Finland will hand out cash to 2000 jobless people to test universal basic income

http://www.nytimes.com/2016/12/17/business/economy/universal-basic-income-finland.html

by salmonet • 10 years ago

610 385 10 years ago

nytimes.com

applecore2• 10 years ago

How is it "universal" if recipients are required to be jobless?

keehun• 10 years ago

It's a test. Here's what the article says about the motivations behind this test:

> Now, the Finnish government is exploring how to change that calculus, initiating an experiment in a form of social welfare: universal basic income. Early next year, the government plans to randomly select roughly 2,000 unemployed people — from white-collar coders to blue-collar construction workers. It will give them benefits automatically, absent bureaucratic hassle and minus penalties for amassing extra income.
> The government is eager to see what happens next. Will more people pursue jobs or start businesses? How many will stop working and squander their money on vodka? Will those liberated from the time-sucking entanglements of the unemployment system use their freedom to gain education, setting themselves up for promising new careers? These areas of inquiry extend beyond economic policy, into the realm of human nature.

Basically, no one knows how humans/societies will react to such a hand-out, and this is trying to figure out if an eventual universal income will be effective.

Also, this quote from later in the article:

> Mr. Saloranta has his eyes on a former Nokia employee who is masterly at developing prototypes. He only needs him part time. He could pay 2,000 euros a month (about $2,090). Yet this potential hire is bringing home more than that via his unemployment benefits.
> “It’s more profitable for him to just wait at home for some ideal job,” Mr. Saloranta complains.
> Basic income would fix this, he says: “It would activate many more unemployed people.”

dvdhnt2• 10 years ago

So UBI is fundamentally a safety-net; insurance, if you will.

The "universal" quality is that all people will be eligible for UBI. Everyone will receive the difference between what they make and what UBI guarantees.

It's sort of like the popular phrase in the U.S. - "everyone is guaranteed the same opportunity but not the same outcome". Thus, while all will have access to UBI, the payout will be determined by individual circumstances.

Regarding Finland's program, it's likely they had to choose a group of individuals who were easiest to justify paying UBI under current popular-thought. Therefore, they chose a group already receiving or eligible for unemployment/assistance and argued they were simply replacing one for the other. That is of course just an educated guess on my part.

So, yes, UBI itself is in fact universal although the initial rollout, or test, is highly compartmentalized.

Edit: As someone pointed out, I'm probably confusing UBI with GMI - Guaranteed Minimum Income.

It's starting to feel like we're discussing rules on laying a foundation while others are already fast at work on their fourth and fifth floor, i/e, what's the point of giving everyone a ladder if the roof is consistently growing out of reach?

applecore2• 10 years ago

Everyone will receive the difference between what they make and what UBI guarantees.

This isn't UBI either.

UBI would simply give everyone the same income without subtracting the difference for extra earned income. You could earn millions and still receive your basic income.

wjossey• 10 years ago

tl;dr

Finland is going to selecting 2,000 unemployed individuals, at random, and offering them cash without strings. Current unemployment schemes, they believe, hold back individuals from finding part time work / any work because the benefits outweigh the job opportunities. They hope that this new scheme promotes people to take work and have an adequate safety net to prevent homelessness and hunger.

edblarney5• 10 years ago

Why don't they just ease/remove the limitations on the current program?

unfamiliar• 10 years ago

Because that would cost a shitload of money and might not work. Hence a trial run.

pvdebbe3• 10 years ago

I wonder why the participants couldn't be chosen from the whole working-age pool. Unless, the final system is not meant for working people at all, going against everything the universal welfare meant to solve. Doesn't surprise me one bit.

scott_karana• 10 years ago

If it works well, I suspect they'll widen trials.

ScottBurson4• 10 years ago

Jobless people generally cannot earn additional income while collecting unemployment benefits or they risk losing that assistance.

Worst. Idea. Ever.

I know -- it's a common feature of income support systems, including here in the US.

I don't know whether UBI is going to prove workable or not. But even if it doesn't, if we could just redesign the systems we do have so they never give recipients a disincentive to work more, that would be a huge, huge improvement.

nickff2• 10 years ago

And taking a job once should not permanently disqualify someone from long-term aid programs like social security.

TillE• 10 years ago

Means-tested programs are the epitome of wasteful government bureaucracy. It's never the right way to "compromise". If we can't sell straight UBI, then something like universal food stamps would be a good first step:

https://web.archive.org/web/20160321083817/http://mattbrueni...

dfraser9922• 10 years ago

I am reminded of an article I read years ago (sorry, no reference) about a low income family in Chicago (I think) during the Reagan era. The family had saved up a bit of money to send their kid to college, but some bureaucratic org found out. It was responsible for handling their benefits and because the total amount of assets the family had was over an acceptable limit, they cut out _all_ benefits to the family. Till the bank account went down to acceptable levels.

Way to go towards helping people help themselves, encouraging middle class values, responsibility, yadda yadda, all the usual stuff Republicans blather about but don't actually care about.

pvdebbe3• 10 years ago

Also a huge problem is that you get this living support based on your income, and it has no proper upper bounds. One could receive hundreds if not a thousand euro in extra support if they chose to live in a costly neighborhood (namely, central Helsinki). Even more of a disincentivizing factor to consider here.

ScottBurson4• 10 years ago

I'm not necessarily opposed to means-testing; for example, progressive income tax rates can be seen as a form of means-testing, and I think they're a good thing.

What I care about is that the function from income earned to income (including subsidy) received be monotonic. Again, the income tax system (at least in the US) is carefully designed to have this property: when you make enough more money to move into a higher tax bracket, that higher rate is applied only to the amount of your income in excess of the lower bound at which that bracket applies. So the total amount of tax never jumps discontinuously, even though the marginal rate increases. Even though you keep less of your next dollar of earnings the more you make, there's never a point at which earning the next dollar will leave you with less money after tax.

The same should be true even if you're receiving a subsidy. That's all I'm saying.

k-mcgrady2• 10 years ago

Is there any data backing up the idea that it actually is a disincentive?

1. Anyone I know that has received benefits for being unemployed desperately wants to be employed again.

2. In the UK, unless things have changed, you can work up to 16 hours per week while receiving unemployment benefits and I believe the benefits you receive gradually falls with the amount of work you get paid for.

3. If you suddenly lose your job benefits aren't built so that you can maintain your current life style. You likely have car, insurance, and mortgage payments to make and the benefits you're receiving either just get you by or you have to renegotiate some of that debt. Not a situation you want to be in long-term.

stale2002• 10 years ago

I mean, if I was offered half of my current salary (which is, admittedly high, as a software engineer) for free under the condition that I don't work, I'd totally take that deal.

iopq4• 10 years ago

1. Anyone I know that has received benefits for being unemployed desperately wants to be employed again.

My father makes so much money that when he's unemployed he actually doesn't really look for a job that urgently. This is because his unemployment benefits are enough for him to pay the bills. He'd like to make money to retire... but he does rest for a few months in between jobs.

a_humean• 10 years ago

Under the present system in the UK it really doesn't make much sense to work <=16 hour at around the lower wages. I know this from personal experience when I was unemployed (graduated uni at the worst possible time during the recession) and was offered a low paying job that was only 16 hours. I had to turn it down because it would mean I would have less money once I factored in travel costs because the benefits got withdrawn at a 1:1 ratio (in some cases it got withdrawn faster than my earned income grew), and I was barely getting by as it was. I was unemployed for another 3 months (6 in total) before I got near full-time hours offered to me. I was miserable for the entirety of my unemployment - there is nothing cushy about it.

This bug/feature in the welfare system is actually a major motivation behind the UK government's long beleaguered universal credit system, which is meant to support this kind of part-time work. The idea being that a worker should never ever be penalised by the benefits system for working, but should always earn significantly more in work than out of work and working more hours should always result in a net increase in income.

They are trying to do this by unifying almost all benefits (unemployment, disability, housing, child benefits, etc...) under a single administrative umbrella, and then only reduce the net benefit by £0.66 for each £1 earned through work. Its been delayed significantly because it requires a major IT overhaul, and that project has so far been a £1-2 billion black-hole of incompetence by a series of IT consultancies that have all failed to deliver the system needed to merge all these complicated means tested processes together.

bmj• 10 years ago

1. Anyone I know that has received benefits for being unemployed desperately wants to be employed again.

How wide is your social network (by this I mean people you actually know and see)? How diverse is it? My experience, living in the Rust Belt in the US, just north of Appalachia, is that many people are more than happy to live on the dole for as long as possible. I chalk some of this up to laziness, and some of it up to the lack of reasonable work.

Again, my sense is that your observations are true for some given demographic, but are probably not entirely accurate for people who are truly living at or near the poverty line. Those people may have been working, even steadily, but they probably didn't have a home, and may not have even owned a car.

You are right, of course, that if I lost my job (as a software developer), I'd be okay for three to four months without benefits, but it would be hard to maintain a home and a vehicle after that. That likely goes for many on HN. But we generally aren't the demographic best served by unemployment benefits.

ScottBurson4• 10 years ago

Anyone I know that has received benefits for being unemployed desperately wants to be employed again.

All the more reason not to discourage them by having them come out financially worse for doing so.

thenomad• 10 years ago

In the UK I have known multiple people who were unable to take jobs that would have brought them out of unemployment, because of precisely this trap.

Can't recall the specifics but they were not stupid people and I believe they'd done the math correctly.

haar2• 10 years ago

Unfortunately it's quite common due to the layered nature of unemployment benefits in the UK to be far better off on benefits than to go into work. I know several people who work the bare minimum to qualify for all their benefits then proceed to claim them for as long as possible. One example being if you have several children, working can easily reduce your child-tax credits by an amount greater than your employment income.

The counter-argument of course is that you shouldn't have children if you can't afford to raise them, but the disincentives are there, and as crazy as it sounds people are incentivised to have a lot of children as a method of escaping work.

(Optional sad Futurama parody being: https://en.wikipedia.org/wiki/The_Cyber_House_Rules)

It should never be more beneficial for someone to sit at home than to go out and earn a living.

ultraforce• 10 years ago

Would it be possible to do a modified system where they instead of losing the universal income unemployment benefits. There could be a system where the benefits are lowered in proportion to the income earned from jobs, that allows for those who are able to and want to work but are only able to find low paying jobs to have benefits that do not discourage them from doing work.

zhemao2• 10 years ago

That's basically a negative income tax.

That is, if you make below a certain amount, the government gives you money until your income reaches some base level.

AnthonyMouse4• 10 years ago

There could be a system where the benefits are lowered in proportion to the income earned from jobs

The thing you are referring to is called taxes. The more money you make the more taxes you pay and there comes a point that you're paying more in taxes than the amount of the basic income.

Phase outs are a pure scam. Their purpose is to conceal imposing higher marginal rates on low and middle income people so that higher income people can pay lower rates.

drallison• 10 years ago

[deleted]

barrkel• 10 years ago

The explanation was right there in the comment: disincentive to work.

ptaipale2• 10 years ago

The worst part of the unemployment benefit in Finland is not even the losing assistance if you take some job for a time. In the long run the payment will even out at least a little bit. It's the short run cash flow problem that really stops people from taking a job, as the jobseeker's allowance is cut immediately upon the employment office learning of someone having a job.

It's already a problem that the benefits are such that net income from an actual job may be negative. But even with that, people might take a temporary job to get the experience. But they cannot afford it, because getting a job cuts the benefit payment instantly, and they can't afford to wait the time that it takes the bureaucracy to resume payments.

roflchoppa• 10 years ago

yeah its a little bit counter intuitive, I would think that it would not be financially stable to have the entire income of a population given to them. Rather it could be a lesser amount of money that would assist, rather than replace their current income.

sqrt• 10 years ago

I'm interested in hearing why it's a bad thing to disincentivize working more. Is it so bad for someone to not be working should they have enough money to live on? (I'm not sure if the benefits in this specific case are enough to live on, but I guess I'm thinking about the general principle.)

dmurray• 10 years ago

People working X hours a week are guaranteed to be spending those X hours producing something useful to society, or at least to their employer. People not working are not.

Sure, some people who are not employed may be raising children or volunteering or doing something else beneficial to society,and encouraging them to work instead would be society's loss. But if we trust in the market economy, those people don't exist, and our real loss is people who are unproductive while on welfare who would be productive given a minimum wage job.

FullMtlAlcoholc• 10 years ago

Anecdotally, it was definitely a bad thing for me. I was laid off of a software dev job at the beginning of the summer in SoCal. I would have loved to have spent that time working as a bartender, for the local bike share program, or as a lifeguard. These were all positions I could leave after the summer (3 months), inevitably returning to a higher paying software development job without causing any harm to my employer. But by actually working, I would earn about half of what I received in UI benefits.

Since I was looking for an advancement in my career (I left the company on good terms and my former boss ended up being one of my references) and not desperately looking for anything that pays, I ended up doing a lot of volunteer work while focused on increasing my skill set a bit and looking for the right opportunity. But I could have just as easily spent that time sitting on my ass.

revelation• 10 years ago

If you are not unemployed, why would you receive unemployment benefits?

The problem with this particular restriction is jobs that don't pay sufficiently, have wildly varying hours or are pretend part-time to stay under some benefits threshold. The solution can not be subsidize exploitative employers who don't provide a livable wage through UB. These jobs are a net cost to society and plain should not exist.

INTPenis• 10 years ago

Important to note too is that in Sweden, and likely other scandinavian countries, you can find a part time job and get part time unecmployment benefits.

As long as it's within the law, on paper. If you're taking undocumented work then you're also taking a risk where you might lose your benefits if found out.

I think maybe there is a larger chance for undocumented work in countries like the US. I have an impression that there is a more prevalent culture of cash-in-hand jobs due to the sheer size of the country.

So maybe you react more to the quote than I would because I've always had documented work, whether it was 25%, 50% or 80% it was always documented and known to the government what I was doing so I could always apply for the necessary benefits I was eligible for.

Eyght• 10 years ago

I know that at least some municipalities in Sweden allows for earnings equal to ~25% of the social welfare payment, before it's reduced. So you can earn about $250 extra per month and get to keep it, instead of being stuck with the same income. Cheap way to provide extra incentive for people to actually get out and work. Even if it's only for a few hours a week.

phkahler• 10 years ago

I have yet to see any mathematical model of how Ubi is supposed to work.

velodrome• 10 years ago

https://en.wikipedia.org/wiki/Negative_income_tax

Negative income tax (more emphasis) + basic income (less emphasis) would be a better system. A negative income tax would encourage people to work. Basic income by itself may just remove some barriers to working but may not result in a change (basic income > costs).

IgorPartola• 10 years ago

If a society produces so much value that everyone can be provided with a basic income that is greater than cost of living, why is that a bad thing?

sonthonax3• 10 years ago

Negative income tax would be a blatant subsidisation of labour, which has it's own issues. In another sense, it's just welfare, but a highly regressive one. More income would go to those who are poor but in work, and less to those for what ever reason (like disability) unable to work.

If you were to further lower the costs of labour, you risk stymieing actual economic growth which comes from improvements in efficiency. For instance, why use a machine when you can just hire more people?

Also what would the effect on monetary policy be? If this was funded though an income tax, would the lower savings rates of the poor, put more money in circulation, thus increasing inflation? Could you account for the change in prices driven by an increase in demand from those who's labour isn't actually valuable enough to sustain their consumption.

I don't claim to have the answers to welfare, but I really think that we should aim for a solution that provides as little market distortion as possible. I sincerely think that a negative tax would be a huge unwelcome and ineffective distortion in the labour market.

aninhumer10• 10 years ago

Negative Income Tax is mathematically equivalent to Basic Income, in that either can produce the same income function with the right tax bands.

However, there would likely be implementation differences in practice as a consequence of their framing.

anotherarray2• 10 years ago

Isn't that the whole point of the experiment?

You need to understand how people react to the idea of "not doing anything and still get paid".

Do they give up? Do they get depressed? Do they create things? Does entrepreneurship increase? Violence rate?... These are all interesting questions

slavik812• 10 years ago

If there are conditions, it's not universal. The distinguishing feature of universal basic income in comparison to traditional welfare was that it doesn't have the disincentives to work caused by means testing. If you add means testing back in, you've defeated the purpose.

InclinedPlane• 10 years ago

"not doing anything and still get paid"

That's not what UBI is about at all. UBI is about getting paid no matter what you do. Which could be doing nothing. Or it could be studying or practicing or learning a new career or even working. The fact that UBI doesn't disincentivize spending ones time in a certain way (whether that's economically productive or not) is hugely important.

This is an aspect of where there's a huge misunderstanding about UBI due to competing economic theories. There are some people, a lot of people, who believe very strongly that the economy is fundamentally coercive. And, more so, that coercive economies are natural, beneficial, and overall desirable. A lot of that thinking has certainly been baked in to a lot of conventional wisdom, culture, laws, and regulation in the economy of western countries for centuries. There are other people who believe that the economy is or at least can be fundamentally cooperative, and more importantly that a cooperative economy is more beneficial and desirable and no less natural than a coercive economy. And this is where UBI comes in, because UBI is essentially how you bootstrap a more cooperative economy. One where people work not because they are coerced to participate in toil due to the alternative being starvation and privation but instead because they enjoy the work or are fairly compensated for it and treated well.

insickness• 10 years ago

Do they get depressed?

I think this is a huge factor that isn't getting enough focus. When people's jobs are replaced by automation and they are on UBI, how do they achieve self-worth? A lot of people get their self-worth from their work, even if their job is monotonous and relatively low-skill. We may be able to replace a low-skilled worker's wages with UBI, but we can't replace their feeling of self-worth. Not everyone can become an artist and even if they could, that may not be enough to give them a sense of purpose. In the long run, this may be a much bigger question than whether or not we implement UBI.

tn132• 10 years ago

Jobless people generally cannot earn additional income while collecting unemployment benefits or they risk losing that assistance.

This is modern day slavery. There is nothing universal about this. It if was universal income than you must get that money irrespective of what choices you make in life. Just because you are getting money from government, government puts up a chain around your neck and says you cant work.

In USA such people might turn to underground economy such as drug peddling.

EGreg• 10 years ago

Why should we care about a disincentive to work more? It's like that trope about welfare recipients all being drug addicts. Or that taxing the rich will make them not want to work.

What motivates people to work is MASTERY, AUTONOMY and PURPOSE. This is very different from the profit motive, and is why people contribute to open source and science.

https://m.youtube.com/watch?v=u6XAPnuFjJc

And anyway, why in the 21st century does everyone need to work? Why should wages be the primary mechanism by which living wages trickle down to the plebes?

McDonalds will soon cut its workforce. So will Uber. Thanks to automation.

If you are jealous that someone somewhere is receiving free stuff, realize how much free stuff you have just by being alive in the 21st century!

If you are upset that you'd be taxed for the free stuff -- then make sure that we develop systems to tax machines. Yes you heard me, start taxing the machines.

If people were more free to choose what to do with their time, they'd probably spend more time with their family and study more and contribute more knowledge to society. Instead of working a dead-end job at McDonalds.

If you want to read more about the economics of this, I wrote an article:

http://magarshak.com/blog/?p=185

kr72• 10 years ago

Another limited duration trial (two years). What's the point? It's not going to measure the real effect. People will know it is going to run out and behave differently than if it was permanent.

nickff2• 10 years ago

Well it's probably better than just instituting a program and hoping it works. Ideally, all government programs should be subject to measurement and re-evaluation.

kr72• 10 years ago

The choice does not have to be between "do a bad study" or "do no study at all".

A proper study would be permanent and self-contained. Participants would need to give a portion of outside income to the program to simulate higher taxes and/or inflation.

readittwice2• 10 years ago

So true, thanks for writing that!

Don't give them the money just for two years, but guarantee them the money over their whole life and you will see vastly different results.

Another "problem" with this kind of study is that they are giving money only to unemployed people. Because it would be also interesting to see what people with jobs would do. I suspect a lot of people would switch from full-time to part-time jobs (at least that's what I would do).

thwarted5• 10 years ago

Don't give them the money just for two years, but guarantee them the money over their whole life and you will see vastly different results.

Since people born into wealth are "guaranteed money over their whole life", can't we study what they do with their life compared to what people who are not born into money do with their life? How or how not would this kind of study produce meaningful, legitimate results?

There is some aspect of this kind of experiment/study to find out how individuals would perform if they didn't have the guaranteed income in the past but then suddenly do, but that's only meaningful for the transitional generation. If UBI were truly universal, it would need to be multi-generational. And how would those born with it, never having known anything else, treat/understand work? There's no such thing as "switching from a full-time to part-time jobs" in this context, or at least the impact and meaning of doing so is different than those who have a concept of what not having the guaranteed income means.

agumonkey3• 10 years ago

What would be an acceptable limit ? 10 years ? in that span you're free to plan long project, even raise children in the same place long enough they can develop habits, friends, without too much stress.

kLeeIsDead6• 10 years ago

There is no acceptable limit. It should be for life, or longer.

mpartel• 10 years ago

While widening the scope in either duration or number of people would certainly help, I think this is still useful. It should still tell us to what extent the current benefits system leaves short side gigs and new small businesses on the table.

The time limit may, to an unrealistic degree, encourage the subjects to look for solutions for the long term. Then again the question of whether UBI encourages laziness seems to be out of scope already, since this targets only people who are already unemployed.

geon• 10 years ago

An what can you accomplish in 2 years anyway? Not enough time to start a business or even study.

ChrisNorstrom• 10 years ago

Will Finland admit publicly when it fails or will they just hide their idea as if it never happened?

Remember Bio-Fuel? How progressive and wonderful it was suppose to be? Until it caused a global food shortage and suddenly none of the media ever talked about it again.

acbabis• 10 years ago

Global food shortage? If you're talking about ethanol from corn, that doesn't sound correct. Corn-based foods are dirt cheap

protomyth3• 10 years ago

Yep, the current prices of commodities are pretty low to the point it was a campaign issue in farm country.

noonespecial• 10 years ago

It will give them benefits automatically, absent bureaucratic hassle and minus penalties for amassing extra income.

That last part is huge. A disincentive to work by cancelling benefits is a feature of nearly every current system. It is extremely important that someone test a system without this in it to see how a people react.

This looks like a very important test for the viability of UBI.

Jarwain2• 10 years ago

It might be some implicit bias that I have, but I read that as minus, or without, penalties for amassing extra income. As in there are no penalties for amassing extra income. There is a double negative in there. I'm trying to find a more authoritative source on whether this is the case

edit: i misunderstood your comment, seems like your interpretation lines up with mine.

edblarney5• 10 years ago

These programs depend at very least on the 'savings' government will incur by not having 'massive bureaucracies' to manage the program.

The problem is - Government Unions are the most powerful in every state, and they will never, ever allow any significant layoff of personnel.

So you get a 'new program' without the most important stated benefit.

The reality of government, is that it is systematically inefficient because of entrenched labour practices - no just because they 'may not be good and doing some thing'.

I love public transport.

In Toronto - we still have people at every station selling tickets and making change. 17 of them were on the 'sunshine' list last year as earning over $100K in the year. You read that right: the guys in the booth making over $100K. Granted, this is with 'overtime', but probably not more than many people in the private sector work.

So the government can't help put pay many of it's entities wages that are quite above normal, with massive add-ons and incentives.

Given that small tidbit - can you fathom why it's so gosh-darn expensive to add public transit services???

There are a few other fairly fundamental problems with the program as well, first being simply the cost (Ontario government that is 'pro' program said it would cost $175 Billion a year, basically our whole budget) - and then the moral/incentive issue: where I live in Montreal everybody is an 'artist' 'photographer' 'cinematographer' 'choreographer' 'dancer' 'writer'. But they all work in coffee shops and restaurants. Montreal would go bankrupt instantly because the 'cinematographer' that makes my latte in the morning will quit instantly. In my community - there is absolutely no sense of 'industriousness' in the Anglo sense - they see no problem with fussing about making quite bad films that nobody wants to watch. Were there some latent amazing output I might think it's a good tradeoff, but no, they're seasoned amateurs.

In a rational and sensible society ... this program would be amazing. But then, in a rational and sensible society, there would be very low unemployment, and streamlined government so that the 'means testing' issue would be moot.

It might work in some specific places.

guard-of-terra2• 10 years ago

As Basic Income is being introduced, unions will be slowly sunsetted. They may still be useful to oversee work quality and workers' rights, but movement to BI means at-will employment and that's not something they'll get to haggle with.

The idea of BI is that you won't be able to live off it in Montreal. It might be sufficient to live off in some small remote town, but not in megapolis. They'll have to still wait tables, or move from Montreal.

sampo• 10 years ago

A disincentive to work by cancelling benefits is a feature of nearly every current system. It is extremely important that someone test a system without this in it to see how a people react.

One example we can look at are university students in Finland. They get 340€ per month student benefit plus €200 student rent support, a total of 540€ per month.

This student benefit is not decreased as long as a student earns less than 1000€ per month from other income. And yes, the students are quite eager to take part-time and short-term jobs.

lastyearman4• 10 years ago

Except you can just barely live on student benefit. Either you take debt or work, so I don't think the two can be compared.

For me I was bumping on the limits while on receiving student benefit, so it made no sense for me to work any more hours than I did. Had I worked any more, the pay would have been effectively zero, which is crazy in my opinion.

rhapsodic• 10 years ago

I want to be on record here. Today, December 17, 2016, I predict that this will fail. And by "fail", I mean that this will not become a universal entitlement in Finland.

yoavm• 10 years ago

That it won't become a universal entitlement as it is - that's pretty easy to predict. Question is whether Finland (and the rest of us) could learn from this experiment and make our current system better using the knowledge we gain from it, or not. "Failing" would be an appropriate term only if this would have zero effect on what we have today.

denim_chicken• 10 years ago

Easy there Nostradamus.

mistaken• 10 years ago

I predict the opposite. It will succeed and will be adopted by all developed nations within 50 years.

omash4• 10 years ago

Of course this "test" will fail, they're giving it to a group of people who already have a specific state of employment. It won't be seen as a safety net to follow their ambition because of its temporary, non-universal nature. It might make sense for them to hoard the cash until the test is over or spend it lavishly as a temporary reprieve from poverty.

I hope this won't create material to make a case against basic income in future.

aninhumer10• 10 years ago

While I'm not particularly optimistic, I could imagine it succeeding by temporarily eliminating poverty traps and providing stability for the beneficiaries, allowing them to gain experience or pursue training and end up in a much better position in two years time.

DalekBaldwin• 10 years ago

It won't be seen as a safety net to follow their ambition

Well then, a basic income only given to the ambitious wouldn't be a universal basic income, would it?

JackFr• 10 years ago

If its only going to jobless people, not UBI.

This is not a meaningless distinction -- one of the features of UBI is that it is universal. If this just goes to unemployed people we cannot see the change in behavior with people who are earning close to their reservation wage. Do they stop working?

This is streamlined rebranded welfare. Not a paradigm shift.

Jarwain2• 10 years ago

They're calling it Basic Income, not Universal Basic Income. The goal being to see what the differences are between the unemployed and the control group.

There may be other issues baked into the implementation, but it will be hard to say the result until it goes into action and we start getting data

samcollins• 10 years ago

I agree. The implementation here will still enable us to learn about some aspects of UBI. The question of how benefits affect the motivation to gain re-employment will still need to be studied in further experiments.

I think it's worth celebrating that Iceland is doing controlled tests to explore this way. To really understand the best design for UBI, we need more of this.

edblarney5• 10 years ago

I agree with that statement.

But a detail: it will not be 'streamlined'. Those government workers are not going anywhere.

It's worth an experiment, though.

komodo2• 10 years ago

Why don't we do a basic income lottery?

- Anyone except previous winners can enter.

- You can only enter once per drawing.

- As the pool increases the payout does not, only the number of winners.

- Winners get a basic income for life.

- As another condition they agree to an amount of monitoring so that we can effectively study how they behave with the basic income.

- This one would be hard, but you might have to be made ineligible for other government assistance programs maybe?

State lotteries already offer annuity payouts and even better they sometimes have 100k for life lotteries. These aren't perfect as the amount is too high but it's worth studying anyway. The basic income lottery described above would be an even better approximation.

EDIT: I just did a bit of googling and it looks like this has been tried before [1][2] , but the amounts were time-limited and low. It would probably have to be state-sponsored to take off.

[1] http://www.businessinsider.com/germany-basic-income-lottery-... [2] https://www.indiegogo.com/projects/the-my-basic-income-proje...

oh_sigh• 10 years ago

There are already lotteries that pay out $1k/week or something for life.

omash4• 10 years ago

I bet winning in a lottery feels a lot different to receiving your regular allowance the same as everyone else. I think this would affect behaviour.

ChrisjayHenn• 10 years ago

The only bit i'd quibble with is becoming ineligible for other assistance programs - one concern pro-UBI economists raise is that if it replaces social programs, the cost of necessities like childcare and housing will just increase proportionally. There's a good argument to be made that certain social goods are actually better when there is no profit motive for the people providing it.

Aside from that, I really like your idea. Given the number of people who want to see a UBI, this might be one celebrity endorsement away from getting crowdfunded.

jondubois2• 10 years ago

NOOO! That is a terrible idea. There is already way too much luck involved in our current economic system. If would really suck if all your friends won the lottery but you didn't.

These kinds of economic lotteries only create more inequality; which is against the whole point of UBI.

It makes more sense to start by giving out a really low UBI to EVERYONE and then gradually raise that amount over time.

wlievens4• 10 years ago

You'd probaby have to change their tax regimen too. Seems completely unworkable.

Manglano• 10 years ago

These are distinct concepts. Anyone can receive the benefits, so it is universal, but there are conditions.

Advocate for the Unconditional Universal Basic Income. All citizens deserve an equal allotment of the benefits, especially because no nation's populace is ever 100% mobilized as workforce.

ilaksh• 10 years ago

Exactly. Its bad because it is reported as a UBI test but is pretty much the opposite because it does not change the one thing UBI changes which is that you continue to receive the money even when you get a job.

jcoffland2• 10 years ago

The article says they will continue to get they money even while earning money elsewhere. They are just selecting jobless people to start the program.

cuppa_chris• 10 years ago

Well they're doing it for 2000 people, so I would assume this is more of a test to see what behaviour jobless people exhibit when given a basic income. They're not rolling this out nation-wide yet. I'm all in favour of UBI because I believe there simply won't be enough work for everyone. But I can understand running a study first to test the waters. 2000 people sounds like a good number too. It's expensive, but if things continue in the way that they're trending, then it's a necessary expense.

ggggtez• 10 years ago

You see this is why other people run the countries. My solution to joblessness would have been to start wars in far off lands.

cromulent• 10 years ago

You have to be jobless to enter the program, but then you can work as much as you like.

"It will give them benefits automatically, absent bureaucratic hassle and minus penalties for amassing extra income."

logicallee• 10 years ago

how pissed would everyone be if one of these people became a millionaire through working on some business while using Finland's cash handout to finance it.

even though the taxes from that is exactly what would make the whole program absolutely free - and is the basic point behind a UBI. It really is "free" for the country.

A proper test of UBI has to make it available to everyone.

jcoffland2• 10 years ago

Why would anyone be pissed? If someone else does well how does that hurt you?

charlesdm• 10 years ago

They would pay capital gains tax upon the sale of their business, and contribute a ton to the treasury. That would be awesome.

gambiting5• 10 years ago

I'm from Poland, where recently the government introduced a "500+" program, which means that every family in the country receives 500PLN per month, per child, from the day they are born to the time when they are 18 year old.

Now, my parents run a company which mostly has physical workers - and for a physical worker, in the "poorer" part of the country, 1500PLN/per month(after taxes) is an ok salary.

The day the 500+ program started, several employees left, literally saying that they have 3-4 children, so by just getting the money from the government they will be better off than working and they don't need a job anymore. They are all jobless and living off 500+ as far as I know.

I would say that's a pretty good indication what will happen with UBI - I'm sure there's loads of people who wouldn't leave their jobs because they like having more money(me included) but for a lot of people if free money is enough to get by then that's what they are going to live on.

inimino• 10 years ago

They now have free time to pursue another career, further their own education, or put more time and energy into the next generation.

The interesting question is what would happen if it was for everyone and not just those with children. Do you think this would be a bad thing?

RealityVoid• 10 years ago

And if the intended effect of UBI is lowering the need for employment, then your little anecdote seems to indicate it would work.

rwmj4• 10 years ago

The interesting question is how did your parents' company react to this: Increasing automation? Increasing productivity amongst existing workers? Increasing salaries to attract people? Employing childless people? [in the UBI case that would be analogous to employing non-citizens or illegal workers] Producing less output? Something else?

ido2• 10 years ago

And yet "Kindergeld" (same principle in Germany & Austria) is more money than that and has existed for decades, and neither country has a much higher unemployment rate than Poland (much lower than Poland in Germany, about the same as Poland in Austria). Furthermore they have fewer children per woman, so this apperantly did not spur a huge baby boom.

So not really sure what we can learn from that. Perhaps salaries are simply too low in Poland?

mrottenkolber6• 10 years ago

Since we are speaking in anecdotes, have you considered they might have just disliked their particular workplace?

schlowmo3• 10 years ago

"which means that every family in the country receives 500PLN per month, per child"

Looks like this isn't quite correct:

"The new, universal child-raising benefit of PLN 500 (EUR 114) monthly is granted for every second child under 18, and for the first child if the family income is below PLN 800 (EUR 182) per capita per month (PLN 1,200/EUR 273 in the case of child disability)."[0]

[0] http://ec.europa.eu/social/BlobServlet?docId=16077&langId=en [PDF]

Fnoord• 10 years ago

The day the 500+ program started, several employees left, literally saying that they have 3-4 children, so by just getting the money from the government they will be better off than working and they don't need a job anymore. They are all jobless and living off 500+ as far as I know.

Yeah, yeah... I know that kind of story.

This isn't the complete picture. You are presenting anecdotal evidence, and omitting important details. Some important details you are ommiting:

1A) For the job you provide, is the QoL of the work low compared to the wage and potential health hazard(s)? This seems to be the easiest counterpoint to your entire argument. You also lack statistical relevance. 1B) You omit the question wether those workers were easily replaced. If yes, what type of income & benefits did those people receive? If no, why not?

Aside from that one:

2) Which other social benefits exist in Poland?

3) Are these affected by child support benefits?

4) How exactly do the various tax systems work in Poland?

5) Are/were they performing unreported work?

I would say that's a pretty good indication what will happen with UBI - I'm sure there's loads of people who wouldn't leave their jobs because they like having more money(me included) but for a lot of people if free money is enough to get by then that's what they are going to live on.

Do you have children yourself? Children are a huge joy, but also a huge burden. It is a living hell to both work, and also have children. What some people with good wage do is work full time, both, and have child caretaker(s). Those are going to be employed.

There's also the problem that unskilled work in the West is in decline. I don't know if that is true for Poland though.

And there is the notion that you either work full time, or you don't work at all. Why these extremes? With 3-4 children you are overburdened by them, and it'd be an option for one of the parents to not work full time.

nkrisc• 10 years ago

Doesn't that open jobs for people who don't have kids or still need work?

douche2• 10 years ago

In a world where childcare costs for 2-3 children can swallow up the lion's share of a full-time salary, I'm in no way surprised that there would be some who can do the calculus and realize that getting paid to stay home and take care of their own kids might be a better deal than working hard to earn money to pay someone else to watch their kids.

johnchristopher• 10 years ago

Not that I disagree with you but there might be some points in the Finland constitution that guarantee its citizens the means to live a decent life. My country has that (France as well I believe) and it's a point of dissension between the various point of view of what is and should be social welfare.

serge2k• 10 years ago

How is this a test of UBI? It's just a welfare system.

undersuit• 10 years ago

If you want to really test UBI and not have critics point out some stupid difference between the test program and real UBI you need to implement a permanent, world-wide, basic income. Other wise "it's not UBI."

So it's not UBI, it's a test.

vondur• 10 years ago

I'd assumed that Finland had a really strong welfare system like Norway and Sweden.

pvdebbe3• 10 years ago

But it has?

jpatokal• 10 years ago

It does, it's just structured badly.

buryat• 10 years ago

Implemented on a big scale it'll lead to higher inflation and ultimately will increase stratification.

scoopr• 10 years ago

Curious thing, Kela (who handle the benefits, among other things) made their sampling code public[0]. The code doesn't really tell me anything though, except that the random seed is taken from wall time.

[0] http://www.kela.fi/perustulokokeilun-otantakoodi

kakoni• 10 years ago

Same as github link; https://github.com/kakoni/otantakoodi/blob/master/otantakood...

koolba3• 10 years ago

What's stopping people from taking their universal income and moving to a different country with a lower cost of living. Do you you have to collect it in person? A UBI of $1-2K/month isn't that much in the western world but you could live like a king[1] in the third world.

[1]: Okay maybe not a very rich king but but you'd definitely be doing more than fine.

taxtaker2• 10 years ago

Benefits are usually contingent on residency. Go away for too long and you lose your benefits.

conanbatt5• 10 years ago

Assuming that recipients are also taxed on their world income there is little difference between someone not working and living somewhere else or or not doing it without the country. It might be something unfair but i cant fathom it being significant at scale.

The problem is the people coming in: how do you stop high levels of immigration from people that would not be as productive as finnish people and hence would quickly become a drain on the state. The greatest single enemy of open immigration is welfare.

omash4• 10 years ago

Don't give it to the people coming in?

murtnowski• 10 years ago

Wouldn't a better idea be to give it to people with lower middle income which is more indicitive of the average household

muse900• 10 years ago

What is that gonna achieve exactly? Aren't prices gonna just inflate upwards and things become less affordable?

If you just pay everyone X amount of money every month for whatever, it just means that in order to produce something you'll need to pay someone a lot more than that X amount in order to work and produce it and also it means that that item is gonna increase massively in cost in order to pay the items production itself.

I am highly against that idea.

You want to solve issues? Give free food/water and shelter for survival, thats all a human needs. It doesn't need to be a food from a chef or Evian water or a house with even an internet connection. All it needs is just to provide some safety that that person is not going to die of starvation or weather. Other than that if you want to have a better have and lifestyle well you have to work for it.

user5994461• 10 years ago

Yes. If you pay everyone the same and you wait for years for the inflation to kick in and stabilize.

it's not gonna have much effect if only a few thousands people are paid (who may already get unemployment benefits by the way).

conanbatt5• 10 years ago

What is that gonna achieve exactly? Aren't prices gonna just inflate upwards and things become less affordable?

Inflation is generalized increases in prices.

I really dont understand why people make the argument that UBI would cause inflation due to demand: it would shift prices of many products (because increased demand in basic cheap goods) but probably marginally so and even then it would not affect inflation rates as a whole. High luxury cars are not going to have more demand.

If you just pay everyone X amount of money every month for whatever, it just means that in order to produce something you'll need to pay someone a lot more than that X amount in order to work and produce it and also it means that that item is gonna increase massively in cost in order to pay the items production itself.

Outlandish claim! We dont know how its going to happen. Its not true that you have to pay more, actually you could argue you will have to pay less, as UBI supplements the income: i.e. someone that wants to make 1500U$S a month, and with UBI gets 500, might be satisfied with an easy 1000U$S job.

True, the jobs that nobody wants to do will probably have a higher premium: it gives higher leverage to every human being as they can choose not to work a bad job like garbage disposal, or cleaning up road kill. So some labor is subject to decreased supply,and others of increased demand. Its impossible to know what would happen without experimentation.

You want to solve issues? Give free food/water and shelter for survival, thats all a human needs.

This is the exact opposite point of whats truly attractive about UBI. Free food and shelter is very expensive to give through the state ,and much cheaper to just hand out money!

For example, SF spent 241 million dollars in homeless programs in a year[1]. There are about 6,500 homeless people in SF[2]. Alternatively, the city could have given them 37k U$S cash and come out ahead, effectively putting them above the median income in the US[3]

In theory, the city could literally make the homeless people disappear overnight at no extra-expenditure.

http://www.sfchronicle.com/bayarea/article/S-F-spends-record...

http://projects.sfchronicle.com/sf-homeless/numbers/ [2]

https://en.wikipedia.org/wiki/Personal_income_in_the_United_... [3]

atmosx• 10 years ago

What is that gonna achieve exactly? Aren't prices gonna just inflate upwards and things become less affordable?

It is a try to save capitalism from itself. You see, today's tech is turning entire sectors obsolete (e.g. self-driving cars). In a standard capitalistic economy, you work at XCorp who pays you (the employee) in order to be able to buy their products. This model worked in the 20th century where industries (e.g. Ford) had thousands or even millions of workers all over the place. Now we have 5-member companies running startups with millions in turnover.

Today average Joe has a very hard time finding a job that will allow him to create a family and live well and no, not everyone can become an engineer, lawyer, doctor or banker.

So, we either find a way to re-distribute wealth or we're up for a bumpy ride that will end bad for everyone...

Universal income is an idea that is making rounds and is generally accepted by modern economists (left, right and liberals) in various forms of course. The idea is that someone with rather basic needs, will spend all his income in food, shelter, clothes, etc. So, since it's nearly impossible for them to find job, just give them money to spend buying stuff, even iPhones if possible...

I believe that we're in a phase of uber-consumerism. To sustain this kind of unnatural growth, capitalism needs to find virtual ways of creating demand or we need to start exporting to mars.

omash4• 10 years ago

in order to produce something you'll need to pay someone a lot more

At some point it becomes worth automating the work and that means no rising pay and fewer humans having to do jobs they dislike.

kobeya• 10 years ago

I'm, that's not universal if it is restricted by means test or employment status.

snicky• 10 years ago

What's the evidence that results of such study could be generalized to the entire population? I mean, yeah, 2000 people seem like a big group, but one might have different ideas about what to do with free money if the society around stays exactly the same vs when everybody else is also entitled to UBI. When I'm unemployed and look around and see all my friends work I might feel quite ashamed of myself and willing to change, but if all of them "retire" at 30 instead this might not be exactly the case.

Mz• 10 years ago

Now, the Finnish government is exploring how to change that calculus, initiating an experiment in a form of social welfare: universal basic income. Early next year, the government plans to randomly select roughly 2,000 unemployed people — from white-collar coders to blue-collar construction workers. It will give them benefits automatically, absent bureaucratic hassle and minus penalties for amassing extra income.

The government is eager to see what happens next. Will more people pursue jobs or start businesses? How many will stop working and squander their money on vodka? Will those liberated from the time-sucking entanglements of the unemployment system use their freedom to gain education, setting themselves up for promising new careers? These areas of inquiry extend beyond economic policy, into the realm of human nature.

I am not a fan of the idea of universal basic income, but I would love to see the existing social safety net system get tweaked to be less retarded. I hope this experiment goes good places.

romanovcode• 10 years ago

This is not UBI (universal basic income), this is re-branded welfare.

aninhumer10• 10 years ago

Not exactly. While it's initially only being offered to unemployed people, it will have reduced bureaucracy and won't be withdrawn if people start earning.

It's by no means a perfect test of UBI, but "re-branded welfare" isn't really fair either.

SCAQTony2• 10 years ago

Finland's population is 5.439 million, It may work for 2000 people but will it be workable and scale up to 10-million, 50-million or 100-million people? I believe the "square cube law comes into play.

Square cube law: https://en.wikipedia.org/wiki/Square-cube_law

CopOnTheRun• 10 years ago

Why would the square cube law come into play here? I don't understand how it's related to this context.

SCAQTony2• 10 years ago

Ooops. I should have referred to the Economies of scale rule instead. Perhaps 10-people could manage 2000 payouts whereas as the population grew to 200,000 or more regional offices and support staff would grow and inefficiencies would become more expensive.

mrleinad7• 10 years ago

Why don't we just cover everyone's basic needs and be done with it?

This is a pointless discussion. Just give everyone enough food, shelter, and free access to medicine. It'll create a society where we don't stress over losing a job because we don't know how we're going to get our food tomorrow.

The reason that some people think this "disincentiveces" people to work is that they'd have to pay higher wages and wouldn't be able to exploit human beings, as all capitalist systems do. That's it. That's their whole argument. The rest is just dressing it up with empty moral questions about "giving away the fish instead of teaching how to fish".

lacampbell2• 10 years ago

I agree with you in principle. But I am extremely dubious of using the state to accomplish this. I would rather see a cultural shift where we all agree we don't need state coercion to get us to help one another. Anything the state does IMO will be inefficient and involve pay offs to a few select chosen corporations.

Do we need force to do this? Do we need cronyism? Do we need corruption?

mrleinad7• 10 years ago

Corruption exists in corporations as well. Who do you think pays bribes to state officials?

The state can be efficient too, regardless of it being a monopoly. It just needs the same thing an efficient company does: overseers and the right push to be efficient (a.k.a. an informed and well educated population that knows when they're being scammed and demands better services for their taxes)

malcolmgreaves• 10 years ago

Well, there needs to be an actor that has enough influence and power to actually make it all work. UBI isn't going to work if it's ultimately a volunteer based system. We already have lots of voluntary donations ($ and time) in our present day.

pgwhalen2• 10 years ago

The problem with your thinking is that it ignores that it takes "work" to get people those basic necessities you refer to. So there absolutely is a danger in disincentivizing people to work, if people contribute nothing, but consume even these basic needs.

I'm not against basic income, but there absolutely is risk to society.

danharaj2• 10 years ago

The amount of work to produce our basic necessities has fallen decade after decade for over a century.

We are wringing our hands over the perceived threat of "lazy" people when the cure for this alleged disease causes so much misery for so many people already. It's not a fear founded on empirical evidence.

mrleinad7• 10 years ago

So, you're saying that giving people the basic needs for living creates more jobs?

There, you just solved the problem. Put money into creating this structure and it'll sustain itself.

saycheese• 10 years ago

Worth noting that less than 100 people on Earth have the net worth of half of Earth's population; half of the world's population is 3.5 billion people.

Notable source: https://theguardian.com/business/2016/jan/18/richest-62-bill...

caseyohara• 10 years ago

The incentive system you mention only exists under the assumption that everyone needs to work. My understanding is that with the productivity gains of the digital age, those that are working are able to produce enough to cover those that are not working. We have an abundance of wealth, more than enough to ensure everyone's most basic needs are taken care of. It's just at odds with a capitalist economy.

hibikir2• 10 years ago

Because giving people money is a better way of doing the same thing while matching people's preferences.

For instance, food: Handing people a government decided food basket will not optimize for what people want to eat, or know how to prepare. Give them enough money to feed themselves, and we spend the same amount and we have happier people and less distortions. Same thing with shelter: Money means that we let people make their own choices, instead of recreating a new version of the projects. The one place where the market tends to fail is medicine, but that's because people's preferences there are a lot less valuable, as all people really want is someone to help them get healthy when they are sick. And even then, there are cases where giving people choices is better: The US' end of life care is so expensive and so dismal in part because what is covered and what isn't is decided by third parties: Often people prefer to end their life comfortably than to do many of the uncomfortable, but somewhat life extending things that we do to them.

That's the ultimate argument for money: Maximizing people's choices in how to go around getting the basic necessities of life. The trick is that the amount of money we give people would have to be modified to make sure said necessities can be met.

mrleinad7• 10 years ago

I couldn't agree more with your point. Mine was just basic needs should be covered for everyone. How? That's up to debate, but giving people money increases demand for goods, which activates the economy, so I'm all in for this program.

golergka• 10 years ago

Everybody has a different idea of a risk/reward ratio he wants in his life. Some people just want stability with basic needs met, and have no ambition for more; you would actually find a lot of them in modern russians who want Soviet Union back. But other people are quite OK with a risk of being sick and homeless as long as they keep their freedom to make their own destiny. And the notion that they have to pay a lot of money to some organization just to pay for other people's mistakes is completely alien to them.

I'm not trying to convince you that their worldview is better. But if you're talking about state-wide things, you have to take those people in consideration, too.

marcofloriano• 10 years ago

Let's back to basics. How do we cover the needs of one person? Better, how do we cover only the need for food? You need to produce rice, beans and meat. How do you produce all that? A lot of ways ... but you need to produce. And that word alone is the problem here.

The moment someone stops producing, he is a burden. He must be carried on by someones else production. The government does not produce anything. The moment he starts handing over cash to people who do not produce, he is transferring the production of someone who works hard to someone who does not.

You want to help those people? Pay them to study, get some skills. Pay then to clean the streets or the public bathrooms.

But for God sake, do not pay them to do nothing. It's unfair with the rest of those who actually work really hard for this handed cash.

mrleinad7• 10 years ago

People out of work is not that way because they're lazy.

They're that way because the only jobs they can get are jobs that will have them work all day long for a pay that won't even cover their basic needs.

Human exploitation in several forms is all too real and happening right next to each one of us, and almost no one seems to recognize it.

Do you want to give them jobs? Fine. But don't provide minimum wage that will make them have to work 70 hours a week just to make ends meet, and want to kill themselves afterwards.

mstodd• 10 years ago

You /might/ replace 'unfair' with 'immoral'. Lots of things in life are unfair and are just a part of life, so there's a mentality that unfairness is just a part of life. Hopefully those who wish to take from those who work can see that this is theft and theft is immoral.

nimoore• 10 years ago

This is not UBI

nradov3• 10 years ago

Instead of just giving people money our governments at federal / state / local levels should become employers of last resort for everyone who has exhausted their welfare or unemployment benefits. Guarantee 30 hours / week at minimum wage to anyone who wants to work. Even if it's just trail maintenance or graffiti cleanup they will at least be maintaining basic employment skills, and have enough spare time to retrain for something better.

ahallock3• 10 years ago

How about actual job and skills training, instead? I would much rather my tax dollars go to training an electrician than some made-up bureaucratic job.

nradov3• 10 years ago

It's not either / or. Someone can work 30 hours / week and still have time for training. I do agree that we should do more to get the long-term unemployed into training programs at community colleges and trade schools.

Gustomaximus• 10 years ago

This is what I really support, but would take it a step further. I feel the problem is so many countries have this poverty line unemployment payments as a once size fits all. I think we should break support into 3 categories.

1) for the immediately unemployed that have had a history of paying tax, give them generous payment coverage between jobs for a 3-6 month window type thing. Something like 60% of their pay.

2) after said time window, if no unemployment is found you are given guaranteed 30 hours (or whatever is right) work at minimum wage in areas that are as non competing the the economy as possible. E.g. Beautifying the city or helping seniors etc.

3) if you refuse to take minimum wage work you can get a set amount of food and basic accomodation to keep you from beng homeless/starving.

From point 2, as automation becomes more prevalent and effective the number of hours worked can be reduced to match this progress.

Ericson23145• 10 years ago

What's the point of making people do stupid ass jobs?

Now I'm all for spending money on the commons in ways the private sector is too petty to address, but do this for the results of the investment, not just for employment.

I'm more OK with adjusting UBI to cancel out fluctuations in infrastructure spending.

nradov3• 10 years ago

There's nothing ”stupid ass" about cleaning and beautifying our public spaces.

eanzenberg• 10 years ago

Why not tax accumulated wealth and assets?

jganetsk2• 10 years ago

I agree with basic income, but most analyses of it are backwards.

For most of history, governments addressed unemployment by starting wars. By shipping off to war, the unemployed temporarily get a job. They either come back dead or ready to take a new job in an economy revitalized by the stimulus of government war spending.

John Maynard Keynes noticed this pattern, especially during the Great Depression and WW2, and made a brilliant suggestion: continue with these government interventions, but keep the government spending and drop the war part. We call it "Keynesian economics", but really, what Keynes invented was capitalist peace. And guess what, since then, no two countries that both had McDonald's had fought a war against each other since each got its McDonald's. [1]

We need a Keynesian boost today, not because of technological progress, but rather the contrary: the rapid technological progress of the 20th century that brought tremendous economic prosperity to humanity has finally come to a grinding halt. Let's stop denying this. The stream of lifechanging breakthrough inventions of the 20th century, from A (antibiotics) to Z (zippers), have ended. As a result, we now suffer from secular stagnation, something Keynes understood very well back then, and Larry Summers understands in the present. [2]

It's especially absurd to claim that automation is the cause of this. Automation has already upended society: it was called the Industrial Revolution and happened 200 years ago. The upheaval caused then to human lives and employment was far more dramatic than anything happening today.

And basic income is simply the most fair way to apply Keynesian policy. It is more fair to split the money up and distribute it equally to every individual than it is for the government to buy things on their behalf. Highly distributed spending will also avoid creating market distortions and liquidity traps. [3] And the resulting economic boost will lead to increased tax revenues and, who knows, maybe more jobs -- this time not subject to labor market distortions caused by people being desperate for work.

[1] https://en.wikipedia.org/wiki/The_Lexus_and_the_Olive_Tree [2] http://larrysummers.com/2016/02/17/the-age-of-secular-stagna... [3] https://en.wikipedia.org/wiki/Liquidity_trap

awqrre• 10 years ago

100% automation is not here yet... we are probably at 25% (my very rough estimate)

stretchwithme3• 10 years ago

Keynesianism is like making waves in a pond and pointing out how much higher the water has risen.

It ignores where the resources come from and the jobs being performed in other parts of the global economy that must be cut, often in some other country, because the resources are being used for something else.

If a country is going into debt to stimulate, its pulling resources from other countries where jobs have to decline. But perhaps those declines are more spread out and harder to measure and understand. So we can make the mistake of thinking they don't happen.

But what if a country stimulates by printing money, not borrowing? Money is only a medium of exchange, not an actual resource. Creating more of it just means more it has to be used to get the same result, if you look at what really happens over time, as opposed to comparing prices the day before you print with prices the day after.

jganetsk2• 10 years ago

It's totally misleading to think of the economy as a pond holding a fixed quantity of water. The water level does change, and sometimes you need to make waves to do it.

For this, you should read Paul Krugman's babysitting co-op analogy, a basic description of how an economic depression functions: https://en.wikipedia.org/wiki/Capitol_Hill_Babysitting_Co-op

kahrkunne• 10 years ago

I hate being "that guy" but am I the only one who expects this particular brand of communism to not be any better than previous attempts?

Somebody's going to have to pay for this...

fnj2• 10 years ago

"Somebody" has to pay for welfare, too. The fact that all social welfare programs have a cost is not a reason to reject all social welfare out of hand. Do you really think welfare programs should be abolished? What level of starving to death and freezing to death in the streets are you comfortable with?

caspianm• 10 years ago

Compared to a regular welfare system where they stop paying if the recipient has the ability to support themselves / doesn't need it (from each according to his ability, to each according to his need) UBI is the opposite of communism. This one where people have to be jobless at the start isn't ideal though.

DonaldFisk3• 10 years ago

It isn't a brand of communism. It doesn't involve any nationalization. Also, no communists have ever implemented basic income. It isn't even an exclusively left wing idea. Milton Friedman supported it, Charles Murray supports it.

sova• 10 years ago

Thrilled that the idea that ones basic needs be met as a basic human right is gaining traction. Granted, in the form of our most common commodity-abstraction apparatus (cash).

ahallock3• 10 years ago

I feel like we're creating a new government program to counter the failures of an existing one: education. If people had marketable skills, it would be a lot easier to find work. Perhaps tax revenue should go to education and training, instead.

I think we're a long way off from total automation of most industries.

mattlevan• 10 years ago

Or perhaps we should drastically reduce government's role in education altogether. After all, we were doing fine before the Department of Education opened in the seventies!

ahallock3• 10 years ago

That would be ideal. Government-run education does not respond to market forces, so I don't trust them to produce skilled graduates.

fnj2• 10 years ago

As many have noted, this is not UBI; full stop. Also, you can't "test" something that is supposed to be universal by definition, on a micro scale and to a selected subset.

randyrand• 10 years ago

we have unemployment cash benefits in the usa. its quite similar in most regards.

itazula• 10 years ago

This reminded me of the Y Combinator Basic Income project. The last I read about that was this: https://blog.ycombinator.com/moving-forward-on-basic-income/ I wonder what the status is?

collyw• 10 years ago

If it is given to jobless people then its not really universal basic income. Its just removing bureaucracy from the current system.

shurcooL• 10 years ago

jobless
universal

Doesn't sound very universal. One of the big factors that make it a good idea is that receiving the basic income shouldn't make you disincentivized from doing more and getting a job, etc. Otherwise, how is it different from existing welfare programs and such?

return0• 10 years ago

A country with very good welfare like Finland is the worst place to test UBI, which is supposed to replace welfare.

fpp• 10 years ago

From a first cross-read, this article is bluntly discrediting UBI.

Starting with numbers: about 204M working age population in the US - hence the USD10K to each of them example would just make somewhere what is spend yearly for military and banks - the 8 times numbers cited in the article of what is spent today does not make any sense.

The linked article does not mention any amounts that Finland wants to provide to the 2k people - instead it is referring to Swiss calculations - last numbers I've heard with Finland were on par with current social security / poverty level pays (~EUR600 p/m) - this of course does not enable most of the key effects intended with an UBI (money into spending, freedom of choice for work etc) - it only continues the current system (with some potential savings within the administration).

To get a better understanding we have to at least repeat the Canadian experiments from the 1920s (proven that it is substantially beneficiary for the economy overall) - more money than poverty level, people must gain freedom by the possibility to live.

Given that soon a large proportion of people will not have a chance to find a job that will allow them to survive, we either go back to lords and serfs or actually look into potentially sustainable solutions.

austinjp3• 10 years ago

What's to stop UBI from "cancelling itself out" due to inflationary effects?

Prior to UBI, the lowest possible income is zero. After UBI, the lowest income is X. The poorest people in the nation will have an income of X, so X becomes the new relative zero, the new baseline. Prices of everything (food, housing, whatever) will reset relative to X. So uni will become worthless shortly after it's introduced.... but only if it is truly universal.

Someone feel free to tell me if I'm missing something.

kalleboo2• 10 years ago

Don't most countries already have welfare systems that keep the lowest possible income at X already? UBI is just supposed to simplify those systems by replacing them with a single non-means-tested system.

austinjp3• 10 years ago

It's my suspicion that the means-testing, or other hurdles, prevent the benefit from being universal, thereby preventing the inflationary effect.

Incidentally, I'm not declaring a belief in either means-tested benefits nor UBI, just exploring the territory.

titanomachy• 10 years ago

Say you have $0 income. A new policy comes into force that gives you $500 a month basic income. Even if prices increased 10x you would still be better off than before. Prices would have to increase an infinite amount for you to be able to afford the same amount of goods as before (zero). Even if you had $500/month before, you'd still be better off as long as prices don't increase more than 2x.

I don't know enough to advocate for or against basic income, but I'm pretty sure that it doesn't amount to a no-op. Whether it's done through printing money or taxation, it ends up redistributing wealth from wealthier people to poorer people.

In the case of printing money, the resulting inflation would cause everyone's money to be worth less: rich people, having more money, would end up losing more. In the case of taxation, the redistribution is more direct.

adwn3• 10 years ago

Say you have $0 income.

It is assumed that someone without a job will still get some money in the form of unemployment benefits, so their buying power won't be $0. Therefore, your premise is wrong.

grkvlt• 10 years ago

Sure, but if hyper-inflation results in that USD 500 buying me a loaf of bread each month, I think 'better off than before' is kindof irrelevant. There have to be tangible benefits to the recipient over and above, say income from finding pennies in the street...

mgamma• 10 years ago

Consider supply and demand. Say there are 100 people and they all need 1 of resource Z and 100 of resource Z are available. People who have only the UBI can afford the lowest quality of Z but those who have UBI + income will all try to get a higher quality of Z. Net result is that earlier it wasn't possible for low income / no income people to get resource Z, now they can. The rich however will have to start paying a slight premium for finer things in life.

alexbecker• 10 years ago

This only true if there is no competition and demand for the good is completely inelastic. What stops grocery stores from doubling the price of food? The other stores will make a killing by undercutting them. I think food is pretty safe here.

I am concerned about housing though. In some places, the supply is extremely inelastic, limiting competition, and the demand is also inelastic due to the difficulty of moving. Although UBI could make moving to a cheaper area easier.

bufordsharkley• 10 years ago

This is why a Land Value Tax is the clearly logical way to fund a UBI-- by collecting land rents in this fashion, you remove the ability for landlords to effectively confiscate the UBI.

qudat• 10 years ago

Won't the cost of hiring staff increase if no one is willing to work for low wages, thereby increasing the cost of any good or service that relies on those UBI adjusted wages?

Retric2• 10 years ago

Inflation is a result of increases or decreases in the money supply, wealth transfers like this have minimal impact.

Consider in these terms. % of economy going to the bottom may raise from say A% to B% but it's that does not push inflation. Because X% of the population has slightly less money to pay for the wealth transfer ~B-A.

witty_username2• 10 years ago

Sure, that's correct if everyone pays the same amount of tax. But that's not true.

grigjd33• 10 years ago

You're confusing the distribution of money with the supply of money. The distribution of money affects economic priorities. The supply of money (as total income per unit time) affects the overall inflation. While the priorities of an economy will certainly affect prices, it's that some prices will go up and others go down.

austinjp3• 10 years ago

Unless money is redistributed then new money will indeed have to be introduced under UBI.

If it is redistributed, then taxes seem an obvious method. And clearly the richer should be taxed more, since we're attempting redistribution.

Unfortunately we all know that trickle-down economics fail, and corporate/elite lobbyists work hard to restrain corporate/elite taxes, to keep worker wages low, and to engage in practices such as zero-hours contacts.... and so on.

So... introducing new money risks inflation. Redistributing money risks perpetuating the existing broken system.

damptowel2• 10 years ago

If there's a big influx in the supply of money bit it only flows into one sector of the economy then the average inflation might be higher, but won't necessarily mean a constant rise in all prices. So I would argue distribution matters also. Likewise, all that new money being spent inside a certain market might raise the average price level if it's supply constrained, but it might also grow the numbers of players in the market leading to higher supply and price competition.

known• 10 years ago

https://en.wikipedia.org/wiki/Parable_of_the_broken_window

aaron695• 10 years ago

Because it's a set amount not a %

Poor people get 1000% more money rich people get 1% more.

Or a poor persons income goes from 1% of a rich persons to 2%

Ericson23145• 10 years ago

"Multiplicative" basic income (i.e. government gives you x * what you'd get otherwise) would do that, but basic income is additive.

Symmetry• 10 years ago

If it's paid for by taxes or borrowing there won't be any net inflationary effect because the money going to the recipients comes from elsewhere in the economy. The new stuff that poorer people are now buying is payed for by the creation of less stuff for rich people. Economies aren't perfectly flexible so there will be some increase in the price of good used by poor people in relation to the goods used by rich people but that effect won't be huge. Of course, if an UBI drastically reduces employment that's a whole 'nother story but people are doing these pilots to figure that out.

damptowel2• 10 years ago

The inflation would probably not be homogenous, different markets have different pricing mechanics and characteristics. Another variable is percentage going to debt financing, which will have a stimulating effect. One in increased gdp because the percentage of gdp going to repayments would likely drop, and secondly one in higher degrees of business leverage are likely, leading to bubbles in certain markets. Inflation probably won't be a general issue while the economy is not approaching max capacity, but there might be inflation in some markets, much like QE is acting like a basic income for the top percentiles through financial asset inflation. Employers in certain sectors will probably lose a lot of leverage over low schooled workers, might increase prices through cost and demand, finance will probably try to siphon off as much as possible of the extra income. Assumptions assumptions, probably way off base :)

witty_username2• 10 years ago

Somewhat off-topic but wouldn't it be cheaper and better to test the basic income in a country with low PPP (i.e. poor countries).

NIL8• 10 years ago

For a good idea of what this type of program can do to a society, take a look at the native Americans. The monthly allotment received by most only perpetuates very serious social problems. I know that most who will push for these types of programs have good intentions, but the outcome will probably prove to do more harm than good, generally speaking.

danharaj2• 10 years ago

Yeah there's definitely nothing else to explain why Native American nations are doing so poorly.

Edit: This was too snarky but also the parent comment is such a bold claim with no evidence justifying it. Counterclaim: Canada and the US have done plenty to destroy the fabric of native societies since their inception. As an example, the residential school system of Canada[1] which ended in 1996. History is so forgettable isn't it?

[1] https://en.wikipedia.org/wiki/Canadian_Indian_residential_sc...

andrewtbham• 10 years ago

I don't know about the native americans... but I agree than UBI just doesn't seem to make sense.

What has always been more appealing to me than UBI is just the idea of sustainable living... i.e. people own their own houses and there is no property tax and they have very cheap renewable energy sources and maybe cheap robots to grow food. making really cheap stuff to survive just seems like a better long term plan to deal with technology than giving money away. that just devalues money causes inflation.. makes prices higher. seems to me.

choonway• 10 years ago

Why not universal basic housing. universal basic internet. universal basic food. universal basic computer. Make it illegal to sell them on the open market.

Anything except universal basic income. You want cigarettes / alcohol? do some work on the internet. Amazon mechanical turk.

osmala• 10 years ago

The model selected maybe problematic. A) There are additional benefits for helping to pay rent which are income dependent. B) There are special circumstantial increases to benefits replaced by basic income, that state has to pay inorder to fill its constitutional equality requirements. For instance increases in unemployment for dependent children, expenditures for education program participation for unemployed... Now testsubjects get them by applying for them. Whats potential problem is what it takes to LOOSE them, its a risk factor on every action to earn temporarily, or taking a risky move to try to start a business. Latter causes also a high risk at the end of experiment, unless you have folded it long before end of experiment.

steakeater2• 10 years ago

UBI is a terrible idea. Anyone who thinks that the government handing out money to everyone is a good idea needs to snap out of the propaganda machine. Those who fund you, control you. There is no way around that. When the people funding everyone is the government, and the people do nothing in return, that places huge amounts of power in the hands of a single entity, and removes all power from the people.

Large companies are getting larger. There are only a couple of choices in any category, and single companies own many different markets. When you combine that with UBI, you have the government handing you a check, and then you have a choice of a couple of companies to spend that money. The difference between this world and communism is almost nothing.

I have never heard of any group of people who were happy on government welfare. Whatever the supposed problem this is supposed to address, it is not a solution. People who are not working at all are not happy.

If I were to guess, I would say the real problems that need to be addressed are:

too many extremely large companies, often supported by laws they lobbied to create.

corrupt government that has no interest in its own country

population increases.

I mean, many of these people proposing UBI are living in countries where they are actively increasing the population. If you have an unemployment problem, why are you increasing the population?

Ericson23145• 10 years ago

Wat.

- UBI's lack of criteria is supposed to remove distortions. The population is minimaly incentivized.

- Employers loose leverage with UBI; large companies are major employers.

- Everybody loves to hate on population size, but shrinking/aging populations are dangerous for the economy. It's a much more complex problem.

steakeater2• 10 years ago

You are just replacing one leverage with another (employers with government). In most places, the employers own the government anyway as they provide the revenue.

I don't know what your first point means. Your last point, you are just repeating what you have read somewhere. Population increases do not change the aging population. The new people also age believe it or not.

Also stop being childish with your "wat" bullshit.

mjs7231• 10 years ago

I fully expect someone to claim this is completly different because of detail xyz, but this has been done before. It worked out better than expected.

http://www.npr.org/sections/money/2013/10/25/240590433/what-...

Ericson23145• 10 years ago

Wow, everyone is complaining about the misleading headline rather than reading the piece.

Oh, and this is the most positive non-opinion piece I've seen on UBI in a major publication, people! How's that?

shinamee• 10 years ago

Personally, I think this a great thing for creatives and researchers, knowing they can spend as much time as they need to create real value for people without having to think of revenue or investors profits.

I heard/read Swiss denied this proposal though, what a shame.

throwaway18922• 10 years ago

Well, from my experience in France, most of them will stay jobless.

throwaway18922• 10 years ago

Still, the article make an interesting point. And their agenda is clear.

gravypod• 10 years ago

It's not ubi if it is not universal.

thomasfl• 10 years ago

    Voters in Switzerland recently rejected a basic-income scheme

I can't understand why the Swiss politicians wanted to ask the general public for a permission to do an experiment. How can the Swiss population be sure universal basic income will not work when no nation has yet implemented it yet across the whole population?

jobsforall• 10 years ago

And like all UBI experiments it will ultimately fail because UBI is essentially a form of theft.

Hiding behind the money illusion doesn't fool anybody for long.

https://medium.com/modern-money-matters/is-basic-income-basi...

leke• 10 years ago

I could relate to the article. I'm currently living in Oulu, and was also working for a Nokia contractor until 2011. Unable to find work, I went back to polytechnic college for 3.5 years to update my skills and perhaps wait out the recession. Unfortunately, the situation hasn't gotten any better and my new bachelor's degree doesn't give me any advantage.

There are plenty of entrepreneurs requiring people of various backgrounds, but these are generally unpaid positions. I am currently writing a web-app for a charity, and have just launched a customised wordpress site for a new business. These are of course unpaid, and like the article states, it's not worth the risk of starting my own business (being a freelancer for example) as it would mean coming off benefits completely and hoping you'll make enough to pay for everything you need to pay for. UBA would suit me great. I could become that freelancer instantly, and with no fear. That company, who's website I just launched wanted to pay me, but legally it was impossible due to the reason I just mentioned (freelancing).

I'm also currently writing a language learning app, a mashup of my favourite features of DuoLingo and Memrise in my free time. Perhaps monetising that in some way may lead me out of this stagnation.

vivekd• 10 years ago

It seems like we can learn so little by selecting only for jobless people. The best way to do a BI test seems to me to get a random sample so we can test how it affects people in various circumstances. Selecting a specific demographic like this seems more a political move than a scientific one.

Finland will hand out cash to 2000 jobless people to test universal basic income

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