Question: what do Milton Friedman, Martin Luther King Jr, Mark Zuckerberg, Thomas Paine, Barack Obama, Elon Musk, Elizabeth Warren, Sir Thomas More, and Childish Gambino have in common? The idea of these individuals, spanning five centuries and representing all four corners of the political compass (and everything in between), sitting in a room and nodding their heads approvingly at a policy is frankly comical. But what is this auspicious policy that has captured the imagination of thinkers across time, space, and politics?
Answer: universal basic income.
Conceptions of the universal basic income (UBI) have evolved over various historical and geographical contexts, but a contemporary understanding of UBI is a universal, unconditional, individual, regular cash payment. Due to successful trials in countries across the globe, including England, Libya, Canada, and eight states in the United States, a universal basic income has transitioned from an unrealistic utopian dream to a central idea in former presidential candidate Andrew Yang’s campaign and to a policy considered by other prominent political figures, including Elizabeth Warren.
Yet as federal debt balloons — held at $27.01 trillion as of October 5, 2020 — and COVID-19 wreaks havoc on the world’s economy, many believe that this would be the worst time to introduce such a supposedly radical economic scheme. Economists, however, are saying something different. According to Guy Standing, professor of Developmental Studies at the University of London and co-founder of the Basic Income Earth Network, the pandemic is making it even more imperative to introduce a universal basic income as quickly as possible.
During the pandemic, the unemployment rate in the U.S. rose from a 50-year low of 3.5 percent in February to a shocking 14.7 percent in April. It has since fallen, but there is a long road to full recovery, especially in the face of the anticipated second wave of the virus.
In response to such record unemployment levels, governments around the world have implemented various strategies resembling a universal basic income. In the U.S., the federal government initiated cash transfers — stimulus checks — to keep people afloat.
“COVID-19 has created a rare policy window,” remarked Sukhi Sharma, director of the Stockton Economic Empowerment Demonstration, “so many people are now tangibly feeling the economic insecurity we’ve been talking about.” Sharma is right; the pandemic has brought us closer to an economic blank canvas than ever before.
Much like the 2008 crash, the pandemic created a demand shock. The aftermath of the 2008 financial crisis demonstrated that quantitative easing — pouring investment into the financial markets and making up the resultant budget deficit by implementing austerity measures — is not the solution. Instead, stimulating demand for basic goods and services is essential in order to kickstart the economy. Economic think tanks, including the Roosevelt Institute, have argued that under ordinary circumstances, using a UBI to create this demand would generate a greater stimulus than tax cuts. In the third quarter of 2020, this solution is no longer simply preferable, but necessary.
The coronavirus has invalidated the standard arguments that a universal basic income would disincentivize people to work. People are eager to get back to the office, providing further confirmation of the psychological benefits of work and the work environment. Yet this does not mean business as usual; the pandemic has exposed a division of essential versus nonessential workers and the multitudes of people stuck in unsatisfying, unnecessary employment. The benefits of a UBI in a pandemic should carry over to periods of relative normalcy — UBI-facilitated financial stability promotes creativity, productivity, and generally greater satisfaction amongst citizens.
Remember that awesome idea you had that one summer but didn’t have the funds to invest in? Or what about the untapped potential of the Mark Zuckerbergs of the world who are too focused on achieving that coveted “stable income” to develop technology that could combat climate change? A universal basic income means freedom.
Now for the big question: how will we pay for it?
Redistribution economics is the answer, a maxim touted frequently by the economic Left. By restructuring the fiscal system, we could easily build up the capacity to pay a basic income. Targets of this restructuring would be the tax cuts and subsidies to rich corporations and individuals — employing Biden’s proposed minimum income tax of 15 percent on the most profitable companies would raise $400 billion alone. Furthermore, it is estimated that a UBI would cut costs by around $3 trillion by dramatically reducing the need for the bureaucratic patchwork of federal welfare spending, and some experts have even hinted at the possibility of a surplus. Generating exact estimates is tricky, but the message is clear: UBI is viable. It is not unrealistic or utopian; it would cost around 3 percent of GDP — compared to the 17.7 percent spent under Obamacare (another notable progressive social safety net policy) — and is urgently needed to combat the recession currently being shouldered by the people.
Beyond a financial solution, however, a universal basic income would remind us that we are all citizens with a personal stake in the way we are governed and demonstrate a governmental interest in the well-being of its citizens — a message we need to hear now more than ever in today’s political climate. If applied as a universal, unconditional, individual, regular cash payment — as envisioned by contemporary economists — the UBI has the potential to break down bipartisan divides. It would meet the Left’s demands for fairness whilst granting the Right’s request for limited government, free from the mess of bureaucracy that currently entangles our social safety net.
COVID-19 has shifted the perception of a universal basic income from an abstract utopia to a matter of urgency. What was considered a good idea by the eclectic mix of thinkers listed above has become a potential salvation.
Categories: Domestic Affairs, Economy
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