Photo illustration by John Lyman

U.S. News


COVID-19 is Making a Basic Guaranteed Income Possible

COVID-19 has proved so infectious and has caused so much financial dislocation for millions of Americans, that for the first time in the history of the United States, it makes economic sense for a limited form of a basic guaranteed income (BGI) to be initiated. A BGI is different from the movement for a universal basic income (UBI) in that a BGI is not universal, but is specifically targeted to a certain segment of a nation’s economy that due to circumstances beyond their control have been shut out of the job market because their jobs have disappeared. A UBI is a universal form of income which would apply to all citizens regardless of income or employment status.

While the increasing use of automation had begun laying the groundwork for the implementation of a BGI, the outbreak of COVID-19 has made a BGI necessary to prevent widespread poverty, and thus massive social unrest from occurring. The virus has introduced a new social phenomena of social distancing, both professionally and socially. Many companies are now allowing, and in some places requiring, employees to work from home. Some jobs however are not able to take advantage of this new professional job standard. This in turn is doing away with service jobs that millions of Americans have depended upon for employment.

These service jobs are primarily concentrated in the hospitality business segments, concentrated in food server positions at dine-in restaurants and fast-food restaurants. With the introduction of automated trucks and buses, mass transportation drivers will be affected as well. As the fall-out from the virus comes into sharper focus, other professions will be affected as the shake out continues.

A new segment of hospitality jobs are being created as people are now ordering prepared meals to be delivered to their homes, out-sourcing food shopping, as well as shopping for food and other products online and having their purchases delivered to their homes. This eventually will affect supermarket employee’s as stores will turn into warehouses and the stocking of food products will turn into a warehouse position. Positions as contact tracers seem to be gaining ground, but the demand for this type of job is unknown at the present time.

Prior to the COVID-19 outbreak, those professions most at risk of being displaced by automation and the growth of natural gas were the professions that would have been the jobs most eligible for a BGI. These would have been factory workers, displaced by automation and robotics, and coal workers whose livelihoods are being displaced by the rise of the use of natural gas to generate electricity. This has changed with the recent spread of COVID-19 worldwide. With the advent of the COVID-19 outbreak, hospitality workers must now be added to this list.

Financing the Cost of a Basic Guaranteed Income

For some time now the United States has been following a policy of Modern Monetary Theory (MMT). Deficit spending combined with the behavior of the Federal Reserve in purchasing commercial grade A investment bonds, as well as fallen angels, has expanded the policy of mimicking the MMT. However, at some point in time, the federal government will need new sources of revenue.

The COVID-19 crisis has emboldened the Democratic Party in calling for the revocation of the Trump tax cuts. With millions of Americans suffering from the economic depression the United States is currently in, and the wealthy profiting by dole-outs of money to corporations via COVID-19 assistance packages, the tax cuts for the wealthy are increasingly coming under attack.

In addition to the revocation of the Trump tax cuts, for the first time in U.S. history, the chances of the imposition of a value added tax (VAT) is becoming attractive. While Europe places a VAT on the middle class, with the U.S. political center turning to the left, a VAT would more than likely be placed on the upper class. This could be done by placing certain luxury goods under a VAT.

How a BGI Would be the Forerunner to a UBI

The adoption of a BGI in the United States would more than likely be a forerunner to a UBI in the future. For a UBI to be successful a higher tax rate would need to be imposed on the creation of wealth for it to be functional. At the moment, with the major amount of production still being created by human inputs, a UBI is not necessary for all Americans. However, to bridge the gap between a fully functional UBI, a BGI would be the most logical economic move to implement to prevent massive poverty and social unrest. Unless some other means can be found to prevent massive social unrest that would come from massive unemployment caused by the COVID-19 virus and the steadily increasing amounts of automation and robotics being used in manufacturing, a BGI is a sensible response to the economic challenges facing the United States.