THE KOREA TIMES

UBI, One-Off Crisis Relief Or An Economic Revolution?

Known as UBI, Universal Basic Income has been a dream of progressive economists. Now it is effectively written into many COVID-19 relief packages. But it may turn out to have staying power well beyond.

People lining up at a grocery store in South East London
People lining up at a grocery store in South East London
Laure Gautherin

Will the coronavirus usher in a whole new economic era? The Universal Basic Income (UBI), which gives all citizens a guaranteed minimal monthly stipend, has been touted in recent years by progressive policymakers as a much-needed way to redistribute wealth. Now, with the coronavirus crisis beginning to cripple national economies and send millions into unemployment, UBI's moment to show its worth has arrived.

In an interview last week with MSNBC, U.S. House Speaker Nancy Pelosi said UBI should be considered: "Let's see what works, what is operational and what needs attention. Others have suggested a minimum income, a guaranteed income for people. Is that worthy of attention now? Perhaps so. Because there are many more people than just in small business and hired by small business ... that may need some assistance as well."

But as John Harris noted recently in The Guardian, UBI's appeal may last well beyond the current crisis. "Right now we need to think hard about a set of realities that the 20th century did not prepare us for. This crisis is likely be repeated. Covid-19, after all, is just the latest sign of the horrors let loose by human incursion into parts of the natural world. Even once the current disaster is somehow dealt with, the catastrophe of climate change – which itself increases the danger of disease, as tropical illnesses start to threaten new places – will speed on. This latest economic crash arrives only 12 years after the last one. We live, in short, in an age of ongoing shocks, and it is time we began to prepare."

Whether UBI is simply a stop-gap emergency measure or will stick, and be integrated into the global economy remains to be seen. But looking around the world, from South Korea to Spain to the U.S. and beyond, the radical rethinking of a citizen's relationship with national treasuries and the labor market is starting to look — at least a bit — more mainstream:

SOUTH KOREA: As early as March, several provinces in South Korea pledged to provide their residents an "anti-disaster basic income" to help cope with the economic impact of the COVID-19 outbreak. The Korea Times reports that the province of Gyeonggi is leading the way after announcing this Tuesday it will pay 100,000 won ($79.85) per person to all its residents in April. Later, the central government announced the anti-disaster emergency package would be extended to the whole territory but target the most fragile citizens. A first in the country. According to Finance Minister Hong Nam-ki, about 14 million households will be eligible to receive the relief payments of up to 1 million wons ($820) for families with four or more members in the bottom 70% of the gross income index.

UNITED STATES: Several U.S. states had already tested a UBI prior to COVID-19, while former Democratic presidential candidate Andrew Yang had included in his program a $1,000 monthly basic income for all citizens, without conditions. It's a vision shared by such high-profile progressives as Congresswoman Alexandria Ocasio-Cortez, who has has been pressing the issue since the COVID-19 outbreak. She tweeted mid-March: "We need to take dramatic action now to stave off the worst public health & economic affects. That includes making moves on paid leave, debt relief, waiving work req's, guaranteeing healthcare, UBI, detention relief (pretrial, elderly, imm)."" The subsequent $2-trillion stimulus package included $1,200 in direct payment to workers with annual incomes below $75,000. But with 30 million unemployed Americans by the end of April, it's looking increasingly insufficient.

We need to take dramatic action now.

SPAIN: UBI was an electoral promise from coalition party Podemos, proposing a monthly payment of 600€ for the country's 10 million most financially vulnerable citizens. But the pandemic eventually pushed the coalition government to a one-off priority aid of 440€ to all workers who had lost their jobs because of the pandemic. A few days later, Economy Minister Nadia Calvino said in an interview with La Sexta broadcaster that a wider basic income was still on the agenda, not only as a reply to the coronavirus but as an economic model to "stay forever," and become a "permanent tool."

UK: There have been calls from a wide range of political parties to approve a basic income as a response to the breakout. As The Guardian reports, former Conservative business secretary Greg Clark urged the government to act immediately to subsidize wages, while Citizens Advice proposed a "crisis minimum income" of at least £180 a week (around $210) so everyone has enough money "to protect their own health and the health of others."

Photo: CC0

In an April 22 letter in the The Financial Times, more than 100 opposition MPs have called on the government for a "recovery universal basic income" to all adults in the country after the end of the lockdown. Such proposals so far have however been turned down by Downing Street.

BRAZIL: Despite President Jair Bolsonaro minimizing the health risks, the Brazilian Parliament has agreed on an emergency relief package including a monthly payment of about $115, for a period of three months, for which 60 million citizens are eligible. This measure is the direct result of an intensive grassroots campaign launched in March that got the backing of more than 500,000 citizens, thousands of media influencers and key business and socioeconomic organizations.

A universal basic wage which would acknowledge and dignify the noble, essential tasks you carry out.

POPE FRANCIS: In an Easter letter addressed to world leaders, Pope Francis officially endorsed the principle of UBI in the time of pandemic. "This may be the time to consider a universal basic wage which would acknowledge and dignify the noble, essential tasks you carry out. It would ensure and concretely achieve the ideal, at once so human and so Christian, of no worker without rights," he wrote. He particularly emphasized the situation of "street vendors, recyclers, carnies, small farmers, construction workers, dressmakers, the different kinds of caregivers' who were being "excluded from the benefits of globalization."



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Economy

Air Next: How A Crypto Scam Collapsed On A Single Spelling Mistake

It is today a proven fraud, nailed by the French stock market watchdog: Air Next resorted to a full range of dubious practices to raise money for a blockchain-powered e-commerce app. But the simplest of errors exposed the scam and limited the damage to investors. A cautionary tale for the crypto economy.

Sky is the crypto limit

Laurence Boisseau

PARIS — Air Next promised to use blockchain technology to revolutionize passenger transport. Should we have read something into its name? In fact, the company was talking a lot of hot air from the start. Air Next turned out to be a scam, with a fake website, false identities, fake criminal records, counterfeited bank certificates, aggressive marketing … real crooks. Thirty-five employees recruited over the summer ranked among its victims, not to mention the few investors who put money in the business.

Maud (not her real name) had always dreamed of working in a start-up. In July, she spotted an ad on Linkedin and was interviewed by videoconference — hardly unusual in the era of COVID and teleworking. She was hired very quickly and signed a permanent work contract. She resigned from her old job, happy to get started on a new adventure.


Others like Maud fell for the bait. At least ten senior managers, coming from major airlines, airports, large French and American corporations, a former police officer … all firmly believed in this project. Some quit their jobs to join; some French expats even made their way back to France.

Share capital of one billion 

The story began last February, when Air Next registered with the Paris Commercial Court. The new company stated it was developing an application that would allow the purchase of airline tickets by using cryptocurrency, at unbeatable prices and with an automatic guarantee in case of cancellation or delay, via a "smart contract" system (a computer protocol that facilitates, verifies and oversees the handling of a contract).

The firm declared a share capital of one billion euros, with offices under construction at 50, Avenue des Champs Elysées, and a president, Philippe Vincent ... which was probably a usurped identity.

Last summer, Air Next started recruiting. The company also wanted to raise money to have the assets on hand to allow passenger compensation. It organized a fundraiser using an ICO, or "Initial Coin Offering", via the issuance of digital tokens, transacted in cryptocurrencies through the blockchain.

While nothing obliged him to do so, the company owner went as far as setting up a file with the AMF, France's stock market regulator which oversees this type of transaction. Seeking the market regulator stamp is optional, but when issued, it gives guarantees to those buying tokens.

screenshot of the typo that revealed the Air Next scam

The infamous typo that brought the Air Next scam down

compta online

Raising Initial Coin Offering 

Then, on Sept. 30, the AMF issued an alert, by way of a press release, on the risks of fraud associated with the ICO, as it suspected some documents to be forgeries. A few hours before that, Air Next had just brought forward by several days the date of its tokens pre-sale.

For employees of the new company, it was a brutal wake-up call. They quickly understood that they had been duped, that they'd bet on the proverbial house of cards. On the investor side, the CEO didn't get beyond an initial fundraising of 150,000 euros. He was hoping to raise millions, but despite his failure, he didn't lose confidence. Challenged by one of his employees on Telegram, he admitted that "many documents provided were false", that "an error cost the life of this project."

What was the "error" he was referring to? A typo in the name of the would-be bank backing the startup. A very small one, at the bottom of the page of the false bank certificate, where the name "Edmond de Rothschild" is misspelled "Edemond".

Finding culprits 

Before the AMF's public alert, websites specializing in crypto-assets had already noted certain inconsistencies. The company had declared a share capital of 1 billion euros, which is an enormous amount. Air Next's CEO also boasted about having discovered bitcoin at a time when only a few geeks knew about cryptocurrency.

Employees and investors filed a complaint. Failing to find the general manager, Julien Leclerc — which might also be a fake name — they started looking for other culprits. They believe that if the Paris Commercial Court hadn't registered the company, no one would have been defrauded.

Beyond the handful of victims, this case is a plea for the implementation of more secure procedures, in an increasingly digital world, particularly following the pandemic. The much touted ICO market is itself a victim, and may find it hard to recover.

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