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Alternative Models Considered for Finland’s BI Pilot

University of Tampere

University of Tampere

Last November, Finland’s plans to test a basic income caught the attention of international media. Although the experiments are still some months away (scheduled to begin in 2017), the Finnish Social Insurance Institution (KELA) has continued to make strides in investigating the possibilities for a basic income.

KELA has recently published a working paper that reviews the current state of the debate on basic income and assesses the pros and cons of various specific proposals.

Johanna Perkiö, a doctoral candidate at the University of Tampere, has written a useful summary of the KELA paper — including a description of the differences between the models of a basic income proposed by the Green Party, the Left Alliance, the think tank Libera, the Christian Democratic Party, and the Social Democratic Youth Organization.

Perkiö also discusses the challenge of removing disincentives to work during the study, given that traditional benefits will remain in place during the trials. She broaches solutions such as a negative income tax system and reduction of benefits on a sliding scale.

To learn more about the variety of basic income models under consideration:

Johanna Perkiö, “Universal basic income: A search for alternative models,” Tutkimusblogi, January 25th, 2016.


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Kate McFarland

About Kate McFarland

Kate McFarland has written 454 articles.

Kate has previously made a living as a professional student, but is retired for the time being. Regarding her present work in the UBI community, you may read more here.

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One comment

  • godenich

    Basic income is an appealing alternative to QE, ZIRP and NIRP.

    a) It does not require the central bank to create money out of thin air, i.e. the frugal form of basic income that is an unconditional, individual poverty-level, citizen’s negative income tax.
    b) It does not artificially raise stock prices, house prices and property taxes and then let them drop precipitously in price when the stimulus programs are terminated, having a deleterious effect on unwary households. Well, at least the stock prices and house prices drop like a rock, but taxes tend to float down like a feather.
    c) It is not an incentive for governments to deficit spend, but rather an incentive for skills training, university attendance and entrepreneurial risk-taking to start a business.
    d) It provides liquidity and hedges main street for recession and continuing business as usual.
    e) It tops up liquidity in the real domestic economy during recession rather than promoting carry trade and stock buy-backs that drain liquidity from the real domestic economy and increase the national debt.
    f) It rewards sound business by allowing over-speculative, illiquid and insolvent businesses to fail and clear the markets without creating queues of bread lines.
    g) It reduces payroll costs for businesses and tops up low wage workers.
    h) It reduces government costs and bureaucracy, bound hand and foot with red tape.
    i) It encourages participation in the formal sector of the economy that generates tax revenues for government rather than induce unemployed into the informal sector[] raising policing costs.
    j) Excepting medical care, it replaces the current welfare benefit programs.
    k) And yes, it does happen to benefit society by abolishisng poverty, as well as encourage the arts, manufactures and commerce.

    QE, ZIRP and NIRP create a temporary wealth effect for some while it lasts. Basic income creates a permanent wealth effect for the entire domestic economy, promoting the idea of booms without bust from real productivity gains.

    Much ado is also made of automatons raiding and pillaging incomes from citizens in the near future. They have indeed already landed if one but takes the time to look about. They come in all shapes and sizes from industrial robots to alogrithmic trading platform agents. To further reduce red tape in favor of stimulating greater productivity in the real economy, consider combining basic income with apt tax reform[1-3]. Replace the convoluted tax system with a tiny flat tax less than 1% on all transactions[4]* and assets[5]. Abolish most other taxes, especially any income taxes on the head of each citizen and business taxes, that may reduce economic activity in the real economy and increase the cost of labor.

    * See also US-EU-UK estimates from “Worldwide Currency Usage and Trends | SWIFT | 2015” and “The rise of money trading has made our economy all mud and no brick | Guardian | 2013”

    [1] The APT Tax | Youtube
    [2] Taxation for the 21ST Century: the automated payment transaction (APT) tax | Edgar L. Feige | 2000
    [3] ON THE CONTRARY; Dreaming Out Loud: One Tiny Little Tax | NYT| Daniel Akst |2003
    [4] This Is How $14 Trillion Flows Every Day Through The US Financial System | ZeroHedge | 2012
    [5] Total Assets of the U.S. Economy $188 Trillion, 13.4xGDP | Rutledge Capital | 2009

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