COVID-19 and the Universal Basic Income debate.

Here Martin Sandbu of the FT  discusses the UBI as part of his Free Lunch on Film – taking unorthodox economic ideas that he likes and putting them to the test. He looks at both sides of the UBI argument with examples from Alaska and Finland where results showed that there was little reduction in working hours when people received the UBI. Good discussion and well presented.

Why has the UBI become such a popular talking point?

  • The coronavirus pandemic has seen wage subsidies – a no-strings attached regular cash transfers to just about everyone in the economy.
  • The automation of a lot of jobs has left people very concerned about redundancy.
  • The modern economy can’t be expected to provide jobs for everyone
  • The UBI is easy to administer and it avoids paternalism of social-welfare programmes that tell people what they can and can’t do with the money they receive from the government.

Concerns

  • Potentially drives up wages and employees will compare their wages with the UBI.
  • Easier for people to take risks with their job knowing there is the UBI to fall back on.
  • It takes away the incentive to work and lowers GDP
  • UBI – not cheap to administer and would likely cost 13% of GDP in the US

Positives

  • In the Canadian province of Manitoba where the UBI was trialled, working hours for men dropped by just 1%.
  • The UBI would make it easier for people to think twice about taking unrewarding jobs which is a good consequence.
  • In the developing world direct-cash grant programs are used very effectively – Columbian economist Chris Blattman.
  • In New Jersey young people with UBI were more likely to stay in education

If the U.B.I. comes to be seen as a kind of insurance against a radically changing job market, rather than simply as a handout, the politics around it will change. When this happens, it’s easy to imagine a basic income going overnight from completely improbable to totally necessary. 

James Surowiecki – New Yorker – 20th June 2016

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s