Disaster Relief Funds: Is Universal Aid Always the Best Decision?

By Jiwon Hwang

COVID 19. The worldwide famous, deadly virus has affected 213 countries around the globe. Korea wasn’t an exception. In fact, it was one of the earliest countries to be affected, being close to China(where Wuhan, the origin of the virus, is located). The virus had a major impact on our society, especially on our economy. The government is trying many ways to revive our economy, including disaster relief funds. On April 18, the Korean government gave ₩200,000 per individual in order to make citizens economically active. When the virus started spreading again in August, the National Assembly discussed a supplementary budget for the 2nd disaster relief fund. However, the discussion did not meet a conclusion because the ruling party and the opposition party started an argument over whether they should aid everyone or a group of selected people. I believe that selective aid will be more helpful in the current situation for the following reasons. 

To begin with, universal aid will result in fiscal imbalance. Fiscal imbalance is an economical term which refers to a situation where the future debt obligations of a government differ from the future income. In other words, it means that the government will not have enough money to pay for their debt. The Korean government has already gone through an immense tax loss due to the COVID 19 outbreak. Since Korea offers a medical insurance system to all citizens(even foreigners who might have been infected), the government had to pay for almost all of the COVID testing and treating bills. Due to all these unexpected expenses, government bonds have already reached 110 trillion won. If the government decides to give out disaster relief money universally, it will add another 7 trillion dollars to the government bond. Considering the fact that the government is in serious need of economic support, universal aid is too risky. Thus, the government should aid only a selected group of people.

Furthermore, universal aid will not help much. The first disaster relief fund, where every individual received ₩200,000 each, was not as effective as the government expected it to be. Even though the government had to loan 35 trillion won, only 20% of added value was created. Usually when a government invests in a certain event, they expect it to create exponential added value which is called ‘the multiplier effect’. When governmental investments fail to generate the multiplier effect, they are usually considered unsuccessful, which means that the first disaster relief fund wasn’t very efficacious. Also, the future generation will have to pay for the governmental debts, meaning that they are not getting any substantial support. It will be foolish to make the same mistake again when they already know the consequences. Hence, it will be much more effective for the government to selectively aid people instead of loaning money when they can’t even afford it. 

The last reason why universal aid will not help our economy is because it promotes consumption. Governmental disaster relief money has a deadline, meaning that if you do not use it until the end of August, it will become invalid. People became less alert about the virus when cases dropped to 10-20 a day during June and July and started to go to restaurants, cafes, and other public places so as to use the money before it expires. Disaster relief money was nothing more than adding fuel to the fire. Covid cases started to rise again, warning us that the start of a second outbreak was coming. As public engagement continued to increase, cases hit 40-50 a day in August. However, people did not take it seriously. The result was a massive outbreak, causing 100-200 cases a day, eventually leading to stricter social-distancing restrictions. If the government gives disaster relief money to everyone, it can make situations worse, causing a third outbreak. The government has to do its best to prevent this from happening. 

Some may argue that every Korean citizen has the right to receive aid from their government. It is true that everybody has the right to be protected and supported by the government. However, we are in a special situation, which makes things a little bit different. For example, the phrase ‘black lives matter’ has become very popular after the death of George Floyd and the numerous protests that followed. On the other hand, people avoid using the phrase ‘all lives matter’. This is because the problem in the current situation is that black lives are not respected and protected as much as white lives. Black lives need urgent protection, while white lives, in general, are not at risk as much as black ones. Thus, all lives cannot matter until black lives matter. This is almost identical to the situation in Korea right now. Of course, all people matter. But people who are in desperate need of economical support are self-employed people, people who have lost their jobs, and other people who have lost the ability to make money due to the global Covid outbreak. Our economy cannot suddenly recover itself until the socially weak are able to step back into it. And given the present situation, the best way to make that happen is selective aid.