Universal Basic Income: What is it and what is going on in Finland?

Finland

In June last year, the people of Switzerland voted on whether to adopt a policy of Universal Basic Income (UBI) for all. That would have meant around $1,650 USD a month for each adult; this was the closest any country had gotten to a full universal basic income programme. However, this was rejected by popular vote.

Finland

But, UBI is still being considered in Finland and the Netherlands who have taken the torch of the UBI in a series of pilots. In Finland, a randomly selected group of people who are currently unemployed will receive a monthly basic income of $600. Starting on the 25th of August, one month after Switzerland rejected their more lucrative measure, it will continue for 2 years regardless of if the participants gain employment. According to Demos Helsinki the government is viewing the measure as both part of a shift toward ‘experimental governance’ but has referred to the measures as ‘incremental.’

Why Universal Basic Income?

What’s interesting is who supports this and who doesn’t. It may sound far-fetched, but the idea, first proposed by Thomas Payne in the 1700s, and has been championed by political minds as diverse as Milton Freedman, Martin Luther King and Andre Gorz. Currently in Finland, one of the major trade union spokespersons, Ilkka Kaukoranta, has come out against the proposal, calling it ‘useless’. It is not a left thing per-say as it doesn’t re-distribute income to just the very poorest.

The two easiest criticisms of UBI are who pays for it and the rise in unemployment that could come from it. After all, why work in a job you don’t like if you can now survive without doing it? Both are easy to counter. Firstly, the UN will tell you in Sustainable Development Goal 10, we are in dire need of a redistribution of wealth of some kind. Secondly, consider this: is spending more time raising a child or finishing a degree better for society than working in a job that you need to survive?

And what are the drawbacks?

Yet, a BBC piece on the matter points out those currently on welfare stand to lose the most (like those with a disability for instance) as they would no longer be able to claim any additional income on top of UBI. That, of course, is the point of UBI. There has been no adequate explanation for how to treat those most in need under a society with Universal Basic Income.

Another problem is the risk of hyper-inflation, which could potentially render the policy meaningless. Kaukoranta stated that Finland’s deficit would increase by about 5% of the country’s entire GDP.

There are many serious problems with UBI, but one is that it does not go further enough? Governments tend to argue against the higher taxes needed for UBI due to fear of flight of their countries wealthiest.  So why not create a global Universal Basic Income? We already know how we could pay for a global measure; the Robin Hood Tax. This idea, of a minute tax on financial transactions, was seriously looked into by the EU till the UK vetoed it.

Imagine the radical consequences if the poorest people in the world go from having $1.25 a day to live on to, say, $10? It would completely rethink the way we see inequality in the world. And frankly, who better to pay for UBI than the world’s very wealthiest?

Why now?

But, of course, that is a bit too idealistic for now. Either way, it has been widely reported (including in a University of Oxford study and by Scott Santens) that mass automation and further developments in the internet will lead to mass unemployment over the next 10-20 years. This reason is why Yannis Varoufakis stated support for the June referendum in Switzerland on Basic Income:

The robotization [of work] has long been underway, but robots don’t buy products. Therefore, a basic income is needed to offset this change and stabilize a society which has an increasing wealth inequality.

Yes, robots are taking over, and this was predicted by another champion of Universal Basic Income; Maynard Keynes, in 1928. His essay, Economic Possibilities for our Grandchildren predicted this mass ‘technological unemployment’ will come in 2028. And so far, no one has come up with a better idea than universal basic income.

John Maynard Keynes

In the UK, Glasgow and Fife is considering a pilot of its own. This could lead to the biggest measure of its kind since child benefit was introduced since child benefit was first introduced. If what’s going on in Finland works well, Scotland could join others on this tidal wave of UBI. For now, all that is left is to watch Finland with baited breath.

Though drastically amended and updated, this was originally commissioned by World Merit

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