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How Finland's Exciting Basic Income Experiment Will Work—And What We Can Learn From It

Talking to the scientist designing the national experiment that could change the way governments take care of their citizens.

How Finland's Exciting Basic Income Experiment Will Work--And What We Can Learn From It

[Top Photo: Telia via Shutterstock]

Could Finland become the first country in the world to introduce a universal basic income?

It's quite possible: The Finnish government likes the concept, and it's putting serious resources behind a national experiment. Starting in 2017, up to 100,000 Finns could get up to 1,000 euros a month, in lieu of other benefits. These lucky souls won't have to work. They won't have to prove they're in poverty to get the money. For two years, they'll get a fixed amount to do with what they will.

The idea of giving away public money, no strings attached, sounds crazy at first. But basic income has been attracting a lot of interest of late. Cities in the Netherlands and Canada are planning pilots. Politicians from Spain to Greece have announced their support. And, here in the U.S., the concept has drawn fans from across the political spectrum, and particularly in Silicon Valley. Basic income is seen as a way of putting a floor under the poorest, and minimizing inefficiencies in current welfare systems.

Finland's government is interested for three reasons, according to Olli Kangas, who's designing the research experiment.

Aleksei Andreev via Shutterstock

First, increasing numbers of Finns are working part-time, or on a temporary or freelance basis. These people don't qualify for work-based benefits and, because they're working, they don't get unemployment benefits either. They're caught in the middle. "One thing is to make our social security more responsive to those changes in the labor market," says Kangas, who is also the research director at the Finnish Social Insurance Institution (KELA).

Second, the government wants to remove disincentives to working. Some unemployed Finns may not take jobs because they can get more money from the public purse. The hope with a basic income—which is paid irrespective of working status—is that people will want to make more money on top of their government allowance, rather than not working at all. "We want to avoid these incentive traps and make taking jobs more attractive than in the present system," Kangas says.

And three, the government wants to reduce bureaucracy. "When you have income-tested benefits, like housing allowances, it takes time for our employees to check all the applications and see that the client's income is this-and-that, and that their rent is this-and-that. Then, if a person's income is changes, they have to repeat the process again. If the government can pay benefits without that kind of testing, it avoids bureaucratic hassle," Kangas says.

Contrary to some reports, Finland is not giving money to everyone just yet. It's planning an experiment to see what effect a basic income might have. Kangas's team will identify a sample of working age people (17 to 65 years) and then, after two years, compare that group with a control sample. Among the research questions: How much do people on basic income want to work? What is their level of well-being and happiness? And, how much do they use public services, like clinics and hospitals?

Telia via Shutterstock

As a social scientist, Kangas hopes to have as big a sample as possible. With 100,000 people participating, he says it would be possible to see trends at a local and regional level, and to understand the impact among certain groups, like the long-term unemployed. The government has mentioned a figure of 800 euros. But the final amount could be more or less than that, and some income could be conditional. KELA might give 400 euros automatically, then base the rest on participation—for example, if people volunteer with charities.

"One interesting group is the creative class, or people starting small enterprises. The issue is how to generate both productivity and creativity in this country," Kangas says.

Surveys show that 69% of Finns favor some version of a basic income. But Kangas says not all groups are necessarily that sanguine. For example, if the basic income level is too high, it could upset unions and pension funds that rely on contributions from workers. "If we are paying out 1,500 euros or so, we could have some political and institutional resistance from trade unions that are responsible for running unemployment insurance funds," he says. Finland has one of the highest rates of union memberships in the world; unions there aren't sideshows as they are in other countries.

Finland's experiment isn't the first. There was a real-life pilot in Manitoba, Canada, in the 1970s, and several "negative income tax" trials in the U.S. during the same decade (a form of basic income where the government means-tests through the tax system). More recently, there have been trials in India, Namibia and Uganda. Finland is unique, however, in the breadth of what it's planning, and in that it already has a generous welfare system. What happens in Europe's far north will be monitored closely around the globe.

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