Finland is considering a plan to give everybody free money

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Finland is considering a plan to give everybody free money

#1  Postby Keep It Real » Dec 07, 2015 12:06 am

Basic income — the concept of giving people money with no strings attached— is having anything but a basic year.

Three months ago, the Dutch city of Utrecht announced it would launch a program to give people on welfare unconditional free money. The plan was so popular that it has spread to more than two dozen Dutch towns.

Now Finland wants in on the action.

The big difference: the country wants to give money to everybody, not just people on welfare.

Over the past decade, unemployment has risen drastically in the small Nordic country, home to just 5.4 million people.

In response, the Finnish Social Insurance Institution, known as KELA, has proposed an experiment to allot a monthly income of 800 euros (or roughly $870) tax-free. The cash will act as a replacement for other social benefits like housing and income support, but people will get it whether they work or not.


http://www.techinsider.io/finlands-plan-to-give-everyone-free-money-2015-11

Good stuff imo - very progressive in a world where unemployment is on the rise due to automation.
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Re: Finland is considering a plan to give everybody free money

#2  Postby scott1328 » Dec 07, 2015 12:26 am

How does this not simply cause prices to go up across all sectors?
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Re: Finland is considering a plan to give everybody free money

#3  Postby Keep It Real » Dec 07, 2015 12:28 am

You mean through the mechanism of demand pull inflation?
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Re: Finland is considering a plan to give everybody free money

#4  Postby NineBerry » Dec 07, 2015 12:46 am

Question is how it is being financed. There must be some mechanism for the state to gain the money it is distributing. This will likely be based on income tax. The effect of that is that for the average citizen net income does not change, so there will be no heightened inflation as a consequence, so no higher prices.

What would then be the advantage? People with no or low income might have a little higher net income. There is less bureaucracy dealing with financial support for people with no or low income. It would also make taking small jobs (employed or as freelancers) more attractive to people with currently no income because in the current system starting to earn money means loosing some of the financial benefits you currently gain.
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Re: Finland is considering a plan to give everybody free money

#5  Postby Ven. Kwan Tam Woo » Dec 07, 2015 12:50 am

scott1328 wrote:How does this not simply cause prices to go up across all sectors?



The Finnish Government orders businesses to keep their prices capped, otherwise they will lose their free money. Simples 8-)
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Re: Finland is considering a plan to give everybody free money

#6  Postby Keep It Real » Dec 07, 2015 12:50 am

I bet it would lead to a reduction in escapist drug abuse and crime too as unemployed people would feel less like sponges.
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Re: Finland is considering a plan to give everybody free money

#7  Postby Ven. Kwan Tam Woo » Dec 07, 2015 1:00 am

Finnish Marxism:

"From each according to their ability, to each according to my need to buy votes."


Eat your heart out, Greece :P
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Re: Finland is considering a plan to give everybody free money

#8  Postby OlivierK » Dec 07, 2015 1:33 am

NineBerry wrote:Question is how it is being financed. There must be some mechanism for the state to gain the money it is distributing. This will likely be based on income tax. The effect of that is that for the average citizen net income does not change, so there will be no heightened inflation as a consequence, so no higher prices.

What would then be the advantage? People with no or low income might have a little higher net income. There is less bureaucracy dealing with financial support for people with no or low income. It would also make taking small jobs (employed or as freelancers) more attractive to people with currently no income because in the current system starting to earn money means loosing some of the financial benefits you currently gain.

This plan is often called Citizen's Income or various other names where it's been discussed or proposed. The usual funding source is to replace various welfare benefits with the flat benefit (so there's little change for people on welfare, but a cultural change and lessening of bureaucracy) and to also reduce or replace the amount of tax-free income workers receive (so you may enter a higher tax bracket sooner, but get back the flat benefit in lieu).

I think it's a great system if the transition can be managed so there aren't any big losers, or funding shortfalls. Avoiding insane high marginal rates for low income people who lose benefits as they pick up paid work is a big one. It's insane that people in that situation pay way higher tax rates than the ultra-rich if their benefits are income-tested.
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Re: Finland is considering a plan to give everybody free money

#9  Postby Macdoc » Dec 07, 2015 3:22 am

It also has some positive knock on effects for employers to keep wage costs down. Switzerland is considering a Basic Minimum Income and has done a lot of work on it. This is a reasonably balanced over view

Imagine the government started handing out $10,000 annually to every adult in the country, or implemented a negative income tax rate so that low earners and people out of work would receive tax money instead of paying it. One key is that the nation must be willing ( like Australia ) to tax it's corporations at a rate to support it .....as corporate income goes up so does the incomes of the entire nation if configured correctly.

Sounds like the ultimate socialist scheme, doesn’t it? Exactly the sort of thing the business community and conservative economists would label a job-killing farce destined to create a nation of lazy, uncompetitive good-for-nothings.

But a growing number of economic thinkers -- and not only on the left -- are saying it could be the exact opposite: that it could be the policy idea of the century. While not exactly a silver bullet to solve all ills, it could eliminate poverty to a great extent, and set the stage for a healthier and more productive society.

And if that idea appeals primarily to those on the left, there is one principal reason why it would appeal to those on the right as well: It promises to reduce the size and intrusiveness of government.


http://www.huffingtonpost.ca/2014/12/23 ... 70458.html


Under the UBI, every adult gets a monthly cheque from the government, regardless of their income or circumstances. That would solve the administrative problems of the NIT, but political objections to this could be stronger. After all, everyone would get this cheque, including billionaires.


Lots out there on it including some real world experiments
http://www.businessinsider.com/this-dut ... try-2015-6

As automation takes more and more jobs and income inequality gets worse....this is a way for a progressive nation to deal with those issues and eliminate and awful lot of bureaucracy with multiple over lapping safety net programs.
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Re: Finland is considering a plan to give everybody free money

#10  Postby Thommo » Dec 07, 2015 3:42 am

Keep It Real wrote:
Basic income — the concept of giving people money with no strings attached— is having anything but a basic year.

Three months ago, the Dutch city of Utrecht announced it would launch a program to give people on welfare unconditional free money. The plan was so popular that it has spread to more than two dozen Dutch towns.

Now Finland wants in on the action.

The big difference: the country wants to give money to everybody, not just people on welfare.

Over the past decade, unemployment has risen drastically in the small Nordic country, home to just 5.4 million people.

In response, the Finnish Social Insurance Institution, known as KELA, has proposed an experiment to allot a monthly income of 800 euros (or roughly $870) tax-free. The cash will act as a replacement for other social benefits like housing and income support, but people will get it whether they work or not.


http://www.techinsider.io/finlands-plan-to-give-everyone-free-money-2015-11

Good stuff imo - very progressive in a world where unemployment is on the rise due to automation.


That is a shocking article. Really poor "journalism" (deserving of scare quotes even).

One 2013 study showed implementing a basic income model for four years in Uganda led to people working 17% longer hours and receiving 38% higher earnings, mostly from the growth of small businesses.

That paragraph contains a link, to a study which shows absolutely nothing whatsoever about the proposed policy in Finland.

Given the average monthly income currently stands at just over 2,000 euros, a reduction to 800 might cause some to bristle at such a steep pay cut.

What does the average monthly income have to do with this policy? Absolutely nothing, why would it make people bristle when they aren't proposing to cut their pay?

Plus, there is legitimate uncertainty whether the Finnish government can keep everyone on its payroll. One estimate puts the cost at 52.2 billion euros a year, despite a projected yearly revenue of just 49.1 billion euros in 2016.

Legitimate criticism and the 52.2 billion might be right (although it looks as though this assumes the income is given to children as well as adults, which is far from clear, it's more likely the policy would cost around ~40bn Euros). I've no idea what the "projected yearly revenue" is either, total Finnish government tax receipts appear to be around 80bn, which would make that figure far too low and the policy itself surely can't be forecast to generate an additional 49.1bn Euros of revenue, or so I would think. :scratch:
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Re: Finland is considering a plan to give everybody free money

#11  Postby Thommo » Dec 07, 2015 4:27 am

Looking around this seems to be a common theme on this topic.

This kind of comment seems to be almost ubiquitous to the articles discussing it:-
http://www.forbes.com/sites/timworstall ... ic-income/
Charles Murray (in his book In Our Hands) did the math for the US: $10,000 a year to each adult over 21. It works. We spend about the same amount we currently do on welfare providing it. Chris Dillow, the thinking man’s Marxist, has pointed to similar studies for the UK suggesting £130 a week works.


Those US numbers don't remotely add up unless you scrap healthcare support to fund the income, which would be grossly inhumane and I'm sure isn't what US proponents of basic income would want.

The UK number doesn't add up either. £130 a week for all adults over the age of 21 would be about £325bn p.a. (before administration costs), which is far more than is currently spent on pensions and benefits which is about £265bn p.a.. This again assumes that a family of two working parents would not get any further benefit than a family of one working parent, one non working parent and three children or a disabled person, or parents of disabled children and so on.
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Re: Finland is considering a plan to give everybody free money

#12  Postby OlivierK » Dec 07, 2015 4:38 am

All the UK proposals I've seen include abolishing the Personal Allowance for workers and paying them the Citizen's Income in its place. There's more complexity than that in the implementation, but any costing that doesn't include this is going to be way out.
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Re: Finland is considering a plan to give everybody free money

#13  Postby laklak » Dec 07, 2015 3:17 pm

800E a month "Basic" income? That's pretty fucking basic, that's for sure. No one I know could live on that, unless you're living in a kraal in Swaziland. I don't think any of our citizens would willingly live in a mud hut with a couple of cows, no running water, and a hole in the ground to shit in. If the basic income isn't enough to actually live on, even if that's a pretty basic living, then what's the fucking point? Take money from me to then give it back to me? Sounds tailor made to generate a massive bureaucracy of clerks and managers, all sucking off the public tit. And as with ANY governmental enterprise, a massive amount of that money will just disappear, POOF.
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Re: Finland is considering a plan to give everybody free money

#14  Postby JoeB » Dec 07, 2015 3:26 pm

laklak wrote:800E a month "Basic" income? That's pretty fucking basic, that's for sure. No one I know could live on that, unless you're living in a kraal in Swaziland. I don't think any of our citizens would willingly live in a mud hut with a couple of cows, no running water, and a hole in the ground to shit in. If the basic income isn't enough to actually live on, even if that's a pretty basic living, then what's the fucking point? Take money from me to then give it back to me? Sounds tailor made to generate a massive bureaucracy of clerks and managers, all sucking off the public tit. And as with ANY governmental enterprise, a massive amount of that money will just disappear, POOF.

It's probably not enough to live on indeed; however, it does allow someone who works, say, 5 days a week to work 4 days a week without loss of income. If 5 people do this then 1 more full time job comes into existence thus reducing unemployment quite a bit. (granted, this would't work for every type of job).
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Re: Finland is considering a plan to give everybody free money

#15  Postby Scot Dutchy » Dec 07, 2015 3:37 pm

JoeB wrote:
laklak wrote:800E a month "Basic" income? That's pretty fucking basic, that's for sure. No one I know could live on that, unless you're living in a kraal in Swaziland. I don't think any of our citizens would willingly live in a mud hut with a couple of cows, no running water, and a hole in the ground to shit in. If the basic income isn't enough to actually live on, even if that's a pretty basic living, then what's the fucking point? Take money from me to then give it back to me? Sounds tailor made to generate a massive bureaucracy of clerks and managers, all sucking off the public tit. And as with ANY governmental enterprise, a massive amount of that money will just disappear, POOF.

It's probably not enough to live on indeed; however, it does allow someone who works, say, 5 days a week to work 4 days a week without loss of income. If 5 people do this then 1 more full time job comes into existence thus reducing unemployment quite a bit. (granted, this would't work for every type of job).


Part time working is very popular here. Even the normal week which is these days 36 hours is even almost part time in many countries. Most people just have an extra day off every two weeks. This is normally happens in professional employees. This extra money would be helpful to the others to move into part time.

Dutch love free time.
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Re: Finland is considering a plan to give everybody free money

#16  Postby Thommo » Dec 07, 2015 4:08 pm

JoeB wrote:
laklak wrote:800E a month "Basic" income? That's pretty fucking basic, that's for sure. No one I know could live on that, unless you're living in a kraal in Swaziland. I don't think any of our citizens would willingly live in a mud hut with a couple of cows, no running water, and a hole in the ground to shit in. If the basic income isn't enough to actually live on, even if that's a pretty basic living, then what's the fucking point? Take money from me to then give it back to me? Sounds tailor made to generate a massive bureaucracy of clerks and managers, all sucking off the public tit. And as with ANY governmental enterprise, a massive amount of that money will just disappear, POOF.

It's probably not enough to live on indeed; however, it does allow someone who works, say, 5 days a week to work 4 days a week without loss of income. If 5 people do this then 1 more full time job comes into existence thus reducing unemployment quite a bit. (granted, this would't work for every type of job).


Yes, unless you fund the programme through increased taxation, in which case this can't hold true for the typical person. It's also debatable whether 5 people working 4 days a week actually constitutes more full time jobs than 4 people working 5 days a week, I think conventionally that would be considered to be the same number of FTE jobs.

As far as I understand it the benefits of the scheme are supposed to be inequality and simplicity related rather than increasing the real amount of economic activity. If Finland goes ahead it will be very interesting to see how it pans out.
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Re: Finland is considering a plan to give everybody free money

#17  Postby Macdoc » Dec 07, 2015 6:30 pm

As far as I understand it the benefits of the scheme are supposed to be inequality and simplicity related rather than increasing the real amount of economic activity.


that is at the heart and also to distribute "national" wealth more equitably as a high earning national champion like say a drug company comes up with a winner and has a high taxation from it.

Part of the problem inherent is multi-nationals hoarding profits off shore so they benefit ( Walmart notoriously ) from the national safety net without contributing much to it.

It also takes away things like having to apply for grants etc for art as it supplies a living wage ( that is the Swiss approach to supply a living wage ).

IF it was combined with affordable public owned or public partnered housing then we'd have a more equitable society.

RIght now there is way too much predation on shelter costs which really widens inequity and is destructive socially big time.
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Re: Finland is considering a plan to give everybody free money

#18  Postby Beatsong » Dec 07, 2015 9:31 pm

I thought it was an interesting idea in principle when the Greens here proposed it. But, as is also alluded to in the OP article, the problem seems to be the sheer monumental amount of money necessary to fund it.

As laklak points out, you then end up making it so low (to even have any chance at all of affording it) that it doesn't actually do the job it's intended for - making sure everybody can at least eat and pay rent. And/or you end up having to retain other benefits like housing benefit as well to make that possible, and then you don't get the simplicity advantage which is supposed to be part of the point.

I think the problem is with the idea of universality. The idea seems to be that everyone has to get it, in order to make sure everyone is invested in it and feels it's a valuable thing. But I'm not sure that would actually work anyway. For higher earning professionals, it would be such a tiny proportion of their income that it would hardly make any difference, and many of them would just wonder why they're having to pay more tax only to get some of it back.

Personally I wouldn't have a problem with the idea of paying a basic income to the poorest 10% or 20% of the population, that IS enough to eat and pay rent (or combined with building enough social housing to house them), with some kind of tapering mechanism to make sure it's still advantageous to work. I don't believe in the whole thing about having to starve people to give them an incentive to work, there aren't enough full time jobs to go around and developments in technology mean that's only going to become moreso. I think it's time to challenge the idea that it's so terribly important everyone works economically all the time, rejoice in how much wealthier we've become as a society and just accept using some part of that wealth to keep people from destitution regardless. Confined to those who need it, that could actually be achievable.

I realise I'm in a minority in that view though, especially in Britain.
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Re: Finland is considering a plan to give everybody free money

#19  Postby laklak » Dec 07, 2015 9:40 pm

Workhouses, that's the ticket. Put 'em to task making widgets. Gruel in the mornings and meat and two at night, and lots of God and Country on Sundays. Don't make it too cushy, though, we want the young men to take the Queen's Shilling.

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Re: Finland is considering a plan to give everybody free money

#20  Postby Matt_B » Dec 07, 2015 9:56 pm

How about just making sure that everyone in work is paid a living wage?
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