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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.

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About Malcolm Torry

Malcolm Torry has written 37 articles.