The UBI debate

By Ollie Campbell 

As Covid-19 has drastically increased government spending globally, is a universal basic income the only way to go?

 

In recent history, a number of campaigns have been built upon a paradisal proposal of a universal income that will indefinitely eradicate poverty nationwide. However, these proposals never seem to get far and the candidates/parties don’t win elections. The two obvious examples being the Green party in the 2019 General Election and Andrew Yang’s mediocre Democratic Presidential nomination campaign. Both failed spectacularly as the Green Party only managed one seat in the Commons and Yang failed to win any pledged delegates in the Iowa caucuses. However, Mr Yang has not been disheartened at all as he leads the race for Mayor of New York City, only proposing a less radical financial stimulus plan involving providing cash for half a million New Yorkers.

 

Despite the heavy criticism that UBI is continually receiving, the experience of most of the populations in developed countries and the concomitant explosion in social spending, the discussions about this radical proposal are beginning to seem more approving. The transfers of cash as grants and income (through job retention schemes) is looking like a very efficient and effective way of settling the economic needs of the population. No country has yet decided to give recurring payments and there is definitely no evidence to suggest the age of a UBI has come to fruition, but the ordeal associated with the pandemic has definitely brought it closer. 

 

Arguments for the implementation of universal-income payment schemes have fluctuated in relevance throughout centuries. One of the initial founding fathers of the USA, Thomas Paine, advocated that the Earth is common property and so therefore, everyone who makes use of its land and resources owes a “ground rent” to society, which should be able to fund the payment of “natural inheritance” to all adults. Throughout the 20th century, arguments for both a universal basic income and the subtly different guaranteed minimum income were flourishing. Although, by the end of the 1900s, concerns of freeloading and continuously high unemployment created reforms that rather reduced benefits to make work seem more desirable.

 

In more recent history, the 2010s have become full of future anxiety of robots and artificial intelligence taking over jobs and increasing the level of redundancies. Now, the interest in basic incomes has largely decreased, as shown through the Swiss referendum which proposed a $2,500 per month payment to all adults, almost 80% of the voters opposed.

 

Then came the global pandemic. Since Covid-19 took over the world, restrictions on activity has placed huge swathes of society into a position of urgent economic need. All developed nations have put out the fire of Covid-19 with a fire hose of cash. In the 3 months from March 2020, over 1.1bn people received cash payments which has accounted for a third of all pandemic-related social policies, most of which faced little opposition. The most recent example of cash payments is President Biden’s Coronavirus Relief Bill in which cheques of up to $1,200 are handed out to a huge number of American citizens, no-strings-attached.

 

Despite the countless cash schemes in the last year, few actually resembled true UBI. Most developed economies provided either one off payments or payments that were proportional to wages. In contrast, poorer countries transfers were smaller and more recurrent, closer resembling that of UBI. But, in less developed countries the payments were only aimed at those who are most vulnerable. The biggest ever welfare programme occurred in Brazil, where the poorest third of the population received monthly payments until December 2020.

 

As the end of the pandemic draws ever nearer, and previous economic activity is able to resume, the number of continuing programmes is ever dwindling. Less than 7% of policies worldwide have been extended; the average length of a scheme lasting a mere three months, according to the World Bank. The American Stimulus Bill is the third round of cash injections to the US population, each round of payments available to less and less of the population.

 

It is fairly obvious that pandemic assistance alone will not evolve into sustained basic-income schemes. However, the world’s experience of the pandemic has definitely made the adoption of a basic income ever more likely. Recent polling has suggested that both Britain and America support the idea of a UBI. The whole basis relying on the continuous motivation of the workforce so that tax revenue can fund the payments. Henceforth, should the economy continue running at a similar level without workers resigning or working less hours due to the payments, UBI can only be seen as a positive. Although, we are a long way from this ever being the case.

 

The new enthusiasm for government cash transfers to the population can in the most part be put down to relaxed concern over government borrowing, seen as an investment rather than a debt. As the pandemic ends, this could change as well, it is possible a global wave of austerity hits, definitely on some sides of the political spectrum at least. Only then will it become visible how far the pandemic has pushed us along the path to UBI. All we know is, it still along way away and until people's perceptions change, it should be avoided to prevent potentially fatal government deficits.              


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