Finland Commits to Basic Income

The next logical step in social services reform is being undertaken in my ancestral homeland of Finland. The government in that nation is exploring the possibility of setting up a basic income system.

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Kela, Finland’s equivalent of the U.S. Social Security Administration, has been directed to conduct a series of experiments to determine the viability of basic or guaranteed income by the country’s latest Prime Minister, Juha Sipila, Vox reported. No specific program has been detailed, but the news is exciting.

Sipila, who supports the idea of basic income, has had his government set aside $22 billion to test the idea, a lot of money in a country the size of Finland which has just 5.439 million people. Kela’s research director, Olli Kangas, hopes to use that money to test a number of different models for guaranteed income in order to see which one will work, starting in 2017.

Finland's Capital of Helsinki
Finland’s Capital of Helsinki

What the Finns Intend to Do

The idea is to test three basic models for guaranteed income. The first would be a full basic income, in which the government would simply give everybody a set amount, probably around $820.95 (€750) a month. The second would be a partial benefit of around $596 (€550) a month, and the third would be a negative income tax in which households making less than $20,000 a year would receive up to $10,000 based on income.

Some other examples, such as payments to people unable to work or those performing unpaid, but socially beneficial activities, such as caring for an elderly loved one, stay-at-home moms and students, might also be tried. Another effort might be to try and provide more benefits to such people.

map_of_finland

As in the United States, the biggest obstacle to such a system could be the social services bureaucracy. An added twist in Finland is unions, which control part of the system. One reason why guaranteed income experiments in the United States and Canada in the 1970s may have failed was sabotage from social services bureaucrats more interested in preserving their jobs than helping the poor.

Finland’s Bold, but not So Revolutionary Move

Despite some of the sensational headlines about it, Finland’s move is hardly a revolutionary one.

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The United States has had a basic income program for those over 65 in place since the 1930s, Social Security, which has been very successful: it keeps 35% of older Americans out of poverty, according to the American Association of Retired People. The U.S. also a partial negative income tax in the form of the Earned Income Tax credit and other forms of guarantees for specific groups, including Social Security Disability and veterans pensions.

The difference with the Finnish experiment is that it would try to cover everybody in the community, not just those unable to work or the elderly. Interestingly enough, one reason for the program is to look for alternatives to Finland’s very expensive traditional social services systems.

Another reason for the experiment is that Finland’s economy has had a hard time adapting to new global realities. The Finns are trying to adapt their society to a world in which things like traditional jobs are a thing of the past.

Helsinki in the fall
Helsinki in the fall

It also has widespread support in the country. Around 69% of Finns supported the idea of basic income in a poll done last year, Vox reported. It sounds like the politicians are simply listening to the people.

It remains to be seen if the Finnish experiment will work; after all, Finland is a very small country with a strong socialist tradition. It is also an ethnically homogenous country with strong traditions of social responsibility.

The Finnish experiments do bear watching because they could be a role model for other countries, including the United States. Finland’s program could become a model for smaller American states such as Wyoming, West Virginia or Montana – some of which have rates of poverty.

The growing problem of income inequality should prompt Americans to take a closer look at what’s happening in Finland. We’re going to need to do something, and soon, if we want to avoid political and social upheaval.