COVID-19 is resetting the world – now maverick economic ideas, including universal basic income, are being accelerated because of the outbreak
History suggests that some of the most radical policies ever implemented were created out of crises, but remained in place long after, according to Yuval Noah Harari, best-selling writer of Sapiens. What radical policies, then, will take flight after this black-swan event? Is now the time for universal basic income?
“Historically, pandemics have forced humans to break with the past and imagine their world anew,” wrote Indian novelist Arundhati Roy, author of Man Booker-Prize-winning The God of Small Things, in the Financial Times Weekend in early April. “This one is no different.”
She continued: “It is a portal, a gateway between one world and the next. We can choose to walk through it, dragging the carcasses of our prejudice and hatred, our avarice, our data banks and dead ideas, our dead rivers and smoky skies behind us. Or we can walk through lightly, with little luggage, ready to imagine another world. And ready to fight for it.”
The coronavirus pandemic is damaging lives and livelihoods around the globe. It has also claimed a more subtle scalp: conventional taboos in economic policy thinking. Indeed, economic proposals that even a fortnight ago looked progressive now appear timid. Similarly, the most generous fiscal packages seen in years are considered derisory only a handful of days after being presented.
MAVERICK IDEAS WELCOMED
The result? Policy ideas that were once the realm of a small number of mavericks and limited to theoretical discussions alone are now afforded centre stage. First, the “helicopter drop” – printing money and handing it out to everyone, with no strings attached – achieved liftoff. But given the longevity of lockdown, it soon became evident that a more significant, more regular drop was required.
The reality is people are living paycheck to paycheck, before the helicopter drops. They don’t have the savings to support themselves, nevermind their families. The more profound question, therefore, is: how do we scrap the paycheck-to-paycheck model and promote policies that enable individuals to save money?
It is becoming painfully clear that governments need to rethink both their economic and labour policies, as unemployment balloons to unprecedented rates, and many people find themselves suddenly facing personal financial ruin. Some countries have responded rapidly and radically, with purses ripped open for one-off handouts to stricken businesses and individuals. While expedited policy-making and relief packages are welcome, it is insufficient to make real changes that ensure greater economic stability in the long term.
Political leaders now must go further to shore up people’s defences ahead of the looming economic crash. For example, a bailout, via a single $1,200 (£965) grant in America, is pitifully inadequate when experts are now predicting millions of job losses in the next six months. Data, analysed by the Guardian, states that for an average individual earning $75,000 (c. £60,000) a year with average monthly expenses totalling $2,876, even after the stipend there are $1,678 in outstanding bills remaining.
READY TO FIGHT
One economic theory gaining traction is universal basic income. Thought leaders and politicians spanning the political spectrum are uniting to promote universal basic income – a model for providing every person with an unconditional sum of money, regardless of employment status or resources – as an essential requirement at this time of extreme financial challenge.
“The best time to introduce universal basic income was 50 years ago when we first started experimenting with an income guarantee approach,” Scott Santens, New Orleans-based universal basic income writer, tells MillGens. “The second best time is right now, and every day that goes by without universal basic income means more preventable deaths and more unnecessary suffering.
“As the saying goes, when crises hit, we look around at the options available. In this case, for the first time in history, UBI is being seen as an available option, and in all likelihood, the first nation to adopt universal basic income – even temporarily – will happen in the weeks ahead. That day will go down in the history books as the day UBI was first introduced in an entire nation.”
In early April, Spain took the lead and declared that UBI would be rolled out “as soon as possible”. Singapore, Japan, Australia, Brazil, New Zealand, and others, are also seriously considering similar projects.
However, universal basic income is great in theory but has been challenging to implement in practice, even on a small scale. Logistically it is a struggle, and then there is a question about who funds such a scheme. Things are changing, though, thanks to tech advances. GoodDollar, for example, is working towards delivering a global universal basic income solution by embracing blockchain technology and token design, to reduce global wealth inequality. Blockchain offers immutability, transparency and decentralisation, so a new type of UBI is possible.
Some might consider GoodDollar too radical to countenance. Still, as the horrifying situation across the globe, with months of uncertainty stretching ahead, makes obvious: there is a desperate need for universal basic income. The delicacy of the fabric of society has been exposed, and it is those with less money that will suffer the most. As the coronavirus fallout forecasts darken, the prospect of a new financial mechanism that widens the safety net for those who need it most offers brightness amid the gloom.