The Strategist

Free money: what does Finland want to prove with the basic income experiment?

02/01/2018 - 10:53

A study by the University of Oxford shows that up to 47% of jobs in Western countries can disappear within two decades. The reason lies in the automation of production, which deprives cashiers and cleaners, guards and train drivers of income.

UnorthodoxY via flickr
UnorthodoxY via flickr
State payments may substitute compulsory employment. The UK, the Netherlands and France are considering plans for the introduction of unconditional basic income. Finland was the first in Europe in 2018 to introduce the experiment.

An experiment conducted in Africa assured sociologists that the guaranteed income inspires not laziness but an entrepreneurial spirit. The total payment, just around ten euros, stirred life around the city of Windhoek in the state of Namibia. Getting rid of the need to make ends meet, the project participants found a multitude of talents in themselves: the incomes of the population increased by 29%, and unemployment was halved. The supporters of universal basic income achieved a positive result in India in 2011, when in several villages selected for experience, the indicators of economic activity increased significantly, and the educational level also increased. The statistics testified that once you help people out of poverty, they quickly become independent. The problem is only in finance: neither Africans nor Indians have ample means for financing projects.

Prosperous states of the European Union have the money, but, oddly enough, they are facing similar difficulties. The unemployed living in a closed circle of poverty cannot move to a normal life - neither relying on state benefits, nor working on low-paid temporary jobs. Many such citizens lack motivation for permanent employment, because the salary they offer hardly exceeds the unemployment allowance.

Finland encountered a similar paradox, where the first and most ambitious European project for the introduction of universal basic income started. The goal of the experiment is to trace how the charging of guaranteed payments changes the economic behavior of people. In the ordinary case, the transfer of unemployment benefits is compulsorily terminated after employment. This time, the rules are different: the system of universal income will continue to operate, regardless of whether the recipient has found a workplace for himself or not.

The Finnish unchangeable payment is an unemployment benefit, only extended and accrued without any conditions on the part of the state. It is assumed that, receiving guaranteed money, unemployed will easily agree for unprestigious and low-paid vacancies.

An economist from the University of Rotterdam, Markus Kanerva, believes that it is not just positive discrimination in favor of the poor (by the way, there are quite a few unemployed in Finland, 10% of the population.) This is to awaken the creative vein in them, forcing them to work not out of fear: "This experiment teaches people to be creative, because they will no longer have the fear of making a mistake."

The expert adds that a good factor in finding a job will be a good mood for the participants of the experiment: "Upon completion, we will measure whether the stress has decreased after the introduction of the basic income." This can be done by collecting hair samples for the content of cortisone in them."

To date, the Finnish project for the introduction of universal guaranteed income is by no means the only one, and every country, which plans the experiment, has different conditions. In Alaska, the universal payment program was tied to the hydrocarbon resources of the region. In practice, this means that, depending on the cost of oil, permanent residents of the state receive a fixed amount to the account. At the peak of commodity prices in 2008, it was about $ 2,000 a year. Alaska's base income was two to three times lower than that planned in Finland.

The Scottish government does not hide the intention to hold a referendum on secession from Britain. The total income, of which Edinburgh dreams, was conceived with the expectation that it would not go to the English. Perhaps the most radical draft of the introduction of universal compulsory income is offered in France, where the candidate for socialists in the presidential election of 2017 Benoit Hamon pronounced a sum of 750 euros per person. However, life made adjustments to the program of the left radical, forced during economic debates to significantly reduce rates: first to 600 euros, and then to the targeted benefit to the needy.