Rethinking Economics - (but what will happen when the furlough payments end?)

One of the most remarkable things to come out of the COVID- 19 pandemic is a radical change in economic thinking

The same politicians who imposed a decade of austerity on us because (they said) "there is no magic money tree" have suddenly found that in an emergency they can find the money they need and spend "whatever it takes".

Of course, money never did grow on trees and still doesn't. I f it did, the amount available would actually be limited, like apples or oranges, but the fact is that it is an artificial creation of mankind, and we can create more of it whenever we choose to.

We've come a long way since Tudor times, when money was actually gold and silver. Today, the vast majority of money in the world doesn't exist in any physical form, even as banknotes: it's just a digital balance in a computerised bank account. I t's 'virtual currency', and like Bit Coin, is worth whatever people continue to believe it to be worth.

Unlike governments and central banks, however, ordinary people cannot create money at will. So when the virus eventually forced our reluctant government to close down the economy they had to find a way to give people money to survive.

Furlough payments were the Chancellor's sticking plaster solution, together with an emergency £20 per week increase for those who missed out on furlough and suddenly realised that Universal Credit was nowhere near enough to live on.

More than 8.5 million people and their families now depend on furlough payments, but as the government plans to cut the cost and companies announce more and more redundancies, it is apparent that in many cases it is just a disguised form of unemployment. As the whole world economy slides into a COVID-induced recession, hopes of a quick bounce-back are fading fast.

It is increasingly clear that we cannot just go back to how things were before. We need to reshape the whole economic framework for a future in which jobs cannot be guaranteed, and in which there is more to life than the pursuit of money at all costs.

TIME FOR A UNIVERSAL BASIC INCOME

The Universal Basic Income (UBI) is not simply a benefit for the unemployed. It is a new approach to the whole tax and benefits system, which guarantees a basic income to all as a right, whatever their circumstances.

It would remove the current maze of bureaucratic hurdles which leave the poorest penniless and dependent on food banks, and free up thousands of civil servants to go after the tax dodgers at the top of the income scale instead. It would enable people to take up part-time work and self-employment without loss of benefits, and boost the incomes of everyone on low pay.

UBI would integrate the present benefits and income tax systems, so those in regular employment could opt to take it either as a separate payment or with their wages. I t would replace, and substantially increase, the basic tax allowance, so everyone on below average earnings would be better off.

Higher rates on top earners and firm action against tax-dodging would help pay for the scheme, which would be a big step towards reducing the huge inequality in our present society, and properly rewarding the many low-paid workers that coronavirus has made us realise are actually essential to all our wellbeing.

UBI would put everyone on the same footing, so for those most in need it would remove the stigma of having to claim benefits and the uncertainty and trauma of having those benefits refused or cut off. It would enable flexibility for those relying on temporary or part-time work, combining a reliable safetynet with the incentive that it would always pay to work.

A Universal Basic Income is a policy which the Green Party has advocated for over 40 years. In the post-COVID world of uncertain employment and changed values, like many Green policies, it is now an idea whose time has come.

BIG BAILOUTS FUEL CLIMATE DESTRUCTION

The biggest single economic casualty of COVID-19 appears to have been the airline industry, who have been among the first to announce thousands of redundancies. They have also been at the head of the queue for huge sums of government bailout money, despite being probably the least deserving.

Air travel is not responsible for the coronavirus itself, but has enabled it to spread so fast all around the world. It has also been the fastest growing contributor to the greenhouse gases that are driving climate change, and that contribution takes place at high altitude where those gases have the greatest effect. The world's airlines produce more CO2 than all but 10 of the world's countries, but when our government claims to be cutting emissions, those from the air industry are not even counted.

Unlike other forms of transport, airlines pay no tax on the fuel they use, which has allowed the boom in low-cost air travel. The same airlines that are now asking for handouts have made huge profits in recent years, and passed them out to shareholders and highly paid directors. For example, in the year to September 201 9, Eastjet made £430 million profit, but they and Ryanair each got £600 million in government bailout loans, and BA and Wizz got £300 million each.

The substantial reduction in air transport due to Coronavirus has been very beneficial to the earth's atmosphere, and the widespread adoption of various forms of online conferencing during the present pandemic has clearly demonstrated that much previous air travel was unnecessary anyway. A Department of Transport survey has shown that in a typical year 1 5% of the UK population are responsible for over 70% of all flights, while over 50% of people do not fly at all.

We should be investing in a climate-friendly future. not seeking to preserve a form of “business as usual” which was always inherently unsustainable.

 

 

Further articles in the Summer 2020 edition of Green News

The New Normal :: A future vision to bring us hope

Rethinking transport :: Is the answer electric? :: Cities for people, not cars

Rethinking economics :: Time for a Universal Basic Income :: Big bailouts fuel climate destruction

The Green New Deal :: Investing in a greener future

Food Security :: The COVID crisis has exposed the fragility of our food supply system

 

 

 

Green News Summer 2020

Articles in this edition

The New Normal :: A future vision to bring us hope

Rethinking transport :: Is the answer electric? :: Cities for people, not cars

Rethinking economics :: Time for a Universal Basic Income :: Big bailouts fuel climate destruction

The Green New Deal :: Investing in a greener future

Food Security :: The COVID crisis has exposed the fragility of our food supply system