Jobless people generally cannot earn additional income while collecting unemployment benefits or they risk losing that assistance. For laid-off workers from Nokia, simply collecting a guaranteed unemployment check often presents a better financial proposition than taking a leap with a start-up in Finland, where a shaky technology industry is trying to find its footing again.
Now, the Finnish government is exploring how to change that calculus, initiating an experiment in a form of social welfare: universal basic income. Early next year, the government plans to randomly select roughly 2,000 unemployed people — from white-collar coders to blue-collar construction workers. It will give them benefits automatically, absent bureaucratic hassle and minus penalties for amassing extra income...The answers — to be determined over a two-year trial — could shape social welfare policy far beyond Nordic terrain. In communities around the world, officials are exploring basic income as a way to lessen the vulnerabilities of working people exposed to the vagaries of global trade and automation. While basic income is still an emerging idea, one far from being deployed on a large scale, the growing experimentation underscores the deep need to find effective means to alleviate the perils of globalization...Universal basic income is a catchall phrase that describes a range of proposals, but they generally share one feature: All people in society get a regular check from the government — regardless of their income or whether they work. These funds are supposed to guarantee food and shelter, enabling people to pursue their own betterment while contributing to society...A Silicon Valley start-up incubator, Y Combinator, is preparing a pilot project in Oakland, Calif., in which 100 families will receive unconditional cash grants ranging from $1,000 to $2,000 a month. Voters in Switzerland recently rejected a basic-income scheme, but the French Senate approved a trial. Experiments are being readied in Canada and the Netherlands. The Indian government has been studying basic income as a means of alleviating poverty...Strikingly, basic income is being championed across the ideological spectrum...“Some people think basic income will solve every problem under the sun, and some people think it’s from the hand of Satan and will destroy our work ethic,” says Olli Kangas, who oversees research at Kela, a Finnish government agency that administers many social welfare programs. “I’m hoping we can create some knowledge on this issue.”
From an interesting long read at The New York Times. I scanned the article for the use of the word "inflation" and didn't see that aspect discussed.
Usually here in Finland inflation is taken in to consideration by tying the amount to an index that follows the purchasing power of the average consumer. I glanced through the Parliament meeting notes about this issue, but there's no mention on inflation. My guess that's out of scope for this experiment. The biggest motivation for this experiment is the disincentive effect, or "income trap" like we call it. For example a family of two unemployed persons getting a temp job that nets a thousand euros would cause them to lose two thousand in benefits. With all the ifs and buts added to this experiment, this experiment will make only a tiny dent in that trap.ReplyDelete
My question re inflation is not how a program would be adjusted for inflation, but rather how a (theoretical) country-wide program might cause inflation. If everyone has additional income, the tendency would be for prices to rise.Delete
And regarding this -
"For example a family of two unemployed persons getting a temp job that nets a thousand euros would cause them to lose two thousand in benefits."
As I read the article it seems to say that this will not be the case for the persons enrolled in this test program. ??
The experiment is an additional benefit that is reduced from whatever you're getting now. So the example family would lose everything up to the basic income level ie to the 560€ mark. Less, but still quite a lot if you're high on benefits.Delete
If implemented, the goal of the final implementation is that it's cost neutral, so it would have winners and losers. The example family for instance would get a lot less in the first place while a poor single student would get a raise. So the effect on inflation should be minimal. But I'm not an economist
I'm guessing the experiment involves the levels of basic income received, starting just above starvation level up to happy and sh!tfaced every day.ReplyDelete
To think societies could dramatically improve within a single generation, by imposing a few allegedly unethical restrictions on procreation. Soon when we have robotic assembly lines, waiters, drivers and ditch-diggers and as well as adult entertainment CGI.
Current taxation systems, and shackles of state debt are entirely incompatible with the Star Trek future of self-improvement.
Never mind base income, how about not having to pay for living for starters, like health insurance, rent and education. In American and in globalized reality we see the opposite trend: After student debt we'll see school debt soon, while kindergartens are already self financed by advertisement, religious indoctrination, recruitment basically the long-con of the various faith systems. Meanwhile jobs and internships without functioning unions, already are not unlike indentured servitude.