5 LESSONS
The following is an excerpt from Brookings :
Previous experiences with Universal Basic Income and UBI-like interventions provide five lessons. They have to do with inflation risks, strains on delivery systems, communication, synchronisation with other safety nets, and using temporary crises to make permanent changes.
1. One-off transfers in Kuwait and Australia, as well as regular UBI payments in Mongolia, did not seem to generate significant inflation. This is because goods and services kept being supplied by private markets and public agencies and enterprises. But this should not be taken as a given during crises.
2. The strength of delivery systems is key. If the movements of people are constrained (e.g., because of quarantines), massive pressure may be exerted on digital and online payments, the development of which lies at the heart of India’s “quasi-UBI” programs. Making sure that those systems are robust would be a priority during pandemics.
3. The importance of a sound communication strategy around a UBI scheme cannot be overstated. UBI comes with competing narratives and expectations, putting a premium on clarity about its purpose, design, and eligibility requirements. This is even more important at times when people are prone to panic.
4. If considered, a UBI program should fit within the ecosystem of existing schemes. A UBI could ensure rapid and widespread coverage, but it may lack nuance in addressing specific vulnerabilities (e.g., providing care to the elderly and other vulnerable groups such as children). And if the crises are prolonged or deep, the burden of supporting people will rest on existing safety nets. Making sure that they are scalable, tailored, and well-funded is key.
5. Crises tend to shed light on the gaps in social protection systems. The experience in high-income economies, as well as in countries such as Indonesia, Egypt, Lebanon, and Ethiopia, shows that crises are often precious junctions for enacting long-term improvements. UBI may be the way to plug the hole but, equally possibly, it may not be the best to do so.
In fighting COVID-19, there might well be a role for developing this new form of one-off cash transfers. Hopefully cross-country learning on cash transfers will spread faster than the virus.
