolians throughout of our existence relied on single leadership. The mentality of the people are to follow a strong leader who cares and fights for his/her country. What democracy brought to Mongolia is not one but too many ambitious leaders and if you know the Mongolian history, when there are too many leaders, they all fight amongst themselves and weaken the country itself. Like the last time when all the nobles and khans were fighting each other the f***ing Manchuus and the Chinese took over Mongolia with bribes and force. If the Mongols were united during that time and resisted and fought the Manchus and Chinese then it would be totally a different history written today.

Every culture and nation has its unique features. Therefore it is inappropriate for others to force their ideas and values. Democracy is one of those ideas and values brought by the western culture.

I agree with Bayasal. It’s not good news. If this crazy people who controlling Mongolia, waste that money like this i do believe it’ll just increase inflation. And people will be still poor and neither that my country. Do you people know why government trying to give that money for us. It was promise that one year ago election. The people who wanted more vote. Also there was same promise few years ago every month per child to give 1.5$. First it was almost 8$ then they realize they can’t give that money per child then it decreased 1,5$ per child. And also they give every 4 month they give every child 18$. It’s like wasting lot of money for nothing. Ok you people will say it’s good for kids or something. Yeah if we were like some other developed country it’s maybe good. But we are not. Do people know what happen in last year after this lot’s of money import our inflation increased almost 40% during 4 month. It’s real collapse. We have lot’s of problem like Bayasal said city have a air pollution problem, not good quality education, Road problem , and tons of problem. And also Mongolia exports unqualifed mining. Because we have only few mining industry. If people who control my country can discuss this things i wouldn’t mind receive that money. So if you people understand this money just for next election and that people just want to show how they keep the promises no matter how important this money.
Greeting from Mongolia thanks for reading Sincerely Telmuun
PS: Sorry for my bad English skill.


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