Is Basic Income Basically Finnished?

When is a Basic Income, not a Basic Income? When it’s a Basic Income Experiment.

In June 2016 a referendum on a Basic Income was held in Switzerland. It was overwhelmingly rejected by 77% of the voters. Instead of learning from the result and adjusting the policy to provide what the majority of people want, those promoting basic income see the 23% as the “Beginning of a Transformation”. Apparently this vote shows that voters see basic income as the policy of the future. Quite what you have to be smoking to see that in the results remains unanswered, but clearly you will be able to buy more of it if you have a basic income.

Supporters see a way around this comprehensive rejection. They want to introduce more basic income experiments on a small scale in local areas. Because if there is one thing we’ve learnt from Quantum Physics, it’s that the large is just the small scaled up.

In reality it is a compliance technique known as foot-in-the-door. Try and get something small accepted so you can move onto a larger request.

Such an experiment is running in Finland at the moment. The Finnish experiment is conducted with 2,000 randomly picked unemployed participants between the ages of 25 and 58. For two years, participants from different parts of the country will receive an unconditional monthly tax-free basic income of €560.

On top of that while unemployed they will receive other means tested benefits such as housing support, which would be withdrawn once the individual gets a job. The €560 part would continue though.

The basic income represents 23% of an average Finnish monthly income. The percentage is entirely co-incidental I presume.

The stated aim of the basic income experiment is to see if the basic income increases employment and if it simplifies the social security system.

So, as we can see, this isn’t a Basic Income in any sense. It is really just a combined unemployment benefit and tax credit system. It is designed to eliminate the disincentives for work and reduce bureaucracy. In that sense it has the same aim and same purposes as the UK’s Universal Credit system. (The Universal Credit is £317.82 per month representing 14.4% of the average UK £2200 monthly income).

The UK Universal Credit system has become a bureaucratic monster due to the byzantine sets of ifs and buts in the system. There is appeal in a flat rate payment combining both unemployment benefit and working tax credits where the withdrawal is handled solely by the pre-existing tax system.

Of course eliminating bureaucracy has a cost in terms of jobs for those administering the bureaucracy. It’s always worth remembering that ‘public sector savings’ is a euphemism. It always means lost jobs. What else those people end up doing instead should be as much a part of the discussion as the alleged incentives to work on the other side.

The Finnish experiment is a flat amount welfare system for a very small number of unemployed people of non-awkward age ranges. It provides no more support for large scale Basic Income than Universal Credit does. The only thing it has in common is the name.

  • The income level is only 23% of average wage. Poverty levels are generally defined at 60% of the average wage. Until a basic income covers both the day to day income and the capital replacement costs (ie. it is genuinely enough to live on) then it is just a form of unemployment benefit or earnings tax credits. And we know how they work.
  • The problem in all capitalist economies is that there are not enough jobs for the people wanting them. The design of neoliberal policies that are in place in the European Union and baked into the EU treaties ensure this is always the case. There will always be 1 in 20 people unemployed, at least, as a matter of construction.
  • The experiment is small scale and limited to unemployed people. They are essentially supported by the rest of society who do not receive the basic income. The same as with unemployment benefit.
  • Even if it was expanded to the whole of Finland and was a living income, Finland is a member of the Eurozone and in a fixed exchange rate with all the other countries of the Eurozone. So Finnish basic income recipients would be supported by the of the rest of the Eurozone who receive no such income. (Much as Dauphin was supported by the rest of Canada during the Mincome experiment).
  • Finland has no minimum wage, which increases the liklihood of wage compression at the low end. The basic income is really little more than a subsidy to private profit.
  • The two year time period is too short for resentment levels to build up to the level where political action eliminates or degrades the payment. The degradation and removal of Universal Child Benefit in the UK has been politically supported over 25 years at least.

There is no doubt that universality improves take up rates of all social benefits. But all the universal flat rate benefit proposals are at levels of income that are not sustainable and are way below poverty rates. So the true purpose is more likely something else: to reduce the outlay on the welfare system overall. That has always been the aim of the right wing when promoting universal incomes — eliminate supporting welfare programmes and the public sector jobs they provide. It’s an austerity measure. If you reduce overall government outlay you depress output which leads to fewer jobs, not more.

The much vaunted Finnish basic income has more in common with the UK’s Universal Credit experiment than a universal living income. It provides no assistance or information about how a wider basic income across an entire currency area would function. To suggest so is a clear fallacy of composition.

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