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Illustration: Aïda Amer/Axios

The coronavirus pandemic has highlighted the value of simply giving cash to those in need.

Why it matters: The worst economic effects of the pandemic have been partially ameliorated by no-strings-attached cash transfers. With the economy unlikely to recover for months or longer and the job-destroying threat of automation growing, the pandemic could be laying the groundwork for a universal basic income.

What's happening: The charity GiveDirectly announced recently it had successfully delivered $1,000 cash payments to 100,000 American families since the start of the pandemic, as part of the largest direct giving response to COVID-19.

  • The organization targets the states with the highest rates of unemployment, then allows a random set of users to fill out basic forms to receive $1,000 via direct deposit, check or an app like PayPal.

The big picture: UBI has become a favorite idea of many in Silicon Valley who believe it might help offset the negative effects of automation, and it formed the basis of Andrew Yang's presidential campaign.

  • One argument against UBI is that regular cash payments would discourage people from working. Many Republicans insist that is exactly what the extra $600 a week in unemployment benefits put in place at the start of the pandemic has done.
  • But while the additional money may impede recruitment for workers in low-wage jobs — who might be able to make more from the subsidies than they would working — on the whole research has found no relationship between the size of the benefits and the likelihood of someone taking a job.
  • As automation accelerates during the pandemic, many of the jobs lost might never return, strengthening the case for ongoing cash payments and potentially a UBI. That's one reason why last month 11 city leaders around the U.S. came together to form Mayors for a Guaranteed Income, with the goal of advocating for direct, recurring cash payments.

Background: GiveDirectly was founded a decade ago by a group of economists and, until the pandemic, had mostly focused on transferring money to the poorest of the poor in sub-Saharan Africa.

  • Direct cash payments "are typically one of the cheapest ways to provide help," says Managing Director Joe Huston. "It lets people who are in need set their budget because they have the best sense of their priorities."

Context: Direct cash payments remain a tiny proportion of overall philanthropic giving, which in turn is only large enough to meet a tiny proportion of overall need, especially in the midst of a pandemic. More effective support requires the public purse — and that's exactly what many governments are doing.

  • The extra unemployment benefits in the U.S. currently add up to some $15 billion in support each week.
  • In June Spain launched a program to offer monthly payments of more than $1,000 to the country's poorest families, whether they're employed or not, in the largest experiment yet with UBI.

What to watch: The extra $600 unemployment benefit for Americans is set to expire next week, and Congress is still debating on whether and how to extend the subsidy at a moment when tens of millions of people are still out of work.

  • GiveDirectly is continuing to expand its $1,000 cash payment program in the U.S., with the goal of reaching another 96,000 families.

The bottom line: UBI has been on the fringes of policy discussions for decades, but the unprecedented shock of the pandemic could finally push it into the mainstream.

Editor's note: This story has been update to reflect that GiveDirectly hopes to expand its cash payment program to reach another 96,000 families, not 200,000.

Go deeper

Bryan Walsh, author of Future
Oct 21, 2020 - Economy & Business

Coronavirus pandemic postpones jobs of the future

Data: Cognizant; Chart: Andrew Witherspoon/Axios

Many of the digital jobs of the future have suffered during the later stages of the pandemic, while in-person health care jobs are on the rise.

Why it matters: Automation and digitization will profoundly change the U.S. labor market, but that future has been delayed as COVID-19 forces companies to shift into survival mode.

GOP Sen. Chuck Grassley announces run for re-election

Photo: Greg Nash/The Hill/Bloomberg via Getty Images

Sen. Chuck Grassley (R-Iowa), the longest-serving Senate Republican, announced on Friday that he's running for re-election in 2022.

Why it matters: The GOP is looking to regain control of both chambers of Congress in the upcoming midterm elections. Several Republicans had urged the 88-year-old senator to run to avoid another retirement after five incumbent senators said they wouldn't seek re-election.

China deems all cryptocurrency transactions illegal

A person walking past China's central bank in Beijing in August 2007. Photo: Teh Eng Koon/AFP via Getty Images

China's central bank declared on Friday that all cryptocurrencies are illegal, banning crypto-related transactions and cryptocurrency mining, according to Reuters.

Why it matters: China's government is now following through with its goal of cracking down on unofficial virtual currencies, which it has said are a financial, social and national security risk and a contributor to global warming.