Finland Prepares Their First Tests Of A Universal Basic Income (futurism.com)

Finland is getting ready to launch their first pilot program with a Universal Basic Income -- one of several countries which are now testing the concept. An anonymous reader quotes a report from Futurism.com: Finland is about to launch an experiment in which a randomly selected group of 2,000-3,000 citizens already on unemployment benefits will begin to receive a monthly basic income of 560 euros (approximately $600). That basic income will replace their existing benefits. The amount is the same as the current guaranteed minimum level of Finnish social security support. The pilot study, running for two years in 2017-2018, aims to assess whether basic income can help reduce poverty, social exclusion, and bureaucracy, while increasing the employment rate.
In January a basic income program will also begin testing in the Netherlands, according to the article, which points out that Y Combinator has also launched a test program in Oakland, California. And there's now also calls for a Universal Basic Income in India, where one social worker argues it's "sound social policy," while pointing out that it's already being implemented in other countries. "In Brazil, it targets the poor and has been a way out of poverty; in Iran, it has substituted for subsidies and citizens receive about $500 a year..."

Comments

Re: Won't work in America

[Anonymous Coward]

The problem with the current system is that if you decide to start working they take away your benefits so people give up and they just take the benefits and don't work. I don't think we would have as many problems if we had guaranteed basic income versus all the social programs that we have now. With guaranteed basic income people will be allowed to look into different career paths and look into having a job on top of receiving the benefits and nobody could complain because everyone would be receiving the same amount of money. If they spend it then they're out and there is no other social programs that they can fall back on. The problem right now is that if you spend all your welfare you still have food stamps and lots of other charity organizations that will give you food and get the housing and pay electric bill which is why people don't manage their money properly.

Better Programs

[JimSadler]

It certainly would help to provide a basic income as long as people are free to work and earn extra money without loss of that basic income. There are a couple of difficulties as those that work in low paying jobs will resent people earning about what they earn without working. In the US there is a larger issue. We need the public to be able to spend money on more than just the bare basics of life. Businesses need buyers. The US now has way too many people who have to stretch every penny. That excludes them as buyers for numerous products and services. As employment becomes more and more an unusual thing due to technology replacing human labor, more and more people are excluded from the buyer pool. That means less employment and less taxes and more public expenses dealing with the displaced etc.. The one and only thing that can hope to work is to provide an income that not only covers all the basics but also leaves money left over to spend on things that are not basic needs. If we do not do this we will surely face a total economic collapse and a loss of our nation. It is also obvious that we will have to price control some items such as medical care and medications or no amount of income will help to bail us all out of the impending collapse.

Re:Better Programs

[Solandri]

It certainly would help to provide a basic income as long as people are free to work and earn extra money without loss of that basic income. There are a couple of difficulties as those that work in low paying jobs will resent people earning about what they earn without working.

That's only an issue if you use hard cutoffs like everyone seems to nowadays because they hated math in high school and don't want anything with a formula. e.g. We'll give you $500/mo in assistance, but the moment you make more than $1000/mo working, that assistance disappears. That creates a negative income gradient. At $0 wages, you're getting $500/mo. At $1000/mo wages, you're getting $1500/mo. At $1001/mo wages, you drop back down to $1001/mo. This discourages getting a better job or working more hours. The assistance either needs to be universal (everyone receives the same amount), or graduated (using a formula!) so it's slowly phased out as you earn more so the income gradient always remains positive.

There's also the issue where assistance scales with certain things under the control of the recipient more than the expenses. e.g. If you have 2 kids and are on food stamps, adding a third kid raises your expenses only $y/mo, but the food stamps you receive increases more than $y/mo. Thus creating an incentive for poor folks who can't afford to raise more kids to have more kids as an easy way to receive more money. The assistance has to scale in a way which discourages adding expenses, not creating more expenses as a way to get more assistance.

Finally there's the problem where the market tries to correct for the existence of a basic income (money for doing no work) by devaluing the basic income while simultaneously increasing the value of wages (money for doing work). The net effect is inflation - the value of the currency decreases (prices increase) while wages rise to keep pace. The $500/mo basic income decreases in value year-over-year (how quickly depends on the amount of the basic income - the closer it is to the average wage, the faster it devalues), while purchasing power from wages remains steady because of the wage inflation.

If you try to correct for this by increasing the basic income each year, you just increase the rate of inflation. If you try to fix that by fixing prices, you break the economy since production costs are now no longer allowed to be reflected in prices. So the only way to get it to work is to either limit it to a subsection of the population (i.e. it's not universal), or to make it a small fraction of the average income (i.e. it can't be a living income). You might be able to get it to work by bypassing money entirely, and distributing the basic income directly as goods and services. i.e. No more EBT cards - you get your assistance not as a money-equivalent, but as food directly from the food bank. There will be some leakage as some people e.g. sell their weekly allotment of canned foods rather than consume it, but as long as that leakage is a small fraction of the total it shouldn't have a large effect on the general economy.

Re:Better Programs

[gcswt]

Yes but this is because those things aren't being regulated and controlled by the government. They are cheap and accessible because Capitalism works. That which they really need such as health care and employment, are regulated by those that are more interested in their vote than welfare. No system of wealth distribution will make irrational economics work.

Re:Better Programs

[sjames]

Wages increasing to keep up with inflation? That sounds like a nice change of pace, let's do it!

More seriously, there would likely be SOME inflation, but since the economy can't tell the difference between basic income money and wage money, it's not going to be the problem you expect. Just index the basic income to inflation and it'll find an equilibrium.

Re:Better Programs

[Anonymous Coward]

The problem is that income "earned" in the sense of receiving money from a corporate or governmental entity is not synonymous with "earned" in the sense that matters--value creation.

Think a CEO is doing 1000x the actual value creation of his engineers? Not in the least. He/she is "getting his hands" on income, not "earning" it in a sense that is of long-term value to the economy. He is being paid to do fuck-all, and doing that to an exponentially greater degree than the "takers" you undoubtedly have in mind as the recipients of social programs.

Conflating these meanings leads to fallacious conclusions, both economically and ethically.

Re:Better Programs

[swb]

I think the best basic income schemes have a negative progressive income tax basis to them. You lose the basic income as your regular income increases and at some level of earned income you don't get any basic income.

This provides a work incentive, since even the lowest form of work produces income gains over basic.

I think low wage employers would end up really hating basic income because while they might not be forced to pay more, they would probably have to improve their working conditions and employee treatment. I think what discourages a lot of impoverished people from working isn't the nature of the work itself, it's the nature of the management combined with the low pay. Unrealistic labor goals, bad shifts, intrusive and arbitrary policies, and so on.

There's a bunch of blue collar jobs I'd do, even for less money, but I just couldn't tolerate the way blue collar employees get treated. High school was less confrontational and paternalistic.

I think there are serious obstacles to any kind of basic income scheme. For one, I think employers generally fear any world where unemployment isn't an existential threat for employees -- I think it radically reshapes the balance of power. Immigration is a real problem -- how do you contain a basic income system to the basic margins of your economy?

Re:Won't work in America

[Anubis IV]

I had a potluck roommate at my university who was of meager means. He wasn't sure if he'd be able to stay in school, but then a $10,000 federal loan came in for him to cover his schooling expenses.

Guess what he did, even before the money had hit his account?

Shopping spree. Bought a gaming console with a number of games, movies, new clothes, went out to a load of restaurants...you get the picture.

By no means am I suggesting he's the brush with which we can paint the entire low income population, but it is safe to say that some people will be foolish with those funds and we'll be faced with the question of how to deal with them then.

Increase employment rate? WTF?

[Qbertino]

Base income to increase employment rate? How is that supposed to happen?
Robots are replacing humans left right and center at an ever increasing rate.
Base income is there to mitigate the effects of increased machine productivity and preventing a rare few from being the only ones reaping the benefits of increased productivity. That's what gouvernments should be seeking to do. But I guess shit will have to hit the fan before anything happens addressing that problem.

Somebody didn't get "basic income". I hope they'll learn before it's too late.

Re:Increase employment rate? WTF?

[zmooc]

That's your explanation. In my world, basic income is a means of fairly distributing the fruits of our planet amongst its rightful shareholders, the people. While basic income comes in handy as a solution for unemployment resulting from increased automation, simply providing it because we cannot come up with a better solution would be stupid, unfair an unsustainable. We should not do that.

I'd rather turn it around: as the productivity increases, the value of our planet increases and we can expect its rightful shareholders to receive more money. That's exactly the reason basic income is starting to become economically feasible in the first place. However, in order for it to work properly in the long run, it should to a large extent be funded from taxes that directly relate to the use of the planet itself, for example through Land Value Taxes, taxes on the profit of mining and fossil fuel production and taxes on the use of the atmosphere (by dumping crap in it). This approach is fair and sustainable and could actually lead us to the unlimited leisure time utopia we were promised, if needed supported by a bit of helicopter money.

Re:Won't work in America

[sjames]

They already allow the banks at the top of the chain to just wish money into existence so they can make even more money demanding interest on it. Why not wish the money in at the bottom of the pile where it will actually fuel the economy that keeps the country running rather than the non-productive swapping of game tokens?

Re:Won't work in America

[Austerity Empowers]

I agree with the message, but I find I'm less happy than those people day to day, I stare in the face of 10 years of future debt, possible economic collapses and unexpected eventualities every day, it's depressing. At the end of the day no matter how good my performance review was, I know the company will drop me like a bad habit should it become necessary, and they will run the company such that it becomes necessary if anything at all goes wrong.

Of course, I'm significantly more happy on the days when they are panicked about money. I'm not sure about the payout, although I think my kids are much, much happier than their kids on a daily basis. The trades we make.

Re:Different from the Social Security benefits?

[epine]

As a guess, it's probably not means-tested. If they get a job, they keep getting the UBI money.

The best feature of UBI is not making it conditional and then eliminating minimum wage. Maybe a person wants just an extra $2/hour over their UBI, they can do that, no problem.

However, with just a select group on UBI, having no minimum wage allows the UBI group to undercut the non-UBI group (who certainly won't be willing to work for $2/hour), so phasing this program in in an ethical way is non-trivial.

This.

[rsilvergun]

The other thing you'll see with the poor is they're used to everything going to shit. It's tough to plan ahead and stick to the plan when you've spent your entire life having shit fall apart around you. When things are going well you don't expect it to last, so you live for the moment.

Similar to today

[bugs2squash]

The US already accepts different tax brackets, this is just another tax bracket at the low end, one where you get negative tax rather than zero tax as the lowest rate. The only other difference is that the IRS sends the "refund" check in 12 installments rather than one.

Only the poor or the mega rich would fall entirely into that bracket

This is garbage

[fnj]

1) A "universal" basic income that is NOT UNIVERSAL is a contradiction in terms.

2) Starvation-level UBI is an insult.

Re:Different from the Social Security benefits?

[Dorianny]

Actually you might see pressure to raise wages for low skill work now that people can choose to drop out of the labor force (without the bureaucratic issues and social stigma of being on Welfare) if the wages offered are not attractive enough. If someone just wants to make some pocket money its probably more attractive to participate in the "at-will gig" economy instead of accepting the constraints of a traditional job. Of course higher wages also means more automation resulting in fewer jobs which would pressure wages lower. I All we can be sure of at this point is that this is going to be a very interesting experiment

Re:not gonna happen

[ooloorie]

1) Your link seems to just prove my point. 45% average tax rate across EU is much lower than that damn 60+24 VAT of Finland. QED.

No, it doesn't. How many links and explanations do you need?

http://taxfoundation.org/artic...

The tax burden on average workers in the Czech Republic is 42.6%, in the US, it's 31.5%. Sales tax in the Czech Republic is around 20%, in the US it is somewhere between 0% and 10%. Your claims don't even make sense for the Czech Republic, let alone for a regular European welfare state.

2) 3 out of the 10 best high schools in US are in my area. I don't think I picked specifically a place with the lousy education system. Who should I have picked? Kansas?

Yes, you live in a luxury enclave. California as a whole, however, ranks near the bottom of school performance among US states. And all Californians pay the same tax rates that you do.

3) I mean they are lacking electricity, running water, hospital within 4 hour driving distance, ... basics even rural places in EU have.

I used to be living in a place "lacking electricity and runing water". There are multi-million dollar rural American homes have generators, wells, and septic systems. What you don't seem to understand is that people in the US choose rural living, for the high quality of life it provides. You project your Bohemian prejudices and preferences onto how other people live.