This should be interesting to watch.
Finland is about to embark on an extremely ambitious journey to test one of the most controversial economic theories of our time. The country’s social security institution known as Kela will be handing free money to thousands of jobless citizens on a monthly basis for the next two years. It’s a test of an economic strategy known as Basic Income, which at its core is essentially free money for every person once they reach a certain age, without any prerequisites.
The idea behind Basic Income is that by giving every individual a certain amount of money with which to keep themselves out of poverty, they are better off regardless of all other factors. If a person has a well-paying job, they still get Basic Income, just like everyone else, thereby creating a society in which every adult is above poverty and also continually contributing to the economy by spending money.
That sounds like a utopia, right? But there are other factors that create a lot of uncertainty, like whether or not free money will impact a society’s motivation to actually work. In the case of Finland’s experiment, individuals will be given a monthly payment of around $590, which is enough to prevent those individuals from becoming homeless, but obviously not enough to go clubbing on the weekends or live frivolously.
I’m interested in the concept of basic income as a public policy. As a political issue and social policy, it’s horrible. It sets up politicians to just continually push up the amount that equates to “basic” in order to curry favor with voters and it disincents work.
But the only way the concept of basic income even comes close to working as a matter of public policy is if it replaces ALL other forms of welfare. After all, if the taxpayers are paying everyone a basic income to meet their basic needs, then there isn’t a need to also provide housing assistance, food assistance, welfare, etc. Finland isn’t doing away with those programs, so their test is going to be badly skewed.
Unfortunately, many troubled people will take their basic income, blow it on booze and drugs, and the government will still have to spend money to deal with them. Social engineers can’t get around the fact that money does not fix broken people. Just think of all of the stories about poor folks with drug issues, poor money management skills, or other issues who win the lottery and find themselves right back where they started after a few years. So the fact that Finland will give everyone a basic income will not fix any of the underlying issues that are causing poverty in the first place.
It will be interesting to watch the results.
“Money cannot fix broken people.”
So true.