[Takryucheongron] Effective for Rapid Damage Recovery and Economic Revival

The so-called 'disaster basic income' continues to spark controversy both domestically and internationally. In the United States, the emphasis on the necessity of cash income support regardless of political orientation?progressive or conservative?is likely due to the expected benefits of rapid damage recovery and economic revitalization in catastrophic crisis situations.

Cash income support is an emergency measure designed to help numerous citizens, including low-income groups, small business owners, irregular workers, and those employed in the food service, tourism, and transportation sectors, who are struggling to maintain their livelihoods amid the sudden crisis caused by the novel coronavirus disease (COVID-19). Moreover, it offers procedural simplicity by verifying only minimal conditions without complicated processes, directness by providing support directly to individuals, and guarantees recipients' freedom of market choice. Despite these necessities, there are several issues that need to be reviewed.

First is the issue of the term 'disaster basic income.' Strictly speaking, the disaster basic income currently under discussion is far from the original concept of basic income. The most representative difference is that it does not fulfill the essential attribute of basic income, which is to be paid regularly and continuously to all citizens. Since it is a one-time payment to some citizens in an emergency disaster situation, terms like emergency disaster allowance or special disaster allowance would be more acceptable to gain public consensus.

Some argue for selective support only to those directly affected by COVID-19 or for differentiated support across various social strata, but this entails high administrative costs for selection and risks missing the timing of support. On the other hand, providing a fixed amount to all 50 million citizens raises issues of fiscal sustainability and political legitimacy. Therefore, a wealth exclusion (negative) approach that excludes only some high-income groups rather than selectively targeting victims or the poor would be a persuasive option. The most straightforward method would be to exclude the top 20% income earners and those under 20 years old; under this design, the required budget would be about 10 trillion won.

The delivery system between the central government and local governments is also a matter to consider. Local governments should provide regionally tailored support based on their characteristics, with the central government providing financial assistance afterward. Meanwhile, the central government should provide quasi-universal emergency disaster income to the general public excluding some high-income groups. This division of roles between the central and local governments seems appropriate. If possible, part of the first supplementary budget could be allocated to local government tailored support, and the second supplementary budget could be fully devoted to emergency disaster income.

The payment method can utilize both local currency and cash simultaneously. Local governments prepared with local currency should use local currency or local gift certificates to revitalize the local economy, while those not yet prepared have no choice but to provide direct cash support. A challenging issue is the timing of payment; local currency can control the timing of consumption through usage period settings, but cash payments might inadvertently counteract the social distancing measures practiced by the entire population. For now, preparations should be completed to enable immediate implementation, and the timing of payment should be awaited. However, simply preparing support measures will provide psychological comfort and stability to citizens suffering from economic anxiety and fear.

Emergency disaster income is both a welfare policy and an economic policy. It is a welfare policy that helps minimize damage and maintain basic living standards during a crisis, and an economic policy that promotes consumption and manages liquidity by directly providing cash. After having been forced to impose personal 'isolation' and social 'distancing,' the state must now seek ways to guarantee personal 'income' and pursue social 'integration.'

Eun Minsu, Adjunct Professor, Department of Public Policy, Korea University

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