Finland, the thought leader in economy destruction, announced that thru 2018 they will provide Universal Basic Income to randomly selected welfare recipients.
If participants find a job, the government continues to pay them the 560 euros in addition to any other income.
This experiment would have had fully audited reporting by 2021, then Covid came
The Finnish government hoped this would resolve their 8.1 percent unemployment rate and initiate full implementation of a universal basic income.
Table of Contents
Universal Basic Income
UBI is intended as a replacement to the current means-tested system of welfare, in which benefits taper off and eventually stop based upon how much income individuals independently earn.
Universal Basic Income does not create an incentive to work, it exaggerates welfare’s problems in comparison to what would exist in a labor market without intervention.
Wealth is forced from those who have it to those who do not
People go from being net receivers of benefits to being net payers of benefits.
Progressive taxation needed to finance UBI causes dislocation as disincentives are transferred onto higher income groups of people
Universal Basic Income diminishes the Power of Consumers
By directing the marketplace by subsidizing non-productive activities it causes dislocation.
If a worker is struggling their work simply isn’t productive according to those who would potentially be consumers. Universal Basic Income allows them to continue their less-valued endeavors with the money of those who have actually produced value.
The rallying claims are that the program reduces existing social welfare program frictions and optimally can be fully replaced by Universal Basic Income.
The tools of automation are commodities, rapidly falling in cost and available everywhere.
The scarcity value of these tools is effectively near-zero, and profits and value only flow to what’s scarce.
Capital and labor have very little scarcity value
This is why capital earns effectively near-zero return. The value of conventional labor and everything that can be commoditized globally is declining.
There is a small but loud, mobilized and oddly well-funded herd that demands the basic income be implemented in the U.S.A.
Finland and what Universal Basic Income is, and isn’t
For a system to function properly it requires:
- Low-cost compliance with regulations:
- Low tax rates and costs of transactions
- Reasonable transport costs
- Reasonable cost of money
- Availability of capital for small enterprises
- Easy to hire and fire employees
- a transparent marketplace not dominated by politically dominant cartels
Wealth has to be created before it can be redistributed
Policies that encourage movement toward less productive types of work will fail to produce the wealth that government planners would like to spread around.
The End?