News; News & Events; Op-Ed; Opinion

Emergency Basic Income during the Coronavirus crisis

A basic income is a periodic cash payment unconditionally delivered to all on an individual basis, without means test or work requirement (BIEN’s definition of Basic Income)

The coronavirus pandemic is causing huge suffering for those individuals who experience serious attacks of the disease, and for the families and friends of those who die from it. Everybody understands the social distancing measures that governments around the world are having to implement, because nobody wants health services to be put under so much pressure at any one time that those who need treatment cannot receive it.

But social distancing, travel restrictions, and the closure of so many businesses, has led, and will continue to lead, to significant economic costs, both for families and for the economy as a whole.

Governments have been doing what they can to protect employees’ incomes when their employers can no longer pay them, and to protect the incomes of self-employed people when their businesses have to cease trading either temporarily or permanently: but the measures put in place often struggle to protect the incomes of large numbers of workers in the informal sector and migrant workers.

Around the world we have seen legislators, journalists, think tanks, researchers, campaigners, and many others, calling for an emergency Basic Income. This is clearly to be welcomed. Also to be welcomed are changes to existing benefits systems that take them closer to being Basic Incomes. What is not to be welcomed is the use of the term ‘Basic Income’ for benefits that are not genuine Basic Incomes: that is, they are not ‘a periodic cash payment unconditionally delivered to all on an individual basis, without means test or work requirement’.

The reason for the increase in interest in Basic Income is that a genuine Basic Income would provide a secure layer of income when all other sources are either absent or insecure; it would inject demand into the economy and help us to avoid a recession; and because everyone would receive it, it would contribute to the social cohesion that every nation will need if it is to get through this crisis. It would not matter that Basic Incomes would be paid to people who didn’t need them, because it would be an easy matter to raise income tax rates on higher incomes so that those who already had secure incomes would not see their disposable incomes rise, and would be helping to pay for the Basic Incomes that everybody needed.

It is a significant problem that instead of paying Basic Incomes, governments are relying on increasing the coverage of existing means-tested benefits and on implementing new income-tested benefits. These benefits fall if earned income rises, so occasional and even permanent opportunities to earn additional income might be turned down because any increase in earned income would reduce benefit payments and could risk people losing their benefit claims entirely. A Basic Income would not fall if earned incomes were to rise, so any opportunity to contribute to the economy would be gladly taken, and there would always be an incentive to start the new businesses that any new economic situation would require.

Given the clear advantages of Basic Income, why are governments not implementing temporary or permanent Basic Income schemes? There might be several reasons for this. First of all, whether a country’s economy is more developed or less developed, there might simply be no mechanism available to enable the government to pay an unconditional income to every legal resident. What would be required would be a database that contained every individual’s name, contact details, date of birth, and bank account details. Given sufficient political will, many countries would be able to construct such a database within a fairly short period of time: but in the midst of this crisis it will generally be easier to use existing mechanisms to protect the incomes that can be protected fairly easily: through expansions of existing means-tested and contributory benefits systems; through using existing ‘pay as you earn’ income tax systems to enable employers to continue to pay employees who have been laid off; and to make grants to self-employed individuals on the basis of submitted annual accounts.

Where existing benefits systems are being used to maintain household incomes, the conditions for the receipt of benefits are often being relaxed: for instance, by no longer requiring stringent employment search requirements. Such changes are steps towards the complete unconditionality of Basic Income, and they are to be recognised as such, and are to be welcomed.

A trend that is not to be welcomed, though, is the use of the term ‘Basic Income’ for mechanisms that are not Basic Incomes. The recent short-lived experiment in Ontario was called a Basic Income, but it was household-based and therefore not ‘on an individual basis’, and it was income-tested and therefore was not ‘without means test’. It was not a Basic Income, and it should never have been called one. Similarly, during this crisis, governments are sometimes using the term ‘Basic Income’ for new or reformed benefits that are not Basic Incomes. This ought to stop, because it is misleading, and it makes rational debate more difficult to conduct.

So we should recognise and welcome the efforts that governments are making to adapt existing benefits systems so that they are closer in character to Basic Income; but we should point out that anything that is not a Basic Income will not exhibit the advantages that a genuine Basic Income would exhibit, and that if it is not a Basic Income then it should not be called one.

BIEN is gathering information from its affiliated organisations on their governments’ measures to protect incomes during the crisis, and in particular information on the extent to which those measures exhibit the characteristics of Basic Income, and the extent to which they do not.

In the meantime, information on the measures that governments are implementing can be found on the IMF website.

.

About Malcolm Torry

Malcolm Torry has written 23 articles.

The views expressed in this Op-Ed piece are solely those of the author and do not necessarily represent the view of Basic Income News or BIEN. BIEN and Basic Income News do not endorse any particular policy, but Basic Income News welcomes discussion from all points of view in its Op-Ed section.

12 comments

  • Stephen Stillwell

    Since you point out the definition, of Basic Income, do you mind explaining why you won’t consider the equal inclusion of each human being on the planet in a globally standard process of money creation?

    The definition includes all, people, yet there seems to be an illogical avoidance of the simple change to international banking that will establish a stable, sustainable, regenerative, inclusive, abundant, ethical, global economic system, with mathematical certainty.

    • andrea brown

      would low income receive this, in Ottawa

    • Bernard Kirkham

      The global BI must be the longterm aim, and should be regularly stated, but we all live in our little patches of the earth where we have some chance of influencing events.

      Let us stop these local flawed “experiments” in BI on human laboratory rats. The justification for BI needs no proof, and anyway “proof” can only be found in a UNIVERSAL Basic Income in as wide a “sample”” as possible, which I would define as a nation state as a minimum.

  • gespil

    Covid-19 exposed Yang’s UBI as fake.
    We need the real UBI.
    Yang’s fake UBI is based on taxing transactions.
    The real UBI is based on taxing the accumulated Wealth.
    There are no transactions during pandemic as Covid-19 proved, unless you care more about Wealth than people.

    Printing money to pay for UBI is inflation.
    Money should NOT be only a medium to facilitate transactions because someone will end up with all the real Wealth while everybody else will only have money.
    That is why Money must be equivalent to Wealth by law!
    Wealth is anything which is perceived as Valuable by an individual or the consensus among individuals in regards to the perceived Value.

  • trev

    Another opposing factor to the introduction of Basic Income, in the UK at least, is the Protestant Work Ethic, which the Establishment is keen to enforce in the esoteric belief that this will hasten the Second Coming, though of course they won’t publicly admit to that.

  • Michael Osborne

    Here in Canada Mr. Trudeau has made available a form of basic income. As an artist it is the first time I feel respected as a professional artist. I’m ready to create , sell my work and move forward to not only grow Canada’s economic well being , but serve and participate in my community . My 47 years of sacrifice has paid off. Thank you Mr. Trudeau, and please make these payments retroactive forever. Your getting my vote forever , no matter the cost. Carry on Canada!!!!

  • Even western countries must surely realize that if the Corona virus epidemic continues in developping countries, it is likely to come back and haunt us for years to come – unless, of course, an effective vaccine becomes available.

    It turns out that providing a Basic Income at 50% of median income for everyone on the planet would cost around $10.6 trillion a year https://simonthorpesideas.blogspot.com/2017/01/blog-post.html

    This may seem like a huge number. But it is less than 0.1% of the value of financial transactions reported by the Bank for International Settlements for 2018 ($14.9 quadrillion). https://simonthorpesideas.blogspot.com/2019/11/bis-financial-transaction-data-for-2018.html

    If the United Nations could get agreement on a 0.1% tax on all transactions, we could have a basic income at a valuable level for everyone on the planet.

  • Here’s a way to get UBI through Congress and provide the missing purchasing power for the economy.

    Combine a $2,000 Universal Basic Income with The Second Income Plan, suggested by the late Louis Kelso, inventor of the Employee Stock Ownership Plan – ESOP – used by 11,000 companies.

    This plan does not depend upon jobs or savings. The Universal Basic Income can be a transition device. Note: With this combined approach there is ZERO net cost to the Treasury! Social Security can remain untouched.

    Kelso saw automation coming. He believed it could liberate humans from toil, work we do not choose to do. He created a plan designed to make it possible for almost everyone to receive about 50% of their income from diversified investments by age 50. Imagine the implications!

    This is the key to reversing the dangerous growth of inequality and poverty. Convince Congress to pass the necessary legislation to establish a SECOND INCOME ACT. It can help unite our divided nation.

    A Universal Basic Income by itself probably has zero chance of Congressional approval. In order to provide immediate economic assistance, combine SECOND INCOMES with a transitional Universal Basic Income. These interim funds would gradually be displaced – as growing taxable earnings are realized by individuals from SECOND INCOMES.

    See MORE at aesopinstitute.org To end stock market concern, 85-90% of an individual’s funds might be invested in Treasury Bills, as safe a place to put your money as exists. The remainder invested in a variety of high risk opportunities. This is a brilliant prescription by Nassim Nicholas Taleb

  • Nedland Williams

    In the US, the virus has highlighted flaws in the current “safety-net”. Because it is activated on an individual basis, the system is overwhelmed. Because we are now a “gig” economy, definitions of 60’s “unemployment” are no longer valid. A UBI covers all (citizens I hope), so there would be no need for the multitude of bureaucrats and litigators to fumble the mitigation strategy. It would be automatic.

    Again in the US, there is a need to fix our horrible tax code; which disadvantages the poor with “means-testing” and benefits the rich with tax deductions based on how much one spends.

    A flat tax, by itself, is a political loser, but add a UBI and you have a smooth effective tax curve, that is slightly more progressive than current. The real bonus is that tax filing compliance time can be reduced from 7 billion manhours to less than 2 billion. That is the equivalent of adding 2 million highly productive people to the workforce, for +2% in national growth, which will favor the rich, who pay for the UBI’s progressivity.. WIN-WIN-WIN

  • Cletus Porno

    Use some common sense as to why there is not a valid implementation of UBI anywhere presently- because developed nations would be flooded with 10 times the number of refugees as presently. We need to get developing countries to make the first step, as a requirement for trade agreements. There are so many incompetent governments around the world, it’s doomed to failure. Some sort of partnership of central banks, philanthropists, and corporations could sponsor a portion of crypto currency ubi to sidestep government inability.

  • Bernard Kirkham

    UBI is a mechanism for the redistribution of wealth, the higher the level, the higher the redistributive effect. This has to be be accompanied by increased taxation of the rich and the better off, and there is no point in dancing around this issue, or nothing will be achieved, other than a slight improvement in welfare.

    But I can see even this must seem a big advance in the USA.

  • Are there any benefits to a universal basic income? I think that it’s an opportunity for people to tryout some lifelong learning options to improve oneself and their families in the areas of financial literacy, financial education and digital literacy. Since many traditional jobs are falling by the wayside it makes sense to train people to be self-employed and financially independent. The basic income should cover the costs of the bare necessities but it should be our responsibility to find our strengths in the new gig economy, to generate additional income based on being active, creative and productive in our generous society.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.