Basic Income/Negative Income Tax

Finland Wants to Replace Welfare Programs With a Minimum Income for All Residents

The basic-income scheme is meant to save Finland money and reduce the country's high unemployment rate.

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Nina/Flickr

Finland has a reputation for being "one of the world's best functioning welfare states," a magical land where—for the low price of paying half their income in taxes—citizens have access to state-funded health care and child care; generous unemployment benefits; and a robust system of services for the poor and the elderly. Now the Nordic nation may scrap all that in favor of giving every Finnish adult a basic income of about $866 per month. 

Details of the scheme are still being worked out—the Finnish government won't issue a final proposal until next November. But preliminary plans indicate the Finnish Social Insurance Institution (Kela) will test two basic-income models in the program's pilot phase. Under the first, adult Finns would each receive 800 euros per month; under the partial model, they would get 550 euros monthly.

"In the partial pilot format, [earnings-based] benefits would not be affected," reports Finnish news outlet Yle. "The partial model would also retain housing benefits and income support packages." Under the full model, however, unemployment benefits, old-age pensions, maternity allowances, health benefits, housing benefits, and other earnings-based benefits would not be available to recipients, and these programs would be abolished entirely. 

Kela Director General Liisa Hyssälä told Lännen Media that a national basic income guarantee could save the country millions and simplify the welfare system, which currently includes an array of overlapping programs and benefits. It would also get rid of traps that disincentivize working under the current system. 

But why now? What's shifted in Finland to warrant this drastic change? "It may sound counterintuitive, but the proposal is meant to tackle unemployment," explains Quartz writer Olivia Goldhill. 

Finland's unemployment rate is at a 15-year high, at 9.53% and a basic income would allow people to take on low-paying jobs without personal cost. At the moment, a temporary job results in lower welfare benefits, which can lead to an overall drop in income.

According to a poll commissioned by Kela, 72 percent of Finns support a basic income. (Slightly more—78 percent—supported a negative income tax of the sort proposed by Milton Friedman.) The plan also has political support from the left and the right, and Finnish Prime Minister Juha Sipilä is a fan. 

Finland isn't the only European locale flirting with a universal basic income. Greece is currently testing a pared-down minimum-income plan. Next year, Switzerland will hold a vote on the issue. The Swedes are at least aflutter about it. And in January, some low-income residents of Utrecht, the fourth-largest city in the Netherlands, will begin receiving a guaranteed monthly income (about $1,000 per month for a single adult or $1,450 for a couple or family) instead of their current welfare benefits. In about 50 of these test cases, the payment will be unconditional. Since Utrecht announced this plan, at least one other Dutch city has pledged to follow suit and six others are considering it.  

Forbes columnist Tim Worstall does a good job of explaining the cross-ideological appeal of a universal basic income:

From the right it gets rid of the thing we worry most about welfare: the immense tax and benefit withdrawal rate that makes poor people not desire (because they are rational in the face of 60 and 70% tax rates) to increase their incomes. And from the left it actually increases workers' bargaining power without, of course, needing those potentially self-interested unions standing in the middle. If you can live, just, without working, then the boss' power over you is vastly reduced. Another way of putting this is that reservation wages rise–the amount you have to be offered to go to work rises.

This will, of course, reduce inequality. The big problem has always been that while in theory it works no one has ever really tried it. Now someone is: the Finns. So, we all get to see whether it really is the deus ex machina that theory states it is.

Actually, basic income has been tried, albeit in a relatively limited way. The results of these small tests have been promising

For more on basic income from a libertarian perspective: here's Reason's Jesse Walker on the issue; here's Mercatus Center researcher Veronique de Rugy on the basic income; here's a Cato Institute debate on the topic; and below see Reason Senior Editor Peter Suderman talking about basic income (and robots) on the Stossel show earlier this year.

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  1. Better yet, why have money at all?!?! Have everything be free!!

    (Yup, solved the world)

    1. Star Trek did it.

        1. Next thing you know we’ll be clothing our women.

          1. And we’ll start frowning upon the selling of our mothers for gold-pressed latinum.

            1. So….how much are you paying?

              Asking for a Ferengi friend.

          2. Idk about the Ferengi women, but I hear the market for Orion slave girls is quite bullish!

  2. “Finland’s unemployment rate is at a 15-year high, at 9.53% and a basic income would allow people to take on low-paying jobs without personal cost.”

    Orrrr, they’d say, “Fuck that job. I make $1,600 a month, plus free health and child care benefits. There’s no reason for me to work.”

    1. Under the full model, however, unemployment benefits, old-age pensions, maternity allowances, health benefits, housing benefits, and other earnings-based benefits would not be available to recipients, and these programs would be abolished entirely.

      1. Lies. There will be myriad cases of people double dipping.

        1. these programs would be abolished entirely. [Emphasis added]

          How exactly would one double dip from programs that no longer exist?

          1. Caveat: that assumes they actually follow through on abolishing the programs, of course.

            1. that assumes they actually follow through on abolishing the programs, of course.

              Or that the programs stay abolished and not revived at the next election cycle. Since when are legislators or electorates beholden to the promises of yore?

              1. Yes, I can believe they’ll be abolished. I can’t believe they’ll stay dead when there are people who run out of money and have tragic stories of poverty

            2. Do I understand this correctly? The Finns are proposing to get rid of health benefits as part of this plan. So what happens when someone needs an expensive medical procedure and their basic income (with or without any other earned income) is not enough to pay the medical bills? That person does not get treated? What happens when Grandpa Onni freezes to death this winter because his basic pay does not cover his rent, food and (previously subsidized) heating bill? I guess he’s out of luck.

              I cannot imagine a country, so used to a certain level of welfare state, would not want some of the welfare programs revived after the above two situations and other similar ones happen.

          1. LALALALALA GO AWAY PLEASE DON’T RUIN MY PERFECT LIBERTARIAN ECHO CHAMBER LALALALALALALA

            1. Make sure to eat at Chipotle this week. They’ll make it extra nice just for you.

              1. “Would you like extra e.coli in that?”

  3. Scrapping all the welfare-state bureaucracy and social engineering in favor of a basic income payment would be a positive step. (Assume standard libertarian disclaimer.)

    1. A step to the left is not a step forwards.

  4. Can you imagine the torrent of shit hail that would rain down on a american version of this proposal? “You mean we’re paying some Welfare mooch 1,000 a month to do nothing? Why don’t they work?”

    Finland’s unemployment rate is 9.5%? Considering its socialistic model I would have thought it was 99.5%. Probably everybody has a job at the local gulag.

    1. Re: American Stultified,

      Can you imagine the torrent of shit hail that would rain down on a american version of this proposal?

      Why would that bother you? The important thing to consider is if it is economically feasible and if the purported goal can be achieved. Economic analysis tells anyone that what the proponents claim a basic income scheme can achieve (reduce unemployment and/or be cheaper than welfare) is not possible.

      Finland’s unemployment rate is 9.5%? Considering its socialistic model I would have thought it was 99.5%.

      Actually, socialistic societies achieve 100% employment, whether the “employed” want it or not.

      1. “Economic analysis tells anyone that what the proponents claim a basic income scheme can achieve (reduce unemployment and/or be cheaper than welfare) is not possible.”

        I’m not sure how anyone can make that claim, without knowledge of the specifics of the basic income plan and the welfare system it’s replacing. Basic income obviously won’t reduce unemployment relative to a totally free market with no social programs, but that it doesn’t mean it can’t do so relative to a given welfare system (or that it can’t be cheaper than it). It entirely depends on the specifics of the situation.

    2. “Considering its socialistic model I would have thought it was 99.5%. Probably everybody has a job at the local gulag.”

      No they’re just vastly poorer and have less opportunities than Americans. They are also much less socialistic than they were a few decades ago.

      I’m surprised you’ve recovered so quickly from getting shellacked in Venezuela. Must hurt, especially so soon after Argentina.

    3. Can you imagine the torrent of shit hail that would rain down on a american version of this proposal? “You mean we’re paying some Welfare mooch 1,000 a month to do nothing? Why don’t they work?”

      Actually some libertarians have proposed it as a way to eliminate the byzantine welfare system.

      1. And while it offers some practical advantages over the current system, it’s enshrining the “right” to an income at the expense of others and enforced by government. Which is completely antithetical to my understanding of libertarianism.

        1. it’s enshrining the “right” to an income at the expense of others and enforced by government. Which is completely antithetical to my understanding of libertarianism.

          Of course it is. But I’m looking at the ground we’ve won fighting the welfare system, and this seems like a pretty reasonable negotiation term for the cease-fire.

          1. by itself..NO, its not reasonable. Its only approaches reasonable as a complete replacement for any existing welfare, and then is still requires a bureaucracy to dictate who has to give how much to support it and a State held gun to the temple to enforce those edicts – which is to say, not really reasonable at all.

        2. It’s a cast on a broken leg. Ideally you don’t break the leg in the first place but it’s a little late for that sentiment now.

        3. If you do it as a negative income tax, then you can eliminate it whenever we get around to eliminating that.

      2. The only useful purpose of a guaranteed minimum income IS pulling the veil back so people can see what there money is being taken from them to support.

  5. But if the Finns scrap their welfare system, how can the govt reward or punish based on their capricious whims? I suspect they’ll introduce a guaranteed income and still keep the previous bureaucracy in place but at a minimal level. Then slowly ratchet it back up.

    1. Exactly. What you’ll discover is the byzantine system of rewards and social-engineering is the point.

      I’m a big fan of simply creating a direct payment system knowing that you’ll probably never eliminate welfare as a concept.

    2. They will fuck with the benefits of those they don’t like.

  6. I hope they try it because it’ll be a grand experiment, but until they give up the Euro, they’re gonna be stuck with high unemployment and slow growth.

    1. Finland is not in the eurozone.

      1. Doh, of course they are. Sorry!

      2. It’s a shame there isn’t a clone of you on these boards to smugly correct you before that retraction was issued.

        1. Maybe that was the clone.

          1. That’s lacist?

    2. That’s not necessarily true. Ireland has the Euro and is growing faster than as far as I can tell any other western European economy. The Euro is bad but it’s not Europe’s core problem.

      1. My point was the Euro is bad for Finland, not that it’s necessarily bad for all of Europe. It’s quite good for Germany. I

        1. It’s not good for Germany either. No, juicing exports is not automatically good. I don’t see any reason why the Euro would be worse for Finland than Ireland.

  7. The basic-income scheme is meant to save Finland money and reduce the country’s high unemployment rate.

    It will do neither, of course. i don’t understand why people think that you magically increase the demand for something – labor – by making it more expensive. Also, if you provide people with basic income you would have to issue a monthly check for every single citizen, not just welfare recipients. How is that supposed to “save money” for the State? It is absurd. It is bad economics.

    “It may sound counter-intuitive, but the proposal is meant to tackle unemployment,” explains Quartz writer Olivia Goldhill.

    Because… labor too inexpensive as it is?

    If you can live, just, without working, then the boss’ power over you is vastly reduced.

    Unless the boss closes shop and moves to Estonia.

    Why do some people always introduce moralistic platitudes in their discussions regarding economics? A boss doesn’t have power over you. He has money to trade, you have labor to trade. That’s all. There are MANY other traders, many more bosses and many more laborers. The idea that some mythical “boss” has power over you is just a red herring the Marxians introduce in their anti-market rants.

    1. All bosses everywhere are like Mr Burns from the Simpsons

    2. It will do neither, of course.

      If they botch it, it will fail, yes.

      But I don’t think its a given.

      It could save money on two fronts: less spending on welfare bureaucracy, and less total outlay on welfare if the guaranteed income payments are less than the sum of the various welfare payments that are repealed.

      It could increase employment as well, depending on how their current welfare programs are structured and what incentives they create. If you lose welfare as your private income goes up, then it creates a disincentive to work. If the guaranteed income is unaffected by your private income, then (relative to welfare) it doesn’t impair the usual incentive to work.

      1. Re: R C Dean,

        If the guaranteed income is unaffected by your private income, then (relative to welfare) it doesn’t impair the usual incentive to work.

        Of course not, if you’re already working. If you’re just about to start, the stipend would certainly raise your opportunity cost for going out to find a job. For 800 Euros a month I would stay at home playing Call of Duty all day. The inherent incentive is perverse.

        Besides, the reason why people on the dole do not go out to find a job is because applying for welfare is in itself a job. But if you receive a stipend without having to move your fat ass of the couch, where is the incentive to work, besides the notion of making much more than 800 Euros a month (not just a few Euros more a month)?

        1. If someone is satisfied to simply exist, then yeah you’re right. But for those who are not satisfied with merely existing, but have been deterred from finding work for fear of losing benefits, this could potentially free them to go and join the workforce.

          1. Re: sarcasmic,

            But for those who are not satisfied with merely existing, but have been deterred from finding work for fear of losing benefits, this could potentially free them to go and join the workforce.

            Only if you assume that the person only faces the choice of staying at home or be productive. I am saying I would stay home an play Call of Duty all day. Any other person would take a hobby. None of the alternatives have to be productive, though, since my basic wants are fulfilled. Such a society would be one filled with one group of people painting landscapes or feeding pigeons and another group made of suckers.

            1. I am agreeing with you in that there are lazy fuckers who are satisfied as long as they’ve got bread, milk, beer, a joint, and a video game. But there are others who are trapped in a system where getting a job would cost more in benefits than would be offset by the job’s income, who would be set free by replacing conditional benefits with a minimum income.

              1. Agreed, but I guarantee you that the first time anyone has a sob story about how they spent themselves into poverty, the program starts being more “managed”; maybe with nudge-style incentives for “good behavior” but managed nonetheless. This management will be sold as cost-saving, the bureaucrats will continue to be employed, and the system will look like the old one in short order (except that now it applies to the entire population rather than the small segment covered by welfare today).

                1. I would say this scenario is pretty much guaranteed, especially if the massive welfare bureaucracies are allowed to stay in place pending attrition by retirement.

                2. There will always be abuse in any scheme. People are good that way.

                  We just don’t know what the unintended consequences will be because we don’t know how the abusers will abuse it.

                  1. You have to pass it to find out!

            2. But someone like you would already be on the current dole, sucking up even more in resources. How could it make you less likely to work?

        2. Mexican: Google “Welfare cliff”. If you’re on welfare, at least in the States, you can *lose money* by getting a job.

          1. You can also lose welfare benefits if you save money or have other assets. A lot of the welfare rules seem to have been drafted as though there was some kind of shame or other pressure to get a job, when in fact plenty of people are consent to sit on welfare of one form or another as long as possible.

      2. if the guaranteed income payments are less than the sum of the various welfare payments that are repealed.

        And who determines the minimum income? Politicians WOULD NEVER propose an increase to buy votes…

        It’s the same moral hazard as current welfare…it just hasn’t been exploited yet.

        1. “Increase the dole!”

          /Roman headcount

    3. “How is that supposed to “save money” for the State?”

      That’s pretty simple. The idea is too eliminate bureaucracy and bad incentives. Don’t be obtuse.

      1. Re: Cytotoxic,

        That’s pretty simple. The idea is too eliminate bureaucracy and bad incentives.

        That’s the idea, you say. When has that ever happened? Bureaucracies almost never go away voluntarily. And, what makes you think that providing a person a monthly stipend just for being alive is not in itself a bad incentive?

        Don’t be obtuse yourself.

        1. Bureaucracies almost never go away voluntarily.

          I imagine what could happen is that the bureaucrats keep their non-jobs for the time being, but the organizations are barred from replacing employees. Then by attrition they slowly wither and die.

    4. i don’t understand why people think that you magically increase the demand for something… by making it more expensive”

      iPhone economics.

  8. “the Finnish Social Insurance Institution”

    Insurance does not mean what they think it means.

    1. Probably best not to cast stones since the American version of ‘insurance’ is required to cover flu shots and birth control.

      1. Can’t they both be wrong?

      2. Now if I could just get my car insurance to cover oil changes and gas.

        1. It will once your premium includes pre-payment for all your gas and oil changes.

          1. People like cars with warranties that include oil changes.

    2. Health Insurance…pre-existing conditions…

      Here either.

  9. That leaves true public goods. But it doubt it’ll be done. Because it doesn’t allow for paternalism, as people get to spend that money “foolishly”. I bet day care and such will still be subsidized.

  10. Good luck to them. I can only see a compromise of Basic Income on top of various programs making it anywhere.

    When some idiot wastes his cash and can’t pay rent or hospital bills the brigade of moral do-gooders will be too much. (It also makes sense that the State would want to maintain and expand various programs.)

    Maybe Finns have more backbone than American’s though.

    1. When some idiot wastes his cash and can’t pay rent or hospital bills the brigade of moral do-gooders will be too much. (It also makes sense that the State would want to maintain and expand various programs.)

      Ding! Ding! Ding!

      We have a winner!

  11. Also, we need a maximum wage.

    1. Who is this “we”, friend?

    2. You can impose it on yourself. Lead by example.

    3. fuckyougotmine|12.7.15 @ 1:12PM|#
      “Also, we need a maximum wage.”

      We already do; it’s whatever the highest paid person currently makes.

      1. Don’t give them ideas, they’ll enshrine that amount in law for all eternity if they get the chance.

    4. There already is, its called “initiative”.

  12. Kela Director General Liisa Hyss?l? told L?nnen Media that a national basic income guarantee could save the country millions and simplify the welfare system,

    That statement tells me the Kela Director General is speaking out of the arse. What makes you think that a simplified scheme to divert capital from producers to non-producers saves the country “millions”? The more INEFFICIENT the process of despoliation, the better for the country. If the Kela Director General is claiming that it would save the government “millions, then the next question would be why would anyone think the government and the country are one and the same?

    which currently includes an array of overlapping programs and benefits. It would also get rid of traps that disincentivize working under the current system.

    Maybe the current system “disincentivizes” working for the welfare recipients, but I am scratching my head wondering how could a basic income not “disincentivize” work for all those who decide to live with mommy and daddy for a better part of their young adult years especially when a basic income would not come with strings attached.

    1. “The more INEFFICIENT the process of despoliation, the better for the country.”

      That’s clearly not the case. If it were central America would be leaps and bounds ahead of Scandinavia.

      1. Re: Cytotoxic,

        That’s clearly not the case.

        But it is the case. Think if the IRS and just how more destructive if could be if it could operate with more efficiency than today.

        If it were central America would be leaps and bounds ahead of Scandinavia.

        Central American countries are run by kleptocratic regimes, Cyto. We’re talking about a welfare system. In order to have a welfare system., you have to have capital accumulation and that requires a free market and protection for property rights. Central American countries are orders of magnitude removed from that.

    2. ” I am scratching my head wondering how could a basic income not “disincentivize” work for all those who decide to live with mommy and daddy for a better part of their young adult years especially when a basic income would not come with strings attached.”

      Really? It’s not that hard. Under the current schema you lose your freebies if you get a job. In this schema, you don’t. More work just means more money. There are some that could just loaf on the basic income but that is still less backwards than the current system.

      1. Personally, I see this as a boost (overall) to productivity. There are always going to be more people who want to work, to get more than the bare minimum out of life and such. Getting the coasters and loafers out of the way means more productive people in the workplace.

        1. “Getting the coasters and loafers out of the way means more productive people in the workplace.”

          By taking away from the productive and handing over to the coasters and loafers,,,,you will get more or less of them?

          1. In the long run, less. I hardly think that 800 Euros a month is something you can live on for very long anyway.

            1. You don’t think that $10,500 a year is livable where the average household makes 28000? Get two people together and they’re making 75% of the median income while doing nothing at all.

              1. Assuming I understand the difference between “average” and “median”, I think you’ll find that the figure is closer to 50k.

                Nevertheless, even 21k a year is not by any means livable except in a limited number of circumstances.

                1. Bull. $800 a month will get you a one bedroom in the nice part of town in DFW. That leaves $900 a month for necessities and fun stuff. That is an extremely livable standard of living, especially if you decide to save on housing by not living in the nice part of town.

                2. We’re talking about Finland, Susan.

      2. Re: Cytotoxic,

        Under the current schema you lose your freebies if you get a job. In this schema, you don’t. More work just means more money.

        Of course but there are a few conditions that makes the two schemes different. Under a welfare system, indeed if you find work you lose your benefits but getting those benefits is a job in itself. Not everybody is up to the task of dealing with the government to pry the money from the unwilling hands of the state (assuming the state doesn’t just give the money away.) But a guaranteed stipend INCREASES the size of the population who are incentivized not to find work. By how much depends by the size of the economically-active population. So a young lad who cannot stomach going to the welfare office to be on the dole will suddenly find his or her sweet dreams realized by receiving a monthly check, without lifting a finger. That ipso facto raises the person’s Opportunity Cost for going to work. All the person has to do is stay with mommy and daddy and rake in the dough.

        1. And I stress: a monthly stipend would raise the Opportunity Cost of GOING to work, leave aside going out to find a job. Whatever the Finnish think a basic income will achieve, reducing unemployment is certainly NOT one of them.

          1. But you’re ignoring the current setup where people already don’t have to work

          2. How would it increase the opportunity cost of going to work?

            1. Re: MokFarin,

              How would it increase the opportunity cost of going to work?

              The opportunity cost of working is the leisure time you don’t get to enjoy. The opportunity cost of your leisure is the money you do not obtain from working. The point where these two conflicting alternatives meet is where a person will consider giving up leisure for work, up to the point where the Law of Diminishing returns compels the person to stop working and enjoy leisure.

              If your income is only partially supplemented by a monthly stipend, it would mean your income from work would have to be substantially more than what you perceive today unless the marginal utility of the stipend is considerably lower than the income you are obtaining. Thus if your income is only slightly above the stipend, then the marginal utility of LEISURE suddenly goes UP. That is the increase in the Opportunity Cost of working.

              1. I can see where you are coming from, but that would be a fairly individual assessment, wouldn’t it?

                I tend to come at opportunity cost from what you miss if you don’t work. I have no idea what 800 Euro is like in Finland, but $~900 here gets you rent (And in a lot of places, not even that). If you happen to live in certain areas, you can probably do rent and food. But if you wanted anything else, including access to most leisure activities or, like, gas and electricity, you’d have to take some form of work, wouldn’t you?

                That’s only $10,800 a year. That is below the US individual poverty limit.

                1. The premise is built on the assumption that the basic income would cover your necessities only, freeing you up to fill lower paying jobs to meet your entertainment and leisure needs.

                  Unfortunately this approach makes two fatal errors : 1)assuming people will value their labor/time any less, just because they get a gov’t check to offset the difference in value. Nope! People will still complain (louder I imagine) when having to do a menial job for a fraction of what they reprieve the value of their labor to be; and 2) that the gov’t checks won’t drive down the value labor because of increased supply, and thus exacerbating the the 1st error.

                  1. Well, yeah. People perceive their value as relative to what others make. No policy or life event will alter that as it’s an innate estimation of “fairness” with a bit of variation as to what should be counted (money is common, but so are things like “green-ness” or victimhood, or sensitivity to the plight of others and so forth).

                    If everyone gets the same boost, and they count money as their only value measure, then everyone will start as zero, just like the do now, and still compete for what the job pays.

                    As for the value of labor, I don’t anticipate the pays to go down in a country like Finland anytime soon. I’d view it like the UAW asking for a pay decrease because government increased their medical benefits. Sure, it might happen, but snowballs and hot places is about where I’d put the probability. 🙂

                    I’d like to know how far 800 Eur would go in Finland to assess if it’s even just the basic necessities, and, perhaps, what “Basic necessities” entails for the Finnish government’s consideration.

          3. Why work at all? You’re free time would be better spent lobbying the government to raise the basic income cap in exchange for your vote.

  13. The Full Option would be an improvement and I am intrigued by that possible experiment. The Partial Option will achieve the worst of both worlds and will fail

  14. That would never fly in the USA. Social programs are meant to help, but also to control. By putting stipulations on how a person may qualify for a program, and what they must do to maintain their benefits, bureaucrats and administrators have immense control over people’s lives. They can coerce the person into selling their home or their car, quitting their job, getting a divorce, or whatever else strikes the petty tyrant’s fancy, as a condition to staying or becoming eligible. No fucking way will those petty tyrants give up that power without a fight.

  15. I might be convinced that this could make an impact on unemployment if people aren’t penalized by seeking more money (e.g. the loss of benefits) but if the unemployment rate (granted, I don’t know what caveats to Finnish unemployment calculations are, so this could be way off) is at 9.5% that should mean the economy has enough labor available to ratchet up employment on demand. Are employers clamoring for bodies and simply unable to find any because of the welfare system? If so, I don’t think this is going to fix the situation.

    If not, then….how does this even help? Just modify welfare to a slower decline based on earnings to achieve the result of saving money while helping people even more, such as losing 50c of benefit for every dollar earned so that people will still “get ahead” while reducing costs to the welfare programs of people that are working.

    The other reason I don’t buy, though. How will it save them money to give everyone 550 or 800 euros a month instead of focusing on just those that actually have a need for welfare?

    1. “How will it save them money to give everyone 550 or 800 euros a month instead of focusing on just those that actually have a need for welfare?”

      It probably won’t. See David Henderson’s reply to Matt Zwolinski. It could be that the current administrative cost of running all of the programs is greater than just giving everyone cash.

      1. I get that, but is the overhead cost actually so high that paying every single person in the country a useful wage is cheaper? Because the math on that is staggering. 3.6B Euros (4.5M adults as of 2011 times 800 per adult) is almost 10% of their spending every year (35-40B Euros annually).

        I looked for Finnish outlays on welfare, but I couldn’t find an English reference. Does anyone have figures on how much do they spend now on their existing welfare programs to compare?

        1. Consider that research grants often include an extra 80% to cover “overhead.”

          1. I goofed up. I did a single month’s math (4.5M * 800). 3.6B * 12 = 43.2B Euros. As in, at or exceeding their current government spending.

            There is no way this could be more cost effective than anything they run now, bureaucracy included.

            1. You’d have to give parents more so they could support their spawn so that number jumps even higher.

            2. Where are you getting their total spending figures? Their economy is about $230B US, and I find it very hard to believe that their government only spends about 15-20% of GDP.

              1. According to what I read, their economy is $192 B in USD, here: http://www.heritage.org/index/country/finland

                According to this: http://www.tradingeconomics.co…..t-spending they spend $10-12 B Euro per quarter.

                I admit I have no basis for rationalizing these figures as I’m not very familiar with Finland. Any other sources you can provide that are better I would love to see.

    2. Are employers clamoring for bodies and simply unable to find any because of the welfare system? If so, I don’t think this is going to fix the situation.

      Read the post?

      At the moment, a temporary job results in lower welfare benefits, which can lead to an overall drop in income.

      1. Oh, I typoed. “If not, I don’t think this is going to fix the situation.”

        My question is actually (supposed to be) a direct result of the statement you quoted.

        Are people choosing to remain unemployed because of the drop in welfare income and it’s causing businesses significant frustration? If not I don’t think this is going to fix the situation.

  16. “Now the Nordic nation may scrap all that in favor of giving every Finnish adult a basic income of about $866 per month.”

    And the taxes on that amount will equal right around $900/mo to pay for it.

    1. For people above certain income levels the taxes will more than zero out their GMI check.

      1. I have a feeling there will be a new leader in the ‘nation-with-highest-tax-avoidance’ event.

        1. I doubt that. Scandinavians in general seem to be pretty content paying high taxes for a robust welfare state. If the welfare state is reduced in complexity to a single agency whose only job is to cut checks every month, they might see it as a bargain.

          1. It would be a bargain. This would reduce costs and thus the amount of taxes needed to support it. I doubt anyone would actually see a reduction in their taxes, but they might buy themselves some time before the next tax increase goes into effect.

          2. “If the welfare state is reduced in complexity to a single agency whose only job is to cut checks every month, they might see it as a bargain.”

            IF we had ham, we could have ham and eggs, IF we had eggs.
            Yes, cultural differences will help, but there ain’t no New Soviet Man.

  17. I hope this income is earned preparing for the next installment of The Winter War.

  18. This will last until the first case of somebody who spent all their money on alcohol and video games and can’t afford diapers for their baby surfaces. Then the welfare bureaucracy will come right back.

  19. Liisa Hyss?l? told L?nnen Media that a national basic income guarantee could save the country millions and simplify the welfare system, which currently includes an array of overlapping programs and benefits

    Has this ever happened, and can anyone truly imagine a situation where the massive social welfare bureaucracies are shut down all at once as a result of leftist politics? The entire premise of modern leftism is that a benign state is required to mediate people’s poor choices; once the left realizes how much power this scheme would give back to people, how long until we hear about the need to “control” for poor people buying lottery tickets or whathaveyou?

    The scheme as described sounds great; as it will be implemented it will be a disaster.

  20. the Nordic nation may scrap all that in favor of giving every Finnish adult a basic income of about $866 per month.

    Every *law-abiding* Finnish adult, right? RIGHT?!

  21. GMI has always seemed like an inflation trap. GMI drives inflation, triggering a call for an adjustment of GMI, which drives inflation. Lather, rinse, go fuck yourself taxpayer.

    1. Good luck with Finland driving inflation of the Euro

  22. If I could just get by on basic income (house, electricity, water, internet, and crap food), why would I work anything but the occasional temp job? Hire on during the holiday season, earn enough to pay for computer upgrades and a few video games, then sit back and become a League of Legends god (or whatever competitive multiplayer game is hot at the time).
    I don’t work for fun. I work because my not living under a bridge depends on it. Hell if I teamed up with my siblings, I’d probably not even need to have the occasional temp job.

    1. Maybe because you desire a higher standard of living than just getting by. A few months of living with roommates or your parents should be enough to compel you to start hitting the job sites. Especially when your peers are getting their own places with way nicer stuff than yours.

      1. Maybe because you desire a higher standard of living than just getting by.

        Sadly I have known many who were satisfied with just getting by. I never understood it. I mean, I like nice things. Can’t have nice things when you’re just getting by.

        1. Lefties have long argued that they can tax the shit out of the top 1% because those suckers can’t stop working. They are too driven.

          I am coming around to that kind of thinking. At least the part about people who are driven to work, regardless of taxes. But that seems evil. Why is it ok to take advantage of someone with what is arguably a birth defect?

      2. I’m an engineer coming off a childhood of just getting by (my parents actually still live that life due to a step-father who is a 100% disabled vet). If you are a computer nerd who’s very good at entertaining yourself, free time is worth more than a lot of material goods (sans computers of course). The running joke is that I’ll be sleeping on the floor in a sleeping bag before I give up my good computer, but in a lot of ways that applies to having free time to do what I want on said computer.

        1. There will always be people for whom free time is worth more than wealth, and that’s fine. A healthy economy can support a few freeloaders. But in my experience the people who are most motivated by material success are the ones who grew up on welfare.

      3. I think you would be surprised at the number of people capable of living their version of ‘high on the hog’ with very meager incomes.

        Were I not married, I could quite easily exist in a 10X15ft box because that’s large enough to house a beast of a computer, bed, shower, shitter, and kitchenette.
        These day’s I’d never even have to leave the structure except to take out the trash and to wash clothes/towels/bedding items.

        Of course, if I’m never going outside anyway, why wear clothes. One less expense.

    2. You’re not comparing it to a system where you can already do that, and without any incentive to work because you lose your benefits if you do.

      I’m not sold on basic income, just pointing that out. Designed right (I know, big if) it could be preferable to the current system, at least in Europe.

  23. UBI makes great sense in theory. Take all of the welfare programs and bureaucracy and replace them with a static monthly income. Given a bad premise, try to devise a better solution. Sounds great.

    It will never fucking happen. Look at any bill passed by Congress. Read the PPACA for fuck’s sake. No such scheme will pass basic legislative muster. And even if it did, it will never last.

    It is, practically speaking, as much of a pipe dream as abolishing welfare altogether. We can’t even get out of the managed-EBT trap and just give people cash. It’s the perfect intersection of fascist and socialist interests.

  24. I wonder what the natural rate of laziness is.

    1. Look at summer vacations in highschool. Exclude kids who work due to parental pressure. That’s about the natural rate of laziness. Some people are super motivated and get jobs for the extra goodies, but a lot prefer to stay home and perfect their Call of Duty game.

      1. Look, they’re training in case their Selective Service lottery number gets called, OK?

  25. Not only all the issues others have mentioned, but if EVERYBODY gets some amount (say $500 a month) then doesn’t that imply that the cost of living will in general rise by about that same amount? In other words, after some time (say a year or so) $500 a month becomes the new zero. So the cost of basic goods and services will tend to rise.

    1. You mean there’s no free lunch?!

  26. this is how everyone becomes indebted to the government. A simpler solution to get people to work is lower the tax rate and reduce welfare payouts solves the problem with less paperwork and less government. Works every time its tried

  27. I would say $866/month would be a lot less than we’re giving away now here.

  28. Re: MokFarin,

    How would it increase the opportunity cost of going to work?

    The opportunity cost of working is the leisure time you don’t get to enjoy. The opportunity cost of your leisure is the money you do not obtain from working. The point where these two conflicting alternatives meet is where a person will consider giving up leisure for work, up to the point where the Law of Diminishing returns compels the person to stop working and enjoy leisure.

    If your income is only partially supplemented by a monthly stipend, it would mean your income from work would have to be substantially more than what you perceive today unless the marginal utility of the stipend is considerably lower than the income you are obtaining. Thus if your income is only slightly above the stipend, then the marginal utility of LEISURE suddenly goes UP. That is the increase in the Opportunity Cost of working.

  29. I think Finland should go back to the original system, where every summer of-age adults raid the coasts of England for three months to offset the cost of living for the rest of the year. hehe.

  30. Wow, a paycheck just to draw breath as a citizen. Guess this might increase the population while they’re at it. Who needs a job when you can pump out a cute little cash cow in 9 mos.

  31. What’s to stop someone from spending this basic income unwisely, and still require the other welfare benefits?

  32. I guess whether you consider this a tolerable libertarian idea is really up to whether you want the government to be small and non-shitty or just smaller and less shitty than it is now.

    I’m of both minds. If it truly permanently eliminated all other benefits, I’d take it. It would be more efficient.

    However, in reality it would end up like the tax code where every election cycle, the party in power would staple on new carve-outs for their backers, until it’s the same byzantine nightmare as now except with everyone convinced they have a right to five-figure payments for being alive AND THEN all the benefits they get now.

  33. I’m trying to run the numbers if we were to do this in the US. Seeing as this would replace everything including Social Security it would need to be more than the current max of $3350 a month lest you be called anti senior. For a married couple that’s $6700. We are currently living on less than this including food stamps, not including MA for the kids.
    The next question would be who would qualify? Citizens, yes. But what about Visa holders? If the money only comes while the Visa is good would that get more people to self deport once their Visas expire? If illegal aliens don’t qualify will they begin to self deport because it will become too expensive to stay?
    Given the utter disaster that is Obamacare, and people having such extra cash, many more people would run the numbers and realize self insuring is the way to go. Especially if more doctors go to an at least partly cash model. I’m not sure what that would do to the health insurance market. Or to people with chronic diseases. I suppose the churches and such could step up. I would think it would be easy to show you need help because of your diabetes and not because you like the finer things in life, damn the consequences.
    I would think it would force property owners to improve rental units because now everyone can afford better than the cheapest dump. Ownership, at least initially, would increase. That could be good or bad. It would depend on the size of the bubble.

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