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News Small trial of paperless unemployment pay in Finland

  1. Jan 2, 2017 #1
    No more unemployment benefits. Trial already in Finland where everyone gets an equal payment from gov regardless of whether you work or not, want it or not. Wealthy and poor all receive the same UBI to do what they want with, other income streams won't affect your UBI.

    Thoughts on UBI?

    Edit by mod: Please read this link to explain that it is just taking away their unemployment payment and returning it to them (trial of 2,000 people only) without the paperwork

    http://www.latimes.com/business/la-fi-finland-guaranteed-income-20170102-story.html

     
    Last edited by a moderator: Jan 3, 2017
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  3. Jan 2, 2017 #2

    berkeman

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    Do you have a link? Some reports seem to imply you must be jobless to get the payments...

    http://www.nytimes.com/2016/12/17/business/economy/universal-basic-income-finland.html?_r=0
     
  4. Jan 2, 2017 #3

    OmCheeto

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    Here we go again.......

    Universal Basic Income
    Evo; "This thread has gotten nowhere in 4 pages, time to close it down. It's is just not realistic in the near/distant future in the US."

    bolding mine

    ps. Greg still has an open thread on the topic: We should give free money to the homeless
    Same general idea, IMHO, with different wording.
     
  5. Jan 2, 2017 #4

    Evo

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    We can discuss Finland, but Finland only because it is unique. We cannot speculate about other countries, so please post only about Finland, also, we do not allow discussions of politics.
     
  6. Jan 2, 2017 #5

    OmCheeto

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    Finland?
    There are only about 18 people that live there.
    Much too small a sampling for a valid scientific discussion, IMHO.

    Evo, we need to talk........
     
  7. Jan 2, 2017 #6

    Evo

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    That's why it works for Finland. :biggrin:

    It will be interesting to look at the situation there in a few years. Hey, I'm all for free money.
     
  8. Jan 2, 2017 #7

    Ygggdrasil

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  9. Jan 2, 2017 #8
    It's easy to guess that Finland currency isn't backed by gold. Give-away schemes like this are just going to devalue the currency. People will invest in some more-valued currency and spend the cheap native currency. Prices go up. Arbitrage traders know how to profit from these things, should they have the foresight or insider information.
    The political party will advertize their superficial good intentions but the people will catch on to the corruption. When the people begin to suffer from the reduction of their personal weath, they will purge that political party for a more responsible one. This same old story gets played out over and over again.
     
  10. Jan 2, 2017 #9

    Vanadium 50

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    Finland uses the Euro. Finland is less than 2% of the Euro economy.
     
  11. Jan 2, 2017 #10
    Wouldn't it just redistribute taxed income upwards. A bit like a guaranteed tax return far above tax paid in most cases. While it might sound like a guarantee for poor, any money a poor person has belongs to someone else anyway. It goes to paying various organisations that in toto maintain life so that one is around to get more money to do the same again and again.

    It seems just a ploy to bolster a failing system in the short term while widening the gap between poor and wealthy. I don't trust the idea, particularly when right wing extremists support it.
     
  12. Jan 3, 2017 #11

    vela

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    You're assuming the program is funded by printing money instead of taxes. If it's simply a redistribution of wealth from one group to another, it's not going to devalue the currency.
     
  13. Jan 3, 2017 #12
    No economist but why is a devalued currency necessarily bad?

    Lower dollar promotes tourism and foreign investment, foreign students, keeps interest rates low.....

    I remember when my country's dollar beat the US dollar, things went to poo. Our dollar dropped and tourism etc went nuts.
     
  14. Jan 3, 2017 #13

    vela

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    It causes inflation because imported goods become more expensive. Traveling to other countries would also be discouraged.
     
  15. Jan 3, 2017 #14
    Yeah but its more dynamic than high dollar value = better, It doesn't especially if your country exports more than it imports or you have a big tourist industry or a multimillion dollar education industry for foreign students.
     
  16. Jan 3, 2017 #15

    vela

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    In Finland's trial, the government is giving money to 2000 unemployed people, but the general idea of UBI, as mentioned in the article, is that everyone gets a check regardless of whether they're working or not. The current system provides an incentive to not work because if a person earn too much, their benefits get cut, leaving them worse off economically. With the UBI, because you receive it regardless of whether you work or not, it removes the incentive to not work. I don't recall it being mentioned in the article, but it would seem that UBI needs to replace the current system to achieve its intended goals.

    I'd think that negative income tax would make more sense. The lower a person's income, the more help the person gets, and people above a certain income don't receive money that they don't really need anyway. Any increase in income reduces the benefit, but still leaves the person better off. The earned income tax credit works like this.
     
  17. Jan 3, 2017 #16

    vela

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    Of course. With any change, there are going to be winners and losers.
     
  18. Jan 3, 2017 #17

    Evo

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    Here's what Finland is trialing.


    http://www.latimes.com/business/la-fi-finland-guaranteed-income-20170102-story.html

     
  19. Jan 3, 2017 #18

    Ygggdrasil

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    FiveThrityEight had a nice piece summarizing various studies on the effects of a UBI (http://fivethirtyeight.com/features/universal-basic-income/). All studies were limited and had flaws, but if you're interested in the topic, it's a nice read. Here are some relevant passages with links to the studies discussed:
     
  20. Jan 3, 2017 #19

    russ_watters

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    It appears to me that the media outlets are playing whisper-down-the-lane with this story and parts of it are morphing or getting dropped. The ideas that the study is targeting unemployed people and that employment doesn't disqualify someone from being in it are not mutually exclusive. However, if they truly are targeting unemployed people with the study, then the study appears pointless because it is excluding from the study the group that most needs to be studied; people who already have jobs. And it sets itself up to be capable of returning only positive results.
     
  21. Jan 3, 2017 #20

    russ_watters

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    Well, that isn't comlpetely true. The problem is that "Universal Basic Income" is more of a catchphrase than a program/plan and the less pleasant details, including the disincentive part arising from the fact that it is not actually "universal" tend to be glossed over when describing it. The details of the plan are what determine the incentive levels and who actually gets this "universal" benefit and who instead pays for it*. The cutoff between receiving the benefit and paying for it is where the disincentive starts, no matter what. Eliminating the exclusion of workers receiving the benefit doesn't eliminate the incentive, it just moves it somewhere else -- a somewhere else that generally isn't specified.

    For simplicity of illustration, let's assume half the population gets the benefit and the other half pays for it. That sets up a specific cutoff income above which the program disincentivizes work. Depending on the level and the person, the courses of action incentivezed could be anything from quitting your job (including early retirement) to not seeking additional overtime to not seeking promotions and other growth opportunities -- essentially incentivizing mediocrity. It may be that the incentive to quit your job is small, but it is non-zero, and the other related incentives are very significant.

    You can add a gradient for the phase-shift from payer to payee, but that doesn't change the overall magnitude of the disincentive, it just spreads out and masks its effect.

    In other words: the fact that it is not, in fact, "universal"** is what ensures there will always be a disincentive somewhere.

    *I suppose you could set up a system where everyone receives a check and then some portion of the country sends back a bigger check, thereby making the receipt truly universal, but that would just be a meaningless and cumbersome gimick. Since part of the claimed benefit of such programs is they simplify welfare programs, adding that layer of complexity would be counterproductive.

    **Except in places with positive cash flow without personal income taxes, such as Alaska and countries with extreme oil wealth.
     
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