Finland Will Give Some Unemployed Citizens a Basic Income (theoutline.com)

Next month, the Finnish government is going to try something completely different to help its unemployed citizens: give them free money. From a report on The Outline: On Jan. 9, 2017, a randomly selected group of 2,000 unemployed citizens in Finland will receive a check for 560 euros (about $585) with no strings attached. They'll continue to receive that check every month for two years straight, even if they find a job or continue to remain unemployed. This is part of an experiment to see what happens to people's participation in the labor market after they've been guaranteed a certain amount of money.

Comments

I predict a lot of misunderstandings about BI

[serviscope_minor]

I suspect this thread like the last will have a lot of misunderstandings about BI.

The biggest misunderstanding for the general principle is that you take the existing system as-is and simply give everyone 10k per year or something. The numbers are clearly absurd so that causes people to dismiss it.

That's not how it works.

Basically what you do is modify (increase) the tax so in most cases, people get net more or less what they do now. That way the numbers come out more or less the same as they are now but in practice on the low end people do get extra money. Most people won't see much of a change.

Re:I predict a lot of misunderstandings about BI

[MrMr]

As Finland already has an indefinite 'labour market subsidy' system it seems not much more expensive than their current system. The difference is just that benefits are not reduced for two years if the long-term unemployed happen to get a job during the trial. If the job-market is poor enough it won't cost anything extra...

Re:I predict a lot of misunderstandings about BI

[bluefoxlucid]

I encourage you to take a look at the spreadsheet labeled "WageTax", and the one labeled "EmploymentCost".

Single individual making $150,000 takes home $3,932 more per year; employer cost is roughly $9,300/year cheaper (assuming a low 18%-of-salary cost of employment, although it's usually 25%-40%). Buying power difference is estimated here as a 9% increase, although that's again a conservative estimate.

Single individual making $60,000 (about median) takes home $6,289 more per year; employer pays roughly $3,720 less. Buying power difference is about a 19% increase.

For married households, it's bigger, although the costs to the employer don't change (they drop by the same amount).

Taxes don't need to be raised on the highest income earners; they can be lowered on businesses, notably on payroll (tax taken based on how much wages you pay).

Re:I predict a lot of misunderstandings about BI

[Tx]

Considerable irony here, seeing as you're guilty of misunderstanding BI yourself. There are many different BI schemes proposed, of which what you describe is just one, so saying "that's not how it works" is clearly not very meaningful. The most practical BI schemes are the ones that are fiscally neutral, whereby existing welfare schemes are scrapped, and the budget used to fund a basic income instead. The Finland scheme is of that sort. It's not about modifying or increasing taxes to pay for it; the big change is the scrapping of the existing complex, bureaucratic, and expensive welfare systems in favour of a basic income payment. Tax is supposed to remain pretty much unchanged.

Re:I predict a lot of misunderstandings about BI

[serviscope_minor]

So you pull money out of the economy, and give a portion of it back to other people. It's a net loss.

If you do it right you pull no more money out and pay no more money. So it's no net difference.

Re:I predict a lot of misunderstandings about BI

[MightyMartian]

A singular advantage in a BI scheme is that it can shrink down a government's welfare fraud investigation system, as many of the forms of fraud seen in most unemployment/welfare benefits systems all but disappear. Depending on how BI is implemented, there might still be some gaming of the system for child and/or marital benefits, but this is more an argument for a flat BI system. But, as you say, there are multiple BI schemes out there, and each one has to be analyzed to determine overall costs both in the form of expenditures and in governance costs.

Re: I predict a lot of misunderstandings about BI

[serviscope_minor]

Administration costs that wouldn't exist if you weren't doing it in the first place.

The existing system already has administrative costs. In fact one of the supposed benefits of BI is you vastly shrink the admin since you don't to deal with vetting and enforcement of myriad different schemes.

Not to mention the opportunity costs incurred by the people who provided the money

I really don't understand how you're failing to get the point. Those people are ALREADY providing the money. It's not like you don't currently pay taxes (unless you're the president elect). The point is the total tax income doesn't change. You just distribute it differently.

Re:I predict a lot of misunderstandings about BI

[networkBoy]

The roads being fixed is absolutely automatable, as is long haul shipping.
Changing streetlights doesn't need to be automated to see a severe workforce reduction, my local muni is replacing nearly all the Sodium Vapor lights with LED. Those won't burn out nearly as often, so you need less people.
In many cases houses are already coming partially framed in advance, roof trusses being the most obvious, but I've also seen entire walls arriving already framed, doors, windows, and all. Just stand them up and nail them down.

Not all of this is labor elimination, but a *lot* of it is labor reduction.

Right now I'm betting (in the case of the framing) that it is more a shifting of labor location rather than full elimination, but there is no big stretch to automating fabrication with wood.

Re:Not unconditional

[olsmeister]

They'll continue to receive that check every month for two years straight, even if they find a job or continue to remain unemployed.

Re:Finland

[MightyMartian]

UBI is not about replacing work, it's about a universal backstop so that if you cannot find work, or sufficient work for the basic necessities, you will be assured enough to pay for the roof, heat and food. Presumably, in a UBI world, high income earners would essentially give all the UBI back in the form of taxes.

Sooner or later UBI will have to happen. Automation is going to remake the working world as profoundly as the Industrial Revolution did.