The biggest problem facing many people during this pandemic is the loss of employment. About 30 million people have lost their jobs and as I have discussed before and Hasan Minhaj highlighted so well on his show, this has knock-on effects that spread all through society. Not having any income means they cannot pay their rent or buy food or other things and that hurts businesses. Not paying rent means that their landlords cannot pay their mortgages or utilities or property taxes, which means that state and local governments lose revenue and can’t provide services. And so on. Congress has passed various stimulus packages but these require people to jump through all manner of hoops to get aid, is insufficient, and does not cover everyone who has been affected.
It struck me that one solution might be for the federal government to simply pick up the wages of every person who lost their job. That seems fair since after all it was due to government policy that they lost their jobs because the government ordered places to close. If the government paid every such person (say) $3,000 per month, then they could pay their rents and buy food and other necessities, which means that the economy would not grind to a halt. For 30 million people, this would come close to $100 billion per month. Given that Congress is passing bills that spend trillions of dollars, this does not seem like that much. In fact, it appears that many countries including Australia, Britain, Canada, France, Germany, and South Korea have been temporarily paying the wages of workers to prevent layoffs.
By paying the workers, that eases the burden on their employers since wages and salaries form a hefty part of a business’s operating costs. Businesses will still need some relief to cover the rest of their operating costs such as maintaining their property and paying utilities and the like, but that would be far less.
The central idea is not that different from that of the Universal Basic Income proposals that has been around for centuries and this article lists all the countries that have tried it out, so it is not unrealistic. Andrew Yang also suggested it during his run for the Democratic party nomination.
With a few exceptions — Kenya, where a big experiment in universal basic income (UBI) is underway; Iran, which has a nationwide unconditional cash transfer program; and Alaska, which gives an annual dividend to everyone in the state — basic income programs are offering money to small groups of a few hundred or a few thousand people, not an entire polity. In other words, they offer a basic income, but not a universal basic income.
These small-scale trials are necessary because governments want to have a good sense of what the effects will be before they start shelling out many billions or trillions of dollars. Proponents of basic income argue it’s the best way to end poverty: Just give everyone money! Some also say it’ll help society cope with a coming era of automation-induced joblessness. And the evidence so far suggests that getting a basic income tends to boost happiness, health, school attendance, and trust in social institutions, while reducing crime.
But critics worry that it will disincentivize work, cheating economies out of productivity and cheating individuals out of the sense of meaning that work can bring. Plus, they say, it’s just plain unaffordable for the government to pay every citizen enough to live on regardless of whether they work. The evidence so far does not support these critiques, as you’ll see.
Sometimes it takes crises to force people to bring to the fore better ways to solve old problems. UBI may be an old idea whose time has finally arrived in the US.
The Canadian Conservative ex-Senator Hugh Segal has been pushing for UBI (aka Guaranteed Annual Income, aka Negative Income Tax) for decades. He has longer ones well worth watching, but this is about the best two-minute youtube video I’ve ever seen.
The UK government is sort of doing this now. If firms can’t use their employees because of the coronavirus pandemic, instead of firing them, they can ‘furlough’ them. While furloughed, they are forbidden from doing any paid work during the time they would normally have been working, but they get 80% of their normal wages, up to a cap of £2500 per month. That 80% is paid for by the government. Their employer can top it up to 100% if the employer wants to do so, but is under no obligation to do so. There are about 8 million furloughed workers in the UK now.
The hope is, of course, that business will be able to reopen very quickly once they are able to do so.
On UBI, I’m certainly in favour. Giving every permanent resident an unconditional payment is the best way to start fixing the massive inequalities in our societies.
The rich already have UBI. It is called ‘inheritance’. I support UBI, but object to making it the sole entitlement as some on the right want it to be. And it should be funded very progressively.
@ 1 Rob Grigjanis
Hugh lost weight! A true, pre-Harper, Conservative.
From every study of GAI that I have seen, the results appear positive. This article is rather interesting. https://thecorrespondent.com/4664/why-do-the-poor-make-such-poor-decisions/179307480-39a74caf.
I particularly like the casino story.
For a while I was for Universal Basic Income (UBI) after hearing one of the late Milton Friedman’s talks. Dr Friedman proposed replacing the Welfare State with UBI (get rid of the welfare bureaucracy!!!).
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One word absent in Dr Friedman’s talks and in Mr Singham’s posting: PRICING of goods/services.
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So far, the UBI experiments were small-scale, thus prices did not change much.
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Do large-scale UBI (say, > 500,000 people) and prices will go up, up, and away like a hot-air balloon.
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With large scale UBI, the GINI index will go down briefly (the Left cheers!!!) and then increases indefinitely (the Left cries bitter tears).
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The Left will clamor for higher and higher UBI payments and for keeping the Welfare State along with the UBI system.
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Small scale UBI experiments were done in several countries; all at best have mixed results. Finland stopped their UBI experiment after 1 year.
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Of course, as it is with Welfare, UBI will bring a few from poverty to riches. Overall, UBI -- like Welfare -- will just add more people into generational poverty.
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Two former welfare recipients who became millionaire and billionaire respectively: Whoopee Goldberg and J.K. Rowling.
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In 2016 the Swiss rejected incorporating UBI into the constitution (77% con, 23% pro). The Swiss are intelligent.
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UBI will be greatly abused by politically-connected entities. Planned Parenthood had received millions of Covid-19 relief aid by fraudulent means and is currently sued to return the money.
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Mr Singham needs to understand that the taxpayers -- not government -- is paying for UBI. Government can only print money. Without goods/services, money is only useful as toilet paper or birdcage lining.
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The closest to UBI in the USA is the Alaska Permanent Fund (started in 1976) primarily funded by oil revenue. The 2019 individual payout was $1600. Yes, $1600/yr is not much. Alaska poverty rate = 12% (2014), 11% (2017)