Free Money for Everyone Sounds Great, But Finland Proves Basic Income is a Bust
Universal basic income experiments and other plans that seek to distribute free money seem wonderful considering so many people struggle to make ends meet because of their limited incomes.
In the U.S., many legislators have called for federal and or/state governments to trial these economic policies. One recent proposal actually calls for people to receive money from the government even if they are unwilling to work!
As lawmakers and supporters champion such ideas, it would behoove them to look beyond the U.S. border to countries who have already taken a stab at basic income.
Finland took up the effort, and the results have many Finns acknowledging that the idea wasn’t a good one.
No Strings Attached Free Money
Finland implemented a universal basic income program on a trial basis to help its low-income citizens. Simply put, they received money from the government, whether or not they had a job or even wanted to work.
Adopted in 2017, early results released this week indicate that the downsides outweigh any economic benefits.
Participants received monthly payments equal to $634 from January 2017 through December 2018. Officials wanted to see if the payments could be a safety net for those looking for work. For those who needed work to tide them over until they found higher-paying jobs, these payments were thought to be of help.
Finland’s foray into providing free money cost the government about $22.7 million. The expected positive effect on the country’s employment rate didn’t materialize.
The early results showed that while employment levels did not improve, participants said they felt happier and less stressed. Unfortunately, the problem of getting people who’d lost their jobs back into the job market remains.
The pioneering universal basic income test in Finland has revealed no real impact on jobs, but huge impact in terms of wellbeing, and showed “people had more trust in their future and their ability to influence it” https://t.co/Y3niXm5IZv
— Basia Cummings (@basialcummings) February 8, 2019
Don’t Want to Work? That’s Okay – Here’s Your Check
Democrats in the U.S. House of Representatives last week unveiled a revolutionary plan called the Green New Deal. Among the ambitious – if not ridiculous – ideas included in the plan is one quite similar to Finland’s basic income trial.
The deal’s architects are very concerned about the rich enjoying exorbitant lifestyles, while others live meagerly because of their low incomes. To bridge this divide, the lawmakers’ Green New Deal promises a guarantee of economic security for anyone “unwilling to work.”
On hearing “unwilling to work,” some lawmakers who signed on to the resolution for the deal began to back away. Critics screamed bloody murder.
To be clear, the official resolution spelling out the details of the deal does not include the “unwilling to work” language. However, an overview document released by freshman House Rep. Alexandria Ocasio-Cortez does include it.
It’s unclear how many people lawmakers will end up voting for this resolution. Even House Speaker Nancy Pelosi seemed genuinely confused about what the resolution entailed.
Finns Want Gainful Employment – Not Just Free Money
As demonstrated by Finland’s basic income trial, the problem with handing out free money is that these payments do not incentivize unemployed workers to find new jobs. What’s the point in working, or looking for employment, if you’re going to get paid anyway?
Interestingly, many in Finland scoffed at the universal basic income system. Some said it helped, but there was nothing more they wanted than to work – and earn their own income.
Here’s a look at how the Finns reacted to the universal basic income experiment:
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