Corona Daily 472: A Private Pandemic

If he beats you, he loves you. (Бьет – значит любит): A Russian proverb

With more than half of the world’s population locked down, the crime rate has reduced drastically. But one particular crime, domestic violence, has shot up dramatically – in every country of the world.

Take the case of Japan. After the lockdown started, Kazuo Makino, 59, a Tokyo resident, killed his wife at home. An unemployed Japanese from Saitama killed his 85-year old mother, because he could no longer take care of her. An 18-year old woman from Fukushima killed her 9-month old son. A 22-year old Aichi woman killed her son born just nine days ago. Chieko Yoshida, 45, from Kuji killed her husband. The list is long.

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Domestic violence is one of the most under-reported crimes. Mainly it takes the form of the man in the family beating his wife or children. Historically, this was accepted as a man’s birthright. In ancient Rome, a father could legally kill his child. In many cultures, fathers could sell their children as slaves or sacrifice them in rituals.

A 2014 report says one in every three women in the world has been beaten, coerced into sex or abused in some fashion- usually by someone she knows. Rape in marriage was raised as an issue fairly recently. Demanding sex, even wife-assaults, has been the prerogative of a man. One Bulgarian husband was tried for severely beating his wife. The judge asked him if he understood what he had done, and would he please apologise, the man said, ‘but she is my wife’.

Children are spanked even today. Several studies have shown that children who are spanked begin to accept domestic violence as an acceptable custom. Many of them in their adult life beat their wives and children.

Tajikistan has an accepted family custom, where the mother-in-law rags and tortures the newly arrived daughter-in-law. The same way she was herself tormented after her wedding. Very similar to ragging traditions in boys’ hostels.

Russia is a 100% literate nation. An average Russian man drinks a bottle of vodka each week. One in four Russian families experience domestic violence. As recently as 2017, the Russian parliament almost unanimously passed a law decriminalizing domestic violence. A Russian man can now legally beat his wife or children, as long as they don’t land up in hospital with multiple fractures. Also, it should not be repetitive. The pass to truly thrash his family can be used once every year. The Russian govt said family conflicts should not be confused with domestic violence.

The Russian Orthodox Church, an enthusiastic supporter of child spanking, said, ‘The reasonable and loving use of physical punishment is an essential part of the rights given to parents by God Himself.’

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If this is the state of affairs in a literate country, you can imagine what happens in illiterate nations. More on this subject tomorrow.

Ravi

Corona Daily 473: Hotels with Heart

Out of long habit, John was about to say ‘cigarette please’ before he saw all of them were in uniform. The lady handed over a mask and the policemen asked him to wear it. Then some liquid was poured on his palms. ‘Rub it and come with us, mate’, said the police.

This was a particularly bad month. Australian beggars were going out of business. John was struggling to get his daily needs. And now they had come to take him to jail. But neither homelessness nor begging was a crime in Perth. And John was given a mask, not handcuffs.

The police van stopped outside a tall building named ‘Pan Pacific Perth’. The team entered the lobby of the luxury hotel with John. After noting down his full name and other details, the receptionist handed him a plastic key. ‘Sir, this boy will show you to your room.’ The policemen said ‘good luck’ and ‘behave yourself’ to him.

‘What’s this whole thing about?’ John growled. Nobody had ever called him sir.

‘Sir, this is a govt initiative. Called ‘hotels with heart’. The homeless in Perth are given rooms in our five-star hotel.’ The bellboy in a mask quickly showed the room and disappeared.

John’s room had a scenic view of the Swan River. Without looking at it, John grabbed the green apple from the centre table. Finishing it in seconds, he put the remaining apples in his dirty rucksack. When he climbed into bed, he sank in. He struggled to get out. The bed was horrible; he would sleep on the floor.

From the rucksack, he took out his collection of cigarettes. Each cigarette he smoked tasted different. He sat on the floor, and began smoking. Suddenly a high pitched siren rang. This was followed by two people storming into his room.

‘It’s the fire alarm. You can’t smoke, sir. Smoking not allowed.’ John quickly put the stub off. The siren and the room invasion had terrified him.

He went to the fridge. It was empty. The room was getting cold, and dark. John tried several switches, but nothing worked. (The bellboy hadn’t bothered to tell him that the plastic key needed to be inserted in a slot for any switches to work).

John checked all the drawers. Except a copy of the Holy bible, there was nothing. He looked at the small bottles in the bathroom. Didn’t seem like he could drink any of them. He put them in the rucksack anyway. Hurriedly, he left the room, walked the staircase down. Fortunately, the man at the reception was busy on the phone.

John ran out, and kept running, until he reached one of his favorite spots near Saint Mary’s Cathedral. The weather was wonderful, a clear blue sky above him. He was happy to have escaped that awful place. He rummaged through the bag, and found the syringe. This was his time to inject himself. Then he lay down on the pavement.

The drug began its effect. John was finally at home.

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P.s. This is not a piece of fiction. This article from The Economist (12 April 2020) will tell you about the homeless people accommodated in hotels in different countries.

Ravi

Corona Daily 474: A Wedding in Melbourne

My Catholic friend, T, and I grew up in the same building in Bombay. Later, he migrated to New Zealand. His family grew and dispersed internationally. One of his daughters, D, and her English boyfriend live in Melbourne. Their long planned wedding was set for the 27 March this year, in a Melbourne church.

A small Indian wedding may have more than one hundred guests, and this was an international wedding. The bride’s large family arrived from Auckland in the middle of March. As they were checking into the hotel, T got a call from the church. The Australian government had started closing all non-essential services.

‘But the wedding service is essential’, said T.

‘Yes, yes. We are trying to convince them we are doing God’s work. But I want you to know we can allow a maximum of forty people.’

The family spent a worried night, making lists, and striking out names. On the wedding day, some close family members would need to stay back at the hotel. 

Good news arrived the following day. India had cancelled all outgoing flights. All Indian guests dropped, with T’s conscience clear. This arithmetic happiness lasted briefly. The church called and put the maximum attendees at twenty.

Fortunately, the same evening, flights from the UK were cancelled. With his family and the best man stuck in London, the English groom would be alone at his wedding.

The same evening, the hotel asked the wedding party to vacate.

‘We can’t do that. See how many rooms we have booked, including a bridal suite.’

‘That’s right. You can stay on, but we won’t be able to provide any service. You will need to clean the rooms, and cook for yourself. Our staff is not allowed to enter.’

Meanwhile, a phone call confirmed the bride’s trousseau and groom’s three-piece suit couldn’t be delivered. The shop was shut. You will get them in April or May, the caller said.

The church called next to say they were not sure the wedding would happen. But they were keeping an eye on the developments. You will need to be flexible, they told T.

On Friday 20 March, when Australia closed all borders, T called the church. We are ok to bring forward the wedding to tomorrow, he said.

We don’t work on the weekends, the clerk from the church said.

On Monday morning, 23 March, D was multi-tasking, cooking and vacuum cleaning. T called her. ‘We have to rush’, he said. ‘The church has just said we can have the wedding today at 11.00’. D removed her apron, and began looking for something decent to wear at her own wedding.

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At the church’s entrance, D’s sisters went in first. The clerk stopped D. We can’t allow any more people, he said.

‘I am the bride’, D said.

‘You don’t look like one’, the man thought, but let her in anyway.

The elderly pastor kept his social distance from everyone. He was technology-agnostic; otherwise he could have Zoomed in for the service. He made sure the family members stood in different corners of the church. He then welcomed everyone to the celebration. Vows and rings were exchanged.

I forgot to ask T if the couple removed their masks to kiss.

The wedding party rushed from the church to the hotel and then to the airport. They were told one last flight would leave for Auckland that evening. They made it.

‘Thank God, the wedding happened as planned’. Said T’s wife on the flight.

‘More or less.’ Said T.

Ravi

Corona Daily 475: A Precedent is Set

The theory, not the practice, of Basic Income started five hundred years ago with Juan Vives’ book On Subsidies to the Poor (1526). Bertrand Russell argued in its favour one hundred years ago. Milton Friedman proposed negative taxation, where below a certain income level, the government pays you. Tesla’s Elon Musk and FB founder Mark Zuckerburg have been enthusiastic about its implementation. Just before the pandemic, Andrew Yang, a US democrat, had made it the backbone of his campaign. And last week, the Pope called for a universal basic wage.

Why should something that has not happened for five hundred years happen now? Once this nightmare is over, wouldn’t it be business as usual? Isn’t public memory short?

Two reasons why the basic income reform may actually happen.  

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Public memory is short. But pandemics can be long. Their devastating impact can drive the world to change the ways in which it operates. A pandemic underlines the fact that the health of a society depends on the health of the most vulnerable.

After Black Death, the 14^th century plague pandemic, public health was institutionalized and made a state responsibility. All wars were temporarily abandoned. (Currently, no news on Syria, Brexit, Kashmir, Ukraine etc). Viruses have checked imperialist projects. Napoleon’s transatlantic ambitions were halted by a yellow fever epidemic in today’s Haiti. His eastern ambitions were thwarted by dysentery and typhus.

Covid-19 pandemic, if it continues for two years, will be equivalent to a World War in terms of the resultant economic devastation. The Second World War, though a man-made event, gave birth to several reforms. Decolonisation was one of its biggest gifts. Global institutions such as the United Nations and International Court of Justice; and UK’s NHS - free health care for all, were all products of the Second World War.

A prolonged pandemic is likely to halt wars for a few years. But like the WWII, it may trigger reforms that could not happen in normal times.

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The second reason is the actions that have started. The USA has legislated a cash transfer of 1200 $ to people below a certain earning level. Another proposal to give 2000 $ for six months is under consideration. The UK govt has promised to pay 80% of salaries under certain conditions. Spain will start a basic income scheme for its poorest. The longer these rescue acts continue, the more difficult it becomes to withdraw them. Any HR manager will tell you that reducing somebody’s package is simply not done. These countries will need to have a rationale for stopping such direct transfers. They will also need to explain how they are funding the stimulus packages.

In a few months, poorer nations will be obliged to borrow, and institute similar basic income schemes for their citizens. Lockdowns will lose all meaning if starvation and bankruptcies kill the people saved from the virus.

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A precedent has been set. It can be binding in the future.

Ravi

Corona Daily 476: UBI: My Four Point Plan

There are two schools of the Universal Basic Income advocates. One wants to replace the existing social security with UBI. The other wants to retain all the current welfare measures and have UBI added on.

If social security were scrapped, financing UBI is easy. In the USA, by dismantling the current social security, 92% money needed for UBI (13000 $ a year) will be released. But this could make matters worse for many beneficiaries (maternal/disability). Switzerland rejected UBI because of this threat.

UBI as an incremental income stands a chance. It is more expensive, but beneficial for low-income countries with no social security. Following is my four-point plan.

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Start with 200 $ per annum: to every person in the world, to get the UBI ball rolling, to establish the principle. Americans looking for 13000 $ will be shocked at the 200 $ figure. But 200 $ per annum will overnight take entire Sub-Saharan Africa (more than 1 billion), and poorest Asian countries like Bangladesh, Nepal, Myanmar (more than 500 million) out of poverty. Remember it is 200 $ per head, so a family of five gets 1000 $, which is enough for survival in low-income countries.

The cost of paying 200 $ annually to everyone in the world is 7.8 billion x 200 $= 1.56 trillion $.

(To get a perspective, in 2009, G20 paid 9.6 trillion $ to rescue the financial sector, six times the above amount.)

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Moratorium on wars for 10 years: USA not engaging in a war would guarantee such a moratorium. Current military expenditure is at least 1.822 trillion $ per annum. Save and allocate 30% of this cost to UBI. = 546 billion $.

This is not a pipe dream. Costa Rica and Thailand reallocated military expenditure to social security. Costa Rica, in fact, abolished its army in 1948. Its constitution makes re-forming it illegal.   

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Start denuclearising the world: The pandemic has once again highlighted the utter uselessness of nuclear budgets. 190 states of the world have pledged in writing not to have nuclear weapons. Only 9 states have that white elephant in the name of deterrence. This undemocratic savagery must end. An estimated 70 billion $ are spent on nukes each year. Allocate 20% of that budget to UBI (and the rest to dismantling). = 14 billion $.

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Inheritance tax: Currently, the world’s 47 million $-millionaires hold a combined wealth of 160 trillion $. (44% of global wealth held by 0.6%). Their average age is above sixty, so by 2060 most of them will be dead. Charging 25% inheritance tax (net of exemptions) will produce 40 trillion dollars over the next forty years. = 1 trillion $ per annum.

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Cutting military expenditure (546 bn $), denuclearisation (14 bn $) and inheritance tax (1 trillion $) are able to finance paying 200 $ per annum to every citizen of the world, directly benefiting the poorest of the poor.  The four-point plan also triggers the building of infrastructure for cash transfers.

As to why any of this should or may happen just because of a small virus, I will answer tomorrow.

Ravi

Corona Daily 477: Don’t throw the UBI out with the bathwater

My definition of the ‘Universal’ in UBI is that every person in the world is given a survival salary. Like climate change, UBI is more meaningful if tackled globally. Of course, countries are so diverse, implementation will take a few years, but that is the destination. A body like the G-7 or G-20 can be made responsible. Contributions and payments are a matter of bookkeeping.

Why should America give free money to a woman in Africa, you may ask.

America should, because Nike shoes are made by the poor in Bangladesh or Vietnam, sometimes in sweat shops. (They just do it.) On the other hand, Nike Inc. pays dividends mainly to Americans.

More than 2 billion non-Americans keep creating content freely to keep Mark Zuckerberg in the top ten list.

Jeff Bezos, the world’s richest man, gets richer every time a Chinese or an Indian places online orders with Amazon. In the USA, Amazon has paid zero federal income tax in the last two years.

A Sovereign state or nation state are political concepts. Trade and money-making are global.  Stock markets of all countries move together like synchronised swimmers.

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In my view, UBI has been discussed or tried in the wrong countries. American economists discuss UBI for Americans, and the Swiss reject UBI in a referendum. Both were blunders. The sums became so astronomical; UBI was thrown out with the bathwater.

It’s like an 18-year old who wants a vehicle to travel to his university four miles away. His father looks at the price of the Mercedes, and says buying a vehicle is a bad idea. But a second-hand car could have been bought. Or a bicycle. A bicycle is all that the son needs, why even look at the Mercedes pricelist?

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My suggestion is to separate the principle and the amount. Establish the principle first. Don’t start with 1000 dollars; start with 100 dollars a month. That amount is in fact adequate for survival in many countries, including India. UBI is critical for poor countries, with little or no social security. Tomorrow I will give specific figures for a worldwide UBI system with suggestions on how to generate the funds required.

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How much should the basic income be in your country? Not as difficult a question as it sounds. Just take your current expense in the lockdown month. That figure is very close to what you need for survival.

Ravi                                                                  

Corona Daily 478: Opposition to UBI

UBI faces strong opposition – usually by those who don’t require any basic income.

The First worry is the abuse of the grant. It will encourage bad behaviour and tempt the recipients to spend it on alcohol, tobacco or drugs.

A detailed worldwide study found this concern to be unfounded. In most countries, this income was used for survival needs rather than temptation goods. Only in Peru, the research found a few instances of people buying roasted chicken or chocolates on the day they received money.

Secondly, it is argued basic income will make people lazy, and they would rather be idlers than work.

Again, no research supports this. In Canada, a study found only two groups who worked less as a result of getting a basic monthly income. New mothers were able to pay more attention to their babies. And working teenagers spent more time on education.  

If this is survival income, most people supplement it with a job. When a person must work for survival, his bargaining power with the employer is zero. He is forced to do jobs he doesn’t like, at wages he is unsatisfied with. This is a classic way of enslaving a poor person. Basic income improves his bargaining position, allowing him to look for a job of his choice. Many of us don’t realise this point, because we didn’t look for jobs when starving.

Thirdly, a worry population would grow further because citizens are getting guaranteed money. Well, without the existence of any UBI, we have added nearly 7 billion in the last 200 years. This concern is as meaningless as the concern about addiction. Most of those consuming temptation goods don’t get any basic income from the state.

Fourthly, critics point to Switzerland rejecting UBI in a referendum, and the end of the UBI experiment in Finland.

Switzerland is a rich country with strong social security. UBI was rejected mainly because the Swiss felt UBI replacing their current benefits or tax exemptions may make matters worse. In Finland, the pilot experiment was planned for just two years. Full analysis is expected or was expected in 2020, but the initial findings were positive.

Finally, the cost. In 2016, 60% of American economists disagreed UBI would be a better replacement for the current welfare measures (like in Switzerland).

Economists often express views as economists, not moralists.  In 2012, a set of eminent Chicago economists strongly defended price gouging, hiking prices and profits in disaster times (such as unreasonable prices for masks or sanitizers in some places).

But the concern about UBI being expensive is valid. It is very expensive. But so are nuclear weapons. So are the wars on Iraq and Syria. So is the beautiful wall to keep the Mexicans away.

Tomorrow, I will talk about how expensive it is, and how to finance it.

Ravi

Corona Daily 479: Why UBI

Guaranteeing a specified monthly income to everyone is justified on several grounds. I will mention only five.

The nature of work has been changing since the industrial revolution. Wherever possible, a man will be replaced by a machine or an app. Coronavirus will give an exponential boost to that process. China has started by opening its highly automated factories before others that require human intervention. Others are rushing to ‘employ’ robots on a large scale. Since the pandemic has hit the developed world hard, robotisation and AI will be a key to reopen business. By the time the pandemic ends, a few million of the current unemployed will become unemployable.  The poorest of the world usually lack the education to readapt to new work that evolves. Their ever-increasing number can survive only with an unconditional basic income.

UBI protects women and girls in two ways. The poorest girls and women put in 12.5 billion hours every day of care work without being paid. This phenomenon has been allowed to continue for ever. Secondly, many women are subjected to domestic abuse. That currently is the largest crime in lockdown times, even in developed nations. Most women tolerate the abuse for want of income or financial security.

Paying unconditional income expands the middle class, and is good for the economy. The incomes of the rich grow at a much faster rate than those of the poor. (Saez and Piketty show that between 1979 and 2014, in the income pie the bottom half went down from 20% to 13%. Share of the top 1% went from 11% to 20 %.)  

UBI is administratively an efficient system. Most developed countries have several welfare measures, subsidies, student grants. The cost of administering each of them is significant. Income tax allows several deductions and exemptions. The minimum salary where tax slabs begin is nothing but a form of basic income for a working person. This multitude of benefits can be merged into UBI to create an efficient welfare system.

Finally, it saves the soul of the society. Arts and literature, classical music and dance, other performing arts which satisfy the soul, decline in a consumerist society. This was one of the few advantages of communism.

Basic income allows poets to write cheerful poems.

Ravi

Corona Daily 480: The Lottery of Birth

Inequality is extensively researched and reported, but rarely acted upon.

In 2002, Queen Elizabeth’s mother died at a 101 years, leaving her daughter an estate worth 50 million pounds. It included works of art, jewels, antiques and thoroughbred horses. The law would have required a British citizen to pay 20 million pounds as inheritance tax. But the Queen is above the law and is tax-exempt. Queen Elizabeth’s current annual package is 50 million pounds.

The economics textbooks we studied told us that capitalism rewards ability, enterprising spirit and hard work. I tried to work out which of these the Queen would fit under. She didn’t. She was merely born in the right palace.

It’s not only about the queen. Donald Trump and Mukesh Ambani, India’s richest man, have built on what their fathers started. For that matter, each of us is an outcome of the family and the country we were born in. Warren Buffet calls it the ovarian lottery. And in most cases, our station in life remains largely unchanged.

Inheritance perpetuates inequality. India abolished estate duty in 1985, Russia in 2006. It exists in the USA, but 11.58 million USD worth of assets are totally exempt. An American child can inherit 11.58 million dollars, even if they were earned dishonestly. The current minimum federal wage in that country is 7.25 USD per hour. A poor American on minimum wage will need to work for 760 years, without spending a cent, to reach 11.58 million USD. 

You will find that the concept of giving a basic monthly income is usually questioned by those who live in a house their grandfather built, and run a business started by their father.

We accepted we are not all equal, as communism had propagated. But we didn’t know we can be so unequal. That the world’s 26 richest people should own as much as the world’s poorest 50%.

In a circus, the animal trainer feeds the animal after every trick performed. That’s both an incentive and a reward. The animal is fed just enough to be motivated, but not more lest it should refuse to obey. In today’s distorted world, most people are like those circus animals, ruled over by a few throwing minimum wages at them.

Yesterday, two miles north of my home in Mumbai, 2000 migrant workers gathered to protest defying orders, putting themselves at risk of getting infected. Most of them, taxi drivers, street vendors and others, have no money left for food. They have voting rights and freedom of expression, which are good things to have. But they can’t be eaten.

Hunger and thirst are so basic; satisfying them should be considered a human right. If the world learns how to satisfy this right, that could make a good change post crisis.

Ravi

Corona Daily 481: Mikhail Coronavirus

Universal basic income is a complex, controversial reform. It deserves a few articles by way of background and explanation.  

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The Soviet Union sent the first man, and before him the first dog, into space. While the USSR was conquering space, Soviet citizens started their day on earth with dogfights, queuing up for bread and meat. Soviets focused on military power at the cost of consumers. Patriotic wars, May parades or Sputnik missions were found to be poor substitutes for food, human dignity and life without queues. Communism as practised by the Soviet Union was not sustainable.

American capitalism, on the other hand, focused on the consumer. So much that America has more cars than people who can drive them and more guns than people who can fire them. America focused on building the strongest nuclear shields, state-of-the-art atom bombs, and now faces fatal shortages of masks and ventilators. The first world has focused on consumerism and defence at the cost of climate and health.

In 1991, Communism duly collapsed. The world celebrated.

In 2020, Capitalism as currently practised, collapsed. Of course there is no formal announcement. There are no CNN-moments like the fall of the Berlin wall or Yeltsin standing on a tank. But history will note 2020 as the year when unsustainable practises of western economies crumbled.

A system that gradually decays needs a trigger for a collapse. Mikhail Gorbachev was that trigger for communism. He highlighted the flaws in the system. He launched an attack on the system. Gorbachev wanted to reform it, but the system had so decayed it collapsed. Though Russia subsequently went downhill due to politics, the Communist Economics never returned.

What Gorbachev did to Communism is now done by a small, invisible virus. It is travelling the world highlighting the flaws of the anti-climate economic system. Suddenly the mighty nuclear weapons are silent, wondering how to defend against a virus. The world has woken up to the fact that on-line white collars can’t run the world without off-line blue collars. 

It is premature to celebrate the demise of the current system. Neither is this the right time. However, there is no doubt that the demands made by the Coronavirus for a ‘Perestroika’ are not an ounce weaker than Gorbachev’s.

Ravi