The notion of a “guaranteed income” has been gaining steam with the progressive crowd and even with a few academics on the right who believe it could help control the mushrooming welfare state. At the beginning of last year, Finland put the proposal to the test. Less than 16 months later, it’s pulling the plug.
“The government has turned down a request for extra funding from Kela, the Finnish social security agency, to expand the two-year pilot to a group of employees this year, and said payments to current participants will end next January,” reported the UK Guardian.
Petteri Orpo, Finland’s finance minister, told the Financial Times that a universal basic income made people “passive.” Who could have possibly predicted that? Apparently, only academics are smart enough to believe that paying people not to work will, on average, encourage them to work.
Finland’s “universal basic income” experiment was only a trial. It gave $685 a month to 2,000 randomly selected unemployed people. This has led to proponents dismissing Finland’s experiment as “too limited, halfhearted, ideologically skewed.” That’s according to Antti Jauhiainen and Joona-Hermanni Mäkinen, co-directors of a Finnish think tank, who also wrote in The New York Times, “To do UBI right, we need to think big and try harder.”
This type of argument is reminiscent of the Marxist trope that the problem with communism — after a century of failed nation-states built upon millions of corpses— is that no one has yet done it right.
For better or worse, this idea isn’t going away. Business leaders such as Elon Musk see it as a mechanism to ease the pain for displaced workers as automation continues to transform the business landscape. There are also other UBI tests going on throughout the world, in places ranging from Stockton, Calif., to Kenya.
For its part, Finland is moving in the opposite direction. The government is pursuing additional reforms to unemployment benefits with the explicit goal of getting people back to work.
“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,” Mr. Orpo told the Financial Times. “We have to look at the incentives to work.”
This is no idling concern. Mr. Orpo believes that without reforms, Finland’s generous social safety net isn’t sustainable. He’s urging the government to adopt policies that encourage employment in order to “save the welfare state.”
It looks like Finland is experiencing a point Margaret Thatcher once famously made. The trouble with socialism is eventually you “run out of other people’s money.” That money runs out a lot faster when you pay people not to work.