While countries in east Asia and Europe are gradually taking steps towards reopening their economies, many in the global south are wondering whether the worst of the pandemic is yet to come. As economists who work on poverty alleviation in developing countries, we are often asked what the effects of coronavirus will be in south Asia and Africa. The truth is, we dont know. Without extensive testing to map the number of cases, its impossible to tell how far the virus has already spread. We dont yet have enough information about how Covid-19 behaves under different conditions such as sunlight, heat and humidity. Developing countries more youthful populations may spare them the worst of the pandemic, but health systems in the global south are poorly equipped to deal with an outbreak, and poverty is linked to co-morbidities that put people at a higher risk of serious illness.
Without the information widespread testing provides, many poorer countries have taken an extremely cautious approach. India imposed a total lockdown on 24 March, by which time the country had about 500 confirmed cases. Countries such as Rwanda, South Africa and Nigeria enforced lockdowns in late March, long before the virus was expected to peak. But these lockdown measures cant last forever. Poorer countries could have used the quarantine to buy time, gather information about how the disease behaves and develop a testing and tracing strategy. Unfortunately, not much of this has happened. And, far from coming to their aid, rich countries have outrun poorer nations in the race for PPE, oxygen and ventilators.
In many places, the human toll of the lockdown is already becoming obvious. Children go without vaccinations and crops are not harvested. As construction projects stall and markets are shuttered, jobs and incomes evaporate. The effects of prolonged quarantine on developing nations could be as harmful as the virus itself. Before Covid-19 rippled across the world, 15,000 children under five died every day in the global south, mostly of preventable diseases associated with poverty. Its likely that many more will die if their families are plunged further into poverty.
What can poor countries do in the face of this pandemic and how can rich countries help them? First, the systematic testing strategies that have been crucial to containing the epidemic and easing lockdown measures in Europe are equally critical in poor countries. In places where public health authorities dont have information about the spread of the virus and resources are limited, the response to coronavirus needs to be targeted at active hotspots. In this way, rather than imposing a universal lockdown, health authorities can identify the clusters where quarantine measures are required.
Second, developing countries must be able to improve the ability of their health systems to cope with a potential sudden influx of sick people.
And third, its crucial that poor countries are able to guarantee people a secure livelihood in the months to come. In the absence of such a guarantee, people will grow tired of quarantine measures and lockdowns will be increasingly difficult to enforce. To protect their economies from a collapse in demand, governments must reassure people that financial support will be available for as long as its needed.
In our recent book, written before coronavirus struck but with a title that is now eerily appropriate Good Economics for Hard Times we recommend that poor countries implement what we call a universal ultra basic income (UUBI), a regular cash transfer that amounts to enough for basic survival. The virtues of a UUBI are its simplicity, transparency, and its assurance that nobody will starve. It avoids the problems of many welfare systems that are designed to exclude the non-deserving, even at a cost to the needy. During a pandemic, when governments need to help as many people as quickly as possible, the simplicity of a UUBI could be lifesaving. Reassuring people that nobody will be excluded from subsistence aid also limits the feeling of existential foreboding that so many individuals in poor (and not so poor) countries are currently experiencing.
These ideas arent mere fantasy. The small west African country of Togo, with its eight million inhabitants and its GDP (purchasing power parity) per capita of $1,538, is working on all these fronts. In addition to testing 7,900 suspected cases, the country is deploying 5,000 test on a random basis to assess prevalence. Health authorities will use the results to determine when and where to restrict peoples mobility. The government has also launched a cash transfer scheme linking an electronic wallet to peoples cellphones; it already has 1.3 million people registered and has sent money to 500,000 in the region of Greater Lom (the capital) alone.
The good news is that many countries, particularly those in Africa, already have the infrastructure to rapidly transfer money across a population using cellphones. Many people already use these systems in private exchanges, so government schemes based on this infrastructure can be up and running in a matter of days. If phone data indicates that some regions are experiencing greater economic distress, the transfer could be more generous in those places.
In fact, the greatest constraint we face isnt the feasibility of these measures its the willpower to finance them. Developing countries will need a substantial amount of help from richer nations if they are to pay for a UUBI. Some fear that their currencies will depreciate if they act aggressively, potentially spurring a debt crisis. Richer nations will need to work with global financial institutions to offer debt relief and additional resources to developing nations. Many developing countries will need to buy food and medical supplies with hard currency, which will become increasingly difficult because of faltering export earnings and collapsing remittances.
Given the unprecedented collapse in earnings that many people face, conventional fiscal prudence is perhaps less important now than it was in the recent past. Now is the time for governments to help citizens and economies by spending more, rather than less. The governments of developing countries may need to accept large budget deficits in order to finance a UUBI, at least in the short term. When countries begin to loosen their lockdowns and resume production, they will face extremely weak demand. Pledging that cash transfers will continue for some time in the future will allow people to go out and spend money when it becomes safe to do so. In turn, this will drive the revival of the economy.
None of this means that governments should simply ignore concerns about macro-economic stability. But a clear spending plan that responds to the immediate shock of coronavirus, in conjunction with a longer term strategy for how the lockdown will end, offers the best hope for preventing the present crisis developing into a future catastrophe.
Esther Duflo and Abhijit Banerjee won the 2019 Nobel prize in economics for their work on poverty alleviation. They are the authors of Good Economics for Hard Times
Continued here:
- Income inequality in the United States - Wikipedia - January 5th, 2017 [January 5th, 2017]
- Basic Income as All-inclusive Democratic Subsidy - Basic Income News - February 7th, 2017 [February 7th, 2017]
- Basic income is superior to the job guarantee - Basic Income News - February 7th, 2017 [February 7th, 2017]
- CANADA: Over 10000 people have signed to support Basic Income - Basic Income News - February 7th, 2017 [February 7th, 2017]
- A response to 'The dangers of a basic income' - Basic Income News - February 7th, 2017 [February 7th, 2017]
- Ebay founder backs universal basic income test with $500000 pledge - Mashable - February 9th, 2017 [February 9th, 2017]
- OPINION: Human rights, basic needs - The Guardian - February 10th, 2017 [February 10th, 2017]
- Left-Wing America Steps Up Calls For Free Money, Jobs Guarantee - Daily Caller - February 10th, 2017 [February 10th, 2017]
- Guaranteed basic income proposed. - Bayshore Broadcasting News Centre - February 15th, 2017 [February 15th, 2017]
- World Economic Forum blog: Canada's basic income experiment will it work? - Basic Income News - February 16th, 2017 [February 16th, 2017]
- Expert: We Can Have Universal Basic Income and Jobs - Futurism - Futurism - February 18th, 2017 [February 18th, 2017]
- Ben Wray: Why both the right to work and the right not to work can set us free - CommonSpace - February 20th, 2017 [February 20th, 2017]
- VIDEO: Basic Income presentation at Meeting of the Minds Summit - Basic Income News - February 22nd, 2017 [February 22nd, 2017]
- Australia Needs A Universal Basic Income, And We Should Start ... - Huffington Post Australia - February 24th, 2017 [February 24th, 2017]
- A guaranteed income isn't the solution to widespread unemployment - Acton Institute (blog) - March 1st, 2017 [March 1st, 2017]
- Industry body bats for universal basic income for women - Times of India - March 8th, 2017 [March 8th, 2017]
- Basic Income in Argentine News - Basic Income News - March 10th, 2017 [March 10th, 2017]
- Basic-income guarantee is way to end poverty - Times Colonist - March 11th, 2017 [March 11th, 2017]
- Letters: Guaranteed income guarantees sloth - The Province - June 6th, 2017 [June 6th, 2017]
- Universal basic income: guarantee pay as way to improve quality of life - WatertownDailyTimes.com - June 6th, 2017 [June 6th, 2017]
- About That Universal Basic Income Idea - FITSNews - June 6th, 2017 [June 6th, 2017]
- Basic income plan doable: Northern study - The Sudbury Star - June 6th, 2017 [June 6th, 2017]
- Study of Iran's basic income shows it did not harm employment - Basic Income News - June 7th, 2017 [June 7th, 2017]
- Should all Americans receive a guaranteed income? - First Coast News - June 20th, 2017 [June 20th, 2017]
- Should all Americans receive a guaranteed income? - KPNX 12 News TV - June 21st, 2017 [June 21st, 2017]
- Should all Americans receive a guaranteed income? - 9NEWS.com - June 21st, 2017 [June 21st, 2017]
- Should all Americans receive a guaranteed income? - KHOU - June 24th, 2017 [June 24th, 2017]
- Net incomes under a Basic Income system - Basic Income News - July 1st, 2017 [July 1st, 2017]
- Basic Income Guarantee program moving forward for 2000 Lindsay residents - Kawartha Media Group - July 8th, 2017 [July 8th, 2017]
- UBI is just a bedtime story Elon Musk tells himself to help the super-wealthy sleep - Quartz - July 14th, 2017 [July 14th, 2017]
- NDP leadership candidate visits Guelph (8 photos) - GuelphToday - July 18th, 2017 [July 18th, 2017]
- Does Basic Income Solve Anything? Grasp the Arguments for and ... - Futurism - July 21st, 2017 [July 21st, 2017]
- Value in using tax system for basic income: Report - The Sudbury Star - July 21st, 2017 [July 21st, 2017]
- NEW ORLEANS, LA, US: Local basic income group begins to hold monthly meetings - Basic Income News - July 25th, 2017 [July 25th, 2017]
- More Calgarians struggle to feed their families over the summer months - CBC.ca - July 26th, 2017 [July 26th, 2017]
- Renfrew County dietitian recognized by board of health for provincial award - www.insideottawavalley.com/ - July 27th, 2017 [July 27th, 2017]
- EDITORIAL: Island needs dollars, not data, to cope with poverty - The Guardian - July 29th, 2017 [July 29th, 2017]
- DON PRIDMORE: Be careful what you wish for... - The Guardian - August 1st, 2017 [August 1st, 2017]
- Is a Well-Paying Job the next Entitlement Program? - Big Think (blog) - August 5th, 2017 [August 5th, 2017]
- Let's talk about a supplemental income - The Hindu - August 7th, 2017 [August 7th, 2017]
- Universal basic income proponent to speak in Boise - Idaho Press-Tribune - August 7th, 2017 [August 7th, 2017]
- Hashtag Trending Battery-free phone, Apple's China backlash - IT World Canada - August 10th, 2017 [August 10th, 2017]
- New Zealand Fabians host Basic Income panel - Basic Income News - August 13th, 2017 [August 13th, 2017]
- Universal Basic Infrastructure to help decrease India's poverty - Economic Times - August 14th, 2017 [August 14th, 2017]
- After lifting minimum wage, NDP government prepares to consult public about reducing poverty - Straight.com - August 16th, 2017 [August 16th, 2017]
- How Cities Can Rebuild the Social Safety Net - CityLab - August 24th, 2017 [August 24th, 2017]
- Food shopping at dollar stores | Brantford Expositor - Brantford Expositor - August 24th, 2017 [August 24th, 2017]
- 'Me too' and the basic income guarantee | Basic Income News - February 6th, 2018 [February 6th, 2018]
- Basic Income Now | It's time for dignity for all - March 17th, 2018 [March 17th, 2018]
- Is a Basic Income Guarantee the Right Choice for Ontario? - June 27th, 2018 [June 27th, 2018]
- The Ethics and Economics of the Basic Income Guarantee ... - September 18th, 2018 [September 18th, 2018]
- Basic Income Guarantee - Your Right to Economic Security ... - November 8th, 2018 [November 8th, 2018]
- Basic income could end food insecurity - Upstream - January 3rd, 2019 [January 3rd, 2019]
- 'Hartz reforms': how a benefits shakeup changed Germany ... - January 28th, 2019 [January 28th, 2019]
- Quick notes from Basic Income Guarantee Panel - falicon.com - January 28th, 2019 [January 28th, 2019]
- New book reviews the Namibian Basic Income pilot - Basic Income News - October 1st, 2019 [October 1st, 2019]
- Democrats focus on some Midwestern issues at Westerville debate, a departure from past three forums - cleveland.com - October 16th, 2019 [October 16th, 2019]
- Assembly Elections 2019: Why is the Congress evasive about NYAY scheme this poll season? - Moneycontrol.com - October 16th, 2019 [October 16th, 2019]
- Letter to the Editor: Universal basic income is inevitable as we head toward a fully automated society - The Post - October 16th, 2019 [October 16th, 2019]
- Democratic debate highlights: best and most substantive answers of the night - Vox.com - October 16th, 2019 [October 16th, 2019]
- Sanders: 'Damn right we will' have a job for every American | TheHill - The Hill - October 16th, 2019 [October 16th, 2019]
- 'Most Americans Don't Want To Work for the Federal Government' Says Andrew Yang, Trashing Federal Jobs Guarantee - Reason - October 16th, 2019 [October 16th, 2019]
- Basic Income as 40 Acres and a Mule - Basic Income News - October 16th, 2019 [October 16th, 2019]
- WAYNE YOUNG: Island voices must be heard - The Guardian - December 15th, 2019 [December 15th, 2019]
- The Guardian view on Finlands new PM: a different type of leadership - The Guardian - December 15th, 2019 [December 15th, 2019]
- 5 Psychological Forces That Turn People into Political Hacks | Aaron Pomerantz - Foundation for Economic Education - January 13th, 2020 [January 13th, 2020]
- P.E.I. groups say basic Income should not replace addictions, other supports - The Journal Pioneer - January 27th, 2020 [January 27th, 2020]
- Trump to let states overhaul Medicaid for the poor, seeking to change Obamacare without legislation - Washington Examiner - January 30th, 2020 [January 30th, 2020]
- Find ways to improve the revenue of farmers: Congress - The Hindu - January 30th, 2020 [January 30th, 2020]
- Eliminating Child Poverty With a Government Check - The New York Times - January 30th, 2020 [January 30th, 2020]
- Andrew Yang Expects 'Many' of His Supporters to Back Sanders in Iowa: We 'Have a Lot of Overlap' - Newsweek - January 30th, 2020 [January 30th, 2020]
- Life, Liberty, and Basic Income | Opinion - Harvard Crimson - February 29th, 2020 [February 29th, 2020]
- Lockdown to fight coronavirus is going to hit most Indian workers very hard - Livemint - March 26th, 2020 [March 26th, 2020]
- Beware of a lopsided lockdown - The Hindu - March 26th, 2020 [March 26th, 2020]
- We face a war against coronavirus and must mobilise accordingly | Free to read - Financial Times - March 26th, 2020 [March 26th, 2020]
- Coronavirus: Iain Duncan Smith says dont bring in universal basic income during pandemic as it would be disincentive to work - The Independent - March 26th, 2020 [March 26th, 2020]
- Solidarity Economicsfor the Coronavirus Crisis and Beyond - The American Prospect - March 26th, 2020 [March 26th, 2020]
- I've lived through plenty of social shocks this time we must learn the lessons - The Guardian - March 31st, 2020 [March 31st, 2020]
- Common Arguments Against Basic Income Don't apply to the Emergency BI - Basic Income News - March 31st, 2020 [March 31st, 2020]
- How a Basic Income And Jobs Guarantee Can Save The Economy From Coronavirus - The National Interest - March 31st, 2020 [March 31st, 2020]