A Look at Finland's Universal Basic Income

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By Isaiah Minter | United States

Last month, the Finnish government rejected a proposal to extend its universal basic income trial. Contrary to most media reports, this does not mean that basic income in Finland has failed. Rather, the program is going to expire at the end of 2018, as planned.

Finland wants to gather data on the results of the program before making a decision on it, but one would never know this from the media.

To no surprise, however, political pundits have tried to explain this supposed failed UBI trial through one of two prevailing theories. The first theory, as offered by Dr. Gigi Foster of ABC News, suggests that the UBI creates a disincentive to work worse than traditional welfare programs. But there is no merit to this claim: unconditional cash transfers had no significant effect on Alaskan employment, nor did Iran's UBI reduce employment.

It never occurs to Gigi Foster that a basic income is a cash supplement. Under a UBI, individuals receive a monthly check and remain free to earn more money through work. The measure does not, in stark contrast to America's current welfare system, make it more profitable for recipients to collect benefits than to seek out employment. Nor does it cut the individual off from their monthly check in the event that they make enough gross income. Ultimately, a basic income, by its very nature, sets a minimum income floor under which people may not fall.

For those less critical of Finland's failed UBI trial, the popular theory seems to be that it didn't go far enough. This is the route that Leonid Bershidsky of Bloomberg took, and it's one I want to steer clear of.

First, Finland has been practicing small-scale cash transfers for years, and with great success. Similarly, in an earlier piece of mine on UBI, I made note of the poverty reduction achieved by non-universal cash transfers throughout Africa. If Bershidsky's claim was true, in the sense that a lack of universality is to blame, then one would expect these cash transfers to have failed. But that isn't the case.

Similarly, even if he meant that Finland's UBI failed because it didn't do enough to reduce poverty, he is wrong. Finland isn't extending its UBI trial because it wants to gather data on the program's results and determine if it was a success or a failure. In other words, it's too early to tell what the effects of the basic income trial are.

Somehow, Bershidsky's claim manages to both lack evidence and run contrary to it.

But I want to get to his central theme, for it's a dangerous one. The notion that we need to redistribute to level Y because level X of redistribution didn't work pardons any bad outcome of wealth redistribution.

Allow an example: in America's War on Poverty, we've taken over $20 trillion from the rich and given it to the poor. In the wake of this lies a destroyed black community and more than 40 million Americans in poverty. This was of little to concern to Sasha Abramsky of The Nation, who published an article some years ago titled "Why We Need a New War on Poverty."

It never occurs to Leonid Bershidsky that the shortcomings of programs often stem from the very institution that enacts them: government. It is illogical to expect that imperfect humans with imperfect knowledge can come together and form a perfect government. With all the different incentives and motives of politicians in a government, there is often tampering with programs. Enough to the point where the actual program may differ greatly from the original model envisioned by policy proponents.

Indeed, Finland's activation measure, apart from serving as an obstacle to the basic income trial, absolutely did more harm than good. In withholding benefits from unemployed persons who were determined to not be actively seeking work, the program restructured welfare policy for the worse.

In this, I am not saying that a basic income is inherently flawed, nor that we must avoid government action altogether. For, in fact, the tampering of said program may very well make it more effective than originally planned. Rather, I am suggesting that citizens be wary of the incentives politicians face and the finite knowledge they possess.

In the end, it would do us well to reject the approach of Foster and Bershidsky. While I am sure they mean no ill, both of their claims are baseless. Each of them looked at some facts of the case and drew conclusions supporting their beliefs. This confirmation bias behavior simply fails to benefit our current political environment, and us as individuals within it.