Universal Basic Income Update, April 21
April 21, 2020
by Steve Beckow
A round-up of articles on universal basic income, designed to whip up enthusiasm, get us over the hump of creation, and propel us into momentum.
In my opinion, this is our chance to bring in this eminently-worthwhile change to our economies – last stop before the Reval.
Second last stop before NESARA and a total change in approach to finances and life.
Covid-19 has changed my thinking on universal basic income
I’m more open to the scheme than I was before.
Stephen Bush, New Statesman, 15 April 2020
https://www.newstatesman.com/politics/economy/2020/04/covid-19-universal-basic-income-benefits-welfare
Although I haven’t closed my mind to the idea of a universal basic income (UBI) in principle, I’ve tended to be sceptical of UBI schemes. Very few manage to escape being either inadequate, iniquitous or pointless.
Many fail to offer an adequate income. Thanks to the work of Citizens Advice, we have a good idea how much money people without care requirements need to cover their basic costs without getting into debt: £960 a month for individuals, or £1,700 a month for a couple with children. Most adults therefore need around £11,000 a year. The basic income proposal created by the RSA in 2015 offered less than £4,000 a year.
It is actually more expensive to have an inadequate basic income than an adequate one. The RSA put the cost of its basic income plan at £280bn a year: for context, the UK currently spends around £220bn on all welfare, including pensions. But because the basic income would not be enough to replace existing income support and pensions, you wouldn’t be able to cut back all that much on existing expenditure. In practice, you’d be doubling the UK’s current spending on welfare, just to get support for those on low to average incomes up to 2012 levels.
What would be the point of this? You’d have to fight and win the argument for a huge increase in welfare spending, with far less conditionality, in order to give people what would in practice be relatively small amounts of money.
An adequate basic income of £960 a month would have a far bigger upfront cost – by my figures we’re talking about £580bn. For context, at the moment, total government expenditure (not counting the extraordinary measures deployed to combat the economic shock of the coronavirus lockdown) is around £800bn. But because you’d actually be spending enough to meet people’s financial needs, a good-sized chunk of that existing £800bn budget would fall away, including the vast majority of the UK’s £220bn in welfare spending, all state pensions, and much of the social security network. You’d need, at a generous estimate, £15bn to provide child benefit and to help people with complex needs. You’d also make considerable savings on administration and elsewhere in government spending because of the handout.
However, giving every adult in the United Kingdom £960 a month runs into the other problem that a lot of UBI models have: inequity. Most of the time, when we talk about a universal benefit going to people “who don’t need it”, we’re talking about sufficiently small numbers that it doesn’t really matter either way. Take child benefit: before George Osborne removed it from higher-rate taxpayers, sure, some people who were receiving the benefit didn’t need it. But if you don’t need the extra 80 quid a month, you are not going to be buying a particular advantage by getting it.
To give higher earners an extra £960 a month, however, would hand them serious financial firepower to entrench their advantages, whether in saving to buy property, paying for private education, or any number of other socio-economic advantages.
The very worst UBI proposals are the ones which offer, say, £650 per person – barely enough to live on if it’s the only option, but a serious boost to your already considerable advantages if you are wealthy. It might address the problem of poverty at the bottom of the income distribution, but it does so by creating a problem of severe and entrenched inequality, in which the opportunities and influence of those at the bottom of the income distribution are drastically curtailed.
There is another fix for this, which is simply to claw back the £11,500 through the tax system — so in practice, your basic income simply acts as a guaranteed income floor. This creates an inevitable inequality in that somewhere around the £30,000 mark, you have people who are losing all of their basic income but not seeing much of a benefit from their extra earnings until they hit the £40,000 mark: an inevitable feature of any basic income scheme is a degree of unfairness to the benefit of the better off, but this would eliminate the biggest problem.
Some people are concerned that this would reduce the incentive to work, but frankly, those people have never earned minimum wage. Yes, you can live on £960 a month, but it’s not a lot of fun. People will take the opportunity to earn more than that, not because of sanctions, but because being able to get a takeaway whenever you feel like it is a nice freedom to have.
There’s the added bonus, too, that clawing back most people’s basic income payments as they earn more further reduces the headline cost.
But here we run into the third problem with UBI schemes: pointlessness. At this point, we’ve created a system that gives nothing to the highest earners but ensures that the working poor and people who are out of work will have enough to avoid getting into financial difficulty. Congratulations, you’ve just invented a system of in-work benefits and unemployment benefit. Tweak a half-promising UBI proposal into shape and you often just end up with a kinder benefits system.
For this reason I’ve been increasingly inclined to agree that UBI is, as Declan Gaffney puts it, a useful thought experiment to work out what an ideal welfare system would do, not a welfare system in itself.
But the Covid-19 pandemic has made clear the advantage of a system in which, at any given time, income support kicks in without anyone in government having to invent a new lever, find people’s bank accounts or otherwise conduct complex and large-scale administration in the middle of a crisis. It seems unlikely, in my view, that we will not have another pandemic; HIV-AIDS has been written out of mainstream history, and the Sars and swine flu pandemics were not as lethal as they first appeared, but they reveal that we should expect a new pandemic every few decades. I think that is unlikely to change, so there is an argument that we will need an off-the-shelf tool for income protection again.
We may well also need further subventions of government money direct to households to get the economy moving after a pandemic – and a welfare system that already has everyone plugged in, even if in most cases most people are not receiving very much from it, does that very well.
I am no longer so sure that UBI is useful only as a thought experiment – it may now be, in itself, a useful aim.
Mike Broihier
Senate candidate seeks emergency, permanent universal basic funds
James Mayse, Messenger-Inquirer, Apr 16, 2020
https://www.messenger-inquirer.com/news/senate-candidate-advocates-for-emergency-and-permanent-universal-basic-income/article_7e63dd8d-bf08-5e0c-a5f2-42c46d205f25.html
Kentucky U.S. Senate candidate Mike Broihier is advocating a plan where every adult in the United States would receive $2,000 monthly for the duration of the coronavirus pandemic.
The proposal was released last week. Broihier is one of several Democratic candidates vying for their party’s nomination. The winner will face the winner of the Republican primary for the Senate seat held by incumbent candidate Sen. Mitch McConnell.
During the pandemic, families with dependent children would receive an additional $1,000 monthly. After the emergency ends, Broihier’s plan calls for adults to receive $1,200 monthly. Families with children under age 18 would receive an additional $400 per month for each child.
Broihier said in an interview last week a universal basic income would benefit local economies. Such a plan already exists in Alaska, where state residents receive an annual payment from the state’s Permanent Fund, which is based on the state’s oil wealth.
“We know money gets exchanged quicker at the local level,” Broihier said. “Just giving money to corporations didn’t make it down to people who need it most.
“A universal basic income would allow people to keep the family farm,” Broihier said, and it would allow people “to do the things they want to do like farming or volunteering.
In Alaska, “no one calls it socialism,” Broihier said. Spain is considering implementing a universal income, and Persian Gulf countries get similar payments “because the government acknowledges the wealth of the land is theirs,” Broihier said.
Broihier, a retired Marine lieutenant colonel and a former newspaper editor, is a farmer living near Stanford. When asked if such a plan were politically possible, Broihier said the coronavirus pandemic has shifted thinking on government.
“I was talking to the Kentucky Democrats … I told them, ‘the greatest tragedy of the coronavirus is if we rush back to business as usual,” Broihier said. “… We’ve got to fundamentally change the way we govern.
“It does make me happy to be an adapter of single-payer health care,” Broihier said, adding that ideas being taken seriously now, “would’ve been, two short months ago, wild-eyed fantasies.”
A woman wearing a sanitary mask as a preventive measure, leaving the train during the first day of work for non-essential sectors. Barcelona faces its 31st day of house confinement due to the contagion of Covid-19. Paco Freire | SOPA Images | LightRocket
The coronavirus crisis could pave the way to universal basic income
Sam Meredith, CNBC, Thu, Apr 16 2020
https://www.cnbc.com/2020/04/16/coronavirus-crisis-could-pave-the-way-to-a-universal-basic-income.html
Key Points
The Covid-19 outbreak has meant countries across the globe have effectively had to shut down, with many governments imposing draconian measures on the lives of billions of people.
The social, educational and economic ramifications of the confinement measures, which vary in their application worldwide but broadly include social distancing, school closures and bans on public gatherings, are expected to have a profoundly negative impact.
To be sure, the International Monetary Fund now expects the global economy in 2020 to suffer its worst financial crisis since the Great Depression.
The dramatic downgrade to this year’s growth expectations has amplified concern about those most vulnerable to an economic slump. In his Easter letter over the weekend, Pope Francis said: “This may be the time to consider a universal basic wage.”
Pope Francis greets the believers as he arrives to lead the weekly General Audience at St. Peter’s Square. The General Audience is held every Wednesday, in Saint Peter’s Square, which can accommodate around 80,000 people. SOPA Images
He argued it would “ensure and concretely achieve the ideal, at once so human and so Christian, of no worker without rights.”
As of Thursday, more than 2 million people had contracted Covid-19 worldwide, with 137,666 deaths, according to data compiled by Johns Hopkins University.
‘We have got to protect everyone’
Universal basic income is not a new idea. But it has gained more traction of late, more recently through the likes of U.S. presidential candidate Andrew Yang, who based his platform on the policy.
The IMF describes universal basic income as an income support mechanism, in which regular cash payments are intended to reach all (or a very large) portion of the population with no (or minimal) conditions.
Guy Standing, a research professor in development studies at SOAS, University of London, told CNBC via telephone that there was no prospect of a global economic revival without a universal basic income.
Standing, who has been an advocate for a universal basic income for more than three decades, said he believed the coronavirus crisis would be “the trigger” for a basic wage.
“It’s almost a no-brainer,” he said. “We are going to have some sort of basic income system sooner or later, but I think getting the establishments of many countries to do it is like pulling the proverbial tooth. There’s a big institutional resistance to it because of the implications of moving in this direction.”
Standing urged world leaders and policymakers to avoid repeating the same mistakes that were made in the aftermath of the 2008 global financial crisis, saying another “toxic combination” of austerity and quantitative easing would simply stoke up another crisis.
“Going back and doing what they did after 2008 would be a disaster.”
Some governments, including the U.K., Austria and Denmark, have introduced wage subsidies in an effort to protect households from an expected economic downturn. They are intended to help protect jobs and cover the salaries of millions of people.
Standing dismissed such an approach as “regressive” and “inefficient,” arguing wage subsidies of this nature would only ever result in a large number of vulnerable people being excluded from the system. “It’s atrocious economics.”
“So, for me, all of the arguments are tilting us toward saying: ‘We’ve got to protect everybody. We are all vulnerable.’”
‘A level unifier’
Earlier this month, Spain’s Minister for Economic Affairs Nadia Calvino told Spanish broadcaster La Sexta that the euro zone’s fourth-largest economy would roll out a universal basic income “as soon as possible.”
Calvino said the government’s wish was to make a nationwide basic wage a permanent instrument that supports citizens “forever.”
If the policy is implemented successfully over the coming weeks, it would make Spain the first country in Europe to introduce a universal basic income on a long-term basis.
A man applauds the hospital workers who are fighting the coronavirus on March 30, 2020 in Madrid, Spain. Denis Doyle
Cailin Birch, global economist at the Economist Intelligence Unit, told CNBC via telephone that Spain’s decision to roll out a universal basic income could pave the way for other countries to follow suit.
“In the U.S., they’ve actually already arrived at the policy — albeit through the back door rather than the front door,” Birch said, referring to the federal government’s direct payments plan.
The first wave of stimulus relief checks were deposited into some Americans’ bank accounts over the weekend, according to the IRS. Millions more expect to receive theirs in the coming weeks.
The checks are worth $1,200 for individuals with adjusted gross income below $75,000 and $2,400 for couples earning below $150,000.
It comes as part of the $2.2 trillion stimulus bill passed late last month. The direct payments are designed to help mitigate the financial strain caused by Covid-19.
“If anything, it makes the case for the need to have some kind of level unifier so that households can avoid financial ruin,” Birch said.
She warned one-off payments would be an “imperfect example” for basic income in the world’s largest economy, given that households would not be able to plan on receiving a second payment and because people are typically hesitant to spend money in the wake of an economic downturn.
There’s a “big divide” between the U.S. and Europe when it comes to their appetite for a universal basic wage, Birch said, suggesting Europe was generally seen to have “more familiarity and comfort with a left-leaning view.”
Shake Shack returns $10 million PPP loan meant for coronavirus-hit small businesses
Michael Grothaus, Fast Company, 20 April 2020
https://tinyurl.com/y72rf6pb
Shake Shack, the fast-food burger chain worth over $1.6 billion, has decided to return the $10 million Paycheck Protection Program (PPP) loan that it was awarded after it applied for emergency funds that were aimed at helping small businesses through the economic effect of the COVID-19 pandemic. The PPP program originally set out $349 billion for small businesses, but all the funds ran dry last week.
Shake Shack founder and chairman Danny Meyer and CEO Randy Garutti posted an open letter on LinkedIn announcing the company was returning the funds. In that letter the pair explained why Shake Shack applied for the “extremely confusing” PPP loan in the first place:
The onus was placed on each business to figure out how, when, or even if to apply. The “PPP” came with no user manual and it was extremely confusing. Both Shake Shack (a company with 189 restaurants in the U.S., employing nearly 8,000 team members) and Union Square Hospitality Group (with over 2,000 employees) arrived at a similar conclusion. The best chance of keeping our teams working, off the unemployment line and hiring back our furloughed and laid off employees, would be to apply now and hope things would be clarified in time.
While the program was touted as relief for small businesses, we also learned it stipulated that any restaurant business – including restaurant chains – with no more than 500 employees per location would be eligible. We cheered that news, as it signaled that Congress had gotten the message that as both as an employer, and for the indispensable role we play in communities, restaurants needed to survive. There was no fine print, anywhere, that suggested: “Apply now, or we will run out of money by the time you finally get in line.”
As CNN points out, Shake Shake was hardly the only company with millions in revenues that took advantage of the PPP loan program. Other chain restaurants including Potbelly and Ruth’s Chris Steak Houses also took the loans, as did coal mining company Hallador Energy. Computer storage device maker Quantum also took the PPP loan. The company had $400 million in sales last year and paid its CEO $2.3 million.
While the Paycheck Protection Program’s $349 billion in funds evaporated last week, the fact that many companies that can’t really be considered a small business took the PPP loans anyway caused disbelief among small and local business owners who were left with nothing to apply for. As that chorus grew over the weekend, Shake Shack decided to return its PPP funds.
The official reason the company decided to return the funds, Meyer and Garutti stated, was because “Shake Shack was fortunate last Friday to be able to access the additional capital we needed to ensure our long-term stability through an equity transaction in the public markets.” Due to that, the company made the choice to return its PPP money “so that those restaurants who need it most can get it now.”
Let’s hope other large companies follow suit.
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Copyright © 2020 Dinar Chronicles
April 21, 2020
by Steve Beckow
A round-up of articles on universal basic income, designed to whip up enthusiasm, get us over the hump of creation, and propel us into momentum.
In my opinion, this is our chance to bring in this eminently-worthwhile change to our economies – last stop before the Reval.
Second last stop before NESARA and a total change in approach to finances and life.
Covid-19 has changed my thinking on universal basic income
I’m more open to the scheme than I was before.
Stephen Bush, New Statesman, 15 April 2020
https://www.newstatesman.com/politics/economy/2020/04/covid-19-universal-basic-income-benefits-welfare
Although I haven’t closed my mind to the idea of a universal basic income (UBI) in principle, I’ve tended to be sceptical of UBI schemes. Very few manage to escape being either inadequate, iniquitous or pointless.
Many fail to offer an adequate income. Thanks to the work of Citizens Advice, we have a good idea how much money people without care requirements need to cover their basic costs without getting into debt: £960 a month for individuals, or £1,700 a month for a couple with children. Most adults therefore need around £11,000 a year. The basic income proposal created by the RSA in 2015 offered less than £4,000 a year.
It is actually more expensive to have an inadequate basic income than an adequate one. The RSA put the cost of its basic income plan at £280bn a year: for context, the UK currently spends around £220bn on all welfare, including pensions. But because the basic income would not be enough to replace existing income support and pensions, you wouldn’t be able to cut back all that much on existing expenditure. In practice, you’d be doubling the UK’s current spending on welfare, just to get support for those on low to average incomes up to 2012 levels.
What would be the point of this? You’d have to fight and win the argument for a huge increase in welfare spending, with far less conditionality, in order to give people what would in practice be relatively small amounts of money.
An adequate basic income of £960 a month would have a far bigger upfront cost – by my figures we’re talking about £580bn. For context, at the moment, total government expenditure (not counting the extraordinary measures deployed to combat the economic shock of the coronavirus lockdown) is around £800bn. But because you’d actually be spending enough to meet people’s financial needs, a good-sized chunk of that existing £800bn budget would fall away, including the vast majority of the UK’s £220bn in welfare spending, all state pensions, and much of the social security network. You’d need, at a generous estimate, £15bn to provide child benefit and to help people with complex needs. You’d also make considerable savings on administration and elsewhere in government spending because of the handout.
However, giving every adult in the United Kingdom £960 a month runs into the other problem that a lot of UBI models have: inequity. Most of the time, when we talk about a universal benefit going to people “who don’t need it”, we’re talking about sufficiently small numbers that it doesn’t really matter either way. Take child benefit: before George Osborne removed it from higher-rate taxpayers, sure, some people who were receiving the benefit didn’t need it. But if you don’t need the extra 80 quid a month, you are not going to be buying a particular advantage by getting it.
To give higher earners an extra £960 a month, however, would hand them serious financial firepower to entrench their advantages, whether in saving to buy property, paying for private education, or any number of other socio-economic advantages.
The very worst UBI proposals are the ones which offer, say, £650 per person – barely enough to live on if it’s the only option, but a serious boost to your already considerable advantages if you are wealthy. It might address the problem of poverty at the bottom of the income distribution, but it does so by creating a problem of severe and entrenched inequality, in which the opportunities and influence of those at the bottom of the income distribution are drastically curtailed.
There is another fix for this, which is simply to claw back the £11,500 through the tax system — so in practice, your basic income simply acts as a guaranteed income floor. This creates an inevitable inequality in that somewhere around the £30,000 mark, you have people who are losing all of their basic income but not seeing much of a benefit from their extra earnings until they hit the £40,000 mark: an inevitable feature of any basic income scheme is a degree of unfairness to the benefit of the better off, but this would eliminate the biggest problem.
Some people are concerned that this would reduce the incentive to work, but frankly, those people have never earned minimum wage. Yes, you can live on £960 a month, but it’s not a lot of fun. People will take the opportunity to earn more than that, not because of sanctions, but because being able to get a takeaway whenever you feel like it is a nice freedom to have.
There’s the added bonus, too, that clawing back most people’s basic income payments as they earn more further reduces the headline cost.
But here we run into the third problem with UBI schemes: pointlessness. At this point, we’ve created a system that gives nothing to the highest earners but ensures that the working poor and people who are out of work will have enough to avoid getting into financial difficulty. Congratulations, you’ve just invented a system of in-work benefits and unemployment benefit. Tweak a half-promising UBI proposal into shape and you often just end up with a kinder benefits system.
For this reason I’ve been increasingly inclined to agree that UBI is, as Declan Gaffney puts it, a useful thought experiment to work out what an ideal welfare system would do, not a welfare system in itself.
But the Covid-19 pandemic has made clear the advantage of a system in which, at any given time, income support kicks in without anyone in government having to invent a new lever, find people’s bank accounts or otherwise conduct complex and large-scale administration in the middle of a crisis. It seems unlikely, in my view, that we will not have another pandemic; HIV-AIDS has been written out of mainstream history, and the Sars and swine flu pandemics were not as lethal as they first appeared, but they reveal that we should expect a new pandemic every few decades. I think that is unlikely to change, so there is an argument that we will need an off-the-shelf tool for income protection again.
We may well also need further subventions of government money direct to households to get the economy moving after a pandemic – and a welfare system that already has everyone plugged in, even if in most cases most people are not receiving very much from it, does that very well.
I am no longer so sure that UBI is useful only as a thought experiment – it may now be, in itself, a useful aim.
Mike Broihier
Senate candidate seeks emergency, permanent universal basic funds
James Mayse, Messenger-Inquirer, Apr 16, 2020
https://www.messenger-inquirer.com/news/senate-candidate-advocates-for-emergency-and-permanent-universal-basic-income/article_7e63dd8d-bf08-5e0c-a5f2-42c46d205f25.html
Kentucky U.S. Senate candidate Mike Broihier is advocating a plan where every adult in the United States would receive $2,000 monthly for the duration of the coronavirus pandemic.
The proposal was released last week. Broihier is one of several Democratic candidates vying for their party’s nomination. The winner will face the winner of the Republican primary for the Senate seat held by incumbent candidate Sen. Mitch McConnell.
During the pandemic, families with dependent children would receive an additional $1,000 monthly. After the emergency ends, Broihier’s plan calls for adults to receive $1,200 monthly. Families with children under age 18 would receive an additional $400 per month for each child.
Broihier said in an interview last week a universal basic income would benefit local economies. Such a plan already exists in Alaska, where state residents receive an annual payment from the state’s Permanent Fund, which is based on the state’s oil wealth.
“We know money gets exchanged quicker at the local level,” Broihier said. “Just giving money to corporations didn’t make it down to people who need it most.
“A universal basic income would allow people to keep the family farm,” Broihier said, and it would allow people “to do the things they want to do like farming or volunteering.
In Alaska, “no one calls it socialism,” Broihier said. Spain is considering implementing a universal income, and Persian Gulf countries get similar payments “because the government acknowledges the wealth of the land is theirs,” Broihier said.
Broihier, a retired Marine lieutenant colonel and a former newspaper editor, is a farmer living near Stanford. When asked if such a plan were politically possible, Broihier said the coronavirus pandemic has shifted thinking on government.
“I was talking to the Kentucky Democrats … I told them, ‘the greatest tragedy of the coronavirus is if we rush back to business as usual,” Broihier said. “… We’ve got to fundamentally change the way we govern.
“It does make me happy to be an adapter of single-payer health care,” Broihier said, adding that ideas being taken seriously now, “would’ve been, two short months ago, wild-eyed fantasies.”
A woman wearing a sanitary mask as a preventive measure, leaving the train during the first day of work for non-essential sectors. Barcelona faces its 31st day of house confinement due to the contagion of Covid-19. Paco Freire | SOPA Images | LightRocket
The coronavirus crisis could pave the way to universal basic income
Sam Meredith, CNBC, Thu, Apr 16 2020
https://www.cnbc.com/2020/04/16/coronavirus-crisis-could-pave-the-way-to-a-universal-basic-income.html
Key Points
- Guy Standing, a research professor in development studies at SOAS, University of London, told CNBC via telephone that there was no prospect of a global economic revival without a universal basic income.
- The International Monetary Fund expects the global economy in 2020 to suffer its worst financial crisis since the Great Depression.
- In his Easter letter over the weekend, Pope Francis said: “This may be the time to consider a universal basic wage.”
The Covid-19 outbreak has meant countries across the globe have effectively had to shut down, with many governments imposing draconian measures on the lives of billions of people.
The social, educational and economic ramifications of the confinement measures, which vary in their application worldwide but broadly include social distancing, school closures and bans on public gatherings, are expected to have a profoundly negative impact.
To be sure, the International Monetary Fund now expects the global economy in 2020 to suffer its worst financial crisis since the Great Depression.
The dramatic downgrade to this year’s growth expectations has amplified concern about those most vulnerable to an economic slump. In his Easter letter over the weekend, Pope Francis said: “This may be the time to consider a universal basic wage.”
Pope Francis greets the believers as he arrives to lead the weekly General Audience at St. Peter’s Square. The General Audience is held every Wednesday, in Saint Peter’s Square, which can accommodate around 80,000 people. SOPA Images
He argued it would “ensure and concretely achieve the ideal, at once so human and so Christian, of no worker without rights.”
As of Thursday, more than 2 million people had contracted Covid-19 worldwide, with 137,666 deaths, according to data compiled by Johns Hopkins University.
‘We have got to protect everyone’
Universal basic income is not a new idea. But it has gained more traction of late, more recently through the likes of U.S. presidential candidate Andrew Yang, who based his platform on the policy.
The IMF describes universal basic income as an income support mechanism, in which regular cash payments are intended to reach all (or a very large) portion of the population with no (or minimal) conditions.
Guy Standing, a research professor in development studies at SOAS, University of London, told CNBC via telephone that there was no prospect of a global economic revival without a universal basic income.
Standing, who has been an advocate for a universal basic income for more than three decades, said he believed the coronavirus crisis would be “the trigger” for a basic wage.
“It’s almost a no-brainer,” he said. “We are going to have some sort of basic income system sooner or later, but I think getting the establishments of many countries to do it is like pulling the proverbial tooth. There’s a big institutional resistance to it because of the implications of moving in this direction.”
Standing urged world leaders and policymakers to avoid repeating the same mistakes that were made in the aftermath of the 2008 global financial crisis, saying another “toxic combination” of austerity and quantitative easing would simply stoke up another crisis.
“Going back and doing what they did after 2008 would be a disaster.”
Some governments, including the U.K., Austria and Denmark, have introduced wage subsidies in an effort to protect households from an expected economic downturn. They are intended to help protect jobs and cover the salaries of millions of people.
Standing dismissed such an approach as “regressive” and “inefficient,” arguing wage subsidies of this nature would only ever result in a large number of vulnerable people being excluded from the system. “It’s atrocious economics.”
“So, for me, all of the arguments are tilting us toward saying: ‘We’ve got to protect everybody. We are all vulnerable.’”
‘A level unifier’
Earlier this month, Spain’s Minister for Economic Affairs Nadia Calvino told Spanish broadcaster La Sexta that the euro zone’s fourth-largest economy would roll out a universal basic income “as soon as possible.”
Calvino said the government’s wish was to make a nationwide basic wage a permanent instrument that supports citizens “forever.”
If the policy is implemented successfully over the coming weeks, it would make Spain the first country in Europe to introduce a universal basic income on a long-term basis.
A man applauds the hospital workers who are fighting the coronavirus on March 30, 2020 in Madrid, Spain. Denis Doyle
Cailin Birch, global economist at the Economist Intelligence Unit, told CNBC via telephone that Spain’s decision to roll out a universal basic income could pave the way for other countries to follow suit.
“In the U.S., they’ve actually already arrived at the policy — albeit through the back door rather than the front door,” Birch said, referring to the federal government’s direct payments plan.
The first wave of stimulus relief checks were deposited into some Americans’ bank accounts over the weekend, according to the IRS. Millions more expect to receive theirs in the coming weeks.
The checks are worth $1,200 for individuals with adjusted gross income below $75,000 and $2,400 for couples earning below $150,000.
It comes as part of the $2.2 trillion stimulus bill passed late last month. The direct payments are designed to help mitigate the financial strain caused by Covid-19.
“If anything, it makes the case for the need to have some kind of level unifier so that households can avoid financial ruin,” Birch said.
She warned one-off payments would be an “imperfect example” for basic income in the world’s largest economy, given that households would not be able to plan on receiving a second payment and because people are typically hesitant to spend money in the wake of an economic downturn.
There’s a “big divide” between the U.S. and Europe when it comes to their appetite for a universal basic wage, Birch said, suggesting Europe was generally seen to have “more familiarity and comfort with a left-leaning view.”
Shake Shack returns $10 million PPP loan meant for coronavirus-hit small businesses
Michael Grothaus, Fast Company, 20 April 2020
https://tinyurl.com/y72rf6pb
Shake Shack, the fast-food burger chain worth over $1.6 billion, has decided to return the $10 million Paycheck Protection Program (PPP) loan that it was awarded after it applied for emergency funds that were aimed at helping small businesses through the economic effect of the COVID-19 pandemic. The PPP program originally set out $349 billion for small businesses, but all the funds ran dry last week.
Shake Shack founder and chairman Danny Meyer and CEO Randy Garutti posted an open letter on LinkedIn announcing the company was returning the funds. In that letter the pair explained why Shake Shack applied for the “extremely confusing” PPP loan in the first place:
The onus was placed on each business to figure out how, when, or even if to apply. The “PPP” came with no user manual and it was extremely confusing. Both Shake Shack (a company with 189 restaurants in the U.S., employing nearly 8,000 team members) and Union Square Hospitality Group (with over 2,000 employees) arrived at a similar conclusion. The best chance of keeping our teams working, off the unemployment line and hiring back our furloughed and laid off employees, would be to apply now and hope things would be clarified in time.
While the program was touted as relief for small businesses, we also learned it stipulated that any restaurant business – including restaurant chains – with no more than 500 employees per location would be eligible. We cheered that news, as it signaled that Congress had gotten the message that as both as an employer, and for the indispensable role we play in communities, restaurants needed to survive. There was no fine print, anywhere, that suggested: “Apply now, or we will run out of money by the time you finally get in line.”
As CNN points out, Shake Shake was hardly the only company with millions in revenues that took advantage of the PPP loan program. Other chain restaurants including Potbelly and Ruth’s Chris Steak Houses also took the loans, as did coal mining company Hallador Energy. Computer storage device maker Quantum also took the PPP loan. The company had $400 million in sales last year and paid its CEO $2.3 million.
While the Paycheck Protection Program’s $349 billion in funds evaporated last week, the fact that many companies that can’t really be considered a small business took the PPP loans anyway caused disbelief among small and local business owners who were left with nothing to apply for. As that chorus grew over the weekend, Shake Shack decided to return its PPP funds.
The official reason the company decided to return the funds, Meyer and Garutti stated, was because “Shake Shack was fortunate last Friday to be able to access the additional capital we needed to ensure our long-term stability through an equity transaction in the public markets.” Due to that, the company made the choice to return its PPP money “so that those restaurants who need it most can get it now.”
Let’s hope other large companies follow suit.
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