The Coronavirus pandemic shows why America needs to offer a basic income to all citizens.
To explain, the Centers for Disease Control and Prevention (CDC) recommends people infected with COVID-19 self isolate themselves. In other words, the CDC wants you to stay home if you have Coronavirus symptoms or test positive for it.
However, tens of millions of Americans cannot afford to stay away from work. The Federal Reserve estimates that 12% of Americans could not cover a $400 emergency expense.*
Americans cannot Afford to Take Time Off
In addition, 17% of Americans admit they cannot pay all their bills now.* Meanwhile, Careerbuilder estimates that 81% of Americans lived paycheck to paycheck in 2017.
Thus, most Americans cannot afford to take time off from work without a paid leave. In addition, there are the 16 million self-employed Americans.
Most self-employed people do not have the resources to take time off. Yet Pew estimates the self-employed account for 30% of the nation’s workforce.
How are those people supposed to pay their bills if coronavirus forces them to stay home for two weeks? Many people can fall back on their savings, but GOBankingRates estimates 58% of Americans had less than $1,000 in savings in 2018.
Is a Basic Income the Answer?
Large numbers of people cannot afford to take time off, but employees must take time off to save lives.
I think the Freedom Dividend could help families get through an emergency such as the Coronavirus. To explain, families will get some cash coming in to cover expenses such as food or housing.
For instance, a couple could get $2,000 a month to pay for groceries and cover basic expenses. In addition, we could make things better by starting the Freedom Dividend at birth. Thus, a couple could get $1,000 a month for each of their kids.
Can the Freedom Dividend Same the Economy from the Coronavirus?
Importantly, the Freedom Dividend could alleviate the economic damage pandemics such as coronavirus could do.
Interestingly, Hong Kong is combating the coronavrius with a basic income, the BBC reports. To explain, Hong Kong’s government plans to give everybody over 18 in the former Crown Colony $10,000 in Hong Kong dollars ($1,200 USD).
The government’s hope is to keep Hong Kong’s economy functioning during the pandemic. To clarify, people not working will still have money to spend at the grocery store, Amazon (NASDAQ: AMZN), and other places. Thus, businesses will keep making money and paying salaries and taxes.
Moreover, people will not be afraid to stay home or miss work. Instead, they will have the resources to survive.
Mitt Romney Joins the Yang Gang
Interestingly, U.S. Senator Mitt Romney (R-Utah) wants to give every American adult $1,000 as a response to the Coronavirus, Vox reports.
Romney, the 2012 GOP presidential candidate is not alone. U.S. Representatives Ro Khanna (D-California) and Tim Ryan (D-Ohio) want to give $1,000 to everybody making under $65,000 a year.
Romney, Ryan, and Khanna and the Hong Kong government are responding to economists who believe traditional stimulus measures will not work in this crisis. For example, interest rate cuts and payroll tax slashing will take too long to help people in trouble.
Americans losing jobs need cash now not stimulus later, Harvard Economist George Mankiw argues. Mankiw writes “sending every American a $1000 check asap would be a good start” in Coronavirus response. Notably, Mankiw was Republican President George W. Bush’s (R-Texas) chief economist.
“A payroll tax cut makes little sense in this circumstance, because it does nothing for those who can’t work,” Mankiw notes.
How the Freedom Dividend could Help Children Eat during a Pandemic
That could be a big help to the 22 million American children the Food Research and Action Center estimates received subsidized or free school lunches in 2017-2018. To explain, 22 million children participated in the National School Lunch Program in that year.
Consequently, one common concern about emergency school closings is that millions of children will not eat if they have no school lunch. If America had a Freedom Dividend, those children’s parents could buy food for them.
Thus, closing schools for public health reasons will be easier and less painful. In addition, a Freedom Dividend could ease the pain from the closing of businesses such as bars, restaurants, arenas, theme parks, casinos, etc.
America’s Economy is unprepared for Coronavirus
To explain, many of those businesses’ employees are low-paid to begin with and rely on tips for much of their pay. If the business closes, those employees will not get paid and some of them will starve.
Notably, 68% of Disneyland workers admitted to having trouble paying for food Working for the Mouse; a Survey of Disneyland Resort Employees by the Economic Roundtable and the Urban & Environment Institute for Occidental College found.
Yes, giant corporations such as the Walt Disney Co. (NYSE: DIS) could afford to pay their employees more or offer paid sick leave. However, most service economy employers are small businesses that lack the resources to pay more or offer sick leave.
Therefore, America’s economy is unprepared for catastrophes such as a coronavirus pandemic. However, I think the Freedom Dividend could provide a safety net that helps ordinary Americans survive such a disaster.
America Needs to Reconsider Andrew Yang and the Freedom Dividend
In the final analysis, the data shows why America needs the Freedom Dividend or something similar. Andrew Yang has shut down his fascinating presidential campaign.
However, Yang has launched Humanity Forward; a political action committee (PAC) that will promote his policies, including the Freedom Dividend. Therefore, Yang’s time could be now even though his presidential ambitions are on hold until 2024 or later.
The Freedom Dividend could help America and Americans survive catastrophes such as the Coronavirus Pandemic. The Coronavirus shows why America needs to take a second look at the Freedom Dividend and Andrew Yang.
Will Coronavirus Force America to Adopt Basic Income?
The coronavirus catastrophe could force America to adopt Basic Income and transform the U.S. economy. Thus, the Coronavirus Pandemic could be the biggest economic paradigm shift in America since the Great Depression of the 1930s.
Remember, the Great Depression gave rise to President Franklin D. Roosevelt’s (D-New York) New Deal and the American welfare state. Notably, Social Security began during the New Deal.
Likewise the modern British welfare state arose as a response to the economic chaos of World War I and World War II. I think coronavirus could lead to a similar paradigm shift in modern America.
Originally published at https://marketmadhouse.com on March 17, 2020.