What the failure of universal income in Finland reveals

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Laurent Pahpy* shows that in real life, universal income and Socialism, which have been tried in the northern European country that the Socialist Democrats are taking as an example, are destructive. He shows that their promise that “socialism works” is false. He doesn’t talk about theories, thoughts, promises or fantasy, but about reality.

To see if [Universal Income] works in practice, the Finnish government tried the experiment for one year on a group of 2000 unemployed people randomly selected. They each received 560 euros [$ 635] per month over the period 2017-2018.

No effect on employment

This is the conclusion of the universal income experiment conducted in Finland on a test population. This is not the first time that this popular idea has been evaluated in the field. But failure is always there. Universal income does not create value. It doesn’t reduce unemployment.

Repeated failures

With universal income, everyone is entitled to a monthly subsidy of a few hundred euros per month, regardless of age, status or salary. This subsidy is financed by a flat tax from the first euro of income.

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With less economical constrains, the poorest could meet their basic needs. They would have greater ease in finding a job while avoiding the stigmatizing paternalism of the state welfare.

Administrative simplification, independence for everyone, restoration of free will, fight against technological unemployment, elimination of threshold effects, the advantages would be numerous and the idea is emulated by many politicians, from Benoît Hamon [In France] to Barack Obama [and now Bernie Sanders and Alexandria Ocasio-Cortez].

Slightly less stress, but no increase in employment

The preliminary study of the results shows that while beneficiaries report slightly less stress, universal income did not increase their employment relative to the control group.

This is not the first time that such full-scale studies have been conducted. Between 1968 and 1982, the United States federal government funded four such experiments. As a result, it is even a significant drop in employment that is observed every time.

A false good idea to fight unemployment

While the idea of universal income may seem attractive at first glance, it fails to get test populations out of dependency.

And that makes perfect sense. For the example, let’s take Frederic, a rich guy living out of his wealth, and Charles, an unemployed with no income.

First case scenario: universal income. The State takes $635 out of Frederic’s pocket and give it to Charles. Certainly Charles has an income, but only for one month, he is kept in dependency, because he is still unemployed. Frederic didn’t get anything in return. It is a zero-sum game (even negative if we take into account the cost of bureaucracy).

Second scenario: investment. Frederic invests the $635 in a productive activity. This capital makes it possible to create a company that will produce new wealth. To do this, the company will need manpower and it will be able to hire Charles. It’s a positive sum game: Charles creates value and earns a salary, Frederic creates value and earns a return on investment, and the consumer benefits. It is a win-win situation for all, it is the foundation of free trade and a market economy.

Rather than subsidized income, an inclusive labour market

Universal income does not help Charles out of dependency because it does not create value. While it can relieve some economic constraints in the short term, it keeps Charles in the poverty trap of long-term assistance.

In Finland, as in France, the relatively high unemployment rate of 7.4% (9.2% in France) is mainly due to an inadequate training system and a regulated and inflexible labour market that creates entry barriers for young people with low skills.

“Social progress” is a question of incentives that can only be achieved through a competitive and innovative market economy. All countries adopting it are currently experiencing employment shortages. The labour market must remain inclusive. For this, there is no need for a universal income. Above all, it is essential to reduce barriers to entry such as extended collective agreements, minimum wages, the legal overprotection of insiders at the expense of outsiders and the mismatch between vocational training and labour demand.

A moral bankruptcy in addition to economic failure

Beyond an announced economic failure, universal income opens the door to a dangerous collectivist drift. This positive law allows the State to take charge of each individual from cradle to grave and creates an almost unlimited dependence on the administration.

Electoralist increases in the amount of universal income, the introduction of progressiveness, financing by bank notes or debt (therefore by future generations)… The political excesses of such a system will not be long in coming.

Universal income could also suggest that the mere fact of existence gives a right to enjoy the work of others. Its defenders praise the autonomy it confers, but it actually creates an even greater dependence on the rest of society. This moral fault leads to the destruction of responsibility, the essential foundation of civilization.

Denying universal income does not mean denying solidarity, it means restoring it

Helping others in a situation of disability or misfortune requires a sincere, responsible and committed donation. Frédéric Bastiat sounded the alarm more than 150 years ago: “It is absolutely impossible for me to separate the word brotherhood from the word voluntary. It is quite impossible for me to conceive of the legally forced brotherhood, without Liberty being legally destroyed, and Justice legally trampled underfoot.”

* Laurent Pahpy is an entrepreneur and coordinator for the Students for Liberty network in Paris. He is also an analyst for the IREF, the European Institute for Research in Economic and Fiscal issues.

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Tomb
Tomb
5 years ago

wow. this is news? i worked in Finland for a while in the late 80’s they were pretty liberal, but educated.

Then I spent some time travelling Europe. After spending time in the Netherlands, I was amazed at the ignorance so soon after WWII. I said these guys are doomed.

it took thirty years, but it is happening.

felix1999
felix1999
5 years ago

The results reveal timeless common sense! It’s just another experiment for socialism – communism.
Stockton, California is implementing it and other U.S. cities are discussing it.

Will ‘basic income’ become the California norm? Stockton starts $500 no-strings payments
BY ALEXANDRA YOON-HENDRICKS

FEBRUARY 15, 2019 03:30 AM,
UPDATED FEBRUARY 15, 2019 10:24 AM

Stockton, California is giving free money to some residents as part of a new universal basic income experiment. Starting Friday, 130 residents will receive $500 a month for 18 months through a program called the Stockton Economic Empowerment Demonstration (SEED)
By David Caraccio

Each month for 18 months, 130 adults living in the city’s lower-income neighborhood will receive $500 to spend however they want. Researchers with SEED will track, study and analyze how the income boost affects residents’ spending and saving habits, and how it influences other factors such as quality of life and financial stability.

The money for the program comes partially from a $1 million grant from the Economic Security Project, a network organization that has raised $10 million to fund and explore universal basic income programs and their viability. Another $2 million for the program comes from foundations and individual donors, according to ESP spokeswoman Saadia McConville.

“I think (the program) will make people work better and smarter and harder,” Mayor Michael Tubbs told NPR last year. “We’re not just designed just to work all day and run a rat race. We’re designed to be in community, to volunteer, to vote, to raise our kids. And I think the more inputs and investments we can give in people to do those things, the better off we are as a community.”

https://www.sacbee.com/news/local/article226280230.html

Alleged-Comment
Alleged-Comment
5 years ago
Reply to  felix1999

After reading the last paragraph it tells me how DELUDED the left is.

The way to make that work the way he wants is to tell the residence they have to pay it back but it will be interest free so long as you pay it back in 18 months. 😉

felix1999
felix1999
5 years ago

That is what they always say. when it always FAILS.

Jay Dillon
Jay Dillon
5 years ago
Reply to  felix1999

Note the /sarc filter there

Doktrinaten
Doktrinaten
4 years ago
Reply to  felix1999

This article was wothless because it relies on that the experiment was done intelligently – which it wasn’t.
The experiment was worthless and watered down.
I can’t go in depth but some points:
There’s mass unemployment (roughly every fifth is unemployed, many part-time and poor). No realistic chance to become active.

Taxes and payments are very hard. It is very unlikely to get a business to stand and grow from grass roots. No realistic chance to become self-activated.

The reason for Finland’s situation is the EU and especially the €uro.
Domestic market and peoples purchasing power: weak.
No realistic chance to become self-activated.

There’s more but perhaps the reader gets the point.

Lynn D
Lynn D
5 years ago

I can guarantee those low income/benefit people who get this universal income in Stockton, will not save it, invest it, They will SPEND IT, and spend it on non essentials, but stuff that they WANT…There will be no increase in employment, no one will work for something they can get for not working, why would they?

Jay Dillon
Jay Dillon
5 years ago
Reply to  Lynn D

Most likely they will spend it on Coca-Cola and Ding-Dongs.

Drew the Infidel
Drew the Infidel
5 years ago

As my grandfather used to say, “You can’t spend yourself rich.”

Jay Dillon
Jay Dillon
5 years ago

That’s a great motto. Here’s one I came up with — “You can cut your hair shorter, but you can’t cut your hair longer.”

Alleged-Comment
Alleged-Comment
5 years ago

First of all, you are gibing money to people that are NOT particularly religious. White people have abandoned their Christianity and its principles a long time ago. They have been morally bankrupt for a long time already and this will make it more so.

In fact, it may be the cause of WHY you need universal income. Might as well THOROUGHLY bankrupt them morally and spiritually.

You took away their guns, their dignity, their wealth, their culture and their children (abortion). So nice of you to do it for a few hundred stink’n dollars a month.

Jay Dillon
Jay Dillon
5 years ago

The next push will be for a “living wage” that is for people who are unwilling to work. Not just $500 a month, but $5000 a month… or more. “Stockton, California is giving free money to some residents as part
of a new universal basic income experiment. Starting Friday, 130
residents will receive $500 a month for 18 months through a program
called the Stockton Economic Empowerment Demonstration (SEED)” In addition to free junkie needles, free health care including dental, and maybe have people just shove food down your throat 3 times a day. Plus you don’t even have to stay in prison, you are free to go out and steal more stuff.

Maranatha
Maranatha
5 years ago

“”Let’s build a new socialist Utopia. With Jewish blood and rich peple’s money.. I know it didn’t work in the past but you know ….I am new here””
(AOC )

ninetyninepct
ninetyninepct
5 years ago

Why is it that Governments take money away from people who work and give it to people that don’t?

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