Government support for UK households during Coronavirus

Government support for UK households during Coronavirus

Published on March 18, 2020

There is much to worry about! The state mandated semi-incarceration of much of the population, the closing of borders and the (often) self serving media hysteria is everywhere and all around.

If the UK Government’s risk/reward decision has been to favour the protection of the vulnerable from disease (and worse) over the probably ensuing social and economic chaos, they are, like it or not, now faced with dealing with the latter.

There are many on the verge of extreme short term and possibly long term hardship – in practical terms meaning they have no jobs to generate money and no money to pay for food and shelter and the other necessities of life.

While the rapid change of tack from “wash your hands” to “isolate” may well have been driven by the seeming success of that strategy over an 8 week period in China, the government must think laterally about the appropriate palliative to ameliorate the consequences and quickly.

As a student of Political Economy in the 1970’s, the concept of the distribution of “Helicopter Money” as espoused by Milton Friedman in his 1969 paper “The Optimum Quantity of Money and Other Essays” was seen at a time of overwhelming belief in Keynesian-ism, as laughable!

The thesis was simply that giving money to the general public (akin to dropping it from helicopters) would result in that money being spent and the economy would be thus boosted without inflation, provided there was an output gap and less than full employment.

Germs (to use a word in vogue) of this concept were floated around the era of quantitative easing although not pursued.

But now is the time! So, why not endow every member of the population on the electoral roll with a one off stipend? The quantum of this could be established by assuming, as seems to be the conventional wisdom, that the current drama is of a duration of 3 months and that the average rent in the UK is just shy of £1000 per month. So £3000 delivered as a voucher through the post using the electoral roll systems, firstly to the most disadvantaged post codes and spread geographically to avoid an immediate rush on banks, where vouchers could be redeemed on the presentation of I.D, could be seriously efficacious.

This might cost £150-200 billion!

Whether in the current circumstances the money would be spent or hoarded wouldn’t really matter as the objective is the elimination of economic fear for the most vulnerable, which such a financial lifeline would accomplish. The importance of certainty and the troubling nature of uncertainty in life is much underestimated.

The fear that has been whipped up by the irresponsibility of the press, the often wild and “off the top of the head” speculation by politicians (when saying “I don’t know” would be preferable) and the constant desire of the broadcast media to fill surplus bandwidth with bad news, is not only unhelpful but risks the development of different health issues and as severe  as mass panic, anxiety and worse emerge amongst those most at risk of economic and social oblivion.

The alternative may well be the world of la Dario Fo – “Can’t Pay Won’t Pay” – and the ensuing anarchy and the civil disobedience which would threaten to come next…