Economy

Finland's Brilliant New Idea to Fight Poverty

December 10th 2015

By:
Thor Benson

Finland is toying with the idea of a national basic income, and many people are paying attention. Right now the country has only commissioned an insurance company to study the idea, but if things look promising, it will experiment with it.

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A basic income is essentially getting paid to be alive. Every single person in a country with basic income gets a certain amount of money every month to use on whatever they want, and they can make money beyond that amount elsewhere. Some have theorized that this kind of policy will become more popular, in a future that could have computers dominating job markets.

The idea has been debated in the United States, but it has never gotten traction.

"This is an old idea that periodically resurfaces, most recently in a Swiss referendum," Richard Wolff, a prominent American economist, told ATTN:. Switzerland has a large portion of the population that is fighting for a basic income, but the government has rejected it.

"It is often motivated by studies showing it is cheaper than existing welfare structures in most countries," Wolff said. "It is less often supported in conjunction with the reassignment of work and the disconnection of work from income—which are more profound and social-transformative ways of thinking about the idea. Deep psychological and political oppositions have usually blocked realization of the idea." He said it could be a great idea if it's carried out properly.

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The insurance company, KELA, that is going to be studying the issue found 69 percent of Finnish people support the idea of a basic income in a recent poll. Many government officials, including Prime Minister Juha Sipilä, are also in favor of a basic income policy.

The basic income wouldn't be taxed, and it would amount to roughly $850 a month. That amount would replace any money someone would receive in the form of welfare benefits. The idea was partially proposed to counter Finland's high unemployment rate. Taking a low-paying job means a citizen gets less benefits from the state, and the wages from the job often don't adequately replace what benefits they receive without it, so many people don't look for work. Having $850 a month automatically means that's not a major issue.

This kind of idea is not unusual for Finland. As we've reported before, the country has traffic tickets that are calculated based on your income. Finland also has tuition-free universities, tons of vacation days, and it's one of the happiest countries in the world.