January 28, 2018


Money for nothing: is Finland's universal basic income trial too good to be true? : Europe's first national experiment in giving citizens free cash has attracted huge media attention. But one year in, what does this project really hope to prove? (Jon Henley, 12 Jan 2018, The Guardian)

While UBI tends often to be associated with progressive politics, Finland's trial was launched - at a cost of around €20m (£17.7m) - by a centre-right, austerity-focused government interested primarily in spending less on social security and bringing down Finland's stubborn 8%-plus unemployment rate. It has a very clear purpose: to see whether an unconditional income might incentivise people to take up paid work.

Authorities believe it will shed light on whether unemployed Finns, as experts believe, are put off taking up a job by the fear that a higher marginal tax rate may leave them worse off. Many are also deterred by having to reapply for benefits after every casual or short-term contract.

"It's partly about removing disincentives," explained Marjukka Turunen, who heads the legal unit at Finland's social security agency, Kela, which is running the experiment. Kanerva describes the trial as "an experiment in smoothing out the system".

To maintain privacy and avoid bias, Kela is not contacting any of the 2,000 participants for the duration of the two-year trial. A handful have given interviews to journalists (several have said they feel less stressed thanks to the scheme), but no official conclusions are yet being drawn from these anecdotal experiences.

According to Kanerva, however, the core data the government is seeking - on whether, and how, the job take-up of the 2,000 unemployed people in the trial differs from a 175,000-strong control group - will be "robust, and usable in future economic modelling" when it is published in 2019.

Unintended benefits
The idea of UBI had been circulating in left-of-centre political circles in Finland since the 1980s, mainly as a way to combat the economic and social consequences of falling industrial employment by freeing all - from students to the elderly; stay-at-home parents to the unemployed - to make meaningful contributions to society by, for example, volunteering.

Appealing both to the left (who believe it can cut poverty and inequality) and, more recently, to the right (as a possible way to a leaner, less bureaucratic welfare system), UBI looks all the more attractive amid warnings that automation could threaten up to a third of current jobs in the west within 20 years. Other basic income schemes are now being tested from Ontario to rural Kenya, and Glasgow to Barcelona. [...]

The trial data may also allow the government to spend less on bureaucracy by simplifying Finland's complex social security system - currently, it offers more than 40 different means-tested benefits - which is struggling to cope with a 21st-century labour market of part timers, short-term contracts and start-ups.

The benefit system is simply "not suited to modern working patterns", Turunen said. "We have too many benefits. People don't understand what they're entitled to or how they can get it. Even experts don't understand. For example, it's very hard to be in the benefit system in Finland if you are self-employed - you have to prove your income time and time and time again."

Perhaps most significantly, the trial marks "a real breakthrough for field experiments", according to Kanerva. Rolled out in record time and after a brief, one-line pledge in the government's platform, it had to function alongside all existing social security laws and clear numerous legal obstacles - including Finland's constitution, which requires all citizens to be treated equally.

It's not a question of whether, but of how such programs will be implemented.  The more experimentation the better.

Posted by at January 28, 2018 7:39 AM