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Thursday, 9 April 2020

A Universal Basic Income may arise from COVID-19's ashes

Several governments are struggling passing on monetary support to their citizens during this coronavirus pandemic (eg, CFRQz, WEF). Spain will soon implement a Universal Basic Income or UBI (eg, Independent). If there’s any moment then it’s clearly now. Else, global citizens may starve to death due to imposed lockdowns rather than die from COVID-19.

Contrary to what you may believe, the political arguments for a UBI are bipartisan. The liberal-left will cherish its welfare aspects. The conservative-right should cherish the downsizing of government. Remarkably, the liberal-left usually understands - and fears - this downsizing argument. The conservative-right often opposes a UBI and thus a potential downsizing.

Replacing the various - if not many - national allowances, benefits, credits, pensions, and subsidies by a national UBI creates transparency between a Government and its citizens. In politics, latter is often viewed as a threat or weakness rather than an opportunity or strength. Hence, governmental policies are often opaque as complexity is serving specific interests. 

Without a UBI, citizens will - sooner or later - start questioning the trade-off between saving the lives of senior citizens and ruining the lives of (young) adults. The American discussion started by Trump, about the macro priorities of economics versus the micro priorities of healthcare, is already spreading into Europe.

The duration of the pandemic will define the outcome of this discussion. Austria is expected to be the first country to reprioritize economics by reopening "small shops" on April 14, "all trade" on May 1, and "gastronomy and hotels" by mid-May (eg, CNN, EurActivFT). Other European countries are expected to follow suit.

Spain's introduction of a UBI will have to be followed by other countries due to the economic havoc of the lockdowns. Most countries will probably not replace existing monetary support by a UBI. Probably, a UBI will be additional support for the duration of the coronavirus.

Only a country like The Netherlands might delete existing credits and transfers while introducing a UBI. My country might then - again - become a fearful role model for other countries. 

A future international comparison between (future) national UBI’s is likely to result into an upward “harmonisation”, similar to CEO remuneration. This harmonisation will result in financial arbitrage and thus pensioners relocating to countries with a low cost of living. Essentially, it’s the business model of the 2011 movie The Best Exotic Marigold Hotel (IMDb). 

A quote from The Best Exotic Marigold Hotel: “Sonny : I have a dream, MummyJi, a most brilliant one. To outsource old age! And it is not just for the British, there are many other countries where they don't like old people too!”

Money for Nothing (1985) by Dire Straits

Note: all markings (bolditalicunderlining) by LO unless stated otherwise.

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