By Tyler Prochazka
As the coronavirus spreads rapidly around the world, the global economy could face its most serious decline since the 2008 Great Recession.
While Taiwan has avoided a serious community spread of COVID-19, it is not immune to the global economic fallout from the pandemic.
To assure that its citizens are able to keep their heads afloat financially, the Taiwanese government should prioritize an emergency basic income for every household over bailouts to corporations.
The United States has passed a one-time basic income payment of US$1,200 to most Americans. Countries such as Australia with similar numbers of coronavirus cases to Taiwan have also issued cash payments. Japan and South Korea are also considering a direct cash stimulus package.
Taiwan’s government should join these international efforts by issuing NT$15,000 (US$500) a month to each Taiwanese for the rest of the year until the global pandemic is under control and the global economy has fully recovered. Taiwanese children can be eligible for a lower amount.
Why now?
Severe effects on Taiwan’s economy are already expected, as the world suffers from falling demand, the tourism sector is slowed, and global supply chains are disrupted.
Creating a financial floor for its citizens in the form of an emergency basic income will proactively address an oncoming recession before its worst effects arrive.
By restoring consumer confidence and restoring citizens’ economic security to pay bills, Taiwan can ensure no one is left behind.
The U.S. waited until the crisis took hold with 3 million unemployed. Now its emergency basic income payments will not reach American citizens for several weeks even though this assistance is needed immediately.
Why cash?
Taiwan has planned to send out vouchers to be used at some struggling businesses, such as night market vendors. However, such programs do not provide serious financial assistance for families. They are intended purely to stimulate select companies.
Cash is the most flexible type of assistance. It ensures that Taiwanese can spend it exactly where they need help for their families when they are struggling.
Providing a financial floor with a basic income will substantially reduce financial anxieties for Taiwanese families in this time of great uncertainty.
The government should keep it simple and send assistance to all Taiwanese who reside in Taiwan. Wealthier families can pay back their emergency assistance through taxes next year.
Universality helps the poor, not the rich. Giving assistance to nearly everyone ensures no one is left behind under strict rules. Simplicity also prevents high administration costs as well as delays due to bureaucracy.
Why people, not businesses?
Providing every citizen with economic security will increase consumer demand, circulating money back to the businesses that are supplying our people what they want most. Bailing out corporations does not guarantee that jobs will be saved or that the money will efficiently reach the average Taiwanese citizen, who does not own a business or may lose their job from falling demand.
Taiwanese businesses have the largest cash reserves in Asia. There is no reason to believe that wealthy Taiwanese businesses will not be able to recover, particularly if these businesses own expensive assets. This underlines why people should be prioritized in Taiwan’s economic recovery.
Many small businesses and the self-employed provide essential services, yet they are less likely to receive bailouts than well-connected large companies. Government bailouts will also require enormous administrative costs, especially if assistance is conditioned on “saving jobs”.
Despite being bailed out by the U.S. government’s stimulus response, United Airlines has warned that it will still lay off hundreds of thousands of workers once the stimulus measures end.
An emergency basic income will stimulate demand that trickles up to all businesses, not just the politically connected, ensuring that no citizen is left out of Taiwan’s stimulus measures.
Taiwan’s public health response to COVID-19 is the envy of the world. Now Taiwan has an opportunity to become a global leader through its economic response as well.
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TNL Editor: Daphne K. Lee (@thenewslensintl)
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