Confronted with the bureaucratic burden of administering its massive welfare programs, Finland has begun kicking around a radical way to simplify things. Rather than handle applications and monitor programs for fraud, they are considering giving everybody free money. It’s called a “universal basic income,” or UBI, and Finland will begin a trial this year. From Science Alert:
This pioneering UBI program was launched by the federal social security institution, Kela. It will give out €560 (US$587) a month, tax free, to 2,000 Finns that were randomly selected.
The only requirement was that they had to be already receiving unemployment benefits or an income subsidy.
The program allows unemployed Finns to not lose their benefits, even when they try out odd jobs.
“Incidental earnings do not reduce the basic income, so working and … self-employment are worthwhile no matter what,” says Marjukka Turunen, legal unit head at Kela.
That’s a primary rationale for the scheme. Conventional unemployment benefits are tied to earned income. You get less if you earn more, which acts to disincentivize work. Why labor if you can get money for free?
Incentivizing people to work stands as a worthy goal. However, giving people free money is the wrong way to do it. The UBI argument collapses in on itself once you realize that the incentive to work is greater when people get nothing for free.
UBI would inflict the same economic destruction inherent to all subsidy. The money has to come from somewhere — namely, the pockets of taxpayers who would otherwise use it for productive exchange. Those thus victimized have to earn more to retain the same purchasing power. On the other side of the transaction, the effective value of a UBI payment will trend toward zero. If you don’t have to do anything to earn $587, then that’s what it will eventually be worth — nothing. This will necessitate periodically increasing UBI payments to keep the Ponzi scheme going.
Of course, nothing as silly as an economic argument will prevail against the appeal of “free money.” We can expect this to catch on worldwide, including in the United States. Folks like Robert Reich and Tesla innovator Elon Musk have already begun advocating for UBI to answer job loses due to automation. So long as “need” stands as an accepted moral argument, destructive ideas like UBI will continue to take root.