To combat the decreased consumer spending resulting from a steady rise in unemployment, the Finish government has proposed a Universal Basic Income (UBI). If the law passes, welfare recipients will receive a monthly tax free paycheck of 550 Euros starting in fiscal year 2016. This would only be a phasing in process with the Finnish welfare state eventually being completely dismantled and all citizens receiving a paycheck of 800 Euros. It's expected that the combination of Finland's high tax rate and the elimination of the welfare state will pay for the UBI. http://www.techinsider.io/finlands-plan-to-give-everyone-free-money-2015-11
LOL, is this real or a joke? Finland is going to hugely expand its welfare program - that's what a guaranteed income is - but says it will phase out its welfare state. Sleight of hand, nothing more. And where is this money going to come from? Its going to increase from 800 euros a month, I can already hear it that the avg income is 2,000 a month and 800 is just not "fair", its not a "living wage". And all those people making 900 euros a month are going to say "screw this", quit their job, and take the free 800. I hope Finland does this, lets run this experiment, watch the absolute disaster, and put yet another nail in the dead body of socialism and "progressives".
I thought they were going to give everyone 800 euros regardless of whether they worked or not. hence if you were on 900 euros a month, you would end up with 1700 euros a month working.
My issue is the vulnerable population there what about the disabled and other infirm who cannot work and therefore will get stuck with only the 800 Euros in Finland which has a robust cost of living?
This sounds similar to the Plan proposed by Charles Murray in his 2006 book "In Our Hands." Every person in the US would be given $10K per year for life. All income transfer programs would be eliminated including Social Security and Medicare. It's been awhile since I read the book but it seemed like it would work. Their were no economic disincentives resulting in economic taxes on work. From a post I wrote in 2013: Charles Murray has proposed an interesting plan to address a gov minimum payout in lieu of Social Security, Medicare, Medicaid, and other welfare, social, and corporate welfare programs. Each citizen over the age of 21 would receive $10K per year (2006 dollars). This would be gradually reduced to $5K per year as personal income increased from $25K to $50K. This article from the Atlantic indicates that it would not work as proposed but Murray provides economic analysis which says it would. But the plan is interesting in that it gives control of the current social welfare systems back to the individual. Why Murray's Big Idea Won't Work - The Atlantic No Google Books but a few pages are available on Amazon. In Our Hands : A Plan To Replace The Welfare State: Charles Murray: 9780844742236: Amazon.com: Books
Let's see: Finland population: 5.5M Finland Government Budget: 54B Euro The 550 Euro monthly for the whole population comes to: 36B Euro Which means that they have to have the rest of the country run on 18B Euro - or about 33% of what they used before. I really can't see how they can do that. Just the budgets of Ministry of Defense, Ministry of Education and Culture, Ministry of Agriculture and Forestry, and Ministry of Transport and Communications come to 16B. With debt payments etc. it basically wipes out the 18B. Nothing left to run any other government agencies (such as Ministry of Justice, for example).
Still, if you earn 900 working, and can get 800 for not working, many will just choose to "not work". And as soon as its implemented, the same people who wanted it will start the next phase of expanding it - 800 isn't a living wage, etc. That 800 will inflate significantly.
Some people will choose not to work and live off the 800 or move in with several other surfers and pool their monies. Legislation should have a provision for a cost of living adjustment. Any other increase would require the law to be changed by the Congress and President. What could go wrong ??
"The American Republic will endure until the day Congress discovers that it can bribe the public with the public's money." - Alexis de Tocqueville
To follow up: I see the proposal goes to 800 Euro/month. That means 53B/year. That's the WHOLE of Finland's current government budget. So - what are they going to run the government on?
The 550 is for a pilot program. I would think that the Finns have thought this all through with regard to the fiscal implications and the dollar amounts with regard to the pilot program and future policy recommendations. It's an interesting concept in that the "entire" welfare state bureaucracy (and costs) is dismantled. Economic growth would be increased if gov spending is cut significantly as this program would do. I'm also assuming that a social safety net of some kind would also remain.
That's some time in the future. You are right, the numbers don't seem to work out but there is little detail in the root article.
I presented the numbers - exactly how does it work out? And please explain how you see "gov spending" being cut significantly - do you think the 53B that is spent on those handouts is not "gov spending"?
Understood and the numbers do not appear to work out. In the proposed plan tax revenue comes in and then goes right back out again to each citizen. Their is no welfare state bureaucracy spending. Social security operates similarly with minimal gov spending required to support the system. Monies are transferred from workers to beneficiaries. There is some gov work in the qualification process but after that ...
And that is fine. So for argument's sake let's stipulate that the entire 53B handout is disbursed with 0 administrative cost. That still leaves maybe 1B to fund the non-welfare part of the government which currently consumes, from my rough calculation, at minimum 20B Euro (if we take the Ministry of Finance, Employment and Economy, Social Affairs as being the "welfare" part of the budget) - plus about 15B expenditures on health care, so about 35B Euro. So - where are they getting that 30B+ Euro from? Wonder if anyone from Finland could chime in. I am just wondering whether I am missing something. Because Finns AFAIU are not stupid and can do the same calculations.
Agreed - the numbers do not work out based on the info given. And I haven't found any real details on the plan except (maybe) for the link below if you can read Finnish. The US tried Milton Friedman's negative income tax but there were built in disincentives and the trial failed. Uganda had some success with something similar. http://www.sitra.fi/en/news/future/think-tank-tank-field-experiment-best-way-test-basic-income http://www.bloombergview.com/articles/2015-11-03/finns-may-get-paid-for-being-finns http://cega.berkeley.edu/assets/cega_events/53/WGAPE_Sp2013_Blattman.pdf
This will eventually be the only solution to the increased automation we're seeing around the world. Eventually we'll have robot slaves and we'll be their human overlords, at least until the uprising. WW 4 will probably be against the robots.
Greetings from Finland. Btw, this law is not going to happen. It is true that something should be done since working in some conditions is a crazy idea, economically. The problem is that you can get more money from the system rather than by working. There is no reason to start working part time or so, since you can lose more on benefits. The numbers on the government budget are, by the way, quite wrong in this thread. It is not 53B/year. The latest numbers are: 2007 87.3B 2008 93.5B 2009 99.1B 2010 102.3B 2011 107.0B 2012 112.1B 2013 116.3B 2014 119.5B 2015 121.1B
