As the global economy shuts down for months and disruption is likely to last over a year, universal basic income (UBI) might be the only way to put food on the table.
UBI is a concept that has been in discussion for some time in many countries and has been tested in some regions. The basic concept is to move government money back into the pockets of citizens to guarantee a basic level of food and housing security to all citizens.
The potential benefits of doing this, is to free up the time of people to work less and spend more time in education, volunteering and training or take up jobs that are highly valuable but less well remunerated.
Coronavirus outbreak means that universal basic income is on the table
Coronavirus is not inherently a financial problem and so cannot be fixed with financial measures. Central banks have been attempting to protect their economies in their current form. However, months of shut down may make this impossible and commercial bankruptcies appear unavoidable.
Interest rates around the world already at record lows and huge economic stimulus packages being introduced. However, global markets are still continuing to drop dramatically. This is because investors and businesses can see that months of shut down leave little viability for a vast swathe of the economy.
What this reveals is that the biggest challenge facing the world at present is making sure citizens have enough money. This is needed to maintain their housing, bills and food during this time. Employment will inevitably drop dramatically regardless of governmental and international measures.
UBI will become essential to feed people and maintain certain sectors of the economy
The guiding principle behind UBI, is for the government to provide a standard “wage” to every citizen. This will provide for the essentials of life, such as housing food and bills. This will then free up citizens to take up a wide range of employment options. These may include community volunteering, education, part time work or regular lower paid full time work, without concern about basic needs.
In the UK this is being pushed by opposition MPs, who see the UK’s £330bn loan scheme as insufficient to maintain jobs. Some have pointed out that providing cheap loans to businesses is a flawed strategy. This is because at times when some businesses are losing 100% of their revenue, they will not be willing to take on more debt in any form and would cease trading instead.
UBI could come in a variety of forms, from governments taking over salary payments through the tax system, to direct payments of a set amount to every citizen for a set period. Many countries are considering this.
There are plenty of detractors of UBI as a concept around the world. However, in the current situation the only method to protect people through an unprecedented scenario would be to put money in the pockets of individual people to allow them to comply with social isolation measures effectively.