{"id":39619,"date":"2017-08-02T03:00:06","date_gmt":"2017-08-02T07:00:06","guid":{"rendered":"http:\/\/quotulatiousness.ca\/blog\/?p=39619"},"modified":"2017-08-01T10:44:55","modified_gmt":"2017-08-01T14:44:55","slug":"some-troubling-early-signs-from-finlands-ubi-experiment","status":"publish","type":"post","link":"https:\/\/quotulatiousness.ca\/blog\/2017\/08\/02\/some-troubling-early-signs-from-finlands-ubi-experiment\/","title":{"rendered":"Some troubling early signs from Finland&#8217;s UBI experiment"},"content":{"rendered":"<p><a href=\"https:\/\/danieljmitchell.wordpress.com\/2017\/07\/31\/early-evidence-doesnt-bode-well-for-finlands-basic-income-experiment\/\" target=\"_blank\">Dan Mitchell<\/a> says we can&#8217;t draw definite conclusions from these early (anecdotal) points, but that it may point toward UBI (universal basic income) not being the panacea it&#8217;s been touted to be:<\/p>\n<blockquote><p><div id=\"attachment_39622\" style=\"width: 420px\" class=\"wp-caption alignright\"><a data-id=\"39622\" href=\"https:\/\/en.wikipedia.org\/wiki\/File:Map_of_Finland-en.svg\"><img loading=\"lazy\" decoding=\"async\" aria-describedby=\"caption-attachment-39622\" style=\"float:right; padding: 0px 0px 0px 10px\" src=\"http:\/\/quotulatiousness.ca\/blog\/wp-content\/uploads\/2017\/08\/Finland-410x600.png\" alt=\"\" width=\"410\" height=\"600\" class=\"size-medium wp-image-39622\" srcset=\"https:\/\/quotulatiousness.ca\/blog\/wp-content\/uploads\/2017\/08\/Finland-410x600.png 410w, https:\/\/quotulatiousness.ca\/blog\/wp-content\/uploads\/2017\/08\/Finland-102x150.png 102w, https:\/\/quotulatiousness.ca\/blog\/wp-content\/uploads\/2017\/08\/Finland-768x1124.png 768w, https:\/\/quotulatiousness.ca\/blog\/wp-content\/uploads\/2017\/08\/Finland-437x640.png 437w, https:\/\/quotulatiousness.ca\/blog\/wp-content\/uploads\/2017\/08\/Finland.png 1371w\" sizes=\"auto, (max-width: 410px) 100vw, 410px\" \/><\/a><p id=\"caption-attachment-39622\" class=\"wp-caption-text\">Map of Finland (<em>Suomen kartta<\/em>) by Oona R\u00e4is\u00e4nen. Boundaries, rivers, roads, and railroads are based on a 1996 CIA map, with revisions. (via Wikimedia)<\/p><\/div>The <em>New York Times<\/em> published <a href=\"https:\/\/www.nytimes.com\/2016\/12\/17\/business\/economy\/universal-basic-income-finland.html\" target=\"_blank\">an in-depth preview<\/a> of Finland\u2019s experiment late last year. Here\u2019s a description of the problem that Finnish policymakers want to solve.<\/p>\n<ul>\n<p><em>\u2026 this city has\u2026thousands of skilled engineers in need of work. Many were laid off by Nokia\u2026 While entrepreneurs are eager to put these people to work, the rules of Finland\u2019s generous social safety net effectively discourage this. Jobless people generally cannot earn additional income while collecting unemployment benefits or they risk losing that assistance. For laid-off workers from Nokia, simply collecting a guaranteed unemployment check often presents a better financial proposition than taking a leap with a start-up.<\/em><\/p>\n<\/ul>\n<p>For anyone who has studied the impact of redistribution programs on incentives to work, this hardly comes as a surprise.<\/p>\n<p>Indeed, the story has both data and anecdotes to illustrate how the Finnish welfare state is subsidizing idleness.<\/p>\n<ul>\n<p><em>In the five years after suffering a job loss, a Finnish family of four that is eligible for housing assistance receives average benefits equal to 73 percent of previous wages, according to data from the Organization for Economic Cooperation and Development. That is nearly triple the level in the United States. \u2026 the social safety net \u2026 appears to be impeding the reinvigoration of the economy by discouraging unemployed people from working part time. \u2026 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. \u201cIt\u2019s more profitable for him to just wait at home for some ideal job,\u201d Mr. Saloranta complains.<\/em><\/p>\n<\/ul>\n<p>So the Finnish government wants to see if a basic income can solve this problem.<\/p>\n<ul>\n<p><em>\u2026 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 \u2014 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? \u2026 The answers \u2014 to be determined over a two-year trial \u2014 could shape social welfare policy far beyond Nordic terrain.<\/em><\/p>\n<\/ul>\n<p>The results from this experiment will help answer some big questions.<\/p>\n<ul>\n<p><em>\u2026 basic income confronts fundamental disagreements about human reality. If people are released from fears that \u2014 absent work \u2014 they risk finding themselves sleeping outdoors, will they devolve into freeloaders? \u201cSome people think basic income will solve every problem under the sun, and some people think it\u2019s from the hand of Satan and will destroy our work ethic,\u201d says Olli Kangas, who oversees research at Kela, a Finnish government agency that administers many social welfare programs. \u201cI\u2019m hoping we can create some knowledge on this issue.\u201d \u2026 Finland\u2019s concerns are pragmatic. The government has no interest in freeing wage earners to write poetry. It is eager to generate more jobs.<\/em><\/p>\n<\/ul>\n<p>As I noted above, this <em>New York Times<\/em> report was from late last year. It was a preview of Finland\u2019s experiment.<\/p>\n<p>[&#8230;]<\/p>\n<p>Maybe I\u2019m reading between the lines, but it sounds like they are worried that the results ultimately will show that a basic income discourages labor supply.<\/p>\n<p>Which reinforces my concerns about the entire concept.<\/p>\n<p>Yes, the current system is <a href=\"https:\/\/danieljmitchell.wordpress.com\/2014\/01\/08\/the-war-on-poverty-has-been-a-disaster-for-taxpayers-and-for-poor-people\/\" target=\"_blank\">bad for both poor people and taxpayers<\/a>. But why would anyone think that we\u2019ll get better results if we give generous handouts to everyone?<\/p>\n<ul>\n<li>We already know that <a href=\"https:\/\/danieljmitchell.wordpress.com\/2013\/11\/17\/obama-administration-urges-more-unemployment\/\" target=\"_blank\">unemployment benefits discourage people from working<\/a>.<\/li>\n<li>We already know that <a href=\"https:\/\/danieljmitchell.wordpress.com\/2012\/11\/13\/how-the-welfare-state-hurts-the-poor-and-causes-unemployment\/\" target=\"_blank\">food stamps discourage people from working<\/a>.<\/li>\n<li>We already know that <a href=\"https:\/\/danieljmitchell.wordpress.com\/2014\/05\/18\/obamacare-could-cause-two-million-additional-adults-to-leave-labor-force-and-become-trapped-in-government-dependency\/\" target=\"_blank\">Obamacare discourages people from working<\/a>.<\/li>\n<li>We already know that <a href=\"https:\/\/danieljmitchell.wordpress.com\/2013\/04\/12\/plagued-by-rising-costs-and-vulnerable-to-fraud-its-time-to-focus-attention-on-the-disability-progam\/\" target=\"_blank\">disability payments discourage people from working<\/a>.<\/li>\n<\/ul>\n<p>So if we replace all those handouts with one big universal handout, is there any reason to expect that somehow people will be more likely to find jobs and contribute to the economy?<\/p>\n<p>Again, we need to wait another year or two before we have comprehensive data from Finland. But I\u2019m skeptical that we\u2019ll get a favorable outcome.<\/p><\/blockquote>\n","protected":false},"excerpt":{"rendered":"<p>Dan Mitchell says we can&#8217;t draw definite conclusions from these early (anecdotal) points, but that it may point toward UBI (universal basic income) not being the panacea it&#8217;s been touted to be: The New York Times published an in-depth preview of Finland\u2019s experiment late last year. Here\u2019s a description of the problem that Finnish policymakers [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":35193,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[25,62,84],"tags":[603,755,95,1091],"class_list":["post-39619","post","type-post","status-publish","format-standard","hentry","category-economics","category-europe","category-government","tag-finland","tag-incentives","tag-jobs","tag-ubi"],"jetpack_featured_media_url":"https:\/\/quotulatiousness.ca\/blog\/wp-content\/uploads\/2016\/06\/favicon.png","jetpack_shortlink":"https:\/\/wp.me\/p2hpV6-aj1","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/posts\/39619","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/comments?post=39619"}],"version-history":[{"count":4,"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/posts\/39619\/revisions"}],"predecessor-version":[{"id":39624,"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/posts\/39619\/revisions\/39624"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/media\/35193"}],"wp:attachment":[{"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/media?parent=39619"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/categories?post=39619"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/tags?post=39619"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}