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In a social experiment, Finland starts giving a $587 monthly income

Discussion in 'Coffee Shack (Daily News/Economy)' started by Scorpio, Jan 3, 2017.



  1. Scorpio

    Scorpio Скорпион Founding Member Board Elder Site Mgr Site Supporter ++

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    In a social experiment, Finland starts giving a $587 monthly income to 2,000 citizens

    Finland has become the first country in Europe to pay its unemployed citizens a basic monthly income, amounting to 560 euros, or $587, in a unique social experiment it hopes will cut government red tape, reduce poverty and boost employment.

    Olli Kangas from the Finnish government agency KELA, which is responsible for the country's social benefits, said Monday that the two-year trial with the 2,000 randomly picked citizens who receive unemployment benefits kicked off Monday.

    Those chosen will receive 560 euros every month, with no reporting requirements on how they spend it. The amount will be deducted from any benefits they already receive.

    The average private sector income in Finland is 3,500 euros per month, according to official data.

    Kangas said the scheme's idea is to abolish the “disincentive problem” among the unemployed.

    The trial aims to discourage people's fears “of losing out on something,” he said, adding that the selected people would continue to receive the 560 euros even after receiving a job.

    A jobless person may currently refuse a low-income or short-term job in the fear of having his financial benefits reduced drastically under Finland's generous but complex social security system.

    “It's highly interesting to see how it makes people behave,” Kangas said.

    “Will this lead them to boldly experiment with different kinds of jobs? Or, as some critics claim, make them lazier with the knowledge of getting a basic income without doing anything?”

    A similar idea, called a universal basic income, has been promoted by some as an answer in the U.S. to the displacement of low-skilled workers by robots and other automation.

    The guaranteed income would be provided to every adult, enough to support a basic standard of living, regardless of whether they were employed.

    Some proponents see guaranteed incomes as a way to prepare for an economy that produces fewer jobs. Others see it as a way to cut back existing government security net programs.

    Two local councils in Scotland are considering introducing trial programs with basic incomes later this year, in Glasgow and Fife.

    The unemployment rate of Finland, a nation of 5.5 million, stood at 8.1% in November with some 213,000 people without a job — unchanged from the previous year.

    The scheme is part of the measures by the center-right government of Prime Minister Juha Sipila to tackle Finland's joblessness problem.

    Kangas said the basic income experiment may be expanded later to other low-income groups such as freelancers, small-scale entrepreneurs and part-time workers.

    http://www.latimes.com/business/la-fi-finland-guaranteed-income-20170102-story.html
     
  2. JayDubya

    JayDubya Gold Chaser Platinum Bling

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    more....

    http://finance.yahoo.com/news/why-finland-ahead-us-guaranteed-215943486.html

    Finland just rolled out a pilot program to test universal basic income, or UBI . And while the idea of regular cash handouts may sound tantalizing, out-of-work Americans shouldn't hold their breaths.

    The Scandinavian country announced yesterday that 2,000 randomly-selected, unemployed individuals between the ages 25 and 58 will receive a monthly cash payment of 560 euros ($582.90) for two years.

    The payments will continue even if the recipient finds work . The goal, according to the Finnish government, is to increase employment.

    A privately funded pilot program is in the early stages in California, but the United States as a whole is well behind Finland in implementing any kind of guaranteed income.

    "Finland is ahead of the U.S. in lot of progressive ideas," says Karl Widerquist, the founder of Basic Income News and an Associate Professor at SFS-Qatar, Georgetown University, in an email with CNBC.

    "Finland already has universal health care. The next step is a universal right to a basic income. With Finland's more progressive politics, it's not surprising they're ahead of the U.S. in the movement for basic income," says Widerquist.

    Taxes are higher in Finland, too, which makes it more feasible for the government to pay its citizens, Martin Ford, author of The New York Times-bestselling novel "Rise of the Robots: Technology and the Threat of a Jobless Future," tells CNBC. "They have the means to pay for a basic income by converting existing programs," he says.

    Although unemployment benefits in Finland are generous, the way they're currently structured can, perversely, keep job-seekers from taking new positions.

    "Many workers in Finland who used to have good jobs with Nokia, for example, are now unemployed. Lots of these people have skills and could try to start businesses or maybe work for another small business at lower pay. But the traditional unemployment program doesn't allow this. If they earn any money, they lose all their benefits," says Ford.

    "So a basic income is a way to structure the safety net so that unemployed workers have an incentive to work to the extent they can, without the fear of losing their benefits."

    Also, while there are about 5.5 million people living in Finland, there are more than 320 million in the United States. Diversity in the U.S. makes it harder for some Americans to feel compassion for each other, suggests writer Misha Chellam, founder of the start-up training company Tradecraft. Chellam is also a signatory of the Economic Security Project, a newly founded research organization dedicated to learning more about the implications of UBI.

    "It may be an empathy gap," says Chellam.

    "Finland is a small, homogeneous country with less than six million people. This may make Finns more empathetic toward fellow Finns' struggles, as they share many cultural similarities. The sense of 'Americanness' can be a bit harder to pin down in a nation of almost 320 million people hailing from all parts of the world."

    The U.S. will only adopt UBI if automation results in mass unemployment, Ford believes.

    "I don't expect it to happen smoothly. I expect that, especially here in the United States, it's going to happen when we have a crisis. We will have a big problem first," he says.

    Despite cultural resistance, Widerquist insists that cash handouts are a viable idea even in the U.S.

    "Basic income works everywhere. We can all realize it is so, if people just have to give up their belief that the rich should have the right to tell the poor what to do," he says.
     
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  3. Usury

    Usury Gold Chaser Platinum Bling

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    So give people money so they'll find a job? Riiiiiiight.....
     
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  4. historyrepete

    historyrepete Silver Member Silver Miner

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    I wonder what they've got planned.
     
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  5. Montecristo

    Montecristo Silver Member Silver Miner

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    So, to lower the unemployment rate they are going to pay unemployed people a basic "salary" that won't be taken away if these people find a job even if it is below what they feel they should be paid or were being paid before they became unemployed.

    Talk about a government scheme of income redistribution!
    Why not cut the taxes of those citizens and business' that are being extorted into supporting this program and leave them more money to spend into the economy, then remove minimum wage and give the business the opportunity to hire more people without having to pay additional taxes that would be collected and redistributed as the economy expands under the additional funds that are now being spent into the economy?
    Viola! Higher employment rates and a growing economy simply by reducing governments attempt to "manage" the economy.
     
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  6. historyrepete

    historyrepete Silver Member Silver Miner

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    Where the hell you get these kinda ideas? Sarc
     
  7. Howdy

    Howdy Silver Member Silver Miner

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    I bet most of the recipients are foreign immigrants.
     
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  8. tom baxter

    tom baxter back from 2004

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    Naturally. Because they probably can't fill out the forms others take for granted
     
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  9. searcher

    searcher Mother Lode Found Site Supporter ++ Mother Lode

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  10. Rollie Free

    Rollie Free Midas Member Midas Member

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    Where is my cut?

    Xenophobic bastards. Just cause I don't live within some imaginary line I am left out?
    Not only are they xenophobic, but sexist, racist, and anti-gay, anti-trans.

    Hate...its costing me $587 a month.
     
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  11. gringott

    gringott Killed then Resurrected Midas Member Site Supporter

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    You can't get there from here.
    I may move there. I could use an extra $587. Anybody know the cost of living over there compared to here?

    I know two women over there, one still speaks to me. Maybe I'll ask her to hook me up.
    We should be in Poland in the spring, maybe I'll defect to Finland.
     
    Last edited: Jan 17, 2017
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  12. nickndfl

    nickndfl Midas Member Midas Member Site Supporter ++

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  13. searcher

    searcher Mother Lode Found Site Supporter ++ Mother Lode

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    The Dangers Of A "Universal Basic Income"

    [​IMG]
    by Tyler Durden
    Jan 18, 2017 5:15 AM


    Submitted by Nathan Keeble via The Mises Institute,

    Finland has announced that it is conducting a social policy “experiment” which deserves closer examination. Through 2017 and 2018, Finland will provide a guaranteed basic income of 560 euros to 2,000 randomly selected welfare recipients. This benefit will be subtracted from other, currently existing welfare benefits that participants may be receiving, and, crucially, the payments will continue regardless of any other income that is earned. If a participant of this program finds a job, the government will continue to pay them the 560 euros in addition to any other income.


    The Finnish government hopes — and many believe — that this program will help to alleviate poverty as well as make inroads in reducing the country’s current 8.1 percent unemployment rate. This test trial is supposed to prove it, potentially opening the door for a full implementation of a universal basic income (UBI).

    Why People Support a Universal Basic Income
    The universal basic income is being considered as a partial or complete replacement to the current means-tested system of welfare. Under the current system, welfare recipients’ benefits taper off and eventually stop, completely, based upon how much income individuals independently earn. Naturally, this creates a disincentive to rejoin the labor force, because people fear a reduction in total income as welfare benefits are removed or if they believe the added income from a job isn’t worth the labor. Demonstrated very simply, if someone is currently receiving a total income of $1,100 through a means-tested welfare program, many will be less likely to seek a job which will result in similar income levels, as most prefer leisure to labor.

    Supposedly, the UBI’s main innovation is that it manages to largely avoid this long standing failure. Since everyone would receive the established basic income regardless of other income earned, proponents believe that people would still have strong income based incentives to work. Some have gone even further, suggesting that the program will be a positive for employment because the financial cushion provided by a UBI will help people in the transition from unemployment to employment. For instance, a struggling entrepreneur or artist could, in part, rely on it while building support.

    For these reasons, the UBI has gained support from the entire political spectrum, including libertarian-leaning think tanks like the Niskanen Center.

    Where UBI Proponents Go Wrong
    A universal basic income is not the god-sent welfare policy that it initially seems to be. It does not create incentive to work. It won’t help solve unemployment, and it will not alleviate poverty. The truth is that a UBI will exaggerate all of these factors in comparison to what would exist in a more unhampered market. There is even reason to think that it would be worse in the long run than traditional, means-tested welfare systems.

    First, UBI does not eliminate the disincentives to work that are inherent in welfare programs; it simply moves them around. This program must be financed after all, and any welfare system, including the UBI, is necessarily a wealth redistribution scheme. Wealth must be forced from those who have it to those who do not. This means that at some point on the income ladder, people must go from being net receivers of benefits to being net payers of benefits.

    The progressive taxation that is necessary to finance a UBI means that the more a person earns, the higher percentage of their wealth will be taken from them. The work disincentives are therefore still very much present in the tax system. They’ve simply been transferred onto different, higher income groups of people.

    UBI Diminishes the Power of Consumers in Directing the Marketplace
    The universal basic income shares another problem with traditional welfare systems. Far from promoting the unemployed from searching for work the market rewards, it actually subsidizes non-productive activities. The struggling entrepreneurs and artists mentioned earlier are struggling for a reason. For whatever reason, the market has deemed the goods they are providing to be insufficiently valuable. Their work simply isn’t productive according to those who would potentially consume the goods or services in question. In a functioning marketplace, producers of goods the consumers don't want would quickly have to abandon such endeavors and focus their efforts into productive areas of the economy. The universal basic income, however, allows them to continue their less-valued endeavors with the money of those who have actually produced value, which gets to the ultimate problem of all government welfare programs.

    In the marketplace, wealth is earned by generating value. When someone buys a good, they’ve earned the money they are spending by having produced something else. This is not so with welfare programs like a universal basic income. Money is forcibly taken from those who have produced enough to earn it, and given to those who haven’t. This allows for people who aren’t producing wealth to continue to consume scarce goods. Eventually, all government welfare leads to the consumption of wealth, or, at the very least, a reduction in the amount of wealth that would have been accumulated otherwise. When entrepreneurs have less need to respond to the needs and desires of their customers, consumers will find themselves with fewer choices and with lower-quality choices.This means that overall welfare makes everyone poorer than they would have been in a free market.

    How Finland Really Can Reduce Poverty
    If Finland (or anywhere else) wishes to help alleviate poverty and unemployment, the best steps to take are in the directions of reducing the cost of living and creating conditions favorable to plentiful employment.

    Charles Hugh Smith recently outlined the basics:

    This may seem obvious, but the conditions required for work to be abundant and the cost of living to be low are not so obvious. For work to be abundant:
    • It must be easy to start a business.
    • It must be easy to operate the new business.
    • It must be easy to make a profit so the business can survive the first few years and,
    • It must be easy to hire employees.
    All these factors require an environment of low-cost compliance with regulations, low tax rates, low costs of transactions, reasonable transport costs, reasonable cost of money (but not near-zero), reasonable availability of capital for small enterprises, local and national governments that actively seek to smooth the path of new enterprises and existing enterprises seeking to expand, and a transparent marketplace that isn't dominated by politically dominant cartels and subservient-to-cartels government agencies.

    This matters because the number one cause of the high cost of living is artificial scarcity created and maintained by monopolies, cartels, and the government that serves their interests. Artificial scarcity imposed by cartels and a servile state is the primary cause of soaring costs in a variety of sectors.

    In Scandinavia, as in most countries, its is becoming increasingly difficult to open and sustain businesses. In Scandinavia especially, labor unions exercise immense power over private business, pushing up costs and raising barriers to entrepreneurship and creating new businesses.

    As has always been the case, it is necessary to create wealth before it is possible to redistribute it, and policies that encourage movement toward less productive types of work will fail to produce the wealth that government planners would like to spread around.

    http://www.zerohedge.com/news/2017-01-17/
     
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