by Kate McFarland | Oct 7, 2016 | News
As previously reported in Basic Income News, Finland’s first international basic income seminar (BIST2016) was held in Turku on August 25. BIST2016 was organized by Varsinais-Suomen Piraatit (Southwest Finnish Pirates) in collaboration with BIEN Finland, the Pirate Party of Finland, and Pirate Youth of Finland.
Videos of the some of the lectures are available on YouTube, and copied below.
Ville-Veikko Pulkka: “Notes on the Finnish basic income experiment”
Summary:
In autumn 2015, the Prime Minister’s Office invited bids for a preliminary study (published on 30 March 2016) as part of preparations for a basic income experiment. After evaluation, a consortium led by the Finnish Social Insurance Institution, Kela, was appointed to study the suitability of different basic income models for the experiment.
The assignment outlined four different options to explore and develop:
1) full basic income (the level of BI high enough to replace almost all other benefits, perhaps excluding earnings-related benefits)
2) partial basic income (would replace most of the basic security benefits, but leave some)
3) negative income tax (“basic income” via taxation)
4) other possibilities to test basic income (the research group analysed participation income and the British Universal Credit, but these systems would not enable one to test the effects of basic income due to their conditionality).
Even though a budget-neutral partial basic income cannot automatically diminish income and unemployment traps, the model appears to be both economically and politically the most feasible one to test. According to power calculations made by the economists in our group, the sample for the experiment should be approximately 10,000 people in order to observe statistically significant results if the employment rate changes by two percentage points. In an ideal setting, the randomisation of people is compulsory and two-pronged. In addition to the treatment group, there must naturally be a control group.
The crucial factor is to have at least nationwide randomization since local experiments do not produce generalizable results. A representative, nationwide randomisation can be combined with more intensive local experiments to capture externalities. Also, weighted samples of interesting special groups are possible if the budget constraints can be tackled. Our research group recommends focusing on low-income households since the elasticity of labour supply is supposed to be greatest among this group and the budget is limited.
Ville-Veikko Pulkka is a researcher at Kela, the Finnish Social Insurance Institution, where he is a member of the research group that is preparing the country’s basic income experiment. Additionally, Pulkka is a PhD candidate at the University of Helsinki, writing a dissertation on “digital working life”.
Photo by Toru Yamamori
Christian Engström: “Basic income: a concrete and calculated proposal”
Summary:
This talk introduces a concrete proposal for a basic income system for Sweden, including a cost estimate and financing. The basic income would be 8.333 SEK (900 EUR) per month for anybody between 19 and 65 who lives in Sweden and has no other income. When you start earning money the basic income would be reduced, but never by 100%, so there is always an incentive to work if you can. The cost of this system would be covered in full by letting the basic income replace the current systems for social welfare, student aid and unemployment benefits, and removing the VAT discounts that certain industries enjoy. To make the proposal politically realistic, there would be no increase of income taxes, and no reduction of current sickness benefits.
Christian Engström is a member of the Swedish Pirate Party and, from 2009 to 2014, was a Member of the European Parliament.
Photo by Toru Yamamori
Albert Svan: “Basic income possibilities – based on informal studies from Iceland”
Summary:
In Iceland the Pirate Party is preparing a policy for implementing a basic income scheme. The debate started a couple of years ago when congressman Halldóra Mogensen proposed a legislation on basic income at the Icelandic Parliament. Some preliminary calculations show that 1/3 of the Icelandic government budget already goes to direct money transfers to Icelandic individuals and that a modest basic income amount for all persons 18+ years old will cost 2/3 of the budget, while a negative income tax may cost a similar amount as the current social financial aid. Of many prerequisites one initial observation is that basic income criteria should be calculated regularly and that a legislation of lowest allowed salaries must be somewhat higher than the basic income criteria.
Albert S. Sigurdsson currently works for Statistics Iceland. He holds a master’s degree in geography from the University of Helsinki, and has previously worked at the Finnish Environment Institute, Iceland’s Environment Agency, Lionbridge Technologies, and Futuvision Media.
Reviewed by Genevieve Shanahan
Turku photo CC BY-NC 2.0 Mikael Korhonen
by Kate McFarland | Oct 2, 2016 | News
The David Pakman Show — a progressive news and politics talk show based in the United States — has broadcast several segments on basic income, such as an announcement of Finland’s plans to test the policy and an interview with BIEN’s Jason Burke Murphy. Pakman himself is attracted to the idea of a basic income.
David Pakman’s latest video on the topic, published on September 1, is a critique of the latest plans for a Finnish basic income experiment, which Pakman says is “set up to fail” and a “bogus way” to test basic income:
In his criticism, Pakman focuses on the fact that Finland plans only to test the effect of the basic income on individuals who are already receiving unemployment benefits, rather than considering a representative sample of the population. He also identifies a tension between the main objective of the Finnish experiment — that is, to test whether a basic income can promote participation in traditional jobs — and the major theoretical justification of basic income as a way to adapt to changes in the nature of jobs and work.
Pakman is not alone in raising criticisms and concerns with the design and scope of Finland’s basic income experiment. See, for example, Toru Yamamori’s interviews with several experts on the experiments and members of the Finnish Green Party. Other critical responses — such as those of Leonid Bershidsky and Basic Income News editor-in-chief André Coelho — have focused on the fact that the experiment is to test only a “partial” basic income.
Reviewed by Dawn Howard
Cover image CC BY-SA 2.0 Lauri Heikkinen
by Toru Yamamori | Sep 23, 2016 | News
As we’ve already reported here, Finland’s Ministry of Social Affairs and Health announced their plan for the basic income experiment, and requested citizens’ opinions on it, on 25th August. We’ve also reported Finnish experts’ responses here, and the Greens’ response here. This article reports the response by the Pirate Party of Finland (Piraattipuolue).
The Pirate Party of Finland endorses an unconditional basic income. On the day the Finnish government announced their detailed plan, UBI advocates from the Pirates Parties of Finland, Iceland and Sweden gathered in Turku for a seminar on UBI.
Tapani Karvinen, the former chair of the party, responded to BIEN on the government’s plan:
Largest problem is that [the] experiment is going to analyze the employment of the target group, not other factors, such as health, participation in unpaid communal work, arts or self-development by studying or hobbies. Target group of 2000 people is inadequate, as the preliminary study suggested 2000 + 8000 whose basic income costs would have been covered from the Finnish Social Insurance Institute’s unemployment fund, therefore creating no extra costs for the study. Excluding students and state pensioners means that there will be no information if basic income will encourage creation of innovations, entrepreneurship and employment of graduates, or mental and physical health of elders.
In short, [the] study’s target group is not wide enough and is not analyzing all the crucial factors, which affect the well-being of individuals and therefore also economy and costs of state. A further study is necessary to complete the analysis of the effects which basic income would have to Finland as a whole.
Petrus Pennanen, the deputy chair of the party, also told BIEN about his views of the plan:
It just replaces the application based minimum unemployment / welfare benefit with a fixed payment, but doesn’t change the tax system in anyway. In a realistic UBI experiment small income would be taxed more than now. Not sure what is the point of the experiment, on one hand it’s certainly better something is being done instead of nothing, but I don’t think there’s much practical benefit from this kind of experiment. One could think it’s like a stalling tactic, waiting 2 years for this instead of actually implementing a sensible reform of our welfare systems.
The full interviews with Tapani Karvinen and with Petrus Pennanen will be published here at Basic Income News shortly.
[photo caption]
Tapani Karvinen on the right, Petrus Pennanen on the left. Photo is taken from a video provided from The Pirate Party of Finland.
Reviewed by Kate McFarland.
by Toru Yamamori | Sep 6, 2016 | News
MEP Heidi Hautala at the headquarters of the Green League in Helsinki
As we’ve recently reported here, Finland’s Ministry of Social Affairs and Health announced their plan for the basic income experiment, and requested citizens’ opinions on it, on the 25th of August. We’ve also reported Finnish experts’ responses here, including a critical remark by Osmo Soininvaara, a former Minister of Social Services from the Finnish Green League and a long-time UBI advocate. This article reports more detail of the Green League’s response (Vihreä liitto, the Green Party of Finland).
An unconditional basic income has been a part of the Green League’s platform since it was founded in 1987 by Soininvaara and others. The Green League published a detailed plan for UBI implementation in 2007. It was the first detailed plan for such a scheme by a political party in Finland.
On the 29th of August, we at BIEN visited the headquarters of the Green League in Helsinki. Heidi Hautala, a Member of the European Parliament, offered us a brief comment on the government’s experimental plan. Here is the video:
https://vimeo.com/181462278
After shooting the video, Hautala also noted the necessity of a European-wide move towards UBI.
Ville Ylikahri, one of the Green League’s experts on UBI, commented in a similar tone:
I think about the government’s basic income experiment the same way that Osmo Soininvaara and Heidi Hautala do: experimentation as such is a good thing but the risk is that the government’s badly designed experiment will be a reason to say afterwards that basic income doesn’t work. The experiment focuses too much on combining work income and social benefits, while it neglects all the other aspects of basic income. The main problem in this experiment is that it lacks taxation changes completely. But, saying that, I understand that any kind of experiment on basic income would be a hard thing to do.
Ville Ylikahri, second from right, at the headquarters of the Green League in Helsinki. Taken by Toru Yamamori
Ylikahri is a member of the Helsinki City Council and Secretary General of the green think tank ViSiO (The Green Cultural and Educational Centre). Ylikahri has published a book on UBI and has been involved in UBI research and the formation of both the party and ViSiO’s detailed UBI plans.
Outi Alanko-Kahiluoto, the Head of the Green Parliamentary Group, gave a statement about the government’s proposal here [in Finnish]. According to Ylikahri, the statement says:
The experiment won’t provide proper information about basic income, and the model without taxation changes is too expensive. The Greens have decided that we will continue to develop our own basic income model.
Reviewed by Genevieve Shanahan.
by Andre Coelho | Sep 2, 2016 | Opinion
Finland’s Ministry of Social Affairs and Health has just published a press release, announcing an experiment based on a partial basic income (< 800 €/month), instead of a full basic income (> 1000 €/month). Although the latter had also been considered for the experiment, it appears that the government has decided that the experiment should be conducted as a partial basic income, specifically 560 €/month. Here are the reasons for which Kela decided to recommend against running the trial with a full basic income:
- It would imply higher taxes;
- It would result in lower earnings-related contributions to unemployment and pension funds;
- Low income earners might quit contributing to unemployment funds and joining trade unions.
Let’s address each of these points:
- Kela links the higher tax rates with the “incentives for work”. The argument is that the former will lead to a reduction in the latter. Why? Ok, so a person on a job will pay more taxes. Assuming these taxes are maintained under reasonable levels, why is Kela assuming these people will stop working? Kela assumes a purely economic standpoint here – meaning that, according to Kela’s logic, people’s decisions, and particularly those related to work, result exclusively from monetary arithmetic. This logic, ironically, is completely non-economical in nature. Kela is assuming that people’s interests, preferences, and particular drives to do things for reasons other than money are not important, and hence can be discarded. Furthermore, Kela assumes that the possible effects of these preferences and drives on the experiment are not even worth trying to capture or understand. Stripping the argument from its technicalities and white-collar language, it can be reduced to the most common, basic, and prejudice-laden argument against basic income: that with a (full) basic income, people will stop working (“the laziness argument”). Nothing about the nature of the work itself is mentioned – such as whether it is socially useful or not, or whether it is contributing or not to people’s sense of belonging and happiness. The only thing that concerns Kela’s officials, analysts and institutional partners is whether a person stays on the job (whatever that job may be): if he/she does (or if an unemployed person becomes formally employed), that’s great; if not, that’s bad. Let’s not forget this is an experiment. If doubts exist, it’s precisely by undertaking an experiment that we might understand more about the subject being tested – in this case, ourselves. If the experiment is only intended to confirm what we already know, then it’s not an experiment: it’s a purposeless act taken only to gain collective confidence, much closer to public relations than science.
- Kela’s second argument goes like this: if people receive a full basic income, then why would they bother saving for unemployment and pension funds? Of course, these savings would be nonsensical at amounts lower than the basic income. But if someone has an average income above the basic income threshold, then a certain amount of unemployment and/or pension saving could be a wise investment, in order to maintain the same level of earnings in case of unemployment and retirement. For sure, this implies that, overall, there would be reduced contributions to unemployment and pension funds. But would that be a bad thing? After all, with the existence of a full basic income, people’s need for unemployment or retirement security would be reduced, so these funds wouldn’t need to be as large as they are today. Anyway, unemployment and pension funds are composed of money belonging to those who have directly contributed to them (or they are supposed to be). So they should only be as large as those people’s need for them. So what if a person stops paying their contribution to unemployment and/or pension funds because now he/she has a basic income? Nothing really happens, other than that the person will have a smaller amount of money to draw from when he/she becomes unemployed or retired. However, that person would never sink below the basic income level, and so a basic safety would always be in place.
- The first part of Kela’s third argument has already been dealt with in our second point. So, the remaining question is just about unionization. Why does Kela assume that joining a union is so important—so important, in fact, that a decrease in union membership could justifying not even testing a full basic income? Trade unions represent a certain kind of vision about work which is declining. In the USA, in the last fifty years, trade union membership has declined from around 33% (of all employees) to about 10% nowadays (Planet Money, 2015). Also in the UK, the number of registered union members has sharply declined in the last 35 years, from 13 million in 1979 down to 6.4 million as of 2014. A moderate to strong reduction in trade union membership has occurred in most other European countries as well, including Finland (Henrique de Sousa, 2015). At the same time, self-employment has been on the rise in several countries (e.g.: Austria, Belgium, Ireland, UK, Netherlands, Czech Republic, Finland)– although, in the European Union overall, it has stabilized around 16.7% since 2008 (World Bank). The vision of work that the trade unions represent includes fixed working periods, clear employer/employee relations, fixed negotiated incomes (collective bargaining), and holiday arrangements. All of these are getting less relevant as the time goes by. This comes with the acute rising of work flexibility, uncertainty over work periods and earnings, and the increase of precarious working conditions (Guy Standing, 2011). Precarity, unions’ number one enemy, does not necessarily represent a problem if a full basic income is in place. Unions were formed to give workers collective bargaining powers over wages and working conditions; in their absence, the threat of destitution was constantly used by employers to retrain and control workers. The employers could push less favourable deals onto workers, who were forced to choose between a bad deal and poverty. But this relationship, based on employees’ fear and employers’ abuse of power, need not exist – and, under a full basic income, would not exist. This makes sense because individual workers would have the personal bargaining power that a full basic income brings. Being part of a trade union would thus cease to be a necessity, and turn into a mere preference. So, reduced unionization is no grounds for rejecting implementing a full basic income, let alone merely experimenting with one.
Kela is rejecting a full basic income out of fear. This is an experiment. Of course there are issues, but that is exactly why the experiment is needed in the first place: to look at the extent of the consequences, within a controlled setup, before any full implementation. And experiment is needed to study the effects, expected or not. And to observe changes in people’s behaviours, when they are able to enjoy (during the experiment’s limited timeframe) a larger degree of freedom that they have never experienced before. I, for one, think that it’s entirely worth it. For the future of Finland – and of humanity.
More information at:
In Finnish:
Olli Kangas & Ville-VeikkoPulkka (eds.), “Preliminary report on a universal basic income”, Prime Minister’s Office, March 30th 2016
In English:
Ministry of Social Affairs and Health, “Ministry of Social Affairs and Health requests opinions on a basic income experiment“, Sosiaali-Ja Terveysministeriö; August 25th 2016
Planet Money, “50 years of shrinking union membership, in one map”, February 23rd 2015
Department for Business Innovation & Skills, “Trade Union Membership 2014 – statistical bulletin”, June 2015
OECD Data, Self-employment rate (% of employment, 1990 – 2015)
World Bank, Self-employed, total (% of total employed)
Guy Standing, “The Precariat: the new dangerous class”, Bloomsburry Open Access / Creative Commons, 2011
In Portuguese:
Henrique de Sousa, “Sindicalização: a vida por detrás das estatísticas [Unionization: thelifebehindthestatistics]”, WorkingPaper, Faculdade de Ciências Sociais e Humanas, September 2011
Article reviewed by Ali Özgür Abalı, Kate McFarland and Tyler Prochazka.
