Finland's Testing a "Universal Basic Income,' Forgetting It's Already Failed Before

P. Gardner Goldsmith | January 12, 2018
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It's a new progressive fashion: a push for a “Universal Basic Income” (UBI) in America.

Like many leftist concepts, it sounds new, but the idea has actually been floating around the US since the 1960s. And, like a bad Christmas sweater, regardless of how old and dusty it is, the concept is being pulled out once more, and repackaged as “new” -- a re-gift that can save the world.

In fact, the folks at Bloomberg Businessweek just published a piece by Claire Suddath exploring in rather selective and glowing terms an experiment in UBI being conducted in Finland.

From the start of 2017 to the close of 2018, the Finnish government is randomly choosing 2,000 unemployed and “poor” residents to receive approximately $560 per month ($6,720 annually), no strings attached. It’s believed that this will give poor people “freedom” to explore their professional interests, or go to school, or take on part-time jobs to add to their income, without having their already existing welfare, unemployment, or other state-provided (taxpayer or deficit funded) payments cut back as their income grows.

As Ms. Suddath writes, the system is run by Kela, the Finnish welfare bureaucracy, which, she tells us, is able to operate because of the great Finnish national wealth:

“With its wealth, Finland created a network of social institutions designed to ensure that everyone enjoyed a certain quality of life. Kela was founded in 1937 to administer a national pension program and has since expanded to encompass roughly 40 services.”

But government institutions are not “social” institutions. Society is distinct from the state. Society is that ever-permuting arrangement of connections and traditions we as individuals make voluntarily with one another. The state is the agency of politicians and bureaucrats who claim a statutory monopoly on the legal use of aggressive violence and ownership over your earnings.

Regardless of her initial misapprehension, the government-provided UBI concept is gaining traction, so it might be worthwhile to note some problems with it, and remind people that this kind of thing has already been tried -- and it failed in epic historical fashion.

First, the United States government already offers guaranteed income on various levels including “welfare,” college grants, unemployment “insurance," and Social Security. In some of these cases, such as “Social Security,” the money is extracted from people before it is handed back to them, and that program has also been used as a way to redistribute money through the so-called “Earned Income Tax Credit” (EITC).

The UBI does more than welfare, and it wont be adjusted. In fact, in the 1960s, some American conservatives embraced the leftist concept of a UBI as a way to avoid a problem they saw in government welfare programs. Many such welfare programs are means-tested, or adjust what a recipient gets based on any additional income he or she makes. Many ‘60s era conservatives saw the “Great Society” programs of President Johnson, and realized that they incentivized people to not work. The welfare system punished people for working by decreasing state payments as people earned more on their own. There are no such barriers for UBI. Finnish people who get it will keep getting it, no matter what other income they might start to earn.

Today, the first argument for the UBI is often based on the old belief that a guaranteed income will prevent that “welfare system” problem, and that people will go get other jobs. This is highly dubious.

The second argument offered today is even more fallacious. It is the belief that since technology will supplant some human labor, the great financial rewards reaped by corporations from the new tech should be showered on those who might be displaced. They could live, and do what they want, while getting paid.

Not a good idea.

First, the argument that people should be compensated for being supplanted by technological is a fallacy that has existed for centuries. The entire point of developing tools and tech is to make work easier, to free up labor. The Simple Machines were adopted by humans because they made work easier and freed people to do more. Once ancient people used the inclined plane, one man could push a heavy object up without help, freeing another man (or more) who previously had been needed to lift it. The idea that the man who was no longer needed should be compensated by the man doing the work runs counter to the entire concept of technological advances.

Additionally, there is something fundamental about markets that’s destroyed by the act of paying people a guaranteed basic income.

Markets possess the distinct power of promoting those things which consumers find helpful to their lives, and decreasing those offerings that are not helpful. UBI subsidizes behavior no matter whether that behavior helps others. For example, some bad artists would, in a market-based environment, not be able to sustain themselves on their art, and would be forced by their own needs to learn skills more helpful for others. UBI lets people continue their less valuable work, being insulated from the necessity to survive, they will not learn those more valuable skills.

And the concept of a UBI misses another important economic point. The opportunities given to the “poor” through this redistribution of wealth will be taken from others. This is unavoidable. If the “wealthy” are taxed, then those “wealthy” people will not have the chance to utilize their money as they see fit. If the government uses deficit spending to fund the UBI, then future generations will be forced to subsidize the UBI handouts of the current era, and they will lose their chances in the future to spend their money as they see fit.

But those won’t be discussed by leftist politicians or those looking at a “test” of a UBI in Finland. They will fall into the trap that great French economist Frederic Bastiat described as “what is seen and not seen”. They will focus on people who are “helped” by the UBI, but not look at the multitudinous people who have lost their opportunities to spend their own money as they see fit. They will not focus on those who feel resentment at having the fruits of their labor and invention go to others that the government selects.

And, as with most leftist policies, this was tried before. In the 1620s. In Plymouth Plantation.

The reason almost all the Pilgrims starved their first year was because, as Governor William Bradford explained in his own notes, they used redistribution of noted and eschewed private property.

Here is what he wrote:

The failure of this experiment in communal service, which was tried for several years, and by good and honest men, proves the emptiness of the theory of Plato and other ancients, applauded by some of later times, –that the taking away of private property, and the possession of it in community, by a commonwealth, would make a state happy and flourishing; as if they were wiser than God.  For in this instance, community of property (so far as it went) was found to breed much confusion and discontent, and retard much employment which would have been to the general benefit and comfort.  …  Let none argue that this is due to human failing, rather than to this communistic plan of life in itself.  I answer, seeing that all men have this failing in them, that God in His wisdom saw another plan of life was fitter for them.

So UBI is nothing new. It’s the same old collectivist sweater that they are trying to rebrand and regift.

It’s not a gift. It’s a curse, and one best left untouched.

(Cover photo:

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