Finland’s Universal Income Experiment Fails

People receiving free money have no incentive to find ways to get money in exchange for goods or services.

The bureaucrats in Finland are stopping their universal income experiment and moving on to other welfare state innovations.

Why would a universal income experiment fail? We’re not told. There are two basic questions that would have to be addressed:

  • What happens to human beings who get money as an entitlement?
  • Where does the money come from?

People receiving free money have less incentive to find ways to get money in exchange for goods or services. Their basic needs are met, so they have no economic reason to seek to meet the needs of others. Advocates claim free money will incentivize long-term projects that people will have the freedom to pursue. They no longer will have to work at jobs that don’t pay well and that detract from their real goals. But where is the evidence that people will be more productive with free money as an entitlement?

Also, the money must be taken from those who earn it and given to others. Who is to say the economic benefits (if there are any) of universal income will be greater than the negative consequences of taking more taxes from society.

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Sadly, the Finnish government is not repudiating the idea of free money. It is just moving on to other experiments in how the welfare state can “help” people.

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BBC News reports, “Finland’s basic income trial falls flat.

The Finnish government has decided not to expand a limited trial in paying people a basic income, which has drawn much international interest.

Currently 2,000 unemployed Finns are receiving a flat monthly payment of €560 (£490; $685) as basic income.

“The eagerness of the government is evaporating. They rejected extra funding [for it],” said Olli Kangas, one of the experiment’s designers.


The argument is that, if paid universally, basic income would provide a guaranteed safety net. That would help to address insecurities associated with the “gig” economy, where workers do not have staff contracts.


Finland’s two-year pilot scheme started in January 2017, making it the first European country to test an unconditional basic income. The 2,000 participants – all unemployed – were chosen randomly.

But it will not be extended after this year, as the government is now examining other schemes for reforming the Finnish social security system.


The study by the Organisation for Economic Co-operation and Development said income tax would have to increase by nearly 30% to fund a basic income. It also argued that basic income would increase income inequality and raise Finland’s poverty rate from 11.4% to 14.1%.

In contrast, the OECD said, universal credit would cut the poverty rate to 9.7%, as well as reduce complexity in the benefits system.

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