Finland wants to institute a basic income for all the wrong reasons
Can sending $876 to every citizen really replace all welfare? Not so fast.
If you live in Finland, then pretty soon you could be getting a regular check — no matter who you are, or whether you're employed or not.
The policy is called a "basic income" or "universal basic income" (UBI) depending on who's doing the labeling. Popular among many liberal policy wonks, the idea is the government sends a monthly check to everyone, unconditionally. The reasons people of a lefty persuasion tend to like it should be obvious: It fights poverty and inequality, and it gives people an alternative if they're trying to escape exploitative employment. But people on the right can like it to: It's super simple to administrate, so it comes with little-to-no additional government bureaucracy, and it doesn't discourage things like work or marriage — which more traditional welfare state programs are accused of doing — because you get the UBI check regardless of whether you're working, whether you're married, or what your household income is.
In Finland's case, the plan is to conduct a multi-tiered experiment across the country with a few different versions, though from reporting it looks like giving every adult 800 euros ($876 in U.S. dollars) a month will likely be one variation. It's not a done deal yet, but support for the idea among the public and lawmakers is broad. It could become reality as soon as next year.
So, great, right? I've stumped for a UBI myself. Why not take a cue from Finland and do the same thing here in the United States?
Well, there are a few things to keep an eye on in Finland's case. For one thing, it looks like the UBI would replace at least some or even most of the country's other welfare programs. That's an idea that right-wing luminaries have pushed here in the States. And at a certain basic level, of course, simplifying the welfare state is always a fine idea: Politics is a messy process, so aid programs can get piled atop one another in an irrational mishmash. There's pretty much always simplification that's worth doing, if you do it right.
But "doing it right" is really the key question. In any society based on market capitalism — like America, Finland, and every other major western country — having a job will always be the primary source of income. But for some groups in the population, it's just really difficult — and quite often utterly impossible — for them to hold a job: think children, the disabled, adults caring for sick family members, the old, students, etc. Not surprisingly, these vulnerable groups are the overwhelming majority of people in poverty here in America. For them, it's just really unlikely the job market will ever be the central source of income. Instead, the government must step in.
But precisely because a UBI goes to everyone whether or not they have a job, and no matter what their income is, the policy isn't meant to replace income from the job market. It's meant to augment it — to give workers a little more bargaining power, a little more financial breathing room, and a little more power over the course of their own lives. A UBI alone won't work for those people in the vulnerable groups listed above, precisely because they never had much of a chance of getting a job income to augment. They'd need an extra top off.
In particular, it looks like Finland's UBI would only go to adults. Families with one or two parents would only get one or two monthly checks, respectively, regardless of how many children they have to support. If they extended it to children — which doesn't actually look like it would raise the cost of the program by that much — it still wouldn't be ideal, but it would be a huge improvement.
All this is why most people on the left advocate for a UBI in the United States as an addition to other welfare state programs. Certainly, the UBI carries lessons in the value of simplicity and universalism. Social Security, for instance, involves minimal means-testing, and is quasi-universal, in that goes to everyone who's retired. It makes a fine UBI top-off for the retired. If we do simplify our welfare state, setting up similar approaches for children, students, the disabled, and the rest would be a good way to go. But scrapping everything and putting a UBI in its place takes a good idea and goes too far.
This gets us into the second concern: the idea of using a UBI to get people back into the job market. Isn't that a good thing?
Again, it depends. Traditional welfare programs can create a trap of sorts, because you lose them once you get a job or if your income rises high enough. So your total income can actually go down if you get a job or a raise, which creates some pretty perverse incentives. The UBI does away with that trap precisely because you get it no matter what. To the extent that dynamic increases participation in the labor force, it's an improvement. But if you're just cutting government aid until it gets below an already too-low wage level produced by an anemic job market, that's bad.
So Finland shouldn't position its UBI as a kind of consolation prize for failing to keep everyone employed, especially if that prize was right around Finland's poverty threshold back in 2010. With an unemployment rate of 10 percent, wage growth that's as stagnant as America's, years of budget surpluses and rock bottom inflation, Finland needs to start serious deficit spending to get back to full employment. A UBI could be a really good place to start, given the enormous sums Finland would have to spend to make the plan happen. But that assumes they don't bother paying for it with tax hikes.
At any rate, come 2016, these will be things to keep an eye on should Finland take the UBI plunge.