A roundup of articles on the status of the Coronavirus and ways we can help….
Folks, this groundswell for UBI is our best chance to bring it in – and not just in one country, but worldwide.
Spanish Government Aims to Roll Out Basic Income ‘Soon’
By Rodrigo Orihuela, Bloomberg, April 5, 2020
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The Spanish government is working to roll out a universal basic income as soon as possible, as part of a battery of actions aimed at countering the impact of the coronavirus pandemic, according to Economy Minister Nadia Calvino.
Social Security Minister Jose Luis Escriva is coordinating the project and plans to put some sort of basic income “in place as soon as possible,” with the main focus on assisting families, Calvino, who also serves as deputy prime minister, said in an interview Sunday night with Spanish broadcaster La Sexta.
But the government’s broader ambition is that basic income becomes an instrument “that stays forever, that becomes a structural instrument, a permanent instrument,” she said.
Spain is dealing with the second worst coronavirus outbreak in Europe, and the pandemic has pushed the government to order a state of emergency, which has put the country in lockdown and driven the economy to a stand-still. The government has announced a barrage of policies to assist self-employed workers and companies, mainly small and medium-sized, but has also said that more measures will be required.
Rethinking the idea of universal basic income
Muhammad Mahmood, Financial Express (India), April 4, 2020
UNIVERSAL BASIC INCOME (UBI): As the Covid-19 pandemic has already caused global economic disruption and massive unemployment, a great soul-searching is now going on how to go through this current crisis and prepare ourselves to withstand any such calamities in the future. There is a growing rethinking of a fairly old idea, which could be traced back to the very end of the 18th century, among present-day economists to ensure that all people in a society are able to meet their basic needs regardless of the circumstances they are in. Such a policy will insulate people from financial deprivation. The virus is jeopardising people’s very livelihood and millions of people are experiencing that now across the globe.
The idea of universal basic income (UBI) has turned into a major discussion point by policy makers around the world to respond to the economic fallout from the Covid-19 pandemic. The virus has exposed the fragility of a labour market characterised by self-employment, zero hour contract and the growing gig-economy (a free market system where organisations and independent individuals enter into short-term work arrangement).
Many MPs in the UK and political leaders and academics around the world including in the US are now calling for a universal basic income to help deal with the crisis. British Labour MP Apsana Begum twitted “I have joined 150 MPs across different parties in writing to @RishiSunak calling for an emergency Universal Basic Income. At this time, direct payments are the only way to guarantee real financial security to workers.”
As ILO Director-General Guy Ryder pointed out “This is no longer a global health crisis, it is also a major labour market and economic crisis that is having a huge impact on people”. It is not only politicians who are calling for UBI in the US and the UK and many other countries, charities and think tanks are also proposing to pay people a basic income to withstand the blow of Covid-19. This could help 25 million workers at threat of the pandemic.
It is quite fascinating indeed to observe how an idea while floating around for a long time but has remained beyond the bounds of plausibility, can suddenly become the centrepiece of discussion as a means to ride out a global crisis that we are facing now. This is the time to try some new ideas to deal with the crisis. Ideas seemingly look impossible, may become a possibility at the critical juncture of a nation’s history like now.
Universal basic income (UBI) is the idea that all citizens should be paid a monthly allowance that allows them to meet their basic needs. This payment is made unconditionally without any work or activity test. It is obviously clear that a floor is to be put so that no one falls into poverty. Most UBI has three basic features: (i) universal – it is paid automatically to all individuals without any means test; (ii) unconditional – without any condition attached such as job search and (iii) adequate – sufficient to protect citizens from poverty.
UBI can achieve the same redistributive outcome as what is known as negative income tax. A negative income tax results in people earning below certain threshold receive money from the government instead of paying it. This is reversing the direction of taxation and pumping back that money into the economy.
Supporters of UBI emphasise that the new wave of technological change may permanently severe the link between economic growth and job growth. Therefore, it will no longer be possible for governments to deal with unemployment, underemployment, insecure jobs and stagnant income by promoting growth. Even those who remain employed will find themselves disempowered. Increasing concerns about the future nature of work has further added to the idea of UBI back on the agenda.
There is now a growing fear that collective bargaining as a process of safeguarding workers’ interests is on the way to be marginalised with increasing automation and gigification of jobs. Membership of trade unions has been on the decline over the last three decades in all industrialised countries. Therefore, UBI is a strategic option for working people around the world to safeguard their economic future. The singular focus on GDP as the guide to measure prosperity is also of questionable merit as it does not reflect quality of life and the environment which now define economic success of a nation.
Supporters of UBI also argue that all wealth is socially generated as education, training, healthcare, legal system, infrastructure have all contributed over many generations to achieve that. Then logically every member of society has a right to share that wealth. There are also suggestions that to fund UBI new taxes on income, carbon, estates and pollution and others be imposed and that will itself balance the book.
UBI AT THE FIRST GLANCE MAY APPEAR TO BE IDEALISTIC, LEFTIST IDEA, EVEN UTOPIAN BUT THERE IS RIGHT-WING POLITICIANS AND ECONOMISTS AMONG ITS SUPPORTERS: But there has also been strong opposition to introducing UBI. The most common line of argument is always that receiving money for nothing undermines work ethic. They also see it as a model of waste and unearned rewards to incentivise to be unproductive. That is bad for people’s self-esteem and self-worth. Also the concept of “moral hazard” – the idea that people behave more profligately when they are shielded for consequences of their deeds and actions. In fact, this is the guiding doctrine of the right to oppose UBI or for that matter any welfare payments. But Nobel Laureate Joseph Stiglitz disagrees with those propositions and points out that there is certain dignity from work and for most people there will be a real desire to work. Unfortunately, UBI is unlikely to be a silver bullet for unemployment.
UBI at the first glance may appear to be idealistic, leftist idea, even utopian but there is right-wing politicians and economists among its supporters. Milton Friedman is regarded as the Philosopher Guru of an extreme free market type of economy, yet he saw benefits in state intervention in situations like economic depression and war. More surprisingly, he was very favourably disposed to UBI or cash grants on a permanent basis. From his perspective a cash grant is far more preferable to interventions in the labour market like minimum wage or job guarantee. As for the rich, UBI will lessen their guilt feeling because it provides a floor for all as they in their usual form go on accumulating more wealth without any guilt feelings.
This right-wing support for UBI makes many on the left very wary of UBI. Many on the left have justifiable fear that as UBI replaces a whole host of other forms of services and benefits, the recipients will be forced to buy those services like health care, education, even pension provisions from private providers from the market place. This is a scheme, from their perspective, to cause transfer of public wealth to private businesses, thus accelerating the marketisation process of a democratic society. Also, there is a fear that while UBI is designed to be a floor on income, it can easily become a ceiling. Thus making many UBI recipients pushed into a low-income or poverty trap.
But the main concern now is that the UBI programme still remains an idea, untried on a national scale. Many experts argue that while the introduction of UBI is challenging, it is possible and will require a longer timeframe. Still questions linger if a country can afford and find ways to implement UBI, should that country go ahead and do it? The answer is a clear yes.
The case for UBI rests on redefining equality in the age of rising income inequality and continuous rapid concentration of wealth in the hands of one-percenters. The Covid-19 pandemic may prompt policy makers to consider introducing UBI now, but UBI must not be introduced as an emergency stopgap arrangement, rather as an ongoing programme. That will require entering into a new social contract to drive the nation’s future towards an egalitarian society.
Muhammad Mahmood is an independent economic and political analyst.