Finland Forced to Shut Down Universal Income Program after Social Experiment Fails
It took two years, but the government of Finland has realized that giving away money can get to be very expensive.
The country’s two-year experiment with a universal basic income program was lauded by progressives when it launched at the beginning of last year. The Finnish government paid out monthly checks of $685 to 2,000 randomly selected unemployed individuals between the ages of 25-58, with no strings attached.
The goal of the program was not only to provide a spark to an economy that was slowed by an unemployment rate above 9 percent, but to also give those receiving the money the freedom to pursue new employment ideas for themselves while they had an income safety net.
But instead of approving money to expand the program beyond the initial two-year window, the Finnish government has opted to end the program after this year.
Finland eliminates its “Universal Basic Income Program” and takes new measures to cut benefits to those who do not actively seek employment.
Univesal Basic Income is a disincentive to work and an economic disaster
— Daniel Lacalle (@dlacalle_IA) April 25, 2018
Part of the reason behind the decision was a concern of how the program would be paid for going forward, but reports also suggest a growing unhappiness among the country’s citizens of handing out money with no requirements of recipients to seek work.
“There is a problem with young people lacking secondary education, and reports of those guys not seeking work,” said Heikki Hiilamo, a professor of social policy at the University of Helsinki. “There is a fear that with basic income they would just stay at home and play computer games.”
To that point, the country has added a mandate this year that requires those receiving jobless benefits to look for work or engage in job training.
A study published in February by the Organisation for Economic Co-operation and Development estimated Finland would have to raise its income tax by almost 30 percent to continue funding the basic income program. It also claimed the basic income program would raise the country’s poverty rate from 11.4 percent to 14.1 percent.
“It’s a pity that it will end like this,” Olli Kangas, who oversees research at Kela, a Finnish government agency that administers many of its social welfare programs, told The New York Times. “The government has chosen to try a totally different path. Basic income is unconditional. Now, they are pursuing conditionality.”
Eureka!
So, paying people not to work doesn’t encouraging them to work…who knew?Finland Has Second Thoughts About Giving Free Money to Jobless Peoplehttps://t.co/JnBy3XT6RE
— Charles V Payne (@cvpayne) April 25, 2018
The Finnish government is now examining other options for reforming its social welfare system.
The OECD said earlier this year it believes a universal credit system — which would replace multiple benefit payments with a single monthly sum — may be a better option than a basic income. A similar type of system is expected to be fully implemented in the United Kingdom by 2022, a full five years later than originally planned.
The OECD claims universal credits would cut Finland’s poverty rate to 9.7 percent, while streamlining the country’s benefits system.
The Finnish government plans to release data on its findings from the basic income program late next year.
The basic income concept has a number of supporters in this country. Tesla and Space X CEO Elon Musk, Facebook CEO Mark Zuckerberg and Virgin Group chairman Richard Branson have been proponents of a universal basic income, saying it will be needed as more jobs are lost to automation in the coming years.
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