As the coronavirus pandemic escalates, governments across the world are putting their people in lockdown or preparing to do so.
In Europe – now the epicentre of the crisis, according to the World Health Organization (WHO) – tens of millions of people are already quarantined, with more joining them soon, potentially for many weeks.
In Asia, while life in China is slowly getting back to normal, in India, most of the local governments have declared an emergency and shut down schools, shops, and all public gatherings, as well as imposed severe international and domestic travel restrictions.
Borders have been shut across South America, while in the United States, the states of Illinois, California and New York have been placed under lockdown.
The logic of these measures is simple – if we limit social interaction, we reduce the rate at which the virus is transmitted. This prevents many who would have contracted it from passing it on to others and lowers the pressure on public health systems that have to respond. That is why “social distancing” measures are widely accepted as good policy even though they are draconian.
But unless implemented alongside complementary welfare policies that protect the socioeconomically vulnerable, they run the risk of producing a tidal wave of negative unintended consequences. Think of people in the gig economy. Delivery drivers in the US, for example, have no income security, no sick pay, and often very limited savings. What happens to them if a lockdown prevents them from working for a month or longer?
Likewise, many who live in in-work poverty face the frightful prospect of not being able to pull through the epidemic. Over the past 20 years, the percentage of workers beneath the poverty line in the United Kingdom has grown from 10 percent to 13 percent, with 56 percent of people in poverty belonging to a working family. This means that you can have a job in present-day Britain and still be so poor that you struggle to get by, often because your job is insecure and poorly paid and because rent costs are so high.
What will happen to the single mother working shifts at a restaurant when the restaurant is shut? How will she pay her rent? Although UK banks are currently preparing “mortgage holidays” for borrowers, there are still questions over the plan to support people in rented accommodation. Worse still, how will she buy food for her children? Online shopping is fine if you can afford it, but what if you cannot? And what if the foodbanks eventually close to prevent the spread of the virus?
The story of economies in the Global South is worse still. In South Asia, for instance, more than 80 percent of non-agricultural workers are in the informal sector, without any contracts, with no safety net, and no employer obligations. The gig economy has practically removed the “classical employer” and created “partners” – driver partners, delivery partners, etc. These are elaborate titles that cover the reality of insecure wage work for people who earn their living day-by-day and with nothing to fall back on. For many, the day they do not earn, they do not eat.
So what can be done to protect these people?
Forty years ago, ground-breaking work by Nobel Prize-winning economist Amartya Sen showed that people starve during famines less because of declines in food production and more because of their inability to access available food. The reasons for this are always sociopolitical: laws that prevent them from taking what they need, hoarding by the wealthy leading to inflation, rationing that is ineffective, etc.
Cash is vital to this story. During the Bengal famine of 1943 which was central to Sen’s analysis, food production was higher than it was in 1941, when there was no famine. Yet agricultural wages had stagnated while food prices skyrocketed as a result of the colonial policy to export rice for the war effort, meaning that local labourers starved because they did not have the money to buy the rice that they grew. In situations like these, even a small amount of cash could actually save lives.
This is one of the reasons why humanitarian agencies now routinely respond to wars and natural disasters simply by giving affected people cash. Indeed, 10 percent of all humanitarian assistance comes in the form of cash, because money is what enables those affected by natural or man-made calamities to survive in a market economy when their income or savings have been wiped out.
Of course, the coronavirus outbreak and the ongoing lockdown are very different from wars or natural disasters and nothing here intends to minimise the trauma of those who have experienced either. But the social and economic dislocation arising from this pandemic could be cataclysmic and traumatic, just like a war.
We have already seen stock markets collapse and with weeks of inactivity, businesses and the livelihoods that depend on them will go to the wall. Alongside securing a regular supply of food, therefore, unless our governments plan to supplant the market economy entirely and move towards a system of resource-allocation that is less anarchic, one of their primary tasks must be to ensure that people have enough money in their pockets to buy it. This is where introducing a basic income becomes an option.
Basic income is a simple social policy. In essence, it involves no more than giving people modest, regular and unconditional cash payments – much like a pension, only for all of us. Historically associated with activists eager to curb inequality, in this time of crisis, the idea is even being advanced on humanitarian grounds by senior officials at the World Bank.
Some states have already begun to announce relief measures. India Network for Basic Income has made a concrete proposal to the government for an Emergency Basic Income.
Since it represents a simple, humane and administratively uncomplicated way of ensuring that everybody has enough money to get by during the crisis, why would anyone be against it? One objection may be cost – that rolling out a basic income would be too expensive. But this claim carries little water in the face of the scale of the ongoing coronavirus response.
In the US, the Federal Reserve has announced that it will inject $1 trillion into the financial system to prevent it from freezing, while in the UK, Chancellor Rishi Sunak has promised 330 billion pounds ($384bn), with far more expected to come in the context of very cheap borrowing. Is it any wonder that politicians like Alexandria Ocasio-Cortez, as well as over 500 scholars and public figures, are already calling for basic income as a bailout for the people?
Ultimately, as this crisis unfolds, what we experience may be beyond our worst nightmares, with the deaths of loved ones and an economic collapse that could dwarf the Great Depression.
In this context, the immense outpouring of solidarity and a corresponding explosion of community organising are heart-warming. Both will also be vital, not least to support the many groups that a basic income will not reach – such as migrants living outside the system or those too old and infirm to go to the shops.
Nevertheless, even if it cannot fix everything, a basic income is a good place to start for policymaking in the time of coronavirus. For as Ocasio-Cortez aptly puts it, “This is not the time for half measures.”