The coronavirus crisis could pave the way to universal basic income, Apr. 16 2020, CNBC, Sam Meredith@SMEREDITH19 KEY POINTS
- Guy Standing, a research professor in development studies at SOAS, University of London, told CNBC via telephone that there was no prospect of a global economic revival without a universal basic income.
- The International Monetary Fund expects the global economy in 2020 to suffer its worst financial crisis since the Great Depression.
- In his Easter letter over the weekend, Pope Francis said: “This may be the time to consider a universal basic wage.”
A woman wearing a sanitary mask as a preventive measure, leaving the train during the first day of work for non-essential sectors. Barcelona faces its 31st day of house confinement due to the contagion of Covid-19.Paco Freire | SOPA Images | LightRocket via Getty Images
The coronavirus crisis has revitalized calls for a universal basic income, with even the Pope suggesting that now may be the time to consider giving everyone free money.
The Covid-19 outbreak has meant countries across the globe have effectively had to shut down, with many governments imposing draconian measures on the lives of billions of people.
The social, educational and economic ramifications of the confinement measures, which vary in their application worldwide but broadly include social distancing, school closures and bans on public gatherings, are expected to have a profoundly negative impact.
To be sure, the International Monetary Fund now expects the global economy in 2020 to suffer its worst financial crisis since the Great Depression.
The dramatic downgrade to this year’s growth expectations has amplified concern about those most vulnerable to an economic slump. In his Easter letter over the weekend, Pope Francis said: “This may be the time to consider a universal basic wage.”
Pope Francis greets the believers as he arrives to lead the weekly General Audience at St. Peter’s Square. The General Audience is held every Wednesday, in Saint Peter’s Square, which can accommodate around 80,000 people.SOPA Images
He argued it would “ensure and concretely achieve the ideal, at once so human and so Christian, of no worker without rights.”
As of Thursday, more than 2 million people had contracted Covid-19 worldwide, with 137,666 deaths, according to data compiled by Johns Hopkins University.
‘We have got to protect everyone’
Universal basic income is not a new idea. But it has gained more traction of late, more recently through the likes of U.S. presidential candidate Andrew Yang, who based his platform on the policy.
The IMF describes universal basic income as an income support mechanism, in which regular cash payments are intended to reach all (or a very large) portion of the population with no (or minimal) conditions.
Guy Standing, a research professor in development studies at SOAS, University of London, told CNBC via telephone that there was no prospect of a global economic revival without a universal basic income.
Standing, who has been an advocate for a universal basic income for more than three decades, said he believed the coronavirus crisis would be “the trigger” for a basic wage.
“It’s almost a no-brainer,” he said. “We are going to have some sort of basic income system sooner or later, but I think getting the establishments of many countries to do it is like pulling the proverbial tooth. There’s a big institutional resistance to it because of the implications of moving in this direction.”WATCH NOWVIDEO11:42Here’s what universal basic income could mean for Americans
Standing urged world leaders and policymakers to avoid repeating the same mistakes that were made in the aftermath of the 2008 global financial crisis, saying another “toxic combination” of austerity and quantitative easing would simply stoke up another crisis.
“Going back and doing what they did after 2008 would be a disaster.”
Some governments, including the U.K., Austria and Denmark, have introduced wage subsidies in an effort to protect households from an expected economic downturn. They are intended to help protect jobs and cover the salaries of millions of people.
Standing dismissed such an approach as “regressive” and “inefficient,” arguing wage subsidies of this nature would only ever result in a large number of vulnerable people being excluded from the system. “It’s atrocious economics.”
“So, for me, all of the arguments are tilting us toward saying: ‘We’ve got to protect everybody. We are all vulnerable.’”
‘A level unifier’
Earlier this month, Spain’s Minister for Economic Affairs Nadia Calvino told Spanish broadcaster La Sexta that the euro zone’s fourth-largest economy would roll out a universal basic income “as soon as possible.”
Calvino said the government’s wish was to make a nationwide basic wage a permanent instrument that supports citizens “forever.”
If the policy is implemented successfully over the coming weeks, it would make Spain the first country in Europe to introduce a universal basic income on a long-term basis.
A man applauds the hospital workers who are fighting the coronavirus on March 30, 2020 in Madrid, Spain.Denis Doyle | Getty Images
Cailin Birch, global economist at the Economist Intelligence Unit, told CNBC via telephone that Spain’s decision to roll out a universal basic income could pave the way for other countries to follow suit.
“In the U.S., they’ve actually already arrived at the policy — albeit through the back door rather than the front door,” Birch said, referring to the federal government’s direct payments plan.
The first wave of stimulus relief checks were deposited into some Americans’ bank accounts over the weekend, according to the IRS. Millions more expect to receive theirs in the coming weeks.
The checks are worth $1,200 for individuals with adjusted gross income below $75,000 and $2,400 for couples earning below $150,000.
It comes as part of the $2.2 trillion stimulus bill passed late last month. The direct payments are designed to help mitigate the financial strain caused by Covid-19.
“If anything, it makes the case for the need to have some kind of level unifier so that households can avoid financial ruin,” Birch said.
She warned one-off payments would be an “imperfect example” for basic income in the world’s largest economy, given that households would not be able to plan on receiving a second payment and because people are typically hesitant to spend money in the wake of an economic downturn.
There’s a “big divide” between the U.S. and Europe when it comes to their appetite for a universal basic wage, Birch said, suggesting Europe was generally seen to have “more familiarity and comfort with a left-leaning view.”
Pope Francis explains a radical new idea in new book called, “Let Us Dream”
Pope Francis has given enthusiastic support to the idea of a universal income in a soon-to-be-released book, Let Us Dream.
The book, which will be released on December 1, is written in collaboration with Austen Ivereigh, the British journalist who has already produced two biographical works on the current pope.
In Let Us Dream, Francis says the institution of a universal income is one of the avenues for getting out of the crisis caused by the coronavirus pandemic.
He believes it is also one of the tools that should be adopted in rethinking the economic system in post-pandemic work, which global leaders are currently debating.
The Argentine pope devotes the entire third part of his book to possible actions to change the world. He advocates for “an unconditional lump-sum payment to all citizens, which could be paid through the tax system”.
“Universal basic income could reshape labor market relations by guaranteeing people the dignity to refuse employment conditions that lock them into poverty,” he writes.
Francis has already addressed the issue in the past.
Last April, in the midst of the first wave of the pandemic, he evoked the “universal basic wage” in a letter to popular movements around the world.
“This may be the time to consider a universal basic wage which would acknowledge and dignify the noble, essential tasks you carry out. It would ensure and concretely achieve the ideal, at once so human and so Christian, of no worker without rights,” he wrote.
But in speaking of “income”, Francis is now going one step further.
By using this word, he is not arguing in favor of a fair salary paid to all employees, but for an unconditional universal income paid to all.
In affirming this, is he breaking with the social doctrine that, until now, has been developed by the Church?
In the past, when they have spoken on the subject, the popes have never directly addressed the question of a basic universal income. They have, on the other hand, clearly condemned idleness.
“Work is presented as a moral obligation with respect to one’s neighbor, which in the first place is one’s own family, but also the society to which one belongs, the nation of which one is son or daughter,” the Compendium of the Social Doctrine of the Church states.
Francis affirmed this in May 2017 when he addressed representatives of the “world of work” in the northern Italian city of Genoa.
“Do you know the percentage of young people aged 25 and under, unemployed, in Italy?” he asked them.
“These young people grow up without dignity, because they are not ‘united’ by the labor that gives dignity. But the cornerstone of this question is this: a monthly cheque, a monthly allowance that enables you to support a family does not solve the problem,” the pope said.
But the Compendium makes it clear that the obligation to work must also be combined with “the level of equity in the distribution of income”.
In other words, income must be distributed by considering “beyond the objective value of the work rendered, the human dignity of the subjects who perform it”.
It is this balance between human dignity, a decent income and work for all that Francis seems to be seeking here.
He says it is a question of ensuring a “basic security” that guarantees dignity.
By urging society to recognize and therefore compensate other forms of work — that of volunteers or people who care for their loved ones — the pope is arguing, for the first time, in favor of the non-correlation between work and wage-earning.
It is a radical new idea.