After Implementing the Basic Income Program, Finland begins to Show Signs of Success

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By: Diego Herranz / Source: Rebelion /August 15, 2017

Finnish Flag / AFP

When the Finnish government made this decision, it caused ripples in every latitude of the planet. In late 2015, the cabinet of the conservative Prime Minister, Juha Sipilä, announced their intention to experimentally implement, between 2017 and 2018, a pilot program of universal basic income, which would cost 20 million euros. This initiative was backed by their Parliamentary allies: the Center Party and the nationalist party: the True Finns. This had a dramatic effect to revitalize the image of the dying European social democracy, which was at the time lacking ideas to combat the growing hegemony of the right, regardless of how populist they were. Years later, progressivist parties are still in a state of immobility. Even though British laborism has woken from their lethargy—mainly due to the demerits of their rivals, the tories—electoral proposals in the vein of the Basic Income were late to the program of the French Socialist Party, which failed at the polls, even though it went against the grain and picked up revendications that were genuinely far from the neoliberal program around the word.

The Finnish experiment has passed the six-month milestone. And, prudently, Helsinki has vowed to unveil the conclusions in 2019. The analysis will be made by Kela, an agency that supervises the Finnish welfare state. During the two-year period of implementation, Kela will measure a series of objective measurements, such as family income, tax payment or medicine expenses—among others—to determine whether the 560-Euro basic income it provides to the unemployed registered in 2016 (10% of the active population) functions as an incentive  for job-seeking. Or to subsist while they carry out precarious work with low pay. In essence, the new culture of work in the job market of the big industrial powers. In the post-crisis era.

The first data in Finland shows that the beneficiaries of this social redistribution program have recovered optimism: they have diversified their income sources thanks to the state help, which has allowed them to become entrepreneurs. Nevertheless, skeptics criticize the high costs. They think it’s going to cost about 5% of Finland’s GDP. This is far superior to the amount proposed by think-tanks specialized on this project, such as the Basic Income Earth Network. They propose that universal basic income has collateral benefits for societies. Businessmen belonging to the wealthiest 1% of society, such as Bill Gates, see this as the solution to the sustainability of pensions and to the insufficiency of income and loss of jobs that will result of the robotization and automatization of work.

Specifically, BIll Gates wants to give money to “certain groups of professionals and workers and for specific activity areas”. But the billionaire considers that “the world of business and the political elites “aren’t yet ready” to promote this initiative which would serve to “spur productivity, improve health, alleviate poverty, reduce crime, raise education, and improve quality of life”.

Big businessmen support Universal Basic Income

Mark Zuckerberg, CEO of Facebook, also backs the idea, and points to the example of Alaska’s Permanent Fund Dividend, in the US, which is granted to everyone with a US residence permit who isn’t planning on leaving the state.

There are more billionaires supporting this project. Jeff Bezos, chief of Amazon and currently the richest man in the planet, also supports this tool to reduce the effects of the crisis in terms of inequality and to face the automatization of work in the near future. But the most enthusiastic of all is Elon Musk (whose workers have denounced bad working conditions), who said “I think we’ll end up doing universal basic income” and that “It’s going to be necessary” to solve the challenges faced by the market and the new tendencies in the production of goods and services.

Support for this argument comes from official predictions made by US scientists in economic-financial commissions  of the Congress, who warn that half of the job posts in the country will be replaced by robots by 2030.

But billionaire businessmen are not the only ones advocating universal income. The spectrum of supporters of this initiative is broad.

The Finnish Basic Universal Income has been a subject of debate in the OECD. After entrepreneurial and political sectors put the topic on the international agenda, this club of industrialized powers considers that “it’s not the cure-all” for the inequality gap that has grown in their societies after the 2008 crisis. In fact, they emphasize that it worsens “the disparity in the purchase power of the rich and the poor”, and it doesn’t contribute at all to the recovery of the beaten middle class. They even predict that it won’t even correct the poverty rates. They do acknowledge that it will contribute to the sustainability of pension funds, at a time where any amount of wealth accumulation serves to contain the demographic explosion in these countries. They base their diagnosis on the experience accumulated in other parts of the world like Alaska, where it has been implemented for years and Iran, which implemented it in 2011. It is noteworthy that Sweden, a figurehead of the welfare state, rejects the Finnish model. Although in reality, this country is watching the results of its neighbor closely.

Nevertheless, the experts of this multilateral institution have made the following analysis—which is based on comparative studies on the costs of implementation in four of its members: France, Italy, the UK, and, of course, Finland.

Premise number one: The universal basic income will cost the welfare states much more than what they are currently spending, and there’s no guarantee that it will reduce poverty, according to the OECD.

Premise number two: The universal basic income will force, in consequence, to raise taxes massively—over 10% of the GDP for some countries, and simultaneously reducing other social benefits to afford it.

Premise number three: The universal income model—not just limited to unemployed people, like Finland’s program—will benefit the middle classes but will barely make a difference for the lower and higher levels of society. The OECD even affirms that those who decide to retire earlier will lose purchase power, and that it will negatively affect countries that already have balanced and healthy social protections.

The OECD’s conclusion is blunt: without clear and calculated benefits, the costs of any sort of Universal Basic Income would skyrocket and the risk of increasing poverty would continue to grow as the social welfare programs would be cut (since apparently, the only way for states to get more money to implement a program is taxing the middle and lower classes or removing welfare from the dispossessed—never taking it from the rich). Despite this, the OECD backs alternative models, which are more restrictive, don’t harm the possibility of early retirement or that are provided in delimited periods of the working life, and, as in the Finnish case, are only for unemployed people, as long as they reside in the country.

On financing methods, some purpose injecting liquidity through action in an Initial Public Offering, and the dividends would go to a Common Capital Fund.

Others propose raising taxes, or implementing new taxes on companies that pollute the environment, on financial transactions or on large fortunes.

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