The economist and former member of Ciudadanos Toni Roldán, who was Economy spokesperson for that parliamentary group in Congress, defends a basic income to combat the social ravages of the economic crisis triggered by the coronavirus. Roldán, who denied this measure, believes that this extraordinary moment justifies it, albeit temporarily. “Economic policies have to be adapted to different times. Now we have to change our way of thinking about everything, and those who are not able to do it are doing a disservice to what is happening because it is something extraordinary.”
His proposal: a basic income of one thousand euros a month for three months for all people of working age and a tax next year that would allow them to recover part of the expense. Whoever had not registered a fall in income would have to ‘pay it back’ completely in that tax and whoever had suffered losses, partially or not at all, would pay it back depending on their situation. Roldán uses the Harvard economist Greg Mankiw’s model to calculate the cost. Initially it would be 12% of GDP, but it ensures that it would eventually be 1% once the tax is collected. A kind of “basic pandemic income”.
You have never been a supporter of a basic income, why now?
Universal basic income usually has three types of problems: one, which is very expensive, even if you narrow it down a bit; the second is incentives, in case it discourages employment; and the third is that you want to focus aid on those who need it most and this income can dilute efforts, the state’s capacity is limited. In a normal scenario, I am more in favor of measures such as salary supplements, but what has changed? There is a radical change, we are in a scenario in which the incomes of a significant part of the population have become zero due to the state of alarm.
The previous economic model is to ask first and give the money later, limit first and then give the help, find the right design and spend later. Now you have to invest that, the help is needed yesterday, there are many people living on the edge, who cannot pay the bills. You have to spend first and ask later, that’s my proposal. There is no time to do the whole complex and bureaucratic procedure to make services focused on groups. They take time to implement, at least longer than this rent, some groups are left out, and then there is an information problem, many people do not know or do not know how to access it. We also have the problem of informality, many people who work outside the system.
What is your proposal then?
This is solved with an income in which you give a payment, a thousand euros a month for three months, without asking anything, simply to the 38 million people of working age in Spain. At the same time, you put a tax the following year – because it obviously has a very high cost – so that those who did not need it, those who have not seen their income fall during that period, pay it in full, and whoever has seen their income fall do not pay or only partially pay. With this formula, the cost could be only 1% of GDP.
There is usually confusion between basic income, universal basic income, minimum incomes … In fact, there are groups and experts who have been proposing income guarantee systems for years or a minimum income that simplifies the existing system and that would not reach everyone, but yes to people below certain income. Taking into account that the Treasury has data on contributions, would it not be desirable to further adjust the design of that benefit and to reach those who need it most or those who are below certain annual income?
Yes, it can certainly be done. My proposal tried to highlight some temporary income and bet on it, and then contribute this calculation made by Mankiw that allows this adjustment ex post instead of ex ante. Right now we don’t have much time to do maybe exact calculations, let’s do it later. But that does not exclude so that effectively from the beginning you can decide to limit a little more, and say that above a certain level of income there is no charge or that the people themselves choose whether to collect it or not knowing that later they will have to pay the tax if they exceed that income. It can be designed in more ways, my proposal has the advantage of simplicity.
His proposal is one thousand euros a month for a quarter for people of working age. Some basic income proposals propose including girls and boys in these systems. What do you think ?, Would it be a way to make up for the lack of dining rooms and other supports that families with children have now lost?
Completely, in fact, in the scenarios that I considered in the excel table when I made the proposal, there was one including an extra allowance of about 500 euros for people with dependent children. Then yes it would be necessary to limit above who collects it because it would be very expensive. But absolutely, in a country with child poverty that we have, in which whoever has children has it much more difficult, it would make sense to design an aid in which there would be an addition for those cases.
And then there is another reflection, here every day the Government announces more measures, many in the right direction, but as the days go by and there are more new benefits, this debate becomes more difficult because subsidies for different groups are added and it is adding hole to the deficit. It would be necessary to think how all these benefits fit, if they are compatible with this or not …
His estimate based on Mankiw’s calculations is that initially the cost of this income would be 12% of GDP, although after collecting the tax it would be 1% of GDP. The current package of measures accounts for 20% of GDP. Although in the long run the cost would be recovered, the State would now have to take out the resources to face the payment. What do we remove from that current package? What would be the total cost considering that part of that package would be maintained?
When I calculated this, I kept in mind that by then the subsidies were not going to reach many people, such as temporary workers or entire groups such as domestic workers, or the self-employed. Those three groups have now touched each other, although even so there are people who are left out, there are many people for example who live from informality. Such an income will allow these people to be supported better and more simply. But every time new coverage and measures are announced ad hoc for these groups everything becomes more difficult to implement.
And beyond this formula, precisely because of precariousness and informality, would this be the time to rethink the social protection system, which is closely linked to employment and social contributions?
In all countries we have to think about the protection systems we have and we will probably have to go to more worker-centered and not workplace-focused systems. This probably speeds up that process. And then there is an intergenerational question: in Spain we have a system in which young people are enormously unprotected, and the elderly, pensioners, are much better protected. There is a reflection to do on labor regulation or on how aid is determined in relation to employment.
On the speed of this aid and taking into account that the offices of the Public Employment Service and Social Security are saturated, is it not naive to think that the income would be really faster than the subsidies that are already being processed? How would it be? your management?
It would be necessary to think, I do not know what the perfect formula is, it can be done through direct transfer, through personal income tax, although that would come later and there are many people who do not declare, you can activate a deduction, or an automatic provision of emergency…