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The Basic Income Has Its Moment

  • Evelyn L.
  • Nov, 2020
  • 129
  • Unemployment Benefits

How the pandemic made a fringe idea go mainstream

A basic income-a regular, unconditional payment distributed by the government-is an old idea. Thomas More wrote about it during the Renaissance in Utopia, and Thomas Paine preached its merits when the United States was in its infancy. But the idea never gained mainstream acceptance. Although social scientists had long been testing the effects of a basic income with pilot projects around the world, it was easy to imagine that the governments permitting these experiments hoped that public enthusiasm might die out by the time the results were compiled. After the 2008 financial crisis, the International Labor Organization, the Organization for Economic Cooperation and Development, the World Health Organization, and, especially, the World Bank showed some interest in a basic income. Never, however, did the idea make the leap from white papers to real-world policy.

In the United States, the most prominent advocate of a basic income was the 2020 Democratic presidential candidate Andrew Yang. As a solution to structural unemployment caused by automation, Yang proposed that every American adult receive a monthly check of $1,000. He called it the “Freedom Dividend,” and it formed a major part of his platform. But on February 11, having received just 2.8 percent of the votes in the New Hampshire primary, Yang dropped out of the race. The lack of interest in his idea didn’t seem surprising. In most high-income countries, it was fair to say that a basic income had a cult following, popular only among the kinds of people who read speculative fiction and wore T-shirts sporting jokes disguised as mathematical equations. It was something of a fringe interest.

Then came the pandemic. In March and April, after COVID-19 forced governments to shut down entire economies, leaders across the world realized that existing benefit programs weren’t up to the task of helping people meet their basic needs while not working. In the United States, even conservatives lined up to support unconditional cash grants. Senator Mitt Romney, Republican of Utah, proposed sending every American adult a one-time payment of $1,000. Congress swiftly passed a massive stimulus package, which handed out payments of up to $1,200 to people under a certain income threshold, expanded the class of people eligible for unemployment insurance, and added an extra $600 to every weekly unemployment check. In less than a month, an idea that nearly all politicians had considered off the wall had-in temporary, partial form-become actual policy.

EMERGENCY RESPONSE

What changed, of course, was the politics. In normal times, the unemployed hardly constitute an important voting bloc, but the pandemic dramatically increased the number of people without jobs, and politicians felt they had to respond. As the lockdowns began and businesses shuttered, people who had never expected to need government assistance began to panic when their paychecks stopped. Many turned to established social programs and discovered that they didn’t qualify-because they worked part-time, worked for themselves, or worked in the gig economy. Those who did qualify found that the level of benefits they were eligible for wouldn’t come close to meeting their basic expenses.

Faced with millions of applicants who had never before needed support, welfare systems were overwhelmed. The pandemic revealed the degree to which unemployment insurance and other social programs had failed to keep up with the evolution of the labor market. Around the world, civil servants were tasked with designing stopgap programs that were rolled out in a matter of weeks-some more successfully than others. Many high-income countries made cash infusions to individuals a centerpiece of their response. In June, Spain rolled out a program offering monthly payments of around $1,100 to poor households. In August, Germany started a pilot project in which 120 Germans would receive $1,400 a month for three years. Without any intention of doing so, governments found themselves experimenting with various forms of basic income.

Fiscal hawks had long argued that more generous social programs were simply too expensive to fund and too complicated to manage, but this was revealed to be untrue. Canada had a generous emergency response benefit up and running just two weeks after the World Health Organization declared COVID-19 a pandemic. The program covered not only people who lost their jobs or had their hours reduced due to the shutdown but also those who couldn’t work because they were quarantining or taking care of children. Gig workers and the self-employed were eligible. People could apply online or over the phone in minutes, and payments were deposited directly into recipients’ bank accounts within days.

Neither the Canadian program nor its...

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