Erstellt am: 4. 3. 2017 - 17:14 Uhr

Money for Nothing – Universal Basic Income

Finland is conducting a radical experiment in the way it delivers social security. Could a universal basic income help European countries tackle poverty, job insecurity and unemployment?

by John Cummins

The European welfare state is in crisis. Costs for social programs have exploded over the past 20 years and, while inequality has not reached the levels seen in places like the US, the divide between rich and poor is continuing to grow.

In Austria, social programs now cost the government around 30 percent of total income or GDP. Unemployment benefits alone have doubled from 2.8 billion euros in 2000 to 5.6 billion euros in 2015.

CC BY 2.0, flickr.com, User: Images_of_Money

Delivering this complex array of benefits has become more and more costly and bureaucratic, and yet, people continue to slip through the cracks. Those taking on project based or freelance jobs, the vanguard of the so-called ‘gig economy’, are particularly at risk, because benefits are often cut off or reduced when people begin to work.

A radical idea

The modern welfare state, introduced after World War Two, was set up in such a way that the unemployed would only receive benefits if they agreed to take whatever work was on offer. While that might have been perfectly acceptable during the post- war boom, it has failed to keep pace with the huge changes that have taken place since in the labour market.

Many academics and policy makers have looked to the radical idea of a universal basic income as way of addressing these problems. What if governments scrapped some of those cumbersome benefits and paid people a fixed income instead? Everyone would be eligible, whether rich or poor, working or unemployed.

The idea may seem modern but it actually goes back a long way. In the 18th century, the American political thinker Thomas Paine proposed paying landless people a basic income, as a way of tackling poverty.

Basic income or a job guarantee?

The advantages of such a system become quickly clear. The most vulnerable in society: people like students, low paid workers and those caring for relatives would have the security of a fixed income that could not be taken away. British academic Stewart Lansley says a universal basic income would actually incentivise work, not promote idleness, and would help raise the wages and conditions of the poor.

Many people are not convinced, however.

Pavlina Tcherneva, a researcher at the Levy Economics Institute in the United States, argues that a job guarantee scheme would be far more effective than universal basic income. She says work has many more benefits than just getting money – it gives people a sense of purpose and keeps them healthier. Moreover, job schemes could benefit communities by directly targeting their needs.

But what if there are simply not enough jobs to go around? Technological change is a major factor in the modern economy and people are increasingly being made redundant by machines. Tcherneva calls this the ‘economics of surrender’ and says it fails to take into account the new jobs that are being created every day.

Finland Trial

Whether universal basic income has a future may depend on the trial currently taking place in Finland.

The Finnish government is paying 2000 unemployed people between the ages of 25 and 58 a basic income of € 560 a month, regardless of whether they find work or not. At the moment, the scheme is running in parallel with other welfare programs but it could be expanded when the pilot ends in two years’ time.

Interestingly, basic income is just part of a larger shift in policy making taking place in Finland. The government is inviting stakeholders and citizens to come up with novel ways to tackle problems, under a new approach called ‘co-design.’ It will then run trials to see which of these policies are effective and should be implemented.

So is universal basic income an idea, whose time has come? Or is it just money for nothing? Stewart Lansley expects that at least one European country will introduce some form of basic income within the next 5-7 years. And once that happens, he says, it will only be a matter a time before others follow.