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Finland ends Basic Income trial
- rijoja 9y agoDoesn't testing this on unemployed people only quite silly. I mean the answer to the question "would poor people benefit from more money?" is quite obvious. The real question is whether people who already are employed would stop working had they received "free" money. I'm so disappointed in this glaring hole in the methodology!
- RealityVoid 9y agoReally, if it' only for poor people it's not basic income anymore, it's welfare.
- DataWorker 9y agoIf everyone got it then it would simply be called inflation.
- azernik 9y agoThat's not how macroeconomics works. If everyone got it and it was funded by expanding the money supply it would be inflation plus redistribution (since the new money is distributed uniformly instead of e.g. to government bondholders). If you're funding it with taxes, it's plain redistribution.
- DataWorker 9y agoSo you don’t think there would be any inflationary impact if you gave everybody, to use an extreme example, an extra 1 million dollars a month? I guess I don’t really see how that’s possible but I’ll admit much of economics is over my head.
- azernik 9y agoDepends on where that money's coming from. If you take it away from the wealthy, that reduces their a) consumption spending, and b) investment, which causes a countervailing downward pressure on prices. The total amount of money floating around, however, stays the same. This comes with some caveats, of course: This would probably cause a demand shock as spending shifts from the things the rich do to the things the newly-not-poor do - so there would probably be a short-term jump in the price of e.g. low-end smartphones and middle-end IKEA furniture, and a crash in the price of international travel and of certain investments, until the economy properly shifts over to the new production priorities. Which can be interpreted oh so hilariously from a Marxist perspective. There may be an increase in money velocity when shifting income to (on average) lower income brackets; i.e. it may be the case that money changes hands more quickly in the case of (poor people consume items, and then the places they buy it from plow that money into both investment and into the taxes necessary to fund the UBI program) than in the current case of (rich people put money into their more high-brow consumption and into investments, and the Apples and Fidelities of the world put their revenue and investments to use). That is, the same amount of money gets spent more often. And that could cause inflation. But of course the determinants of velocity of money, and its effects on inflation, are an open question in economics.
- DataWorker 9y agoBut everybody gets it, it’s not taken away from any person. The wealthy get a million dollars extra just like everyone else. Let’s also assume it’s revenue neutral, so the government doesn’t need to raise taxes. I hear that’s the claim of most ubi proponents.
- azernik 9y agoThe wealthy get a million dollars along with everyone else, and that money has to come from somewhere, so you need to tax the wealthy a lot more than a million dollars on average. Basically the way to think of it is: you're giving everyone a million dollars on average, so you need to tax everyone a million dollars on average, and the only way to make that work is to actually tax someone with, say, $5M/year in income $4M of that income to balance out the people who make only $20K/year and can't pay anywhere near their share. (That tax rate is probably impractical, but then we're looking at a pathological case for the sake of analysis anyway.) If it's revenue neutral, then that means you're taking money from other programs - which by definition spend that money. Just on different things. (And probably a lot of the same things, if you're taking that money from existing welfare programs.)
- nsbq71 9y ago>I mean the answer to the question "would poor people benefit from more money?" is quite obvious. No, because: >The real question is whether people who already are employed would stop working had they received "free" money. So: will unemployed people stop looking for a job if they receive free money?
- scarmig 9y ago> will unemployed people stop looking for a job if they receive free money? That's not quite the question. The question is, will unemployed people look less for a job if they're guaranteed free money even once they get a job, compared to the status quo where they are guaranteed free money (for awhile) that stops once they get a job. There's also a follow-up question, that is something like "Will people on permanent disability start getting jobs if you stop punishing them by permanently taking away disability payments if they get a job?"
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- commandlinefan 9y agoI think testing it for two years is the silly part. I have complete confidence that, say, the United States could easily sustain basic income, at a livable wage, for 20, maybe 30 years, before it started to crack under the pressure of too many people collecting and too few people putting in. Of course, by then it would be too late to close the box...
- disordinary 9y agoCorrect me if I'm wrong but the length of unemployment benefit allowed in the US is six months and the unemployment rate is 4.1%, the length of unemployment benefit in New Zealand is for life and the unemployment rate is 4.6%. So on the surface it appears as though giving free money to unemployed has no impact on unemployment rates.
- Jhsto 9y agoIn Finland people receive conditional aids, sometimes amounting so much money that there is little incentive to go to work anymore, because doing so would cut your subsidies. I guess what the government wanted to see is that given it "unconditionally," would people take up low paying jobs because now they don't lose any more aids by doing so. I agree it was dumb to coin this as a UBI.
- digi_owl 9y agoYeah, another interesting aspect of UBI would be how many would quit their existing job and just subsist on UBI. The real fear of most against UBI seems to be that the majority will quit their jobs, resulting in the government losing way more in income tax than they pay out in UBI.
- um_ya 9y agoYou don't even need to test UBI to see that it won't work. You can tell by our existing system that UBI will promote people to take advantage of the system. If you're poor, you get free grants to go to college, food stamps, and all sorts of free programs. As soon as you start working, you lose all those things. This also contributes to why black families have only one parent, because the government gives more money to broken families than regular families.
- eurleif 9y agoIt sounds like you're referring to welfare cliffs. Practically the entire point of UBI is that there are no cliffs.
- jMyles 9y agoI don't know exactly how to say this without seeming insincere, but can you try your comment again? There's no part of it that makes sense to me. I think it's potentially an interesting surface for discussion, but when broken down, I can't quite find anything about it that makes enough sense to respond meaningfully.
- dragonwriter 9y ago> Doesn't testing this on unemployed people only quite silly. Not necessarily: if the purpose of the test is to determine how basic income affects outcomes over a period for the unemployed, having the experimental group to whom BI is given be exclusively drawn from the set of people unemployed at the beginning of the experiment and comparing that to a similar group of unemployed people not given BI is a fairly sane experimental design.
- scarmig 9y agoIt's important to emphasize that right now, the responsible thing is to perform extensive experiments on how UBI will affect work incentives. There are lots of unknowns, and this will give us some information to formulate later questions, once results are actually reported.
- tnzn 9y agoWhile sane, it has the drawbacks of similar experimental designs : wouldn't UBI distributed to everyone have other effects on the unemployed than UBI to 2k unemployed?
- JumpCrisscross 9y ago> Doesn't testing this on unemployed people only quite silly Testing it on a series of population subsets before testing on the entire population seems reasonable.
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- debt 9y agoIt's quite arrogant to outright assume Fins are so stupid as to not have thought of this.
- omg_ketchup 9y agoI'm curious if "stop working" is an appropriate measure of the potential downsides. Especially in a place like HN where work on side-projects that could become real businesses are encouraged.
- tabeth 9y agoI've never really understood basic income. Why give everyone free money? Why not just give the people who need things the things they need? Is this really an economic problem or a cultural one? Just decide on what everyone should have and how much and then find those who lack those things and give it to them. EDIT: the responses below are interesting but unconvincing. Why wouldn't giving everyone X amount raise all prices by X? In a world with targeted advertising and unprecedented advertising I'm confident basic income would be counter productive. If giving everyone X works, why not 2X? 3X? Lastly, where is the money for this scheme coming from and why would anyone who doesn't need it agree to this?
- azernik 9y agoBecause knowing what people need requires an expensive and error-prone system. Most people know what they need and will go buy it given the money to do so - the joy of fungible assets!
- commandlinefan 9y agoI don't know, knowing what people need actually seems easier than knowing how much (variable value) money they'll need to buy it. A person's required caloric intake hasn't changed since 1970. Incomes have.
- azernik 9y agoThat's a relatively simple case, that a developed country's welfare system does indeed handle well. But what about transportation, housing, education, entertainment? The list is long.
- JumpCrisscross 9y ago> knowing what people need requires an expensive and error-prone system Unemployment provisioning in the United States is relatively inexpensive. I wonder if the administrative savings are being overstated, having been estimated before governments digitized such things.
- marricks 9y agoI think the best thing to try is universal basic income for those making less than X and then slowly getting phased out once you hit middle to upper class is best. People want to work but if the end up not getting enough to live while looking for work and not much more when the work you have a recipe for trouble. Getting everyone onboard with taxing the rich to pay for it would be tough in US with its penchant for doing the exact opposite, cutting welfare and giving wealthy tax breaks... how trials like this go will be very interesting. I look forward toy the results even if it’s just targeting unemployed persons.
- andrewchambers 9y agoThen it is not "universal" or "basic" anymore, how is that different to just more benefits.
- freeloop10 9y agoIt depends on how you look at it. A phase out of UBI could also be viewed as an additional tax. In fact, you could consider the current system of benefits only if you are not working a form of UBI, if you just treat the UBI not received by the working as a tax against the benefits they would have received. All in all, UBI isn't much of a departure to what we already have, except that people are expecting the benefits given would be much moar.
- adrusi 9y agoWhat you're describing is more like a negative income tax. As long as the tax brackets are narrow enough (or better yet: tax rate is a continuous increasing function of income!) so that at no point does increasing youre before-benefit income reduce your total after-benefit income. With negative income tax, you have the problem of people cheating on their taxes to get free money, so it's often assumed that implementing it would require the abolition of cash.
- medlazik 9y ago>Finland's two-year pilot scheme started in January 2017, making it the first European country to test an unconditional basic income. The 2,000 participants - all unemployed - were chosen randomly. 560€ for the unemployed? We've had this in France for decades[1]. Not sure why they needed such an experiment. [1]https://en.wikipedia.org/wiki/Revenu_de_solidarit%C3%A9_active https://en.wikipedia.org/wiki/Revenu_de_solidarit%C3%A9_acti...
- scarmig 9y agoThe difference is that you lose the money when you get a job. That acts as a disincentive to job seeking. UBI attempts to get around that by making the grant unconditional.
- tjoff 9y agoI don't know how it is in France but I think the keyword here is unconditional. I'd guess most countries require you to actively look for jobs and potentially force you to accept any reasonable job you might get or you loose the "income".
- medlazik 9y agoOf course, missed that part. My point was more about the 560€ which is ridiculous as an incentive to anything. The RSA is regarded as poors staying poor and profiteers gaming the system to keep having it. It was pretty clear an unconditional 560€ wouldn't have changed anything.
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- mgleason_3 9y agoThere’s a lot of unanswered questions. To bad the results weren’t released. It’s interesting that the OECD feels “Basic Income” would increase Finland’s poverty rate while their proposal for a “Univeral Credit” (a consolidated benefits system) would lower it. But, it gives no clear reason why.
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- zjaffee 9y agoI imagine it's fear of inflation, which has been shown to happen when incomes rise for lower income people.
- mgleason_3 9y agoPossibly the Basic Income is seen as a disincentive to work because you only receive it if you’re unemployed (or earn less than a minimum income level). But you loose it once you’re employed (or earn more the minimum income level)
- driverdan 9y agoAs the article said the results will be released next year.
- i_am_nomad 9y agoYou cannot possibly have a meaningful trial of UBI unless most if not all of the population is receiving it. Providing a basic income to all will profoundly alter the economy in some ways we can predict and in some ways we cannot.
- JumpCrisscross 9y ago> Providing a basic income to all will profoundly alter the economy in some ways we can predict and in some ways we cannot If proponents can't propose sensible and limited tests to de-risk a UBI proposal, it's not a serious one. There are downside risks to raising tax levels by 30%. That has to be offset with experimental data.
- scarmig 9y agoI'm a strong proponent of a UBI, and I agree with you 100%. But you make it sound like most UBI advocates are insisting it be inplemented in one fell swoop and have no idea how to test it empirically. That's not the case at all: this was one such test, and I'm eager to see the actual methodology and results. Another is being run by YC itself. This isn't some imaginary proposal that can never fail and can only be failed.
- JumpCrisscross 9y ago> you make it sound like most UBI advocates are insisting it be inplemented in one fell swoop Pardon me, didn't mean to come across that way. The history of social programs informs us to start small and scale carefully. If a program doesn't work in a town, it's unlikely to work nationwide.
- scarmig 9y agoWe're probably in agreement, then. Though, with a caveat: sometimes it can fail in a town but succeed on a wider scale. For instance, a city offering generous, open-access homeless benefits is almost doomed to have all its benefits swamped as it attracts homeless from around the country, but that doesn't give us much information about how the same policies would work if implemented nation-wide. In the case of the UBI, though, those effects can be worked around by designing the experiment well.
- jadedhacker 9y agoThere's literally no information in this article other than the government decided to end the trial. One reason it might have been ended is because there were anti-social effects. However, it might also have been ended at the behest of anxious rich people afraid that positive results would increase their taxes. We'll have to wait for the full report.
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- elihu 9y agoThe headline "Finland's basic income trial falls flat" implies that the results were poor, but the actual article just says that the government decided not to fund it anymore and the OECD doesn't think it'll work without going into what the results were.
- manicdee 9y agoThe Finland experience turns out to be a great example of how not to run a UBI experiement: - no management support (government was divided and attention wandered) - unemployment benefits sre privately managed so those entities lose out if UBI is successful - not universal (no entire village/city was chosen) - tiny sample size - only unemployed people chosen - no employed people, chosen from a range of income brackets But regardless of the flaws, the experiment will be held up as an example of why UBI doesn’t work (never mind that the experiment was not UBI).
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- partycoder 9y agoUniversal basic income makes sense if you are spending a lot of money on people already: - crime prevention - justice system (the state gives you a free attorney if you cannot pay for one) - jail is more expensive than an expensive hotel - people without shelter going to hospital emergency rooms The idea is that by giving them money they would get back on their feet. Some people don't care though. Personally I think it should not be universal, and that there should be certain amount of merit to apply for it.
- sctb 9y agoPrevious discussion: https://news.ycombinator.com/item?id=16874921 https://news.ycombinator.com/item?id=16874921.
- RickJWagner 9y ago"US venture capitalist Sam Altman, who runs start-up funder Y Combinator, is organising a basic income experiment." Interesting. Also: Those uber-rich guys who like the idea should pony up some cash, maybe spreading it around the poor community of San Francisco. It'd be a great way to study the concept.