COVID-19 update – UBI and “un-Australian” grocery stockpiling

US progressive pundits such as Ana Kasparian and Kim Iversen are stunned the Trump administration is considering a temporary Universal Basic Income (UBI) as a response to the COVID-19 crisis (e.g. check out Ana REACTS to Trump giving Universal Basic Income and Trump adopts Andrew Yang’s UBI???) The idea of a $1,000 cheque to every American adult (with the exception of those earning $1M+) has been floated, an idea partly inspired by failed Democratic Presidential candidate Andrew Yang who proposed a $1,000/month UBI, as I told 612 ABC Brisbane’s Kat Feeney yesterday (COVID-19 and UBI chat with Katherine Feeney).

I don’t think a temporary UBI would be sensible in Australia. There won’t be a need to provide income support for every adult in Australia, as large numbers of Australians shouldn’t end up infected, or will suffer only mild symptoms, and many of the infected will be able to rely on paid leave, savings, or existing welfare payments. A UBI wouldn’t be well-targeted and would add unnecessarily to Australia’s growing debt burden. Instead, we should look at how we can make the existing social security system (i.e. Newstart, Sickeness Allowance, etc.) easier and quicker for people to access in this time of great need.

The federal government may also need to consider a new temporary social security payment to partially replace earnings of casual workers who find they are unable to work because the café, bar, or restaurant they work at isn’t allowed to open, as suggested by ANU Professor Peter Whiteford to ABC News today. The federal government may be thinking of something along these lines as it formulates its “huge” new rescue package (see Scott Morrison to unveil huge package of fiscal and monetary measures Australian article).

In other COVID-19 news, the Prime Minister, in his press conference this morning, criticised stockpiling of grocery items as “un-Australian”, one of the strongest rebukes you can hear in this country. My good friend and former Treasury colleague Joe Branigan of Tulipwood Economics made a great observation regarding supermarket shortages (e.g. of toilet paper) in a discussion we had following the PM’s press conference. He suggested that if Coles and Woolies were “allowed” (i.e. if it wasn’t considered “un-Australian”) to increase the price of toilet paper packs by $2-$3 dollars, with exceptions for the elderly or social security recipients on equity grounds, that could be enough to balance supply and demand in the short-run and prevent the excessive hoarding of toilet paper. So Uber-style surge pricing for toilet paper and other heavily-demanded grocery items in the coronavirus panic could be a possible solution, although a very unpopular one, and one that could itself be labelled “un-Australian”. An article which makes a similar point to Joe’s, but in the US context, has been written by Sandra Klein and published on the Mises Institute website:

Anti-gouging laws are the reasons there is a toilet paper shortage

Finally, it’s remarkable how a crisis forces people to reassess strongly held positions. Some conservative national governments are undertaking large-scale industry bailouts and social assistance measures which could result in a permanent expansion of the size of government. And Queensland’s centre-left, interventionist state government is having to unwind regulations affecting trading hours and the times at which supermarkets are allowed to re-stock, to ensure people can get the groceries they need. Will there be convergence to a Scandinavian-style strong welfare state with flexible markets across the OECD? Time will tell but, for the time being, as was the case during the 2008 financial crisis, everyone is looking to government for help.


These shelves were once stocked full of toilet rolls. Are we living in Australia or the former Soviet Union?

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2 Responses to COVID-19 update – UBI and “un-Australian” grocery stockpiling

  1. Russell says:

    I suggested in a Facebook post that the supermarkets should have doubled or tripled the price once they realised what was happening with a rebate voucher for those who qualify. It got very negative feedback but I still think it is a reasonable idea. Rare things cost at lot when they are in demand. Maybe toilette paper is too cheap anyway.

    • Gene Tunny says:

      Yes, the supermarkets may not be valuing the shelf space toilet paper occupies highly enough and reflecting it in the markup. Part of the problem is because it’s bulky it can run out quickly if there’s a surge in demand. Thanks for the comment Russell.

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