Tuesday, January 03, 2017

Finland prepares to waste some money

I saw this elsewhere half a day ago, but it's popped up again on ever-trustworthy CNN:

Finland has started a radical experiment: It's giving 2,000 citizens a guaranteed income, with funds that keep flowing whether participants work or not.

The program, which kicks off this month, is one of the first efforts to test a "universal basic income." Participants will receive €560 ($587) a month—money that is guaranteed regardless of income, wealth or employment status.

The idea is that a universal income offers workers greater security, especially as technological advances reduce the need for human labor. It will also allow unemployed people to pick up odd jobs without losing their benefits.

The initial program will run for a period of two years. Participants were randomly selected, but had to be receiving unemployment benefits or an income subsidy. The money they are paid through the program will not be taxed.

If the program is successful, it could be expanded to include all adult Finns.

The Finnish government thinks the initiative could save money in the long run. The country's welfare system is complex and expensive to run, and simplifying it could reduce costly bureaucracy.

The change could also encourage more jobless people to look for work, because they won't have to worry about losing unemployment benefits. Some unemployed workers currently avoid part time jobs because even a small income boost could result in their unemployment benefits being canceled.

I wish the Finns luck, and I want to keep track of this experiment, but I don't see it ending well. Free money thrown at people who aren't working isn't a solution; it's more like tossing dead, dry leaves at an inferno.

If I were out of work and knew I could get two years' guaranteed subsistence-level income, I seriously doubt I'd be motivated to find work right away. Human beings are natural procrastinators: we don't get moving until we absolutely have to. We also have a tendency to ignore dangers until it's almost too late (ask any environmentalist). Two years will seem like a comfortably long time for the recipients of this cash. How many will actually find work within, say, the first three months after they begin to receive this stipend? I'm not optimistic.

Humorously, the CNN article notes that Alaska has been giving annual oil-money payouts to state residents since the 1980s. I wonder how analogous Alaska's case is. Are the payouts calculated to be subsistence-level? Do they go only to the poorest families, or to all residents? I guess I'll have to do some research.

UPDATE: what's happening in Alaska is not analogous at all to what Finland is now attempting. Here's some info on the Alaska Permanent Fund Dividend:

The lowest individual dividend payout was $331.29 in 1984[,] and the highest was $2,072 in 2015.

Keep in mind that these are annual payouts. Divide the above figures by 12, and you've got a pittance. The Finns will be doling out far more cash per month, by contrast, to their 2000 charges. Note, too, that the Alaskan payouts go to all residents, not just the poorest:

The Permanent Fund Dividend [PFD] is a dividend paid to Alaska residents that have lived within the state for a full calendar year (January 1 – December 31), and intend to remain an Alaska resident indefinitely.

So the purpose of the Alaska PFD is different from the Finnish program; the target of the APFD is different (residents versus the poor & unemployed); and the mechanism by which payouts are made is utterly different. Total disanalogy. Sloppy going, CNN.


Surprises Aplenty said...

I left a comment here, about Walmart and Finland and jobs. Turns out, someone else was signed in - that person had used my computer and didn't sign out. Anyway, that was me.

Kevin Kim said...


Never saw it. I'm afraid you'll have to re-submit. Sorry, man.

(It's not in my spam filter, either.)