The Coronovirus Crisis Shows That Universal Basic Income is an Idea Whose Time Has Come
This is a crisis that threatens thousands of lives; but it also endangers our entire economic system, seeming to guarantee a deep recession. Millions of workers around the world have become economically inactive at a stroke; either because they are sick or instructed to stay at home as a result of their symptoms, cannot work because their job is not essential and their place of work is closed, or have nothing to do because the lockdown has removed their customers. And people who cannot work often cannot earn.
Governments around the world have promised that their generosity knows no bounds and that they will do whatever it takes to plug the gap in the economy, legislating for grants and government backed loans. Everyone will get whatever money they need to tide them over.
Suddenly, fiscal prudence and tight budgets were defenestrated, as the consensus decided that some crises were worth going into massive debt for. Governments were universally praised for their swift work and generosity. All was looking good and we were saved – until the cracks started to show.
The problem is that you can’t move from market capitalism with low taxes, reduced benefits and an underfunded health service, social care and public health system, into a rescue package where such things become essential. You haven’t maintained the levers that you will need, so the stimulus won’t work as effectively as it should.
In the UK, the government is planning to use employers to deliver a grant of 80% of wages to furloughed workers, the banks to lend to small businesses, self-employed people to have a partial return of their earnings through the tax office, and the benefits system to upgrade sick pay and give meagre universal credit (£94.25 a week) to everyone else. They haven’t any choice really. There isn’t any other way to give people the money they need. But none of this will work properly. The structures and the staff simply aren’t there, and even the UK government which has promised the whole thing to be over in 12 weeks, can’t guarantee extra money for the self-employed until June. Already, small businesses are complaining that they don’t qualify for a government-backed loan and are having to seek loans at commercial rates. And can you guess what’s happened to commercial rates?
If everyone received a Universal Basic Income, things would be different. Not only would the structures and payment methods already exist, but it is arguable that the costs of the stimulus package required would be much reduced. People would already have their UBI to fall back on and so the government’s bailouts would be limited to a few essential corporations. With UBI, people without work would still have money, and so the economy would still continue. Basically, a system designed to protect citizens from small-scale temporary poverty, would work just as well for large scale economic disaster. UBI would spread the risk caused by a pandemic that affects everyone by spreading the costs that it incurs among everyone.
It is possible that the current crisis will increase the demand among the public for UBI. Despite the fact that most of the government schemes to get us through this crisis can’t be as effective as they should be, because of the history of neglect in relation to government intervention, there is likely to be repercussions of this nature originating from the grants of cash that are available. Andrew Yang was a democratic candidate for the US Presidency until February, and he is an advocate of UBI. In a recent interview, he said: ‘If we do put cash in peoples’ hands, people will recognize that it has an immediate good. Every American who gets the money will say, “Oh, my gosh. I needed this badly. This really takes a load off. Now I’m going to stock up on some food or pay this bill that’s been haunting me.” There are, of course, massive problems ahead, which to me is the reason why we need to make this money regular. If they send it out around, let’s say the end of March, and then this crisis drags into June, then clearly whatever money we sent in March will have been exhausted. It’s one reason why we need to make this regular and predictable and say, look, as long as the economy is locked down, then you’re going to get this every month.’ (You can read the rest of the interview here.)
One of the lessons to be learned from the fallout from the coronovirus crisis is the genuine value of the people who actually keep the economy and healthcare functioning. We suddenly realise that we can’t live without doctors, nurses, cleaners, delivery drivers, refuse collectors, shelf-stackers, corner shops or public servants of all kinds. Maybe it would be too much to ask for the economy to revalue the contribution of these workers by giving them a raise. But what we could do is to alleviate the casual and insecure nature of many of these jobs by giving everyone a Universal Basic Income. Just to tide people over as demand fluctuates and the jobs disappear. A UBI might even enable some of them to tell an employer to shove his job until the pay and conditions were better. That could make for a real revolution in the way that we value our local heroes. It’s certainly more effective and long-term than a round of applause.
Finally, the world seems delighted and relieved by the tide of volunteers who have answered the calls of their nations to help with caring for the isolated, delivering to the housebound and swelling the ranks of care-professionals. This is indeed a wonderful phenomenon, and confirms the instincts of people to look after and be involved in their communities. But of course, the number of people who can volunteer is limited by the number of people who can make the financial sacrifices and possess the required resources. A Universal Basic Income would enable so many more people to help out because they would have the time to spare, no longer having to devote their working hours to zero-hours contracts required to keep a roof over their heads. And what else is UBI for if it’s not a means of allowing people to enjoy a dividend from their country’s collective community strength and prosperity, whoever they are? It would certainly be a good way of saying ‘thank-you’.
After all, it’s amazing how the money can suddenly appear if you really want to do something.