The Coronavirus Bailout - an alternative suggestion

[This was published as a letter to the Editor of the Financial Times on 12 May, 2020. It has nothing to do with Social Policy Bonds!]

Already, it looks big businesses are are preparing their appeals for bailouts from governments all over the world, to compensate for income lost because of COVID-19. And, most likely, they'll get them. These titans of industry and their pals in government everywhere are probably already drafting the terms. I think we can foresee the result: more industry concentration, and a further widening of the gap between the rich and well connected on one side, and small businesses and ordinary people on the other. 

Here’s another idea. If we want to keep competitive markets going, give people rather than politicians the opportunity to choose who stays in business. Instead of lavishing enormous sums on favoured giants, let people have some say as to where taxpayers' cash should go. Take the total national expenditure on things like aviation, hospitality, and personal services, divide it by the number of people in the country, and issue coupons worth that much to each adult, to be spent on that service or product. So, if the average sum spent by an adult on air travel in the UK, say, was £200 last year, give each adult a coupon worth that sum, with the stipulation that it be spent on air travel over the next two years. Make the coupons tradeable, so that those of us who don’t want to fly can exchange them for cash or swap them for a couple of sessions at a body piercing salon, or a few weeks’ high street cappuccinos.

The alternative and, unfortunately, the more likely scenario, will be a form of central planning, in which government lavishes taxpayer funds on its favourites in exchange for some degree of control. We know what that will mean: inefficient, bloated and corrupt industries-- and yet more cynicism. Instead, tradeable coupons for purchases of designated coronavirus-hit services would restore some much-needed competition and consumer power.

My next post goes into a bit more detail about this suggestion.