How many people are living in the precariat, i.e. in precarious economic and financial situations, is relentlessly revealed by the measures that governments around the world are currently taking to stop the spread of the coronavirus. Curfews, forced closures of shops, restaurants and event venues, as well as border closures and travel bans, are massively impeding economic life. And with it also the financial situation of many people who are dependent on this income.

I myself am self-employed, working as an author, keynote speaker, workshop trainer, and host of delegations visiting Silicon Valley, and my income has collapsed massively due to cancelled events and trips in the last few days. Since the duration of the situation is unpredictable, and even after the suspensions have been lifted, it will take some time to get back into full operation, I also do not yet know how much my own income will suffer this year.

Precariat

But the situation for many others is worse. Artists who make a living from performances are now unable to play in front of an audience and have no salary. Shopkeepers no longer have a clientele and therefore empty cash registers. Temporary workers who are paid by the hour and cannot do their work from home are left without income. Their situation becomes precarious.

Larger companies react differently to the situation. Some commendable, but by far not all companies continue to pay salaries, even if nothing can be done at the moment and business is down. Other companies, however, have already registered their employees for layoffs with the employment agencies. Even though the boards of directors have granted themselves and the shareholders generous bonuses and dividend payments

Surveys on the income situation in the USA, for example, have shown that almost 40 percent of Americans do not have enough financial reserves to pay an unexpected, emergency bills of 400 dollars.

Emergency Packages

We see this situation all over the world. The people in the first affected region around Wuhan in China were the first to experience it. Now it is Europe’s turn, and it is becoming clear in the US. The governments have started to put together financial emergency packages to cushion the worst. Small businesses are to be offered financial help through them. But these packages are so bad and hastily put together that they do almost everything wrong. Artists are not included as recipients. Neither are businesses with fewer than 25 employees, for example, and that includes most restaurants and private cultural establishments. Not self-employed people anyway, not to mention families where parents are employed in the healthcare system, grocery stores or other companies that keep the world running with the most basic things, and where their children who are now at home have to be looked after because schools are closed, but there is not enough money for babysitters and the like.

Unter normal circumstances, one can fall back on family members, such as grandparents, relatives and acquaintances, to get support. But now there are groups among them who are particularly at risk from the coronavirus. A pandemic has a completely different social impact than, say, a pure economic crisis or disaster situation. Contact must be kept to a minimum. With the result that many people have reached their financial limits within a few days.

Universal Basic Income

And here a discussion about the universal basic income would be more than appropriate. So far, this has been addressed primarily with regard to jobs threatened by machines and robots. And there was always a subliminal tone that the people concerned should have “learned something proper“. Or the argument that many new jobs would be created. And that one could not afford a UBI.

Yet any talk of financing an unconditional basic income is actually not a real problem. Transfer payments already represent a significant part of the budget expenditure of countries worldwide. Transfer payments include, for example, unemployment salaries, child benefits and pensions, but also tax rebates, subsidies and grants for companies, and farmers.

Even though the calculations differ depending on the amount of the unconditional basic income – which is usually set at between 750 and 1,500 dollars per month for each citizen – the amount needed is close to being affordable. There are even concrete suggestions as to how this income could be financed safely. From taxes on robotic and mechanical labor, which, unlike human labor, are not taxed today, thus providing an incentive for entrepreneurs on the one hand to replace people with machines and thus save taxes, and on the other hand to reduce precisely the tax income of the state, to the financial transaction tax, there is a whole range of possibilities.

With the financial transaction tax, each purchase of a financial value (shares, options, CDS, shorts, longs…) would incur a tax as a percentage of the transaction amount. Although this sum would be quite small in percentage terms, the amount of transactions carried out worldwide today is so high that we could easily guarantee every resident an unconditional basic income. The pleasant side effect would be that, in the event of economic fluctuations, speculators would think twice about making financial transactions. This could lead to more stable and less volatile markets.

There Are Countless Advantages

It is precisely these measures that could make a pandemic such as the one currently underway less financially precarious for individuals. People would then not feel forced to take the risk and go to work – even if they were already infected or ill with the virus – and thus spread the virus even more. Companies could temporarily suspend continued salary payments and thus not slide into bankruptcy themselves, because they know that their employees can pay the most essential necessities of life from the universal basic income. The markets – both the economy and the securities market – would be more stable because liquidity would be maintained in the economic cycle. Apart from the fact that everyone would have less stress, at least from a financial point of view, and would not become a burden on the health system. And we would preserve many small and regionally valuable gastronomic, economic and artistic businesses and employees.

And these are only the positive effects of the coronavirus crisis. Field trials show a whole range of other positive effects, which spoke of massively improved health and mental condition of the recipients, reduced alcohol and tobacco consumption, the possibility of further training and qualification for better jobs, while at the same time only a small number of the recipients gave up their jobs.

In other words, we should use this crisis and be grateful to the coronavirus that we are not only resuming the discussion about the universal basic income, but are also rapidly implementing it throughout Europe. This model is much more targeted, more effective and deals better with taxpayers’ money than the hastily put together packages of measures by governments.

This article was also published in German.