Money for nothing?
Finns tot up value of basic income experiment
● Before receiving free money from Finland’s government, Sini Marttinen had to take care to plot how much she could work without losing her unemployment benefits.
The 35-year-old consultant could make about €300 (about R4 400) a month before she was taxed 50c in every euro above that. “You would spend a lot of time on the best strategy to get the most money,” she said.
But at the start of last year, Marttinen “won the lottery”, in her words. The Helsinki resident was one of 2 000 unemployed people picked at random from across the country to take part in the world’s most prominent trial of universal basic income.
Instead of receiving her unemployment benefits, about €500 after taxes, she now receives €560 in monthly basic income. This money is unconditional — she keeps it no matter how much work she finds.
“It’s absolutely perfect. Because I got basic income, I could start my own business,” she said.
The two-year Finnish trial is at its halfway stage, and there is anecdotal evidence that basic income has helped reduce stress among participants by easing the requirements of benefits bureaucracy.
But there are also increasing doubts about the trial itself and whether it offers a viable example of how basic income could work.
“We are not really testing a specific model that could be introduced in Finland. We are a very long way away. But we have come one step nearer,” said Markus Kanerva, a senior specialist at the prime minister’s office who has been heavily involved in the trial.
The idea of giving citizens money for nothing has a long heritage, with supporters including Martin Luther King and Milton Friedman.
More recently the idea has been touted by the new titans of the technology industry, such as Facebook’s Mark Zuckerberg and Tesla’s Elon Musk.
Finland’s centre-right government started the trial under a new framework that allows it to try various social policies through randomised tests. Kanerva said the goal is to make Finland “the most innovative and experiment-friendly country by 2020”.
But the basic-income experiment was hurriedly set up — in part so that it shows results before parliamentary elections due next year.
Ilkka Kaukoranta, chief economist of the SAK trade union confederation, is sceptical of the trial.
Unions believe taking away the conditionality of benefits — the requirement that the recipient has to look for work — would undermine the welfare system, leading to cuts. “A conditional safety net is the only way to combine a high level of benefits with a high level of employment,” he said.
He added that implementing the basic-income model being tested would increase the budget deficit by five percentage points. That is because the trial includes no changes in taxation: participants keep the €560 no matter how much they earn through work.
An example is Mika Ruusunen, a 47-yearold former baker from Tampere. He had been unemployed for more than a year while retraining in IT. A few days before being told he would be part of the trial, he was offered a job, which he still has 13 months later.
“It’s just extra money on top of what I earn,” he said. He thinks basic income would work best for people who have an idea for a new business, rather than the broader mass of unemployed.
Juha Jarvinen shows why this could be true. The 39-year-old father of six in rural western Finland had wanted to start a business but felt inhibited by rules limiting supplementary
It finally meant that what I can do only depends on me Juha Jarvinen Basic income recipient
earnings. Basic income allowed him to risk starting a video business.
“The biggest change is with my mind. It finally meant that what I can do only depends on me. Before, with benefits, it was too much controlled by the employment office. They are saying you must do this and this and this,” he said.
Basic income has given him back control of his life, he added. “For six years, I was breaking down all the time. Now I have the freedom — I don’t need to feel stressed.”
A common refrain from those taking part in the trial is that bureaucracy often put them off finding work. “The big impact has been psychologically, not the money. The trial doesn’t really change things money-wise, but it does change the bureaucracy and makes taking work easier,” said Marttinen.
Finnish authorities could extend the trial to different groups such as low-income employed, self-employed, stay-at-home mothers and students, said Kanerva. Other experiments could take place — such as cutting or increasing childcare incentives for certain families.