Fans of the welfare state mostly the naive waiting for the streetcar to Utopia have dreamed for years of a “universal basic income” for everybody, paid by governments to layabouts and unemployables. The doughty Finns tried it, and to their surprise and disappointment it didn’t accomplish anything beyond an expensive lesson in how human nature invariably works. Now they have discontinued their 16-month-old experiment in giving a no-strings-attached “universal basic income” to certain unemployed Finns.
The government in Helsinki didn’t explain why, perhaps not wanting to call attention to a failed experiment, but there might be an explanation in one of Ronald Reagan’s keen observations of human nature: “If you want more of something,” the Gipper said, “subsidize it. If you want less of something, tax it.”
The “more of something” in this case was the scourge of unemployment. The jobless rate in the first quarter of 2018 in Finland, a nation of 5.5 million people, stood at 8.8 percent, according to Moody’s investments service. That’s a lot of jobless workers to tempt welfare-state experiments.
The two-year pilot program, begun in January 2017 with 2,000 randomly selected Finns getting a monthly payment of 560 euros (currently about $672), was aimed at reducing poverty and boosting employment. While such handouts might reduce poverty, though in an economically unsound and unsustainable way, it’s not at all clear how these handouts would have boosted employment. When these Finns realized that they could get their daily bread for free, why should they work for it?
The stipend was meant to eliminate “disincentives” among the jobless, because they would continue to get it even if they got a job. But there was no requirement to look for one. The Finnish guaranteed basic income program was the first of its kind in Europe, after voters in Switzerland overwhelmingly rejected a similar scheme to hand out 2,500 Swiss francs each month to the unemployed, currently about $2,510.
The Finnish experiment will be allowed to run its course through the end of the year. That’s presumably to enable recipients to avoid experiencing the withdrawal symptoms of going cold turkey. As you might expect, the Finnish welfare bureaucracy administering the universal basic income giveaway, the Social Insurance Institute, is suffering withdrawal symptoms already. The agency said the experiment should have been expanded to give it a better chance of ascertaining whether it would “work.”
One of the researchers said the two-year trial was “too short a period to be able to draw extensive conclusions” from such a cutting-edge experiment. But if drawing conclusions was too much for the bureaucrats, it wasn’t so difficult for others. “It’s highly interesting to see how it makes people behave,” one researcher observed. “Will this lead them to boldly experiment with different kinds of jobs?” Perhaps, but a wise bureaucrat shouldn’t hold his breath waiting for the scheme to work.
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