As Poslovni Dnevnik/Tomislav Pili writes on the 18th of April, 2020, the decades-old idea of universal income that all citizens would receive, whether they’re employed or not, has come back to life once again with the outbreak of the economic crisis caused by the coronavirus pandemic.
Although some economists consider it a necessary instrument for the recovery of economies in general, the second stream of thought nevertheless considers it an entirely utopian proposition.
For the time being, Spain is the country considering the most concrete introduction of universal income. The Spanish Government wants to accelerate the introduction of “universal income” to help people who have lost their income due to the coronavirus pandemic.
“Because of this crisis, we need to urgently discuss universal income. It’s essential if we’re to guarantee the dignity and minimum purchasing power of many Spanish families who are now in dire straits,” Deputy Prime Minister Pablo Iglesias, leader of the left-wing Podemos, told national television on TVE last week.
Among the last to take up the idea publicly is no less than Pope Francis. Pope Francis suggested the idea of universal income because “the poor and all those who have been excluded from society are paying and will continue to pay the most,” in the ongoing coronavirus pandemic. All in all, universal basic income is far from some sort of new idea.
It’s based on the premise that all citizens of the state will be paid a certain amount of money each month, regardless of whether they’re employed or looking for work, and regardless of their age group. This should provide social security in an era of rapid robotisation and automation.
It has also been defined by the International Monetary Fund (IMF) as a revenue support mechanism in which cash payments are provided to the entire population, or at least a large portion, without or with minimal conditions implied. Guy Standing, a professor at the University of London and a long-time proponent of the idea, pointed out to CNBC that he believes coronavirus could be the trigger for its introduction in more countries across the world.
In his view, there will be no global economic recovery without the introduction of universal income, and sooner or later, the world will have to introduce some kind of basic universal income for all citizens.
However, Luka Brkic, a professor of international economic relations at the Zagreb Faculty of Political Science, is very skeptical of the idea that universal income will become a reality. He clarified that it was completely understandable that the advocation of such an idea comes from a moral authority such as Pope Francis. “But it has nothing to do with the economy,” Brkic pointed out.
“In the conditions of a world organised into nation states, the introduction of universal income is practically impossible because national interests are primary,” Brkic stressed, asking what the source and fundraiser for such income be on a global scale. In theory, universal income can be introduced in any country, including here in Croatia, providing that there is political will for it.
A study by the Roosevelt Institute showed that, in the American scenario, there would be economic growth due to the greater availability of money in the market. However, the most famous universal income experiment, the one in Finland that ended back in 2018, showed that there was no shift in employment growth – none whatsoever.
Only unemployed Finns between the ages of 25 and 58 were included, who received state aid in November 2016 and were selected by random sampling.
Participation was compulsory and the net basic income level was set at 560 euros. The survey results showed that the experiment participants were no more successful on the labour market than those who received “ordinary” unemployment benefits.
With the differences highlighted between the Finnish and the American scenarios, could Croatia be the next to toy with the idea of the introduction of universal income more seriously as the coronavirus pandemic continues to wreak havoc with its tourism-based economy? The questions are both moral and economic, and it will be interesting to see how things play out in the wake of the pandemic.
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