Finland is reportedly considering taking a step towards UBI. From CNN/Money:
The Finnish government, elected earlier this year, is planning to introduce a tax-free monthly payment of 800 euros ($865) to all adult Finns, regardless of income, wealth or employment status. The payment would replace most other state benefits.
The government thinks that the move will actually save money. Finland’s welfare system is very complex and expensive to run, and the government hopes that simplifying it could reduce costly bureaucracy.
It also argues that the change may encourage more people to look for work. About 9.5% of Finns are currently out of work — the highest rate in more than a decade — and the government believes some people are deterred from working because they’re better off on unemployment benefit than accepting a minimum wage job.
Tim Worstall at Forbes.com approves:
From the right it gets rid of the thing we worry most about welfare: the immense tax and benefit withdrawal rate that makes poor people not desire (because they are rational in the face of 60 and 70% tax rates) to increase their incomes. And from the left it actually increases workers’ bargaining power without, of course, needing those potentially self-interested unions standing in the middle. If you can live, just, without working, then the boss’ power over you is vastly reduced. Another way of putting this is that reservation wages rise–the amount you have to be offered to go to work rises.
This will, of course, reduce inequality. The big problem has always been that while in theory it works no one has ever really tried it. Now someone is: the Finns. So, we all get to see whether it really is the deus ex machina that theory states it is.
My best guess is that it is and that we should all be adopting it. But given that someone else is doing it, perhaps not just yet. Let’s actually be scientists about this, observe what happens and only if it works, as I’m sure it will, do we adopt it.
Abolish the entire welfare system in its totality and just give every citizen just enough to scrape by each month. Why not? We’re a rich country, we can do this. After someone else has proven that it works of course.
Dylan Matthews @ vox.com may have a more comprehensive look:
Ideally, Kangas told me, he’d like to take several different kinds of samples. In the scientifically ideal research setting, there would be a national lottery so he gets a representative random sample of Finns across the country who’ll receive a basic income. But he also wants to do regional lotteries that are regionally representative, and then lotteries confined to large towns. He also wants there to be some smaller municipalities that have a large portion of their populations (30 percent, say) get checks. In the PowerPoint, he suggests that in a couple of districts 100 percent of households could get checks.
The idea is to see what happens to a community under a basic income, rather than just to individual people. Having a whole town get benefits could have cascading effects as households escape poverty, as some people use the income guarantee as insurance so they can take risks and form companies, as universities see increased enrollment from people better able to afford supplies, etc. “If people in a smaller area are getting the benefits, their behavior vis-a-vis other people will change, employers and employees will change their behavior, encounters between clients and their street-level bureaucrats (social workers, employment offices, etc.) will change, and the interplay between different bureaucracies will change,” Kangas says.
There is a basic tension between the American tradition of everyone taking care of themselves, and the older societal imperative of sticking together and taking care of all the members, sick and healthy, young and old. It’ll be interesting to see how the basic American suspicion that everyone is on the take plays out if Finland’s trial is considered a success and they decide go all in.
