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    Has the Pandemic Boosted the Idea of Universal Basic Income?

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    The COVID-19 pandemic and the ensuing lockdowns have brought economic activity to a standstill. As a result, the livelihoods of people around the world have been threatened. To respond to the crisis, some governments have considered how to expand their social safety net. This is particularly because many people who work in the informal economy or those without jobs have been left with no financial support. In this context, the idea of a universal basic income (UBI) has resurfaced.

    Until recently, UBI was a utopian proposal relegated to academic discussions. But the pandemic has led to a debate about UBI as a potential tool of public policy. Now, several basic income programs are running around the world. Advocates see in UBI an instrument to build more resilient societies in the face of economic crises, income inequality and automation. Critics argue that governments should strengthen existing social programs instead.

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    In June 2020, Spain offered monthly payments of up to €1,015 ($1,200) to the poorest families. Germany has implemented a small-scale pilot study to take place over three years. As part of the program, 120 Germans will receive monthly payments of €1,200. In the United Kingdom, a motion to introduce UBI was signed last year by more than 100 parliamentarians from across the political spectrum. At the start of the pandemic, the US government paid up to $1,200 to adults earning below $99,000 a year; a second stimulus package meant Americans received even more money. Thus, it seems that the crisis has shifted the UBI debate, at least in some European countries and in the US.

    However, in South and Central America, the debate on the desirability of UBI could “not take off, given the very severe fiscal constraints in most countries,” says Oscar Ugarteche, a Peruvian professor of economics. This is despite the Bolsa Familia (Family Allowance) experiment of Luiz Inacio Lula da Silva, the former Brazilian president. This indicates that the debate is partly country-specific and that the implementation of UBI may require “several national experiments, which are likely to influence corresponding variations in policy design,” according to counselor Andrew Cornford.

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    Indeed, UBI is not a one-size-fits-all program. Many questions need to be considered. For example, should payments be issued per household or adult? Should everyone be eligible for UBI or only those receiving low salaries? Should a universal basic income be temporary or permanent? How will it affect the willingness of people to find a job or to continue working? How would UBI be financed?

    The first step is to assess the feasibility and implications of UBI. To do so will require building on the experiences of small-scale studies, comparing their results and collecting further evidence. Thus, it could be a long time before governments and the wider population see such a program. That is unless the current health crisis can serve as a catalyst for socioeconomic change, contributing to make UBI part of the legacy of the pandemic. 

    By Virgile Perret and Paul Dembinski

    Author’s note: From Virus to Vitamin invites experts to comment on issues relevant to finance and the economy in relation to society, ethics and the environment. Below, you will find views from a variety of perspectives, practical experiences and academic disciplines. The topic of this discussion is: Where does the debate over a universal basic income stand in your region? Has the pandemic had an impact on discussions about UBI?

    “…ensure that everyone has a floor on which to build [their] life…”

    “World GDP in 2020 reached $90 trillion. To bring this number down to earth, it means that what we presently produce is equivalent to $3,800 a month per four-member family, amply sufficient for everyone on earth to live a dignified and comfortable life. A modest reduction in inequality and a flat redistribution to adults is sufficient to ensure that everyone has a floor on which to build [their] life. Huge financial resources lay idle in the world, growing not through productive investment, but financial rent. Taxing them might make these resources useful, stimulating demand and production at the bottom while drastically reducing poverty. Those who do not need the support might just be taxed back for the amount.”

    Ladislau Dowbor — economist, professor at the Catholic University of Sao Paulo, consultant many international agencies

    “…a certain confusion reigns here around the notion…”

    “In France, the debate concerning a universal basic income remains confined to academic spheres and to a few militant groups. The issue was, however, put in the political agenda by the socialist candidate in the last presidential elections (spring 2017), that is to say before the outbreak of COVID-19. This candidate achieved a very poor score. The crisis itself does not seem to have brought the problem to the fore. It is true that a certain confusion reigns here around the notion: Is it a real universal basic income, a negative tax, aid to citizens without resources or a subsidy to all residents? The imagination is lost, which does not help the political inscription of this notion, nor the serene economic discussion.”

    Etienne Perrot — Jesuit, economist and editorial board member of the Choisir magazine (Geneva) and adviser to the journal Etudes (Paris)

    “…with the COVID crisis, the idea is resurfacing…”

    “In June 2016, a proposal to introduce a universal basic income was rejected by three-quarters of Swiss voters and all Cantons. With the COVID crisis, the idea is resurfacing, but to gain traction, it will need to address two issues. The first is how to finance it, especially if UBI should be enough to live on, without having adverse incentives for work and the tax base. The second is why provide support to everyone instead of those in need? Even with the pandemic, the vast majority of the population have kept their income and thus do not need support.”

    Cedric Tille — professor of macroeconomics at the Graduate Institute of International and Development Studies in Geneva

    “…dissatisfaction with existing social-security systems…”

    “Dissatisfaction with existing social-security systems has recently led to greater attention to the universal basic income. Perhaps the best-known experiment is that carried out on a limited sample of recipients in Finland. In the recent municipal elections in the UK, almost 300 candidates of the Green Party were declared supporters of the UBI. Supporters stress the automaticity and universality of the UBI, which are believed to contribute to wellbeing and the ease with which beneficiaries are able to handle other problems of their lives. Critics stress the undesirability of the delinking of financial benefits from particular welfare services owing to its likely impact on popular support for these services. This is a debate that requires several national experiments, which are likely to influence corresponding variations in policy design, including other solutions such as negative income taxes or simply strengthened social security.”

    Andrew Cornford — counselor at Observatoire de la Finance, former staff member of the United Nations Conference on Trade and Development (UNCTAD), with special responsibility for financial regulation and international trade in financial services

    “…the proposal could draw away people from the labor force…”

    “During the pandemic, the Spanish left coalition government accelerated a plan called Ingreso Minimo Vital, expected to hand out between €462 and €1,015 per month according to the conditions of each household unit. This in part replaces or adds up to existing regional schemes. Until March 2021, 210,000 beneficiaries had their submission approved, of a total of 1.3 million requests. The unions and a few NGOs — some of them very efficient in relieving newly emergent poverty — denounced the slowness and administrative maze in the process. The Spanish unemployed still number 3.6 million (15.99%), plus about 750,000 in furlough schemes. The proposal, if successful, could draw away people from the labor force, whereas we need public-private policies aiming to the contrary.”

    Domingo Sugranyes — director of a seminar on ethics and technology at Pablo VI Foundation, former executive vice-chairman of MAPFRE international insurance group

    “…these measures would provide tangible help that women need right now…”

    “For myriad women in economies of every size, along with trailing income, unpaid care and internal work burden have exploded. While all are facing unprecedented challenges, women continue bearing the brunt of the economic and social fallout of COVID-19. Pandemic-induced poverty flow will also widen the gender poverty gap, which means more women will be pushed into extreme poverty than men, thereby revealing women’s precarious economic security. Introducing direct income support to women would mean giving cash directly to women who are poor or lack income that can be a lifeline for those struggling to afford day-to-day necessities during the pandemic. Further, these measures would provide tangible help that women need right now.”

    Archana Sinha — head of the Department of Women’s Studies at the Indian Social Institute in New Delhi, India

    “In Central America, it has not even been considered…”

    “In Mexico, the discussion went to Congress as a proposal in June 2020 and is unapproved with a cost of 1% of GDP. In Central America, it has not even been considered as it is too onerous for the limited public finances of those countries. In Brazil, Chile, Colombia and Argentina, among other countries in the region, there is public discussion on the desirability of UBI promoted by ECLAC and UNDP and has not taken off, given the very severe fiscal constraints in most countries. UBI would not reduce inequalities as people who do not need it would get it and families with many adults in one household would get a bigger share than those with children.”

    Oscar Ugarteche — visiting professor of economics in various universities

    “…at the center of the most dynamic debates…”

    “The pandemic triggered a socioeconomic downturn — already sharpened by the 2008 debt crisis — that raised economic uncertainty and widened inequalities. Fundamental rights and basic life parameters are at risk, especially for the poorest of the poor. Scholars, experts and citizens feel that it’s surely the time to voice their support for a series of socioeconomic initiatives — the universal basic income being at the center of the most dynamic debates. The southern Mediterranean countries and Greece prioritized the pandemic effects and kept aside for a short period of time the austerity measures. However, Greece is expected to turn back to the economic stability narrative, as described during the debt crisis, a fact that disempowers a possible engagement to the UBI debate. If this becomes — as it should — an international matter, weaker economies will follow.”

    Christos Tsironis — associate professor of social theory at the Aristotle University of Thessaloniki in Greece

    “…popularizing the idea of universal basic income in the US…”

    “Thanks, Andrew Yang, for popularizing the idea of universal basic income in the US. Yang ran in the 2020 Democratic presidential primaries, offering the “Freedom Dividend,” a UBI of $1,000 a month to every American adult, as a solution to the eventual replacement of (nearly all) humans with automation. He scarcely answered how his UBI was to be funded, a significant, but not insurmountable, problem for UBI’s proponents. UBI skeptics were somewhat silenced when the former and current administrations sent out modest checks to those who lost jobs in the pandemic, in a series of massive economic rescue packages. Maybe the rescue plans are a nascent solution to UBI funding: higher taxes, deficit spending and pump priming.”

    Kara Tan Bhala — president and founder of the Seven Pillars Institute for Global Finance and Ethics

    “Italy introduced two years ago the Reddito di cittadinanza…”

    “Italy introduced two years ago the Reddito di cittadinanza, with 1.2 million Italians receiving this first attempt of universal basic income (€560 on average), at the condition of refusing no more than two job offers. In two years, only a small number of citizens actually signed a contract, as most offers were short-term. On the other hand, Italy just presented its Piano Nazionale di Ripresa e Resilienza )PNRR), consisting in €235.1 billion. Roughly 27% of the resources of the plan will be devoted to the digital agenda, 40% to investments to counteract climate change and 10% to social cohesion. Particular attention was paid to the historically disadvantaged Mezzogiorno of southern Italy (€82 billion, of which 36 in infrastructures), with projects involving young people and women, groups hit hard by the socioeconomic impact of the pandemic.

    Valerio Bruno — researcher in politics and senior research fellow at the Centre for Analysis of the Radical Right (CARR).

    *[A version of this article was originally published by From Virus to Vitamin and Agefi.]

    The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy. More

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      Does the World Need to Contain China?

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      The rise of China has revived the rhetoric of Cold War-era containment to depict competition between dominant powers, although the state of international relations is fundamentally different. Containment strategy toward China featured prominently in former US President Donald Trump’s policy, and many believe that strategic competition will continue to define the relationship under the Biden administration but in a different form. However, the necessity to contain China is a contested idea both on economic and ethical levels.

      In the first place, it should be understood that the world “includes many different groups with varying degrees of dependence from China,” says Domingo Sugranyes, director of a seminar on ethics and technology at Pablo VI Foundation. Therefore, he adds, “the need for containment will be seen differently if you are looking at textile supply chains, workers’ rights in [Xinjiang], data privacy rules, markets for European cars.”

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      Oscar Ugarteche, a Peruvian professor of economics, believes the emergence of a new superpower competing with other Western countries may be “positive, particularly for the Global South.” That said, we are undeniably witnessing “the emergence of a new distribution of power in which relative weights are shifting away from the United States and its allies, although the absolute political and economic power of these nations is and will remain considerable,” he mentions.

      Some, such as researcher Valerio Bruno, see the rise of China not only in the economic and military domains, but also as an ideological confrontation — “between two Weltanschauungen” — that determines whether the future world order will be defined by liberal or authoritarian ideas. Proponents of a containment policy believe that China does not offer a realistic alternative to the liberal order and that it should be obliged to comply with those rules. How? According to economist Etienne Perrot, it could be through “multilateral agreements and targeted alliances” designed to bring European powers more firmly into the containment effort in the economic and technological domains.

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      In contrast, some observers question the necessity of containment. Kara Tan Bhala, president and founder of Seven Pillars Institute for Global Finance and Ethics, argues that “a deliberate policy of containing another country, and thereby not allowing many to achieve their human potential” may not be morally justified. States should “respect the diversity of systems … while encouraging each other to become ‘better socialists’ and ‘better capitalists’ serving humanity,” says Christoph Stuckelberger, a professor of ethics. On the economic front, Ugarteche says, “the technological competition between the USA and China is positive for all of us as it speeds up innovation and reduces costs and consumer prices.”

      At first glance, the Cold War rhetoric of containment refers to a bipolar world, which is not (yet) the case. Multipolarity seems to be the best guarantee to avoid the world sliding into bipolarity, with a risk of falling once again into a Thucydides’ Trap. In this perspective, the swift assertion of the European Union as a global, active player is urgently needed to leverage a new negotiated equilibrium anchored in a minimal level of mutual commitment on most urgent global challenges. In that sense, the notion of containment may be reformulated in terms of the world’s self-containment, especially, as Edward Dommen says, when we look “at the way the world economy abuses the planet.”

      By Virgile Perret and Paul Dembinski

      Author’s note: From Virus to Vitamin invites experts to comment on issues relevant to finance and the economy in relation to society, ethics and the environment. Below, you will find views from a variety of perspectives, practical experiences and academic disciplines. The topic of this discussion is: Does the world need to contain China and, if so, how?

      “… multilateral agreements and targeted alliances…”

      “Yes. China, by virtue of its human capacities, its natural resources and its organization, is today the dominant power (in terms of purchasing power parity). Opposite, the United States retains a monetary and military advantage, which China seeks to steal from them. Knowing that “power corrupts” (Lord Acton) and that “only power stops power” (Montesquieu), how to contain China without submitting to the USA? Through multilateral agreements and targeted alliances against MNCs [multinational companies] who, in the global market, behave like privateers in the service of their country of origin, sometimes even like pirates without faith or law.”

      Etienne Perrot — Jesuit, economist and editorial board member of the Choisir magazine (Geneva) and adviser to the journal Etudes (Paris)

      “… China does not export its politics.”

      “Is it the world or is it the West? Did the world need to contain Great Britain or Spain or the US in its time? What we are facing is a new superpower emerging that will compete with other Western countries and the result should be positive, particularly for the Global South. “The more, the merrier.” The technological competition between the USA and China is positive for all of us as it speeds up innovation and reduces costs and consumer prices. All else is irrelevant. China does not export its politics.”

      Oscar Ugarteche — visiting professor of economics at various universities

      “…negotiate with a clear understanding of issues at stake…”

      “The ‘world’ is no geopolitical actor; it includes many different groups with varying degrees of dependence from China. The need for containment will be seen differently if you are looking at textile supply chains, workers’ rights in [Xinjiang], data privacy rules, markets for European cars and machinery, monetary balances, Taiwan security and microprocessor supplies, loans to Africa and Latin America, or rare earth resources. … If the question refers to containment from the ‘West’ or, more precisely, the European Union, then the answer is no. We should negotiate with a clear understanding of issues at stake, as in the case of the proposed comprehensive agreement on investment. Above all, we should learn more facts about the incoming largest economic power.”

      Domingo Sugranyes — director of a seminar on ethics and technology at Pablo VI Foundation, past executive vice-chairman of MAPFRE international insurance group

      “One world — diverse systems”

      “How should the role of China be in the world? Three options: 1) China is disconnected from the world, sealed off, as it was to some extent 1949-1979, based on self-reliance and autonomous development; 2) China is fully integrated in the globalized world and follows the Western model of so-called capitalism and democracy as many powers in the West hoped that China, with its Open Door Policy since 1979, would develop; and 3) China is integrated in the world, but with its ‘Chinese characteristics’ of ‘third way’ combining planned and market economy, socialist one-party system with elements of consultative participatory processes and controlled civil society. The ethics of international relations needs to respect the diversity of systems as in option 3, while encouraging each other to become ‘better socialists’ and ‘better capitalists’ serving humanity.

      Christoph Stuckelberger — professor of ethics, founder and president of Globethics.net foundation in Geneva, visiting professor in Nigeria, China, Russia and the UK

      “…we are witnessing the emergence of a new distribution of power…”

      “The danger of conflict arises when there is no longer a consensus regarding the real power situation of the major parties — in this case, Russia as well as China and the United States. Conflict can become real when the parties, acting on significantly different subjective visions of the objective situation, come into collision. The purpose of conflict will be to demonstrate what the real power relationships have become and to establish some new consensus. Avoidance of conflict requires peaceful development of such a consensus, for which prerequisites will be acceptance by previously dominant countries that we are witnessing the emergence of a new distribution of power in which relative weights are shifting away from the United States and its allies, although the absolute political and economic power of these nations is and will remain considerable.”

      Andrew Cornford — counselor at Observatoire de la Finance, past staff member of the United Nations Conference on Trade and Development (UNCTAD), with special responsibility for financial regulation and international trade in financial services

      “…foster friendly and mutually fruitful relations…”

      “Does the world need to contain China? The USA? Itself? To contain oneself is always good advice, and if we look at the way the world economy abuses the planet, the world ought indeed to contain itself. However, to struggle to contain another party normally provokes a hostile reaction, and things go from bad to worse. Better to converse with it and thus to foster friendly and mutually fruitful relations. Trade is a form of that kind of conversation. As Adam Smith said, “It is the great multiplication of the productions of all the different arts, in consequence of the division of labour, which occasions, in a well-governed society … universal opulence.”

      Edward Dommen — specialist in economic ethics, former university professor and researcher at UNCTAD and president of Geneva’s Ecumenical Workshop in Theology.

      “…climate change will do more to change China…”

      “Containing China may be too big a task, and not all the world necessarily agrees on this goal. Indeed, it’s questionable if a deliberate policy of containing another country, and thereby not allowing many to achieve their human potential, is morally justified. Certainly, we should robustly oppose her monstrous conduct in Xinjiang, Tibet and Hong Kong and counter the Chinese Communist Party’s unacceptable behavior, for example, in trade and IP [intellectual property] in a targeted manner. But the demographics of an aging and gender skewed population, and the devastating effects of climate change will do more to change China than any containment strategy. One final thought: Should the world have contained the US when it destroyed indigenous peoples or practiced slavery?

      Kara Tan Bhala — president and founder of Seven Pillars Institute for Global Finance and Ethics

      “…two comprehensively different conceptions of the world…”

      “As Xi Jinping continues to steer the Middle Kingdom out of its historical isolation, avoiding challenging the United States for the position of world leader will be difficult, given China’s demographics and economic status. These two Weltanschauungen, two comprehensively different conceptions of the world, sooner or later will present the international community with a choice. Xi is well aware that the Biden administration can finally change course for the US and its allies, forging a united and progressive front after years of populist, nativist and authoritarian politics. Perhaps this element can help understand Xi’s assertiveness at the last World Economic Forum better than the recent economic successes. After all, political and civil rights are China’s Achilles’ heel.”

      Valerio Bruno — researcher in politics and senior research fellow at the Centre for Analysis of the Radical Right (CARR).

      “…obliging China to follow the rules…”

      “Present international relations cannot be correctly interpreted in the Cold War terms. The current confrontation between the United States and China is not Cold War 2.0 — it has a different nature. A historicist attempts to adapt the strategy of containment to post-Cold War realities are doomed to failure. The heterogeneous world is not able to be either an opponent or a proponent of the People’s Republic of China; only the consolidated West can be such an actor. China is a revisionist power. [It] criticizes the liberal world order but does not offer a realistic alternative. The most effective way to minimize Beijing’s destructive influence is to improve a rule-based order, and therefore a liberal order, by obliging China to follow those rules.

      Yuriy Temirov — associate professor, dean of the Faculty of History and International Relations at Vasyl Stus Donetsk National University in Ukraine

      *[A version of this article was originally published by From Virus to Vitamin and Agefi.]

      The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy. More