Argentina Debates Basic Income and Human Capital

By the mid- 1990s and particularly after the country’s economic meltdown, it had become clear that high unemployment and informality were the new normal. This new class of labor- market outsiders, which in the mid- 1990s outnumbered formal- sector workers (Lo Vuolo 1995, 131), found itself excluded from the country’s contributory social security system. In response, Argentina played host to a lively debate between supporters of basic income and human capital cash transfer programs.

In a pioneering work, economists Rubén Lo Vuolo and Alberto Bar-beito (1995) proposed that these problems be tackled through an uncondi-tional basic income guarantee for all Argentines, starting with the univer-salization of child allowances. The proposal gained particular salience during the depths of the economic crisis. In December 2001, 2.7 million Argentines voted in an informal referendum on child allowance universal-ization organized by the National Front Against Poverty, a coalition spear-headed by the Argentine Workers’ Central Union, a major labor union, and organizations representing unemployed workers (piqueteros) (Arcidiácono et al. 2012, 156; Rossi 2013, 145). However, de la Rúa resigned before the National Front Against Poverty could present the results.

In the meantime, social policy technocrats from the center- right Menem administration were, with assistance from the IDB, developing what would have been one of the region’s first human capital CCTs— Ingreso para el Desarrollo Humano (Income for Human Development, IDH). In a book chapter detailing the program, Irene Novacovsky and Claudia Sobrón (1999, 232) of the Social Development Ministry described the proposal as “a bet on the development of human capital.” The authors made a point to distinguish their program from both existing workfare programs and Lo Vuolo and Bar-beito’s basic income proposal (Novacovsky and Sobrón 1999, 230).

As would be expected from a program designed by a center- right administration with support from IFIs, IDH met all the criteria for a human capital CCT. A proxy means test would be used to narrowly target the poor and prioritize those in extreme poverty. Benefits were to be conditional on a detailed list of educational and health benchmarks that would vary by age and be rigorously enforced (Novacovsky and Sobrón 1999, 234). Stipends were to vary based on the estimated opportunity cost of remaining in school and the regional cost of living. In line with its human capital motivation, the program would pay additional bonuses for passing grades, particularly the ninth grade, the last before upper- secondary school (Novacovsky and Sobrón 1999, 231). The program was to be subject to rigorous evaluation, beginning with a pilot funded by IFIs (Novacovsky and Sobrón 1999, 238).

Neither basic income nor IDH were implemented in the immediate aftermath of the crisis. Duhalde doubled down on workfare by launching Jefes y Jefas. Néstor Kirchner inherited the program, which at the end of 2003 still covered 1.8 million households (Repetto and Díaz- Langou 2010, 6). Kirchner and his team were not fond of Jefes, which was associated with Duhalde, who was still seen as a formidable political rival (Fenwick 2016, 133), or of the CCTs that had started being adopted across Latin America.

As left- leaning Peronists, they firmly believed that poverty should be tack-led through the creation of formal employment (interviews with Laura Gol-bert and Pablo Vinocur; Arcidiácono 2016, 103). Opposition to CCTs was strongest from Alicia Kirchner, Néstor’s sister and social development min-ister during most of the Kirchner administration and the entirety of Fernán-dez’s tenure. Alicia repeatedly derided CCTs as “neoliberal,” “impositions from IFIs,” or “pre- packaged programs” (programas enlatados) not suited for Argentina’s reality (Kirchner 2010; interviews with Eduardo Amadeo, Leonardo Gasparini, and Pablo Vinocur).

Kirchner at first tried to have Jefes fade away as beneficiaries “gradu-ated” and inflation, which, starting in late 2004 reached double digit annual rates, ate away at remainers’ stipends. However, in October 2004, he signed a decree ordering the transfer of remaining beneficiaries to two new succes-sor programs. Those deemed to have favorable employment prospects would move to Seguro de Capacitación y Empleo (Training and Employ-ment Insurance), which would provide training and a stipend. Those with less favorable prospects (primarily single mothers without a secondary school education) were to be transferred to Programa Familias por la Inclu-sión Social (Families for Social Inclusion Program), a new, partially IDB-

funded (Jaime and Sabate 2013) CCT modeled on IDH (Arcidiácono 2007;

Campos, Faur, and Pautassi 2007, 14; Cruces and Gasparini 2008, 7; Zaga Szenker 2009, 12; Straschnoy 2015, 132; Trujillo and Retamozo 2019, 96).²⁹ Familias was envisioned as a strict human capital CCT with conditionality verification every three months (Campos, Faur, and Pautassi 2007, 16; Fen-wick 2016, 150). The actual program was much less ambitious than the original IDH plan (Novacovsky and Sobrón 1999). Stipends were not dif-ferentiated by grade and there were no academic achievement bonuses.

Conditionality enforcement never got off the ground. Conditionalities were only verified once during 2005 before being dropped altogether in 2006 (interviews cited in Fenwick 2016, 139).

Familias never came close to replacing Jefes. In 2009, shortly before AUH replaced both, 700,000 were enrolled in Familias while 550,000 remained in Jefes (Repetto and Díaz- Langou 2010, 6).³⁰ The program’s launch was repeatedly delayed and it was not available in much of the coun-try during its first years (Campos, Faur, and Pautassi 2007, 30). Fenwick (2016, chap. 5) attributes this to lack of buy- in from municipal govern-ments, which are politically and financially beholden to state governors.

The governors, in turn, did not support Familias, which, unlike Jefes, was highly centralized and thus could not be manipulated for political gain.

Although this may have been true, Familias and other anti- poverty pro-grams were simply not a priority for Kirchner or, initially, Fernández, as Levitsky and Murillo (2008, 28) explain:

Though widely considered left- of- center, the [Néstor] Kirchner govern-ment neglected social policies aimed at combating poverty. Indeed, despite unprecedented fiscal health, the government did not invest heavily in either conditional cash transfers to the poor, or health and education programs for them.  .  .  . Consequently, although unemployment and poverty rates declined sharply under Kirchner, these declines were rooted almost entirely in economic growth. In fact, levels of poverty and inequality remained higher in 2007 than they were during the mid- 1990s.

This antipathy toward anti- poverty programs did not extend to other areas of social policy. Starting in 2004, Kirchner gradually doubled the share of the population covered by pensions to near universal levels (Gol-bert 2010, 152; Etchemendy and Garay 2011, 295). Minimum wages and pensions increased steadily under both Kirchner and Fernández (Golbert 2010, 150). And, in November 2008, Fernández renationalized the

coun-try’s pension system, which Menem had privatized (Ewig and Kay 2011;

Arza 2012).