Monthly Archives: April 2020

In March, the federal government announced Australians left without an income due to coronavirus will have access to increased welfare payments, dubbed the Coronavirus Supplement.

And it also delivered a $130 billion stimulus package that will see workers receive fortnightly wage subsidies or replacements of $1,500.

In the last few weeks, the government has spent $320 billion to keep the country afloat. For reference, the last federal budget was $500 billion.

While the outlay is jaw-dropping, the spending presents an opportunity to rethink the way we deliver welfare and function as an economy, according to senior research fellow at the University of Queenslands School of Economics, Professor John Quiggin.

Hes one of 100 signatories to an open letter calling for the introduction of a Liveable Income Guarantee, also signed by business leaders, policy exports, business people and religious leaders.

As we see in the context of this crisis, the economic system we have is one that periodically generates high levels of unemployment and often has large numbers of people unable to find work, he told Yahoo Finance.

In these circumstances, paying people a living income with no conditionality or much less conditionality than we've tried to impose in the recent past makes a lot more sense and is a lot more equitable than the policies we've been pursuing with increasing severity over the last 20-30 years.

According to Quiggin, the Coronavirus Supplement essentially is a Universal Basic Income (UBI). The question now, he said, is what if we tried a UBI in a non-emergency period?

Why go back to an approach [to welfare] which had to be abandoned at the moment we had a crisis?

The punitive approach to unemployment needs to change, he said, noting that few Australians are looking forward to collecting an income to sit on the couch.

People queue to enter Centrelink on March 24, 2020 in Melbourne, Australia. (Photo by Quinn Rooney/Getty Images)

And a future UBI would be a baseline pay, with Australians encouraged to seek gainful employment. But where it was difficult, there would be volunteering channels.

Given some encouragement, people who can't find paid work will be happy to make contributions in other ways, he said.

What we need to get rid of completely is the punitive approach which says if you're unemployed it's your own fault.

The problems with Australias social security program have been widespread and on display in recent days, as images of hours-long queues outside Centrelink were beamed around the country and the MyGov website crashed under the huge demand.

Tens-of-thousands of Australians have been stood down since February, with companies like Qantas, Virgin Australia and Myer alone pushing thousands into the welfare system.

According to the last census, 10.6 million Australians are employed. Prime Minister Scott Morrison believes as many as 6 million Australians will receive the $1,500 wage subsidies over the coming six months.

One of the recognised benefits of a UBI is that it takes the strain off existing systems: no questions asked means no forms to fill out our hoops to jump through.

Professor Quiggin said the cost will depend on the level of the UBI.

One way to deliver it would be to return to a system where the main benefits including unemployment benefits and the pension are delivered at the same rate.

My estimate is that to deliver this comprehensively we'd need something between 5 and 10 per cent of national income, that's essentially an increase in effective tax rates of between 5 and 10 cents in the dollar, taking account of income tax and the GST.

So it would be a very significant expansion... but not something impossible.

Australias United Workers Union is calling for a UBI thats equal to the minimum wage of $740 a week, which comes close to the $1,500 fortnightly subsidy announced by the government on Monday.

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Spanish minister for economic affairs Nadia Calvio recently announced Spain is moving to introduce a permanent UBI as the already struggling European nation buckles under the pressure of coronavirus.

"We're going to do it as soon as possible," she said. "So it can be useful, not just for this extraordinary situation, and that it remains forever."

She said she hopes the scheme will be permanent, and that a basic income will be mainly aimed at families.

Finland experimented with a UBI. Image: Getty

A large scale UBI experiment has not yet been carried out, with the coronavirus crisis the first time such payments have been deployed at such scale.

Finland carried out an experiment between 2016 and 2018 to measure the effects of a UBI and found that it didnt boost employment, but did lead to increased well-being.

The researchers had begun with a hypothesis that no-strings-attached income would encourage people to seek out work.

"The recipients of a basic income were no better or worse than the control group at finding employment in the open labour market," research coordinator at the Labour Institute for Economic Research Ohto Kanninen said.

Finlands social affairs minister Pirkko Mattila said the experiment was successful.

"We can use the data from the experiment to redesign our social security system; that is going to be the next major reform.

Another test in the 1970s in Manitoba, Canada found that a UBI boosted high school completion rates, pushed hospitalisation rates lower and also lightened the load on the healthcare system.

And billionaires including Elon Musk and Richard Branson have also described a UBI as a potential way into the future.

"A lot of exciting new innovations are going to be created, which will generate a lot of opportunities and a lot of wealth, but there is a real danger it could also reduce the amount of jobs," Branson said in 2017.

"This will make experimenting with ideas like basic income even more important in the years to come.

Robots will change the way we work. Image: Getty

In 2018, then-Greens leader Richard Di Natale proposed a UBI, although met with criticism that such a scheme actually boosts inequality given billionaires and minimum income workers would receive the same funds, and claims that a well-targeted welfare system was more effective.

US congresswoman Alexandria Ocasio-Cortez has also voiced support for a UBI, but warned that the schemes need to be designed effectively.

She said its worth considering whether a UBI will impact paid leave, access to publicly funded healthcare, and other taxpayer-funded programs already in place.

But according to consulting firm KPMG, a UBI could be inevitable.

UBI represents one option for reinvesting profit created by technology back into society. It would be paid to all, irrespective of income, employment or savings, and would provide enough money to live on, KPMG Innovate national leader James Mabbott said in January this year.

Speaking in the context of a robot and artificial intelligence revolution, Mabbott said the future will require Australia to rethink its approach to displaced workers.

What is the right balance between tax on capital, on profits and on incomes to make this possible?

UBI is one potential solution, though in most countries it would require major tax reform; in the Australian context, an evolution of our century old targeted income support system is more likely in the shorter term at least.

As Professor Quiggin noted, Australia already has something very similar to a UBI.

If we get back to a situation where we're not in a near-lockdown that we have, but we still have this [income], we will have a good chance to try it out, see what works and what doesn't.

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Is this the beginning of a Universal Basic Income? - Yahoo Finance Australia

What will the United States look like after the coronavirus pandemic?

We've been told by experts and politicians that it will be hard--if not impossible--to go back to the way things were.

So, how could things change?

Sallie Krawcheck, CEO of Ellevest, weighs in on what this could mean for the U.S. economy in the future.

Watch the video above for more.

And watch the full interview with Krawcheck here: How to Handle Market Volatility, Manage Personal Finances During the Coronavirus Pandemic

KATHERINE ROSS:President Trump has said that the economy will come back better than ever. And I'm wondering if you see this as a big opportunity or is it more of a problem?

SALLIE KRAWCHEK:Well, I have no idea what he means by that, but I think we're in a really important moment for, who are we? What do we as a society and in economy value? And it's one thing to have these discussions in a vacuum and it's another to be faced with this. We're a country where people don't have all the healthcare that they need. And while we think, "Ah, it's them, it hurts them. I don't want to pay for their heart attack," when you hit a situation like this where it's not them, it affects all of us, that if someone cannot afford to have the coronavirus test, if they can afford to have the test, but they can't afford the treatment, if they're not able to make ends meet and so go into the workforce and infect others, we're a society, we're not a group of individuals. And same with the safety net.

SALLIE KRAWCHEK:There's been talk of universal basic income and there's a lot of debate to be had but essentially that's just what we did by sending these checks to people. So what is that safety net that we value as the greatest country, the most powerful country, the richest country in the history of the world? Who are we? I think about this often. Historically, despite all of that, we had been a country that is mean enough that we don't have mandated paid maternity leave. How can we be the only developed country, the only country besides Papua, New Guinea, that doesn't have the kindness of its heart to allow mothers who are producing and bringing up the next generation, which is vital to our economy and society, we don't guarantee them paid time off to get their child off on the right foot. How is that right?

SALLIE KRAWCHEK:

P.S., let me add, the paid parental leave pays for itself in a year. It's hard to think of that because we think of it as an expense when in fact it's an investment that if a mother and a father has time with a child early on in life, they're much more likely to come back in the workforce, so they're much less likely to end up on welfare. And so I think there's one thing about let's come out of it stronger than ever. Yeah, I think we will. Will we come out of it kinder than ever and kinder in a way that has a positive ripple effect to the economy? Again, with the mandated paid leave. That will grow our economy. And so I'm hopeful that we'll have some kind of reckoning of, now that we've looked this in the face, we've had this existential risk, who are we as people and what do we really value as a society when we step back from the easy infighting that can occur when you've frankly got too much?

The rest is here:

How the Pandemic Could Shape the Economy In the Future - TheStreet

*This article was originally publsihed by Fair Observer

Peter Isackson| Recently, The Daily Devils Dictionary highlighted the battle that is beginning to shape up in the media and in political circles around whether a return to a real or imaginary pre-pandemic status quo is possible. Most commentators in the West understand that the status quo they refer to embraces two major concepts: a globalized, liberal, free market economy and nations with political regimes based on (or at least paying lip service to) representative democracy.

On March 19, the newspaper The Australian reported this surprising piece of expert analysis: Macquarie Wealth Management, the stockbroking arm of the beating heart of Australian capitalism, Macquarie Group, has warned that conventional capitalism is dying and the world is headed for something that will be closer to a version of communism.

Words change their definition over time. Until 2020, most people thought they knew what the word communism meant. A firm of capitalist investment advisers tells us we may now need to rethink it.

Todays definition takes into account two moments of history, one in the future (from a dictionary to be published circa 2030) and one that includes the past and present.

Contextual Note

Macquarie Wealth Management cites the notion of conventional capitalism, which implies that an unconventional form of it may also exist. The same can be said of communism. In reality, people speak all the time about capitalism and communism without having any clear idea about their definition. Communism at least contains the idea of a group of people, the community, just as socialism contains the idea of society. The word capitalism represents a kind of absurdity because it makes no reference to people. Capital, in the sense of capital goods or the means of production, exists in every economy, whatever its organization and whatever its attitude toward ownership.

What capitalism ended up meaning in most peoples minds for the better part of two centuries was not just the simple fact that industry requires capital investment a given in any economic system but that capital (money and production capacity) has more weight than people in economic decision-making. Financialized capitalism even reaches a point at which people are totally irrelevant. Money (the marketplace) has a mind of its own.

Capitalism as most people understand it means that individuals, groups or institutions that own or control capital have a power of decision-making that is specifically denied to the people merely involved in production and consumption. The only difference would be that in communism, the ownership is said to be collective, meaning all of society has a stake in the ownership of the capital. That may be the distinction Macquarie had in mind when it claimed that capitalism would be replaced by a version of communism.

The Australian explains that Macquarie analysts and researchers said a number of policies announced in recent days, including cash payments to US residents, credit guarantees for businesses in Germany, and a Swedish stimulus worth 6 per cent of the Nordic countrys economy to keep banks lending to companies, were a sign that governments were shifting towards neo-Keynesian and Modern Monetary Theory policies, including a universal basic income guarantee. That type of communism, if applied permanently rather than provisionally during a crisis, would mean that all of the mechanisms of a market economy would still exist, but high-level decision-making would take into account the welfare of real people the entire community rather than merely shareholders seeking maximum profit.

When journalists espousing the liberal or conventional capitalist point of view react to the reality of the policies being put in place across the globe to counter the economic effects of the COVID-19 pandemic, they may be tempted to call it war capitalism. That is how Adrian Wooldridge at The Economist framed it this week. Macquaries communism is Wooldridges war capitalism. The difference lies in the fact that Wooldridge sees it as an ephemeral measure intended to last only for the duration of the threat. And he insists that, just as happened in the US after World War I, the crisis will be followed by a return to normalcy, a term invented or at least popularized by US President Warren G. Harding in the 1920 election.

Other commentators even conservative billionaire Mark Cuban (a possible future US presidential candidate) and centrist French President Emmanuel Macron appear to lean in Macquaries direction, despite their own philosophical preferences.They understand that things will simply not be the same in a post-pandemic world. There will be no return to normalcy. The nations of the world and the world itself as a global community must work to build a new equilibrium, not seek to reproduce an old one, especially one that has shown itself, through two successive crises, to be fundamentally unstable.

In an article on Al Jazeera, the award-winning economic journalist Paul Mason highlightsthe contrast between the top-down crisis in 2007-08 provoked by the mad derivative-based logic of the global financial system and the bottom-up collapsing foundations of todays crisis provoked by the reaction to the coronavirus. Mason expects radical change and quotes Macquaries analysis. He cites as historical evidence the dramatic effects of the Black Death in 14th-century Europe that precipitated the dismantling of feudalism. Mason argues that capitalism is unlikely to survive, long term and in the short term it can only survive by adopting features of post-capitalism. Its no longer a question of political will but of social necessity.

Nobody in a position of political responsibility wants chaos, though it would appear that some people in a position of economic responsibility are so focused on their fiduciary duty that chaos outside of their own market would only be an unfortunate byproduct of their short-term decision-making. Politicians fear the pitchforks of history. Mason cites the incredible violence of the Peasants Revolt, the French Jacquerie and other similar events following the outbreak of plague in the 14th century, violence that quickly resulted in serious destruction and ideological transformation. Even when violently quelled, such revolts provoke lasting change, fatally undermining the power relationships of the normal order that preceded the crisis.

Historical Note

Future historians will look back at the 20th century and wonder why, for a brief space of history, people were so obsessed with isms. Consistent with the reality of the emerging consumer society, political thinking came to be conceived as a kind of catalog of ideological packages that political groups could arrange in a display case from which consumers could choose their preferred brand.

The identities of the brands were singularly confusing, partly because the marketers shifted their branding strategies incomprehensibly, appealing alternatively to the intellect or the emotions. They based some of the appeal on a supposed understanding of the economy (communism, capitalism, socialism), some on political hierarchy (authoritarianism, populism), and some on power relationships (nationalism, fascism). There were other somewhat eccentric isms as well that corresponded to a narrower consumer target audience: communitarianism, libertarianism, religious fundamentalism.

The same was true in the arts, where, after the success of impressionism in the late 19th century, all sorts of isms burst forth to attract the publicas well as the artists themselves, offering a shared brand to exploit for individual artists who couldnt manage to turn their name into a brand: pointillism, fauvism, cubism, expressionism, surrealism, minimalism, constructivism, naturalism, to name only a few. Commercialism never achieved the status of a movement, but it was constantly present as a central feature of the art market. And, of course, the art market over recent decades has become dominated not by aesthetic principles, but by the factor of capitalistic investment. Just last week, Forbes informed us that, in the midst of a pandemic, The Art Market Is Beating The Stock Market.

As the consumer society itself appears to have reached the point of beingconsumed by the pandemic, we shouldnt be surprised if the age of isms itself may be ending. In 2016, the Democratic primary campaign of Senator Bernie Sanders restored some respectabilityto the term socialism, a word vilified in the US for decades as synonymous with un-American. The fact that society will only remain sustainable at the price of transforming many of its institutions means that it will make no difference whether the economic system that emerges from a crisis is described by commentators as post-capitalism, democratic socialism, humanistic communism, unconventional capitalism or a trendy new moniker that doesnt end in ism.

Though many in the public eye are still making a profession of denying it, we already knew that the planet was in peril. Some radical change in our way of life is clearly required to avoid the destruction of humanitys lifeline. Now we can see with our own eyes that what many thought of as the natural order of a free market economy is in a state of provoked collapse. Nobody knows what form it will take, but the new rulebook for the worlds political and economic system will, in the coming years, be very different from what it is today. Will some enterprising marketer invent a new ism to describe it? Or will another Warren G. Harding attempt to impose a normalcy that has been proven unsustainable.

The last time normalcy was imposed, by President Harding and his ilk, the US experienced in quick succession: Prohibition, the Jazz Age, the stock market crash of 1929, the Great Depression, the rise of fascism that included the Business Plot, the Spanish Civil War, Adolf Hitler and World War II. That normalcy didnt seem much like a status quo. It may not be the pattern most people would like to see repeated in our immediate future.

*This article was originally publsihed by Fair Observer

See the rest here:

After the pandemic, will there be a new status quo? - The Corner Economic