The ongoing pandemic has brought to the fore discussions in the US around universal basic income. As more economies are being put into suspended animation by governments putting entire countries or regions into lockdown, it’s becoming clear that people need some sort of sustenance during their temporary retrenchment to help with their dues and expenses.
In India, this week has seen an exodus of migrants from cities back to their home towns and villages because daily wage jobs have been put on hold as cities lock down. The second-order consequences are serious: while people have moved back to avoid rent and high expenses in cities (than in their home towns), the move puts pressure on resources in these towns, both economic and social. Even once this crisis abates, there will be disruption – not all these migrants will be able to return to the same jobs and the same living quarters as before.
There is a strong case now to build slack into the system in the form of basic income.
The modern economy operates at criticality. For nearly two hundred years now we’ve benefitted – mostly – from lower prices, faster availability, increased quality and greater variety by ekeing out efficiencies in the economy. For example fewer companies pay out dividends now because the wisdom is to re-invest surplus capital in growth or just buy back stock than pay that capital out.
As long as the infrastructure, the underlying conditions are stable, this works. But like with any well designed critical system, there have to be redundancies built in, and perhaps part of that is having a country pay out a dividend to its citizens in addition to investing in (GDP) growth.