UN Finland drops Universal Basic Income - Turns out giving away free money is expesive

http://dailytorch.com/2018/05/unive...n-finland-but-will-the-left-learn-its-lesson/

By Natalia Castro

Finland tried, and Finland failed. To combat high unemployment and wage stagnation, Finland’s government decided to try a universal basic income (UBI) experiment with a portion of their population. Establishing a UBI has been viewed as a favorable by liberals and Silicon Valley elites who view a UBI as a necessary method of injecting capital into the economy.

Unfortunately, as Finland just learned, giving citizens money without restriction does not fuel growth, it wastes money. Now, Finland is backtracking on their UBI program to instill real reforms to end individual dependency on the government.

The unemployment rate in Finland has exceeded eight percent since long before the UBI program began in January 2017. Petteri Orpo, Finland’s finance minister, told the Financial Times, “Working life has changed through globalization, automation. We have to reform our society in order to activate people to reach a higher employment rate…”

These fears of a more globalized future led Finland to a two-year experiment in basic income. The Financial Times continues to explain, Finland selected a large group of unemployed individuals to be given €560 (about $670) a month without any conditions on what individuals must do to receive the funds or where they could be spent.

The first glaring problem with the program was, of course, the cost.

One of the reasons the experiment could not continue or be expanded is because of the extreme tax hike it would require. The Organization for Economic Cooperation and Development found in a Feb. 2018report on Finland’s economy, while a UBI might enhance work incentives — a dubious finding, but okay, let’s play along — in order to universally adopt the policy, Finland would have to increase taxes by nearly 30 percent causing an increase in overall poverty.

Finland was placing their hopes in a system they could not afford, which is why they have decided against renewing the program at the end of this year. Instead, Finland is now pursuing the exact opposite style of reforms to fix their broken welfare system.

Jon Henley, the European affairs correspondent for The Guardian, explains, Finland has now introduced legislation to make some benefits for unemployed people contingent on the completion of work or work training.

Even finance minister Orpo had to admit to the Financial Times that the UBI system in fact made people “passive”. Orpo explained, “When we look at our economy that is now growing, we have tens of thousands of free jobs [that cannot be filled] and more than 200,000 unemployed people. We have to look at the incentives to work.”

Giving individuals free money while hoping they get a job might seem like a distant European concept, but it hits much closer to home. More and more people in the United States have advocated for a similar UBI model over the years.

Michael Hiltzik of the L.A. Timesreports, from Martin Luther King Jr. to Elon Musk to apparently everyone in San Francisco, UBI is seen as a great way to kick-start economic growth and offset the impacts of automation taking jobs.

While the Finnish government insists full results on their experiment will not be gathered for several years, the country’s top economists believe it failed to do exactly what they had hoped, instead widening the free jobs gap and maintaining stagnant employment numbers.

For an example closer to home, techies like Musk should look no further than our own Social Security system.

While Social Security, including Supplemental Security Income, is not a UBI program because it is not universal, it does mirror how the program works: a select group receives a monthly guaranteed income from the state. Social Security can be seen as our own experiment in UBI and highlights the insurmountable revenue problem if it were to be made universal.

Sean Williams of the Motley Fool explains in April 2018, according to the Social Security Board of Trustees’ annual report, “Social Security is expected to begin paying out more in benefits than it’s generating in revenue by 2022. That’s only four years away. By 2034, after just 12 years of cash outflows, its roughly $3 trillion in asset reserves, which is primarily invested in special-issue bonds, is expected to be completely exhausted.”

This means in order for our Social Security system to survive; it will be forced to engage in dramatic benefit cuts or just borrow the money. If we cannot maintain the closest thing to a UBI system which we currently have, where there is an incentive to work, because there is still not enough revenue, it is clear we cannot universalize it in a context when there will be far less of an incentive to work. People will stop working and the system will collapse.

Finland tried the system people around the world claim will end the welfare state, but they found out the real truth. Universal basic income is the welfare state. The only way to truly end the welfare state is to incentivize people to be less reliant on the state, not more.

Natalia Castro is a contributing editor at Americans for Limited Government.

Who could have guessed that paying people to do nothin' gets you a whole lotta nothin'?

 

[El Garbage]

The whole experiment is questionable: it' supposed to run only 2 years, and the UBI merely replaced unemployment benefits for the 2000 people involved, thus they didn't gain anything. The only beneficiaries are those who managed to get employed during the two year period, as they'd get both their regular wages and the 560€ per month.

It's a crock of shit, a nothing burger and whatever else you want to call it.

Oh, and the article in the OP is also a crock of shit:

Unfortunately, as Finland just learned, giving citizens money without restriction does not fuel growth, it wastes money.

Fuck you, we've known that for decades. We just keep doing it because we're retarded.

 

[Randall Fragg]

And the age-old mantra of the dumb reproduce more stands true when you have billions of exceptional individuals reproducing.

Stop sending aid to Africa so only the productive members of society survive and the parasites who out-breed their food sourced from international handouts either learn to work or learn to survive without eating.

Many parts of Japan are overcrowded, with housing situations being literal holes in the wall. So what if their population doesn't grow at an exponential rate? The only people who need nonstop economic growth via population growth are large longterm banksters with billions in investments.

I notice that you didn’t respond to @D.Va ‘s point about labor and service industry jobs being taken over by robots, and the idea that the total number of jobs could end up decreasing. Instead you chose to sperg about those dang niggos in Africa.

 

[TowinKarz]

I'm always bemused at the total lack of understanding of not only economics but human nature that the clueless lefties backing this shit are guilty of.

Who is going to pay for it? You ask.

THE GOVERNMENT! they say

Okay, the government gets revenue through taxes, it can't just print checks if there's not any actual money coming in, that's why Zimbabwe had 100 million dollar banknotes, they decided to try and end poverty by just printing money..... when money is increased without increasing the actual wealth behind it, that's what you get, it takes a wheelbarrow load of bills to just buy a stick of gum, it's been proven time and time again in history, from Depression era Germany to Venezuela, how can you STILL be ignorant that you CAN'T just PRINT MONEY to make people rich?!

TAX HE RICH! they say

And when the rich open the paper and read that their taxes are about to go up 50,000 %, how long, in hours, will it take before they've made enough phone calls to be totally relocated to another country by next Monday?

This cannot work for the same reason communism doesn't work, it fundemntally IGNORES everything we've ever learned about how money and humans interact, but like communism, it's pitched as inevitable and different because "CURRENT YEAR" is somehow the exception to the previous 10,000 years of human economy. There have been huge shakeups before, but never, not once, not even with fundamental changes in how economies work from industrialziation, unionization, automation or whatever has any system that purports to create free money EVER worked.

Because you CAN'T do it, not even if everyone "Tries" to make it work, they can no more succeed than if they all tried, really hard, to not be affected by gravity.

 

[Shugo]

I notice that you didn’t respond to @D.Va ‘s point about labor and service industry jobs being taken over by robots

Labor and service industry jobs are propping up in the US because manufacturing is shipped out to where it costs $1/hour to pay some Chinese/Indian for their 12 hour shift.

Manufacturing isn't going anywhere, it's just going where it's cheapest.

The disappearance of labor and service industry jobs isn't proof of the end of scarcity, it's the end of the US' economic model of only supporting a service industry, and when Social Security won't even be funded in a few years, I'm not sure how people think that UBI is the solution to service industry jobs becoming automated.

The logic doesn't seem to follow that if we can't pay people >65 or whatever arbitrary number it is, who have paid into the system their whole lives and were told they had "contributed," that we can somehow afford or that it is a good idea to pay everyone else who lost their service industry job a basic income.

the idea that the total number of jobs could end up decreasing

Dva didn't make that point, they made the point that

unskilled labour jobs have all but been automated out or deferred to the lowest bidder

'Unskilled' labor is becoming automated or going to the lowest bidder, i.e. countries with a minimum wage extremely lower compared to the USA.

The jobs aren't going away, they're simply now taken up by people working them for $1/hour. What's there to do? Maybe people without jobs should learn to survive on $1/hour like all the Indians in the sweatshops across the world do.

That's the product of shipping manufacturing to shitholes, you end up lowering the standard of living for the entire world when you support tens of millions of people working for 1/10th of your income.

and the idea that the total number of jobs could end up decreasing.

Even if the total number of job decreases, so what? Should we ignore the realities of a scarcity economy and continue to support people who consume resources, and whose population grows exponentially and offer not much in return?

What is the benefit for letting Africa's population go from 1 billion to 4 in the next 100 years while, due solely to outside aid, every other continent stays generally the same? Why do you think Africa's population explodes while every other continent's doesn't?

 

[RG 448]

Finland’s conservative government was, of course, an implausible champion for progressive experimentation.

Ooooh okay that’s why it didn’t work you guys. Everyone can have free money as long as our political opponents aren’t in power.

 

[D.Va]

The jobs aren't going away

Then by all means, go get a job as a telephone switchboard operator, or a lift operator, or a film projectionist, or a toll booth operator. I'm sure it'll be easy since these positions totally haven't been automated away over the century

I know it is convenient to package "labour" as meaning any unskilled jobs that haven't been automated yet, but it also includes skilled jobs on the homeland which, in your lifetime, are likely to be automated as well. Any modern factory has replaced what used to be dozens of people with a single CAD machine, and you'd better believe it when even the outsourced sweatshops that still do manual labour will do the same as the hardware gets cheaper. I won't doubt for a second that you take for granted at least one modern amenity that used to require at least one person to keep in proper service.

Maybe people without jobs should learn to survive on $1/hour like all the Indians in the sweatshops across the world do.

I think on top of learning how IQ is actually measured you should also read up on what purchasing power parity is, because I really don't think you understand how this works.

 

[Piss Clam]

Sorry, but what the fuck is that chart? The "world IQ" will always be 100 because that's how intelligence quotient work-

>MailOnline

Ah

I've seen this before

 

[Marchesa of the Vast]

The only reasonable way for a UBI to work is to have it completely replace the existing welfare system. Since you would just be cutting every citizen a check monthly you could cut the bureaucratic apparatus to the minimum. You wouldn't need the massive apparatus to make sure people aren't cheating the system if the system is just a monthly deposit.

It's an option that'll have to be considered once service jobs really start getting replaced and even "good" economies get Greek unemployment numbers.

 

[An Ghost]

We just need to give everybody a universal basic income, tax everybody’s ubi to get the money to distribute, then repeat until there is no money.

 

[ICametoLurk]

Finland right now has just south of 500,000 people (in a country of 5 mil.) working without pay. Students, interns and +100,000 unemployed who are forced to "work" for their unemployment benefits.

The austerity policies are destroying the country and the facade is kept up by making the unemployed work for free or force them to take zero hour contracts so they can say "there, unemployment solved". The Scandinavian welfare state is crumbling.

The trend is these "jobs" and the experience they grant no longer turn into actual employment opportunities. A growing number of youth graduate straight to either low-skilled and paid precariat or unemployment where they're after few months put to work for free, some times for very long periods only to be ultimately be replaced by another unemployed person.

 

[Bum Driller]

I don't know what the cost of stuff is in Sweden. But here in the US you'd struggle to survive on a sum like that unless you had a lot more government help with housing and low income utility assistance.

With 600 euros/month it's very possible to live in Finland, albeit not in luxury, since you also get the Housing Support(my own translation of the term) which is roughly half of your rent. Renting a 20 square meter apartment costs roughly 400-500 euros/month in larger cities, although the price may vary a lot depending on the exact location. In smaller cities apartments of 40+ square meters rent for cheaper than that.

It should also be noted that Finland already has very extensive social welfare system, which gives out much more money than 600 euros/month on average to the recipients. On average if you end up in state-funded unemployment money, you get between 800 and 1000 euros/month, plus the Housing Assistance, plus more if you are a parent to children(even if you wouldn't live with them). Currently, Finland has about 200,000 unemployed citizens, although it should be noted that not all of them receive the tax-funded unemployment money, but rather "income-bound daily allowance" which is paid by the labor unions to their members, and is considerably higher than what the state pays.

Also, the unemployment money is paid only for a certain amount of time, after which you're entitled to "Basic support income", which is slightly less than the unemployment money, somewhere around 550 euros a month. However, once there, you're also entitled to other decided-on-the-case-by-case basis benefits, such as state paying for your computer, television, hobbies and sex-change surgeries.