The Jeonju municipal government holds a session in Jeonju, North Jeolla Province, on March 13, 2020, to discuss the city’s anti-disaster basic income proposal in this photo provided by the council.
SEOUL, March 16 (Korea Bizwire) — With the coronavirus pandemic threatens economies around the world, debate is rising over the viability of so-called ‘emergency basic income’.
South Korea, as well as other countries around the world, are devising ways to distribute cash to encourage consumption.
Hong Kong has already announced plans to offer cash to all permanent residents, while Macau has vowed to give out vouchers that can be used as cash.
Taiwan is also considering distributing vouchers to all citizens, but plans to impose limits on where they can be spent. Australia has decided to give out cash to a limited number of citizens.
All countries, with their respective means of distributing cash, are following a similar purpose of encouraging consumption, while minimizing the economic impact caused by the coronavirus.
Currently, Hong Kong is taking the lead in the policy of subsidizing its citizens.
The Hong Kong government vowed to give out HK$10,000 (US$1,287) to all permanent residents over 18 years of age.
Some 7 million people qualify for the emergency benefit that could end up costing the government as much as HK$71 billion.
Some countries have chosen to distribute means of currency other than cash.
Authorities in Macau, for one, plan to distribute electronic vouchers worth MOP$3,000 (US$375) to all residents. The vouchers will be valid for three months, usable only at restaurants, retail stores, and shopping centers.
The concept of the so-called ‘emergency basic income’ isn’t the first of its kind. The idea first appeared during the 2008 global financial crisis, and some countries actually implemented it.
Japan, for one, gave out 12,000 yen (US$112) to each citizen as an emergency subsidy in 2009. To citizens under 18 years old or over 65 years old, Japan distributed an additional 8,000 yen.
The biggest issue at hand when it comes to emergency basic income is where the money comes from.
Hong Kong recorded a deficit of HK$139.1 billion in its 2020/2021 budget plan, which includes the emergency basic income. It is a deep plunge, considering that Hong Kong experienced a deficit of HK$37.8 billion in the previous year.
Effectiveness also comes into question. Japan’s emergency subsidy in 2009, for instance, failed improve the decrease in consumer prices of 1.6 percent.
Ashley Song (ashley@koreabizwire.com)
