What Might Covid-19 Mean for Basic Income?

Will it lead to a more caring future society?

Basic Income was a widespread topic of discussion before the Covid-19 pandemic began. This crisis, however, may encourage people to look more favourably on the idea. There are a number of possible reasons for this.

We’re all vulnerable. The pandemic proves it.

Before the pandemic, some people with seemingly secure jobs or successful businesses were extremely disparaging towards people who received welfare payments. They had a severe ‘them and us’ attitude. They saw themselves as ‘hard-working taxpayers’ and resented having to pay for government ‘handouts’ to people they casually dismissed as ‘scroungers and layabouts.’

During the pandemic, however, many of those same people had to rely on government ‘handouts’ themselves. They may have lost their jobs or businesses, or only managed to keep them thanks to furlough payments.

The truth is that any of us could find ourselves in a crisis, at any time, through no fault of our own. It may be an international crisis. It may be a recession. Or it may be a very personal crisis. And when it happens, we may need support from the government.

The government’s duty to help

Market forces do wonderful things. Yet, in a crisis, such as a pandemic, we accept that the government has a duty to step in and help. We accept that the government has a responsibility to ensure everyone’s essential needs are met.

But that fundamental responsibility won’t end with the pandemic. The government sets the laws under which we live. It sets the rules within which markets must operate. It therefore becomes morally responsible for ensuring everyone can meet their essential needs all the time.

A Basic Income system would be the most effective and efficient way in which the government can meet that responsibility.

Could stimulus payments continue?

One of the US government’s key financial responses to the Covid-19 crisis, was to issue $1200 emergency payments to millions of eligible Americans. These were designed both to help those in need and to provide a stimulus to the entire economy.

These payments did look rather like Basic Income payments — prompting some people to ask whether they could become the first of many, as part of a permanent Basic Income system.

It’s important not to get confused. Basic Income payments are not stimulus payments. Stimulus payments are temporary measures designed to give a short-term boost to demand. In contrast, Basic Income payments provide security and stability over the long term. They are there for you through good times and bad, whether a general stimulus is required or not.

Nevertheless, it’s worth noting that a Basic Income system would provide an excellent framework for providing an economic stimulus. Whenever a stimulus is required — in ordinary recessions, as well as during a pandemic — it would be a simple matter to temporarily increase Basic Income payments above their usual level. The necessary databases and payment mechanisms would already be in place.

Basic Income versus furlough schemes

Furlough schemes seem reasonable in the short term. The government pays people’s wages for a few weeks, so they don’t lose their jobs and can go straight back to work once the worst of the crisis is over. But some furlough payments have continued for over a year. And when you think about it, you realise how unfair furlough schemes can be.

Here in the UK, for example, someone who would otherwise have lost their job due to lockdown, could receive furlough payments of 80% of their normal wages, up to £2500 per month.

But someone who became unemployed just before the pandemic began (or even during the pandemic) might only qualify for welfare payments of less than £350 per month.

So you can have two people, both of whom are unable to work, through no fault of their own. One gets £2500 a month from the government for doing nothing. The other gets less than £350 per month and has to prove they spend the full working week looking for and applying for jobs.

That’s patently unfair.

It would seem much fairer for everyone to get the same amount of state support each week, in the form of a Basic Income. And during a crisis, that Basic Income could be boosted for everyone.

Greater awareness of welfare unfairness

Thanks to the pandemic, many people in previously secure employment have been getting first-hand experience of some of the unfairness inherent in our welfare systems.

Some, for example, were shocked to find they were ineligible for welfare support, because they had too much money in savings.

It is, of course, grossly unfair to be denied welfare because of your savings. One person spends all their spare income on alcohol and gets welfare support when their income falls. Another person acts more responsibly and diligently saves their spare money, only to find those savings make them ineligible for welfare when times get tough. Perhaps now, more people will appreciate how unfair that is.

Perceptions of affordability have changed.

Basic Income is easily affordable because it is only a transfer payment. It is money that is collected from the population in tax and then paid straight back to the population as Basic Income. As a society, it doesn’t really cost us anything at all. There is a small amount of administration involved — but much less than under existing welfare schemes.

Nevertheless, Basic Income debates have been plagued by false claims that it is unaffordable. The figures for increased total government expenditure are big numbers — and some people find that scary, because they don’t appreciate that we’re only talking about transfer payments.

The pandemic, however, may have reset people’s perceptions of what can or cannot be afforded.

The financial costs of government interventions have been eye-watering. And, unlike with Basic Income, these costs are not merely transfer payments. They represent the use or loss of real resources.

Many countries have been racking up huge budget deficits caused by the lockdown measures they’ve imposed to combat the pandemic. But no country would need to run a deficit to finance Basic Income.

So if we can somehow afford the costs involved in dealing with the pandemic and in imposing lockdowns, this helps to highlight how ridiculous it is to claim we can’t afford Basic Income.

Covid-19 hasn’t suddenly made Basic Income affordable. Basic Income was already affordable. But this crisis may make people more willing to accept that fact.

A more compassionate future?

Finally, there is the hope that this crisis may have boosted people’s compassion for others. People might be kinder to one another.

In pre-coronavirus times, there were far too many people willing to assume that people in difficult financial circumstances deserved their plight.

The truth is that people who suffer from poverty and deprivation almost always suffer from huge disadvantages that were not their fault. They did not choose to be born to a poor family or brought up in a neighbourhood ravaged by crime. They did not choose to go to substandard schools. They did not ask for people to be prejudiced against them. And when people lose their jobs, it is often not their fault.

We recognise that coronavirus strikes people who do not deserve it. We recognise that lockdowns and other pandemic restrictions cause unemployment and business failure where it is not deserved. Similarly, we should all recognise that misfortune plays a key role in poverty.

We should be kind enough, as a society, to help people out whenever they don’t have enough to eat or a roof over their heads. Basic Income would ensure everyone has that help whenever they need it. And it would do that job far more effectively and efficiently than existing welfare schemes.

We just need to be kind enough to want to help people — and smart enough to realise that Basic Income is the very best way of achieving that aim.