We need to talk about Universal Basic Income, Temporary Basic Income, Economic Inequality, and COVID-19.9 min read

We need to talk about Universal Basic Income, Temporary Basic Income, Economic Inequality, and COVID-19.
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“Our moral responsibility is not to stop the future, but to shape it…to channel our destiny in humane directions and to ease the trauma of transition.”

– Alvin Toffler

Economic Inequality.

Economic inequality has been at the center of political, economic, and sociological conversations for centuries.  In 1912 the Italian statistician Corrado Gini developed a model to measure the distribution of income across a population, measuring wealth and income distribution among populations[1] . This model has been in place long enough to showcase the importance of addressing economic inequality.

But what is economic inequality?  Why should we address the problems that it brings to society? Economic inequality can be easily defined as “the unequal distribution of income and opportunity between different groups in society,”[2] the answer the second question; however, it deserves a more in-depth look.

Cleaning part In in word Inequality on white background

TM Scallon explains that “A justification for reducing inequality through non-voluntary means, such as taxation, needs to explain why redistribution of this kind is not just robbery.” [3]  There has been a trend toward ever-increasing wealth concentration.  Many of us can’t help but feel that there is something morally wrong about this ongoing situation and believe governments worldwide should take action to reduce inequality throughout our societies.

There are many reasons why we should address economic inequality; here are just a few of them:

  1. “Economic inequality can give wealthier people an unacceptable degree of control over the lives of others.
  2. Economic inequality can undermine the fairness of political institutions.
  3. Economic inequality undermines the fairness of the financial system itself.
  4. Workers, as participants in a scheme of cooperation that produces national income, have a claim to a fair share of what they have helped to produce.”[4]

The reasons listed here have one common root: they all result in control.  As economic inequality increases, the power to make political and social decisions falls in the hands of those who control the economic power, which they often use for personal benefit.

“Many of us were raised to believe in the slogan, “Economic growth is a rising tide that lifts all boats.”  The saying ignores the plight of the billions who are clinging to leaky rafts—or who have no boats at all.” [5]

COVID-19 and the financial crisis.

In 2020 the world was hit by an unprecedented event in modern history, a global pandemic caused by the virus SARSCOV-2, also known as COVID-19.  This event paralyzed the world, with many unknowns, and the rapid spread of the disease.  The only way to try to manage the Pandemic and try to protect the people was to ask people to shelter in place, wear masks, and social distance.  Staying Home to Stay Safe paralyzed the economic activities of a large portion of the world.

Record-breaking numbers of unemployment and economic loss struck governments across the globe, showcasing in many cases, the worst and more humane effects of economic inequality.  Given that poor and near-poor households were not able to social distance, they have been disproportionately affected by the Pandemic.  At the same time, these people also suffered from job losses and cuts associated with many social assistance programs.

Protective mask on a American Dollars background

This quote from frontiersin.org explains the situation perfectly, “In addition to marked health inequalities, especially in countries without universal healthcare coverage, the economic impact of the COVID-19 Pandemic will be heterogeneous across the country’s income distribution.  For example, office workers are more likely to transition to flexible working arrangements during the restrictions, while many industrial, tourism, retail, and transport workers will suffer a significant reduction in work due to community restrictions and low demand for their goods and services.”[6]

Every country has been affected by the COVID-19 Pandemic, GDPs have taken severe hits.  However, the most significant burden always falls on poorer households.  To address this problem, the United Nations Development Programme (UNDP) has published a report titled: Temporary Basic Income. Protecting Poor and Vulnerable People in Developing Countries.   This report outlines an economic plan for developing countries to provide a Temporary Basic Income, at least while we recover from the Pandemic.

Universal Basic Income might be the answer.

In recent years advent of the 4th industrial revolution, most of us have at least heard the term Universal Basic Income also known by many as only UBI, which is a government-provided universal and unconditional payment that each citizen of a country receives.

“The intention behind the payment is to provide enough to cover the basic cost of living and provide financial security. The concept is also seen as a way to offset job losses caused by technology.”[7] There isn´t one finalized perfect plan to implement it, but without getting not specifics, the basic idea is for every citizen to receive enough pay to keep them at least above the poverty line.

In regards to COVID-19, the World Bank explains it perfectly and, in very few words, “Rule number one of crisis management: When you find yourself in a hole, first, stop digging.”[8] As countries scramble to address the issues presented by the Pandemic, many countries decided to give people money to stimulate the economy, these plans helped. Still, a strategic and sustainable approach would be better.

One hundred dollar bills are creatively laid out. Business concept, development perspective
One hundred dollar bills are creatively laid out. Business concept, development perspective

UBI has the potential to solve the most significant problems brought by the economic crisis that periodically occur either by natural disasters or by movements in the market; it has the potential to make the world more equal and reduce social tensions, which would benefit everyone.

In another article, we will go in-depth into the discussions around the Universal Basic Income and its implementation, the pilot programs that exist, and why we think that this is an important conversation around inclusion.

For now, I want to talk about the idea of a Temporary Basic Income, at least for developing countries, and how it could help the most vulnerable people.

What is a Temporary Basic Income?

“Temporary Basic Income (TBI), a minimum guaranteed income above the poverty line, for vulnerable people in 132 developing countries.” If we are asking people to stay at home, shelter in place in order to stop the spread of the Pandemic, it makes sense that we provide at least enough to cover the basic survival needs.

“The economic costs imposed by the pandemic are hard not only for the existing poor but also to those who were at high risk of falling into poverty before the pandemic and who are likely experiencing a limited income-generating capacity.” A temporary basic income is an opportunity to reduce economic inequality, to prevent the disenfranchised populations from suffering the consequences of the worst financial crisis in recent history.

The UNDP explains that a Temporary Basic Income amounts to “between 0.27 and 0.63 percent of their combined GDPs, depending on the policy choice:

  1. top-ups on existing average incomes in each country up to a vulnerability threshold;
  2. lump-sum transfers that are sensitive to cross-country differences in the median standard of living; or,
  3. lump-sum transfers that are uniform regardless of the country where people live.” Temporary Basic Income. Protecting Poor and Vulnerable People in Developing Countries.

The fact that it is a viable solution to one of the biggest problems posed by the Pandemic is really something to consider; all of the developing countries have an opportunity to start implementing solutions that benefit the most vulnerable during a health and economic crisis like this one, it is absolutely necessary to consider these types of solutions.

Final Words.

These are viable solutions to systemic problems that are very much in reach, which could benefit the most vulnerable populations across the globe.  It also opens the door to a real conversation about Universal Basic Income as an objective economic measure to make our globalized society more resilient to the economic downturns in the future.

Going back to the quote at the beginning of this article, we have a moral responsibility to shape the future.  It is in our best interest to create a more equal world, where we are all safe, secure, free, and fully included in society.  I passionately believe that we are at a point in human history where conversations around Temporary Basic Incomes and Universal Basic Incomes are not only possible but necessary.

When we are talking about solutions to economic problems, we are always talking about inclusion; creating solutions opens the doors to real-quantifiable inclusion, accessibility, and equal opportunities for all.  Society needs to do a better job for everyone, not only those with power and money.

Young plant

If we understand that we are not in control of the future, we should also know that we must be better prepared to provide real support for people and families in need.  Let´s remember that “A society grows great when old men plant trees whose shade they know they shall never sit in.” -Greek Proverb.

[1] https://www.investopedia.com/terms/g/gini-index.asp

[2] https://wol.iza.org/key-topics/economic-inequality#:~:text=Economic%20inequality%20is%20the%20unequal,climb%20up%20the%20social%20ladder.

[3] https://ideas.ted.com/the-4-biggest-reasons-why-inequality-is-bad-for-society/

[4] https://ideas.ted.com/the-4-biggest-reasons-why-inequality-is-bad-for-society/

[5] A World of Three Zeroes by Muhammad Yunus

[6] https://www.frontiersin.org/articles/10.3389/fpubh.2020.00241/full

[7] https://www.thebalance.com/universal-basic-income-4160668

[8] https://www.undp.org/content/undp/en/home/blog/2020/the-case-for-a-universal-basic-income.html

David Pérez

Chief Financial Officer,

Ruh Global IMPACT

David is a Costa Rican Political Scientist with his MBA and masters in diplomacy.  He is also a leader, advocate, social media specialist, and communication strategist.  David has experience in public policy implementation, development, and evaluation as well as consultancy services for NGOs like UNESCO and others linked to the European Union. David´s professional background is mainly in work with minorities, ensuring they have access to their rights.

His primary focus is to expand the vision of Ruh Global IMPACT across the globe and impact the lives of People with Disabilities both in developed and developing countries. He has spoken in Latin America and the US on disability inclusion and accessibility.  He has been asked to be a Visiting Professor on these topics and Future of Work for The University Del Norte in Barranquilla, Colombia. David recently was a keynote speaker at the Future of Work and the Employment of Persons with Disabilities in one of the first conferences on this topic in Colombia. David is fluent in Spanish and English and often advocates for Americans (Latin, South, and North America) that speak Spanish.  15 to 20% of the US population are Spanish Speakers, and this group is often disenfranchised in the US.

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