Can you make the State smaller by making it bigger? Case in point: Finland, which plans to introduce a minimum income for everybody. According to proponents of the plan, a basic income will make people less dependent on the government and more prosperous. Soon, every person in the country will get 800 euros or about $876 per month without actually doing anything to deserve it.
The Nordic nation is getting closer this month to finalizing a solution to poverty: paying each of its 5.4 million people $876 tax-free a month — and in return, it will do away with welfare benefits, unemployment lines, and the other bureaucracy of its extensive social safety net.
The reason seventy percent of Finns support a basic income is simple: their economy is struggling. The welfare state costs them so much that they don’t see any other option to get it back on track. Introducing the “basic income” concept is, they believe, the best way to reform the welfare state and get rid of its excessive burden.
The most recent economic forecast from Finland’s finance ministry, for autumn 2015, begins flatly with grim news and little hope for a better future: “The Finnish economy is in a serious situation. GDP growth is close to zero. Unemployment is rising and unemployment spells are becoming longer. Even once the recession is over, growth will be painfully slow.”
The basic income plan is supported by Finland’s center-right party which came to power earlier this year. That’s rather interesting because the basic income will cost the Finnish government all of its yearly revenue and then some. If all people — babies and teenagers too — are included, the total cost will be 52 billion euros a year. If only adults are included, the government will still have to spend 47 billion euros.
Note, the Finnish government expects to raise only 49.1 billion euros in 2016. This means that, at best, Finland will have 2.1 billion euros left to take care of the police, army, fire department, infrastructure and every other duty of the government.
But wait, there’s more! Finland is also deeply in debt. The country owes the equivalent of more than 58% of all the goods and services it produces in a year. According to the central bank, that amount could soon double. We can be sure it will double if this plan is actually put in place. In other words: if Finland wants to survive the basic income it will have to raise taxes. Significantly.
Now, I’m obviously no Milton Friedman, but even I understand that this will have a negative rather than a positive effect on the country’s economy. This proves that the real goal of those who push this plan isn’t to reduce the size of government or to give the economy a much-needed boost, but to “spread the wealth around,” as President Obama might say.
No wonder then that the Swiss had the good sense to vote against a similar plan earlier this year. In Switzerland, both the left and the right opposed it. Conservatives correctly pointed out that it would encourage laziness and turn the country into a paradise for immigrants who refuse to work, while the left feared it would mean the end of benefits for the poor, and therefore result in the dismantling of the welfare state as they understand it.
For Finland’s sake, we can only hope that its people and its leaders wake up and throw this horrible idea in the trash can, where it belongs, before it can do any real damage. If they don’t, Finland will soon be financially ruined.