Getting free money makes people happy


Hot on the heels of Alexandria Ocasio-Cortez’s Green New Deal proposal, which includes a call for “economic security for all who are unable or unwilling to work” (or included, since AOC is now denying her own work), come the results of Finland’s experiment with “basic income” or guaranteed minimum income:

Finland’s basic income scheme did not spur its unemployed recipients to work more to supplement their earnings as hoped but it did help their wellbeing, researchers said on Friday as the government announced initial findings.

The two-year trial, which ended a month ago, saw 2,000 Finns, chosen randomly from among the unemployed, become the first Europeans to be paid a regular monthly income by the state that was not reduced if they found work.

Finland — the world’s happiest country last year, according to the United Nations — is exploring alternatives to its social security model.

The trial was being watched closely by other governments who see a basic income as a way of encouraging the unemployed to take up often low-paid or temporary work without fear of losing their benefits. That could help reduce dependence on the state and cut welfare costs, especially as greater automation sees humans replaced in the workforce.

Finland’s minister of health and social affairs Pirkko Mattila said the impact on employment of the monthly pay cheque of 560 euros ($635) “seems to have been minor on the grounds of the first trial year”.

But participants in the trial were happier and healthier than the control group.

“The basic income recipients of the test group reported better wellbeing in every way (than) the comparison group,” chief researcher Olli Kangas said.

Chief economist for the trial Ohto Kanniainen said the low impact on employment was not a surprise, given that many jobless people have few skills or struggle with difficult life situations or health concerns.

“Economists have known for a long time that with unemployed people financial incentives don’t work quite the way some people would expect them to,” he added.

Thank you to the University of the Obvious for these startling results. If I were to receive 560 Euros per month no strings attached, there is no doubt that I would be quite stoked about it (though my inner libertarian child would be kicking and screaming against accepting the largess and would question every step of the way the morality and the efficacy of such blatantly redistributionist, and arguably unsustainable, government policy). But surely no one seriously expected that the unemployed would be more motivated and incentivised to seek work upon receiving guaranteed money for nothing? All things being equal (like the employment market being generally good and not in a recession), those who want to work and be earning decent money will find a way to find work; those who, to borrow AOC’s formulation, are unable or unwilling won’t, at least not without a lot of specific assistance and/or lots of prodding. A regular handout represents neither of these things.

In the end, your values will determine if you think that an initiative like “basic income” is still worthwhile, warts and all. As the article continues, “The higher taxes that the Organisation for Economic Co-operation and Development (OECD) says would be needed to pay for basic income schemes might also be off-putting for voters. In a review of the Finnish scheme last year, the OECD warned that implementing it nationally and cost-neutrally for the state would imply significant income redistribution, especially towards couples from single people, and increase poverty.” But then again, if you like basic income you probably don’t mind higher taxes (particularly if “the rich” pay for it all) or income redistribution across society. Furthermore, you might well think that while the payment scheme of this sort provides no tangible economic benefits, all people deserve to be happier and healthier. If you call yourself a progressive, human dignity is more important than any financial considerations. People before profits, community before the economy, and all that.

Trial participants were generally positive, however, with Tuomas Muraja, a 45-year-old journalist and author, saying the basic income had allowed him to concentrate on writing instead of form-filling or attending jobseekers’ courses.

He said the end of the two-year trial, during which he published two books, had made it difficult again for him to accept commissions, because “I … can earn only 300 euros per month without losing any benefits”.

“If people are paid money freely that makes them creative, productive and welfare brings welfare,” Muraja told Reuters about his experience of the pilot.

“If you feel free, you feel safer and then you can do whatever you want. That is my assessment.”

You can see why basic income might seem attractive to the proverbial starving artists and other reliable left-of-centre constituencies. What’s less expected is the attraction the idea seems to hold for a not insignificant number of people on the right. I suspect that it might appeal to their idea of efficiency the same way that a flat income tax does; basic income, after all, is often sold as a way to radically simplify the welfare system and eliminate the welfare bureaucracy. Instead of a myriad of different payments, pensions and allowances for people in different circumstances, you give everyone the same sum of money – no strings, no exceptions – every fortnight, whether they are an elderly, unemployed, a single mother or disabled. A single chimp sitting in front of a computer would be able to administer the system, completely eliminating all the government churn.  Sure, it doesn’t help people get off welfare, and it goes against quite a number of conservative instincts and values, but it still might be worth it if it actually shrinks the size of the government (if not exactly the tax take or the government expenditure). Which is why, even though trail after trail seems to show that basic income “doesn’t work”, we’ll keep hearing about it some more.

Meanwhile, I’m still waiting here for the government to help make me “creative, productive” and help me publish two books. Or at least a blog.

Picture: what recipients of basic income in Finland might look like.

P.S. If Finland really is the happiest country in the world then why does it keep producing bands like H.I.M., the Rasmus and Children of Bodom?