I had an interesting conversation this afternoon with 612 ABC Brisbane’s Katherine Feeney about coronavirus and whether Universal Basic Income (UBI) might help people get through coronavirus-induced financial difficulties (from 1.55:20):
Note that this audio recording disappears from the ABC’s website after one week.
In my view, instead of UBI, I’d rather see consideration of temporary relaxation of requirements for existing social security benefits such as Newstart and Sickness Allowance to ensure that people who need assistance during the coronavirus outbreak can access support without the usual waiting periods and other conditions (e.g. the need to demonstrate you’re actively seeking work). Realistically, we need to work with the existing welfare system, with some temporary modifications, to help us get through this, and a UBI scheme wouldn’t be feasible in my view.
Certainly, if we permanently implemented a UBI it would come at a high cost and we’d need to sharply increase marginal income tax rates. Check out this Parliamentary Library paper on UBI and this YouTube video on UBI pros and cons which I found informative. You might also be interested in my Economics Explained interview with Andrew Leigh MP, in which we discuss UBI among other topics. Andrew is not a fan of UBI, primarily because he thinks work helps provide meaning in our lives.
In my conversation with Katherine, I did something I’ve been doing a lot lately and quoted Austan Goolsbee, who was once Chair of President Obama’s Council of Economic Advisers, on the economic response to coronavirus: “the best thing you can do for the economy has nothing to do with the economy.” It’s good that governments all over Australia are considering what they can do to temporarily support the economy, but what is really critical for the economy, and for public health, is to contain the spread of the virus, as I first noted in a recent post.