Last year, Andrew Yang took a single issue to his run for the Democratic nomination: universal basic income (UBI), a living stipend available to everybody below a certain income bracket. Mr Yang’s “freedom dividend” would be set at US$1,000 a month, but was generally considered a pipe dream – too onerous and too expensive to work.
But the coronavirus has seen political leaders around the world change their tune. Spain is considering instituting UBI, with its Minister for Economy and Business Nadia Calvino saying “we will do it as soon as possible” so that it “remains forever” – even after the coronavirus crisis is firmly in the rear view. Whether or not Spain actually does that remains to be seen, but the willingness of a government to throw its weight behind such a proposal suggests that the once controversial idea is gaining traction.
The crisis has seen other governments around the world open the fiscal floodgates to support workers. In Australia, the Morrison government opted to pay certain employers $1,500 a fortnight per employee for the next six months to prevent lay-offs. The US unleashed a US$2.2 trillion package that included US$1,200 income support cheques, while the UK will pay 80 per cent of the salaries of workers furloughed by lockdowns.
While these measures are mostly time limited, they demonstrate a break with the idea that, in many (nominally) capitalist societies, the individual is more or less responsible for their circumstances and shouldn’t lean too heavily on the state for support. Financial crises – and their ensuing recessions – usually see this kind of behaviour. The Great Depression led Roosevelt to create the social security safety net, institute a wealth tax, and impose limits on trading of some securities in the secondary market through the Securities Exchange Act of 1934. The GFC led the Rudd government to hand out cheques of around a $1,000 to 8.7 million Australians. And it’s likely that governments will be forced to take more action to keep their economies afloat as the full impact of the global lockdown becomes known.
But the question of what happens after still remains. If Spain implements UBI – and if it works – could we see the idea of supporting citizens through the good times and the bad become more popular? While the coronavirus has made it politically easy to move on such measures – and while we shouldn’t expect them to last – they set a precedent that future governments will likely look at closely.
