This article is a year old, but I just saw it and considering what the Democrats are advocating in the Primary, it’s still appropriate to write about.
From Bloomberg News:
Finland’s Basic Income Test Wasn’t Ambitious Enough
The payments encouraged beneficiaries to take work that doesn’t pay a living wage.
No shit, Sherlock. Who would have thought giving money to people would encourage self-indulgent indolence?
I know, everybody who didn’t get their degree from The Marx School of Economics at Leftists Indoctrination University.
KELA, the Finnish social security agency, has failed to secure the funding it needs to extend its universal basic income experiment beyond this year. Although it’s sad that this grand leftist idea is suffering another setback, Finland’s trial effort deserved its fate.
At least the land of Nokia has figured out that they should let the program, which was a terrible idea to begin with, die before it bankrupts them.
Before the experiment was approved by the government in 2016, KELA officials talked of paying 800 euros ($974) a month in unconditional income to a test group of working-age citizens.
That’s over $11,000 per year or just shy of a minimum wage job after taxes. For doing nothing but breathing.
But by the time the program began early last year, the amount was whittled down to 560 euros: If extended to the whole country, the cost of the earlier proposal would have exceeded the Finnish government’s entire revenue.
It’s fun to watch a nation put its hand over the country’s “economic self destruct” button.
A similarly impractical approach led to the failure of a 2016 Swiss referendum on offering a payout of 2,500 Swiss francs ($2,540).
Two countries tried this bullshit and both failed.
That’s like watching your buddy lose at a game of Russian Roulette with a semi-auto and saying “I think I can do better.”
It’s all but impossible to live on 560 euros in Finland. A one-bedroom apartment on the outskirts of Helsinki rents for almost that much. So the experiment’s designers settled on not really paying the UBI to the unemployed, who kept a higher level of government support — at least 32.4 euros a day for the first 400 days after losing a job. Only the working poor would benefit significantly from it.
That limitation was designed to address two problems. Finland has a low employment rate for a rich country: just 71 percent of the working-age population, compared with 77 percent in neighboring Sweden and almost 86 percent in Iceland. So the idea was to provide an incentive for the unemployed to step into the job market, even if it meant taking on part-time or badly paid work. The other goal was to simplify Finland’s complex system of housing, child-care and other benefits by replacing them with the lump sum payment.
Macroeconomics is not a terribly hard subject to understand. It is just “human behavior with money.” The best way to understand macroeconomics is to be a cynical bastard and assume the worst in people, that they are lazy, stupid, and selfish.
That’s not mean by the way. Lazy and selfish is the natrual state of life on earth. Cheetas don’t run at top speed all the time, just the minimum that they need to, to catch a meal. Life expands the least amount of energy it has to, to accomplish a goal. It’s why ambush predation is so often seen in nature. Extrapolated to economics, it means people won’t work harder than they have to, to meet a desired level of economic security. You don’t put in overtime if you’re not going to get paid for it.
For something like UBI, ask “how would a lazy, stupid, and selfish person act if I gave them a bunch of cash.” The answer is “they will work just enough to make up the difference in income between what we are giving them and where they feel comfortable.”
KELA is not promising to release any results of the experiment, which involves 2,000 people, until the end of 2019 or even the beginning of 2020.
It’s so bad they want to burry it.
But it was clear from the start that a basic income, even such a low one, is an extremely expensive way to boost precarious forms of employment. At 550 euros a month, KELA calculated, the UBI would cost 19.3 billion euros a year, while the government would only save 3.6 billion euros on existing benefits.
That is a shit ROI.
There are, in other words, less financially bruising ways of streamlining the benefit system. As for getting people to return to the job market, the center-right cabinet of Prime Minister Juha Sipila appears to be more interested in cost-effective negative motivation for the unemployed than in rewarding them for finding work that doesn’t pay a living wage. The government has proposed, for example, requiring out-of-work people to apply for at least one job a week to keep receiving benefits (unless they’re in job training programs).
they thought they would be paying people to work part-time until they found full-time employment. What they got was subsidizing some millennial to have a part-time job so that millennial could spend more time hanging out or going to slam poetry readings or whatever bullshit millennials do.
Finland undertook its experiment for the wrong reasons. Using the universal basic income to increase labor market participation and phase out some benefits is like swatting flies with a sledgehammer. In a report on the future of work released earlier this month, the World Bank recommended the much more ambitious goal of considering UBI as a means of ensuring a “societal minimum” of welfare in a world of increasingly precarious employment and growing automation. If a society is to accept much higher taxes to pay for a basic income plan, it has to be for a revolutionary outcome, not a mere bump in employment numbers and a dent in the cost of social security administration.
BANKRUPT ALL THE NATIONS!!!
Low UBI-like payments aren’t even likely to work well for the purposes KELA had in mind. Neither dividends from the Alaska Permanent Fund, which paid every state resident $1,100 for 2017, nor Iran’s one-year experiment, in 2011, with paying 96 percent of its population $45 a month, had any effect on employment. The Finnish program, of course, pays more but also below subsistence level, so its outcome is likely to be similar.
Must try the failure of Communism harder next time. This is actually worse than Communism because you are not making up the difference with forced labor. It’s “to each according to his need” without the “from each according to his ability.”
The UBI idea is not dead. It’s still worth watching other experiments, especially the ones that actually provide a living income.
No, no it’s not.
These include Oakland, California, which pays $2,000 a month, almost exactly at the poverty line, and the one in Kenya, which pays $23 a month, about half the average income in the country’s rural areas. Other tests, in the Dutch city of Utrecht and an upcoming one in Ontario, Canada, offer low payouts relative to the living standard, but still higher than in the Finnish test.
If these experiments show that tangibly increased financial security makes people more inclined to study, try more creative endeavors or even start businesses, the undeniably high cost of the UBI may yet seem justified.
Those will fail too, and fail harder and faster because those people will be paid not to work at all.
UBI is just as much of a failure as socialism and for exactly the same reason.
There has never been an UBI that worked the way it was intended, yet these idiots want more of it.
As we watch the Democrat primary in which every Democrat promises more free stuff, keep thinking about this.
All free stuff does is subsidize indolence. It never fails to fail, and still they want to do it more.
All UBI does, that I can see, is redefine the level of “zero.” Like welfare on heroin.
It’s an extreme moral hazard. Not to mention what it’s likely to do to inflation. (Futurama episode on the Silk Surplus …)
I also think you are right about this. If everyone is walking around with an extra $10k a year in their pocket free and clear I think the market would respond with higher prices as well as demand for consumer goods would rise.
Similar to how $15/hr minimum wage would reset 0 to a higher level.
Well like you said people fuck it up. To that end I’d say it isn’t really UBI that is the problem, but people.
I’d be in favor of ubi if and only if every single other government welfare and support program was axed and the bureaucracy was massively reduced and real saving can be demonstrated after 3 years. But that will never happen because the government will never reduce in size and they manage to make a program that should be insanely simple to administer somehow cost more that anything that existed prior. Because people fuck everything up.
What should actually happen first though is a simple and easy to understand and calculate tax policy and reduction in the IRS. That’s be really nice. I should know at the outset of the year how much I’m paying in taxes based on my income without having to calculate deductions and all kinds of other bullshit.
Traveling through Phoenix last week, we had dinner at a restaurant. When the bill came, I noticed an extra line-item charge, for around 2.0%. I looked-up reason for the extra charge online and discovered that, last year, AZ voters approved a hike in the AZ minimum wage. Apparently, many restaurants simply slap-on an extra charge equivalent to the wage increase.
It’s an economic principle as old as government: When you incentivize something, you get more of it. Inversely, when you disincentivize something, you get less of it.
UBI incentivizes part-time work, or no work at all. Saying that UBI incentivizes laziness is not inaccurate, and because laziness is incentivized, they got more of it.
Could it be used by principled people as an opportunity to step up into higher-paying and more valued jobs, by using the UBI stipend to cover costs while seeking higher education or internships? Absolutely, in theory, but they key word is “principled” — a trait that is growing increasingly rare among humans. Most will use the UBI to work the absolute minimum to be comfortable (and many will be upset that they have to work at all).
Just like socialism and communism, though, it’s an idea that won’t die. University professors will always insist that it just wasn’t “done right”, instead of admitting that as an economic policy it has zero merits, and begets nothing but disaster and universal poverty. Don’t hold your breath on that.
In one of Neal Boortz’s books, he offered the idea that the government set up a few socialist utopia cities where people who want things like UBI could go live.
All they’d have to do to qualify is give up their vote in the next X election cycles.
Their crazy ideas being isolated and letting the rest of us live free of them might make the expense worth it. We could wall off San Francisco and send them there to shoot up heroin and molest each other.