For the past couple of months, the world has been dealing with an unprecedented crisis with an impact so extensive that governments across the world are beginning to rethink their strategies for different sectors such as health, economy and public welfare. As most economies of the world are experiencing a short term lockdown, stalling of economic activities due to the pandemic situation; economic setbacks, recession and jobs losses are obvious consequences.
Many emerging countries like India have daily wage labourers as a vital section of the society. Millions of them do not have a home and depend on their daily labour earnings for essential needs such as food and shelter. The current country-wide lockdown situation has created an acute crisis for migrant labourers that has come down harshly on their survival. In the lack of work, money and shelter, most of them have begun turning back to their homes on foot.
This grim picture of homeless people is not only coming out from India but across the world as well. While people across the world are trying to minimize the spread of the virus by staying indoors, those without a home are getting more and more vulnerable to the disease in the absence of shelter, money and food. And it’s not only the poor who are at risk. Millions of middle class people in the world, who do have a home and financial security right now, are highly likely to go jobless within a year. This is going to put them in acute financial stress making it impossible to carry out their financial liabilities such as repaying their home loan or paying their monthly rent and EMIs.
UBI (Universal Basic Income) for all citizens across all nations can avoid the healthcare and economic crisis from turning into a social unrest and civil war.
Universal Basic Income or Citizen’s Income is a minimum cash amount provided by the government unconditionally to all the citizens of the country for their basic living expenses. The amount could vary from ~$100 per person per month in an emerging country to $1000+ in developed countries. Most UBI implementations so far have been in the form of limited pilot projects aimed at assessing its impact on the weaker sections of the society. Many of these experimental projects have yielded positive outcomes such as recently in Finland. But despite its great potential we don’t really see it applied in a wide social setups.
As the world inches towards a global economic crunch, people are now realizing the importance of having a UBI-like policy in place. Although governments are trying to assist the affected people with economic packages, it cannot be ruled out that if a UBI was already functional, the economic setbacks could have been more manageable. The good news is that now more than ever questions about UBI are being asked and solutions are being suggested.
How UBI Works: As a guaranteed monetary benefit for all citizens, UBI enables financial security for all adult individuals alike, whether they’re working or not. Critics have often argued about the idea of the government paying wealthy individuals who are already earning hefty amounts. While the argument is sound in its place, the philosophy behind UBI goes deeper than just governments paying money to its citizens. While capitalist economies thrive on the freedom to make money, it also increases the economic disparities between different sections of the society i.e. the rich become richer and the poor become poorer; which is far from ideal. The fundamental idea behind UBI is to distribute economic profits among all people alike – no questions asked, no conditions applied. So while a $100 or even $1000 in cash may not do much for a billionaire, it can prove extremely helpful and decisive for a homeless person, a single parent or someone who has just lost his/her job. And likely scenarios where UBI could prove very helpful in retaining social order and calm include,
- Economic recessions
- Mass unemployment due to automation
Once the COVID-19 crisis is contained, we’d have to deal with other upcoming challenges such as automation that is seeping into most sectors causing major job losses. Autonomous cars alone will push millions of drivers jobless within the current decade itself. Similar trends will be seen in the manufacturing and IT sector as well. All economies, developed or developing, will have to gear up for this inevitable development. While the future job crisis is still impending, the current economic issue is making a stronger case for the implementation of UBI.
Even from a global standpoint, UBI could have helped to neutralize the economic slowdown to some extent. First of all, the weaker sections could have been saved from piling up issues such as lack of food, shelter and health facilities. The recession may have still been inevitable but at least the impact could have been a lot less serious than what has been predicted for the coming months. A Universal Basic Income seems like a valid solution to emergencies like the one prevailing right now. But to err is human. Humankind had long been in the habit of not preparing for crises until they actually happen. What is unfortunate is the fact that we have not started learning from our mistakes or else our previous experience with epidemics and recession could have taught us something.
UBI may often seem too good to be true. While it indeed is a perfect solution in theory, staunch critics of UBI have more than just a few arguments against it.
- UBI will make people lazy – Well, not necessarily. It’s a mechanism to reallocate capital which will work well in the case of emergencies like wars, pandemics, automation stealing human jobs, as well as in normal times at a small cost. Think of it like insurance (against social unrest); and nobody drives recklessly because they have car insurance.
- It’s a Utopian fairy tale – Possibly. But I believe it’s achievable if taken up as a priority over some other budgets.
- UBI implementation cost shall make it inconceivable – The cost of UBI can be allocated from annual national budgets by possibly compromising from certain heads like defence. Also, this additional money given to all citizens is likely to come back in circulation by their consumption story and will eventually lead to an economic growth cycle leading to more jobs and more taxes.
- If UBI is such a perfect and why hasn’t it ever been applied successfully on a large scale? Well, if nobody is doing it, it’s not necessarily wrong. Good things happen with time.
What are the requirements for implementation of UBI?
- Intent – UBI can be implemented as long as there is strong intent in the nation, especially its government and its leaders. From there, the following actions would need to follow.
- Strong communication with the stakeholders including citizens, corporates & tax payers on why it’s important and how it will be executed.
- Strong planning and execution is the key in implementing the UBI project professionally. Follow the example of Aadhaar UID program in India, it was implemented by not government, minister, or a bureaucrat, but by roping in a professional IT company CEO with experience of delivering massing digital transformation projects.
- Digital identity of all citizens is needed to make this project faster and efficient to implement and track. Fortunately, India is uniquely well positioned hereby due to existing Aadhaar card Unique ID implementation.
- Direct Bank transfers are required to cut out leakages and middlemen. India is again well positioned with this as it has high amounts of its citizens banked.
Crisis presents opportunities. Let’s use the current one to bring out some constructive UBI alike solutions to the world.