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Business Impact

Finland Starts Handing Out a Basic Income

A few unemployed Finns are receiving a monthly check with no strings attached—but it’s unlikely to tell us whether universal basic income is a good idea.

Finland has become the first European country to implement a basic income. In a small experiment, 2,000 of the around 213,000 people in the country who are currently unemployed have been selected to receive 560 euros (about $587) a month as part of their benefits package, according to the Guardian.

The aim of the experiment is to see whether guaranteeing a baseline income for people without jobs will spur them back to work. Finland’s unemployment benefits provide enough for people to get by without working—and they can be revoked if someone takes even a low-paying or temporary job.

Under the new plan, people who are selected will not get any extra money; the 560 euros will replace part of what they already receive. But they will continue to receive the stipend, no strings attached, even if they get a job.

Olli Kangas is research director for the Social Insurance Institution of Finland, the agency conducting the country's experiment in basic income.

These kind of tests have become popular lately—the startup incubator Y Combinator is planning an experiment with 100 families, and there are others in the works in the Netherlands and Canada.

But there are several problems with them. The first and most obvious is that they’re expensive. Y Combinator says it will give away $2,000 a month, which may be why the cohort for the “short-term” pilot project is so tiny, though Y Combinator has said it plans to follow up with a longer-term experiment if the first one “goes well.” Scaling that up would require nontrivial amounts of money.

It’s also unclear whether automation is truly eliminating jobs at a high enough rate to constitute a threat to the workforce (a central assumption of many who argue in favor of a basic income). Even if it is, is giving people free money the best solution? Or does it amount to giving up on folks who might do far better if the funds being handed them were instead spent on training for new jobs?

These are hard questions to answer, and while it’s tough to argue with the motivations behind a program like Finland’s, it will be difficult to draw broadly applicable conclusions from such a small study. Making experiments in basic income bigger won’t necessarily help, either. As we wrote in our exploration of the topic, large trials have been conducted before, and the results were all over the place. That has left room for the idea to rear its head again—regardless of whether it was ever a very good one.

(Read more: The Guardian, “In 2017, We Will Find Out If a Basic Income Makes Sense,” “Basic Income: A Sellout of the American Dream”)

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Olli Kangas is research director for the Social Insurance Institution of Finland, the agency conducting the country's experiment in basic income.

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