Finland planning no mo' benefits (but everyone gets 800 Euros/month)

[The Bread Guy]

This via the National Post - the bit in yellow caught my eye:

Finland’s government is drawing up plans to pay every citizen a basic income of euros 800 ($1,165) each month, scrapping benefits altogether.

Under proposals drafted by the Finnish Social Insurance Institution (Kela), the tax-free payments would replace all other benefit payments, and would be paid to all adults regardless of whether or not they receive any other income.

While it may sound counterintuitive, the basic income is intended to encourage more people back to work in Finland, where unemployment is at record levels. At present, many unemployed people would be worse off if they took on low-paid temporary jobs due to loss of welfare payments.

More than 10 per cent of Finland’s workforce is unemployed, rising to 22.7 per cent among younger workers.

A survey commissioned by Kela found that close to 70 per cent of the population favours the idea of a national basic income.

Detractors caution that a basic income would remove people’s incentive to work and lead to higher unemployment. Those in favour point to previous experiments where a basic income has been successfully trialled. The Canadian town of Dauphin experimented with a basic income guarantee in the Seventies and the results – both social and economic – were largely positive.

Juha Sipila, the Finnish prime minister, supports the idea, saying: “For me, a basic income means simplifying the social security system.”

The measure will cost Finland euros 46.7?billion per year (CDN $68.4 billion). Kela’s proposals will be submitted in November 2016.

Not entirely "news", given some coverage from earlier this year here and here.

 

[CBH99]

Question for someone with more knowledge of this type of economics than me...

If Finland provides a base monthly income of 800 Euro a month, to every citizen regardless of whether they are employed or not - how are they saving money?

I understand the idea of streamlining their social assistance model.  But is paying 800 a month to everybody going to be less expensive than just providing assistance to those who are unemployed?

And if unemployment is that high, that equals a fair number of people who aren't even paying taxes.  So how does this model work itself out?  Or does it?  :dunno:

 

[The Bread Guy]

Question for someone with more knowledge of this type of economics than me...

If Finland provides a base monthly income of 800 Euro a month, to every citizen regardless of whether they are employed or not - how are they saving money?

If the proposed system costs $68.4 billion a year, and the current system costs more than that, they're saving $.

 

[CBH99]

Guess that's a pretty simple & efficient way of looking at it.

Cheers

 

[jollyjacktar]

Not to mention that the people will be spending that money which will generate tax revenue and boost the economy at the same time.  Gets cheaper still then.

 

[Colin Parkinson]

The question will be; "do they have the political will to walk away from someone who spent all the money on a weekend party and has nothing to eat and no food for their kids". Because there will be some people that will do just that. What the authorities will do in such a situation will make this idea work or not. 

 

[The Bread Guy]

The question will be; "do they have the political will to walk away from someone who spent all the money on a weekend party and has nothing to eat and no food for their kids".

That right there  :nod:

 

[Danjanou]

Not to mention that the people will be spending that money which will generate tax revenue and boost the economy at the same time.  Gets cheaper still then.

Yes and no, in theory people using our present social safety ( EIB, WSIB, CPP, OAS, Welfare etc.) are already spending that money, no probably no net gain there.

The question will be; "do they have the political will to walk away from someone who spent all the money on a weekend party and has nothing to eat and no food for their kids". Because there will be some people that will do just that. What the authorities will do in such a situation will make this idea work or not.

Probably the same as is done now, which dependent on the program and those implementing it and all sorts of other factors can range from “ too bad going to be a long month”, to “there there muffin, it’s not your fault you’re financially irresponsible, here have some more money to tide you over and don’t do it again.”

For this to work, the overall costs would have to be less than the present multi faceted system. The savings would be in the admin fees, the cost of delivering the program. Theoretically you would be removing several groups of bureaucracy at the municipal, provincial levels (WSIB, EIB, OWA, ODSP, NCBS, CTB, OCB, CPP, OAS, etc.)  and allowing one, albeit larger group to administer this single universal benefit.

 

[Eaglelord17]

I recall reading a article a while ago detailing how in the future with the decline of the amount of employees required to actually produce things (thanks to robots, automated processes etc.), governments might find it more beneficial just to pay everyone a base salary to survive off of, and the people could work odd jobs and such to actually earn money for spending.

Its interesting that this is basically the system that was recommended. I am very curious to see the end result of this.

 

[Underway]

Last Fed election Green party was in favour of this.  And there are some of the CPC who are in favour as well.  I personally am in favour too.

And its not just UI, Welfare, CPP etc... it should include OSAP, university subsidization etc...  as a student you can now take your 15000 and pay for your tuition and books (even if you are in engineering) and take a loan out/work to cover food housing etc...

In Canada however the wage should be closer to 20000 as that's approx the poverty line.  In one fell swoop you eliminate child poverty.  No one would be unable to afford daycare because the 20 thousand would cover those costs and you could go back to work.

Tricky negotiations with the provinces though.  They would be the big savers in this scheme, but the Feds would then be on the hook for what is their constitutional responsibility.

 

[Spartan]

I don't see how this would be a) feasible and b) differ any differently from what we have seen in any of the welfare spending that we do now. Those have been studied (Native reserves, provincial welfare programs etc) and all have the same disincentives to employment, as well as creating dependencies.

 

[Halifax Tar]

This looks like an interesting social experiment.  I look forward to seeing the long term effects.

 

[jollyjacktar]

Yes and no, in theory people using our present social safety ( EIB, WSIB, CPP, OAS, Welfare etc.) are already spending that money, no probably no net gain there.

Yes, you're probably right there.  You can bet they're not out there income splitting and buying RRSP with the funds.

 

[ballz]

Not to mention that the people will be spending that money which will generate tax revenue and boost the economy at the same time.  Gets cheaper still then.

This does absolutely not boost the economy. The idea that "spending" boosts the economy is based on the fact that we are arbitrarily measuring "the economy" by the GDP, so more spending means a higher GDP.

A higher GDP does not mean more productivity.


There are actually some pragmatic libertarians in favour of a mincome. Despite not wanting government-run social security, the idea is (as has been pointed out) that if the savings on all the bureaucracy of running so many different programs are enough, then taxes can be reduced and people can be left alone to spend their money however they want and have no one to blame but themselves for the inability to turn that mincome into something that improves their lot in life.

For those who are taxpayers as opposed to social assistance receivers.... this just represents a return of their own money anyway.

 

[Pusser]

The question will be; "do they have the political will to walk away from someone who spent all the money on a weekend party and has nothing to eat and no food for their kids". Because there will be some people that will do just that. What the authorities will do in such a situation will make this idea work or not.

What do they do now if people spend all their welfare benefits too quickly?  There will always be people who spend beyond their means.

In the UK there are a number of "Benefits Street" type programs (one of them actually called "Benefits Street") on TV which profile folks living on welfare (what the Brits refer to as "benefits"). Some of the stories are quite shocking:

1)  foreign workers (eligible to work in the UK because of the EU) who legally claim child benefits for children who don't even live in the UK (i.e. they're sending the money back home to their families);

2)  many people who simply refuse to work and make it clear they have no intention of ever doing so;

3)  folks who manage to collect enough in benefits to fund foreign vacations, cosmetic surgery, lavish weddings, etc;

4)  folks on disability benefits because they're too fat to work, yet consume multiple 2L bottles of Coke (full sugar variety) daily or who get all their meals from fast food joints;

5)  families demanding larger council (public housing) homes because they have outgrown their existing ones (kept having children even though neither parent had ever held a job, nor had any intent of getting one).  In one case, the local council actually knocked out walls in a duplex in order to make a single family home for a family of 10; and

6) the list goes on...

The UK benefits system consists of subsidized housing, tax credits and payments for a variety of issues (job-seekers allowance, disability allowance, etc).  A major complaint is that economic migrants from throughout the EU are flocking to the UK in order to collect benefits that are more lucrative than in their home countries.

 

[Danjanou]

The UK, and to an extent some other EU countries social safety net is severly broken. Ours does have issues and if not addressed properly could end up like that someday, but for whatever present shortcomings we do have we still ain't as bad as they are .... yet.

Except for the computer system we use,  that piece of crap fostered on us by the Irish is useless.  >

http://www.insidehalton.com/news-story/6156317-auditor-details-social-assistance-mess/

 

[Colin Parkinson]

You need the political will to ratchet back the benefits, it's better to do it slowly and focus on the new people coming in. Basically saying anyone new coming into the system do not qualify for X, X and Y. for those already on, just start making it harder and harder.

 

[The Bread Guy]

Except for the computer system we use,  that piece of crap fostered on us by the Irish is useless.  >

http://www.insidehalton.com/news-story/6156317-auditor-details-social-assistance-mess/

Better or worse than the Accenture system?  Discuss >

 

[Danjanou]

You need the political will to ratchet back the benefits, it's better to do it slowly and focus on the new people coming in. Basically saying anyone new coming into the system do not qualify for X, X and Y. for those already on, just start making it harder and harder.

Thats similar to saying we need the political will to end ( or more realistically severly reduce) poverty and/or homelessness in our society. It involves a lot more than tossing money at it year after year. Sadly no level of gevernment, and it would take unprecedented cooperation at all levels, is willing to spend this political capital. Much easier and safer to spend tax payers dollars.

 

[daftandbarmy]

This looks like an interesting social experiment. I look forward to seeing the long term effects.

The one thing that I have learned form being involved with the administration of various social programs is that social programs do not last for the long term. You can bet this won't last beyond the next election, or scandal, or one of any number of other things.