Biden’s first mandate: a pandemic GI bill - RSA

Biden’s first mandate: a pandemic GI bill


  • Picture of Peter Marber FRSA
    Peter Marber FRSA
  • Picture of Julian Savulescu
    Julian Savulescu
  • Economics and Finance

While Covid-19 vaccines are fast becoming available, there are millions of fatalities and health compromised victims, with billions of people displaced from jobs and school.

Meanwhile, self-isolation policies have led to nearly a 5% contraction in global economic activity. Julian Savulescu and Peter Marber FRSA ask whether there are pandemic policies that can be both fair and equitable, while also jumpstarting the world economy.

History has shown that the US often learns the hard way. After World War I, poor planning made re-entering civilian life a challenge for nearly five million Americans who served. With little financial or employment support from government, many veterans floundered for years; this weakened the US economy and most likely worsened the effects of the Great Depression in the 1930s.

Important moral and economic lessons were learned. Before World War II ended, the US government passed the Servicemen’s Readjustment Act of 1944, known popularly as the GI Bill. This legislation was the fair, comprehensive response to those who sacrificed for the country. Nearly nine million veterans were eligible to receive unemployment compensation, free university and trade education, along with subsidised loan and mortgage programs. The results: millions who served went to school, bought homes, and started businesses which launched a golden era of equitable socioeconomic prosperity. For the next three decades, America’s bottom 90% income group grew faster than the top 10%.

The lost jobs, bankruptcies, evictions and deteriorating health and education from prolonged Covid-19 lockdowns have affected exponentially more people than those hurt directly by the virus. President-elect, Joe Biden might learn from history, take a similar approach to that taken in the postwar period and launch a ‘Pandemic GI Bill’ to reintegrate millions of economic casualties and refugees who have sacrificed for the broader good via lockdowns.

Governments have inherent abilities to quarantine, but such power does not eliminate democratic protections of ‘reciprocity’ to restore the economic value had citizens’ property and liberties not been expropriated by lockdown measures. This ethos is embedded in America’s fifteenth Amendment, which states that private property shall not be taken for public use without “just compensation.”

Providing people with assurances about their livelihoods during quarantine is an important component of public health compliance, which should help end the crisis faster and reduce damage. A 2020 study highlighted a 94% compliance rate when compensation was offered versus less than 57% without. When effective vaccines are finally approved, compensation might also be used to accelerate its adoption – particularly in light of public skepticism.  

Yet not all sacrifices are equal under lockdowns. Those in lower paying sectors such as travel, retail, hospitality and day-labour – which total more than 25% of Americans – have either lost their jobs or have been furloughed for long periods. Essential workers, too, suffer from potentially hazardous conditions and their children are often left at home unattended. Single parent households are also at risk. In the US some 23% of children under the age of 18 live with one parent and no other adults. In short, under quarantine socioeconomic disparities worsen for those already struggling.

At the same time, some winners keep winning, even during pandemics. Many higher-paid knowledge and office-sector employees have worked from home with little or no interruption to their income. High-flying e-commerce companies have flourished during quarantines from increased revenue at the expense of traditional brick-and-mortar operators. Financial markets have recovered due to monetary policies such as lower interest rates and quantitative easing, yet who really benefits from higher equity prices?

Mostly the already wealthy. Stock ownership is relatively narrow in most countries. In the US, for example, only 10% of Americans own more than 84% of the market, with 50% held by the top 1%. With rebounding stock prices, the world’s billionaires have seen their already-huge fortunes grow to a record high of more than $10 trillion. The wealth of Jeff Bezos, the world’s richest person, rose by a startling $100 billion during the pandemic; this is more than the individual GDPs of 120 countries.

In short, the unintended consequences of Covid-19 quarantine policies have accelerated inequality trends that began before the pandemic: a small slice of wealthy, better educated people are quickly pulling further ahead of less-resourced, more imperiled citizens.

In light of these realities, a progressive Pandemic GI Bill would provide just compensation to those most harmed with costs being borne by those who have lost little or even gained by quarantine orders. The compensation would come in the form of job security legislation including lost wage assistance, protections against wrongful discharge, and hazard pay for at-risk workers; medical and family support for caregivers; and educational assistance including computers and wifi for those who are required to learn from home.

In order to not burden future populations with such costs, the ethical argument would be to increase taxes on specific beneficiary populations during pandemics. Those earning above a threshold of $250,000 (the top 5% in the US), for example, could pay a higher rate on income above this level. Furthermore, large corporations that generate profit above $1 billion, perhaps, could also pay a higher amount.

In addition, governments should temporarily raise or eliminate capital gains tax rates. In many countries, profits from investments are often taxed at less than half the rate paid on wages. This inherently favours the affluent who derive much of their income from investments versus labour. Amid a pandemic in which securities may be inflated by monetary and fiscal policies, not only do windfall gains go to relatively small populations, they are taxed, ironically, at lower rates. This is regressive and unfair under normal circumstances, and even more so during national crises.

Several studies highlight that nearly all capital gains benefits flow to the highest income brackets. In the US, this costs government more than $120 billion per annum with 75% of the benefits going to those earning over $1 million; a remarkable 50% is captured by only one in 1,000 taxpayers. Both suggested tax rate changes could be restored or adjusted when the economy has normalized.

Covid-19 and quarantine policies have created a few winners and many losers. Morality dictates that no one should benefit greatly during such crises at the expense of those harmed and weakened. Indeed, it is effective exploitation to profit from vulnerable populations. Quarantine measures, restricting liberty and harming citizens economically, are only justified under conditions of reciprocal compensation.

Our suggested Pandemic GI Bill could have an economically and psychically galvanising effect in America and overseas. It can end the pandemic faster with incentives for quarantine and vaccine compliance, thereby reducing its total cost. It also supports society’s more vulnerable populations rather than destabilising them and should help the economy normalise and recover faster and fairer - just as the GI Bill did after World War II.

Fewer people would be setback by such an approach, with very few already-fortunate gaining less excessively. Joe Biden has a unique, once in a lifetime opportunity this January. He can tackle one of the greatest global threats in decades while, more importantly, restoring faith and confidence in democratic government - something sadly lost in recent years.

Julian Savulescu is a doctor, bioethicist, and Director of the Oxford Uehiro Centre for Practical Ethics at Oxford University. Peter Marber is a noted author on globalization and teaches at Harvard University.

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