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Finland’s Basic Income Pilot Was Never Really A Universal Basic Income

Much has been made of the end of the Nordic country’s experiment with giving some of its residents cash, but the program was actually a conservative welfare program that doesn’t say anything about the true UBI experiments in the works around the world.

Finland’s Basic Income Pilot Was Never Really A Universal Basic Income
[Image: Aleksei_Derin/iStock]

In 2015, the government of Finland announced a new program that on its surface had progressives pretty excited. Beginning in 2017, 2,000 Finns would receive a flat monthly of €560 (about $685). It seemed like a concrete step toward implementing a universal basic income–a no-strings-attached, economic-security-boosting financial floor for people that’s been praised by everyone from Bernie Sanders to Mark Zuckerberg.

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So when Finland recently made it clear that they will not continue to administer the program after the end of 2018, several outlets–most prominently The New York Times–read it as a death knell for universal basic income, and “a reflection of public discomfort with the idea of dispensing government largess free of requirements that its recipients seek work.”

[Image: Aleksei_Derin/iStock]

To interpret what happened with the Finland program in this way is not only incorrect, it also does a disservice to the other universal basic income experiments currently in the works from Stockton and Oakland, California, to Kenya to Ontario.

The whole premise of a true universal income program is that people can be eligible to receive the supplemental payment regardless of whether or not they work. While the income threshold for receiving the benefit necessarily varies by context, generally the idea is to help people clear the poverty threshold wherever they live.

In Finland, the government only made the basic income stipend available to people who were already unemployed. “That’s really the biggest distinctive factor compared to what a universal basic income program is,” says Ioana Marinescu, a professor and economist at the University of Pennsylvania who studies labor market policies. And it was always the plan, Marinescu adds, for the Finland trial to conclude at the end of 2018. So it’s not that the government is axing the program–they’re just choosing not to extend it, and not to expand it for people who are employed but low-income. The organizers of Finland’s trial have also issued a statement correcting the misconception around the ending of the trial.

[Image: Aleksei_Derin/iStock]

Limiting the basic income program to unemployed people serves a very different function than including all people below a certain income threshold. Unemployed people in Finland are already eligible for a benefits package roughly equal in value to the basic income payment. The difference in this two-year program is that people would still receive the basic-income stipend even if they secured a job, while traditional unemployment benefits disappear once someone starts working. “Those benefit cliffs are always a trap,” says Matt Bruenig, founder of the nonprofit think tank People’s Policy Project. That structure effectively disincentives unemployed people from seeking work, because even if they accept a part-time job, the extra income could cost them their benefits, which in Finland are very robust.

Finland’s goal, Marinescu says, “was to understand in what way this might affect the behavior of the unemployed in terms of looking for and finding jobs.” Earlier this year, Finland changed their basic income program to make the stipend contingent on recipients actively seeking or securing work, which was very unpopular among the Finnish public, and effectively mirrors similar conservative American welfare policies.

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In contrast, a significant part of the appeal of true UBI programs now comes from the fact that jobs–especially for less highly skilled workers–have not proven to be an adequate source of economic stability. And with automation threatening to make low-skilled jobs like cashier or waiter redundant, we can’t continue to rely on jobs as a path out of poverty. A UBI could certainly enable people to work if they would like to, but the point of it is that economic well-being should be a guarantee for all, regardless of labor.

[Image: Aleksei_Derin/iStock]

In one project, for instance, Y Combinator Research (the nonprofit offshoot of the startup accelerator) plans to give 1,000 low-to-moderate-income Oaklanders $1,000 a month for up to five years, no strings attached, regardless of their employment status, to research the effects of UBI on everything from voter participation to mental health to spending habits. “It is targeted to people that are lower-income, but within that, it’s not limited to unemployed people or anyone in particular,” Marinescu says. “In that sense, it’s more similar to what an actual universal basic income is.”

But the Oakland program, while more precisely a UBI in who it serves, still does not give an accurate picture of what a scaled-up universal basic income program would look like. Y Combinator is relying on philanthropic donations to fund its experiment, but for a true UBI program to be implemented, we’d have to see the state take an innovative approach to generating the funding for the program. In Finland, which will release the results of an analysis of their program next year, the government just converted its existing conditional unemployment benefits to unconditional basic income, it also did not create a new funding scheme.

While in both cases, “we will learn about how the income affects the people who receive it, we won’t necessarily learn about how different communities can afford this program,” Marinescu says. “To make this a real policy, you have to get an income stream, which means either cutting some benefits or raising money with new forms of revenue for the government.”

That, Marinescu says, is where her research around Alaska’s unique universal stipend program could prove useful. Since 1982, the Alaskan government has sent a check to every resident from an investment fund established with oil revenues. In 2015, when oil prices were high, the Alaska Dividend Fund sent every individual an annual check for $2,072, or $8,288 for a family of four. Nobody is arguing that this annual stipend is enough to live on, or to qualify as a true UBI (especially because it fluctuates with the price of oil), but it’s a proven model for how a government can collect and redistribute revenue. Perhaps, Marinescu says, Alaska could be instructive in how states could put a tax on carbon and use the revenues to boost incomes.

While Finland’s basic income trial has generated a lot of buzz for being one of the first country-wide programs to launch, its end is not a referendum on the future of UBI on the whole. Finland’s program, Bruenig says, was never intended to be much more than a publicity stunt, and it’s worth noting that it originated from the current right-wing Finnish leadership who ultimately wanted to use the stipend as a way to drive more people into the labor force. “The goal all along was more familiar to the conservative American goal of: ‘Let’s get them into work,'” Bruenig says, but it did not ultimately require a radical overhaul of Finland’s current benefit structure.

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That is why Finland can’t serve as a bellwether for how UBI will play out going forward. For UBI to truly work and scale, it will require some radical measures. Anything that cleaves too closely, as Finland’s program does, to existing conservative policies is not the kind of UBI we’re looking for.

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About the author

Eillie Anzilotti is an assistant editor for Fast Company's Ideas section, covering sustainability, social good, and alternative economies. Previously, she wrote for CityLab.

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