Around the world, there is a lot of buzz around the idea of universal basic income (also known as “unconditional basic income” or UBI). It can take different forms or vary in the details, but in essence: UBI is the idea a government would pay all citizens, employed or not, a flat monthly sum to cover basic needs. This funding would come with no strings attached or special conditions, which would remove any potential stigma associated with receiving it. In short: it would be free money.
UBI advocates argue that many jobs don’t pay enough to even make rent and buy groceries: people can work full-time and still be below the poverty line. It’s easy to understand why people on the left would advocate for a guaranteed income, but a version of this concept is also popular among libertarians, who see UBI as a way to shrink the welfare state. For example, you could take away food stamps, medicare, and housing subsidies, and replace all of it with this one flat sum.
People in tech are also interested in the concept of basic income, and they feel a certain urgency about it due to increasing automation. In a world where jobs are scarce, they argue, everyone will need a financial cushion. In that future world, a UBI could also free people up to start businesses or go back to school.
The idea of a universal basic income has been around for a long time — Thomas Paine, a founding father of the United States, talked about it centuries ago. As recently as the 1960s and 70s, limited UBI studies were run in parts of the US. President Nixon even brought up the idea of an income floor for families in a State of the Union address.
There’s been a lot of recent excitement around the idea, especially after an experiment launched by the Finnish government started in early 2017. It has the public and the media wondering: how will recipients react to getting this unconditional source of income?
The experiment itself is fascinating, not just because of what Finland is testing but also how they are testing it. Finland is trying out a unique, design-oriented way of thinking about government. Rather than rolling out laws on a massive scale, they are trying to craft legislation in stages, with user feedback, just as one would create a piece of design.
Every good design is made to fill a need or solve a problem. In the case of the Finnish basic income experiment, the problem they are thinking about is not automation. And they are not trying to see if people will stop working if they can collect basic income. They are trying to see if basic income will make Finns start working. The problem is unemployment.
The unemployment rate in Finland is around 8.8%, which is about double that of the United States. Residents of rural areas, like Sanna Leskinen of Joensuu, have a particularly tough time finding jobs outside of big cities. Leskinen is 39, and she’s been unemployed for a little over two years. She has a master’s degree in history and worked as a researcher until her project ran out of funding.
In Finland, unemployment benefits can last for around two years, and even after those run out there are other assistance programs that citizens can apply for. Here’s a catch: recipients generally cannot earn additional income without putting their benefits at a risk. “You cannot take a part-time job,” explains Leskinen, “because then you are gaining money [and] it’s counted against you. You lose that little bit of support.”
Unemployed Finns don’t want to risk that loss by trying to pick up part-time jobs, gigs or freelance work. Some people even do small jobs for free in order to avoid compromising their benefits (this was the case with the sound engineer who helped us record interviews for this episode). The government of Finland has comes to realize this system accidentally discourages willing and capable citizens from taking small jobs or maybe even starting businesses of their own.
There are different ways to potentially address the problem, but the Finnish government wanted to start simply and then elaborate slowly, They wanted to design and test policy, in a process very similar to the way designers come up with new products. They wanted to use design thinking.
Design thinking is a process that goes a little something like this: first, designers come up with ideas and prototypes. Next, they try those out with a model or sample. Then they get feedback, review outcomes and incorporate that into the next iteration, and the process starts all over again. Among designers, a shorthand for this is “express, test, cycle.”
Applied to government, this approach involves thinking “about policies as kinds of design objects or design services,” explains Roope Mokka, founder of Demos Helsinki, a Helsinki-based think tank, which “means that you do iterations and tests.” Demos was contacted by the office of the prime minister to help them apply design thinking at a national level.
Demos helped establish an “experimentation unit” for the prime minister’s office to create prototypes of laws, deploy them in a controlled fashion and see what’s effective before scaling them up. In order to run these experiments, Finland actually had to pass a law to ensure that they were not in violation of the constitution, “because all the constitutions of democratic countries in the world say that you have to treat people equally,” explains Mokka. And, by definition, running experiments on citizens means treating them unequally.
With that in place, one of the first experiments the Finnish government decided to try was with basic income. Instead of attempting to modify the extensive and complicated welfare system already in place, this experiment is performed on a sample segment of the population sample in a randomized and automatic fashion. Basic income just gets deposited in participants’ bank accounts every month.
The program is currently overseen by Marjukka Turunen, who works for a government institution called KELA. This agency helps oversee the over forty different kinds of benefits Finns can receive, including student support, parental care, pensions and other subsidies. In January of 2017, KELA picked 2,000 unemployed Finns from all over the country. They ranged in age from 25 to 58 (too old for student support, too young for a pension), and they were selected completely at random. They didn’t volunteer for the experiment — at the beginning of the year, they just got a letter that explained they were to be part of the test, and would now receive 560 euros a month.
Sanna Leskinen was one of those selected, and she was excited about the news. The amount is slightly less than she got through her unemployment benefits, but this basic income is guaranteed, and will be unaffected by her employment status. “Finding a job is very important to me,” she says. “So now I’m able, if I find a job … [to] take it and not lose the support money.”
Normally, to collect unemployment in Finland, Sanna would have to go to job training meetings and check-ins every few months. Under the basic income experiment, Sanna and the other test participants scattered around the country don’t have to do anything at all to get their 560 euros every month.
At the end of the experiment, KELA will look and see if this group of unemployed people who got basic income took on work, and compare it with their control group: the rest of the unemployed people.
This test could bring basic income one small step closer to becoming a reality in Finland, but it has its critics. “I don’t think it is going to happen,” admits Marjukka Turunen, who is overseeing the experiment at KELA. “I think that it would be too dramatic,” she says. “We would wipe out all of these social security systems we have been building for decades.” Turunen imagines that a basic income wouldn’t be sufficient for, say, people who care for parents or children with special needs, and don’t have ability to seek part-time work. “And of course,” she asks “Who would pay for it? Who would finance it?”
It is really hard to say how much basic income would actually cost the average taxpayer (were it to be instituted) or exactly how it would affect the economy or inflation rates. So much would depend on the terms of its implementation, and there are a number of factors to consider. There is no exact math on this.
“If someone truly claims that they know how much more expensive basic income” would be, says Roope Mokka, “they’re lying. It’s such a systemic shift that if we decide to start paying everyone a lump sum of money it will change the economy in such a way that the whole system changes.” Basic income would save money by cutting back on bureaucracy, but, regardless, it would be expensive to fund. “But that’s almost technical if you know?” Mokka argues. “If you need money, you raise money. It’s what politicians do. They change the way budgets are arranged. ”
Mokka thinks politicians could find a way to make basic income work, if it’s proven to make citizens more engaged and active. He says that’s why they have to test, before anything else, if basic income would really increase productivity, and improve general well-being. At this point, basically, Finland is testing to see if basic income is worth more investigation.
This experiment, however, is not a test of UBI, in that it’s not actually universal. It’s only for unemployed people. “I think what we’re experimenting with now is called partial basic income,” says Mokka. “This is of course a limited experiment. I don’t know how relevant it is, because a lot of groups are missing.” If so, then in a future test, basic income will also have to be given to people who are already employed, to see if they quit or change jobs.
Critics of the experiment also argue that 2,000 people is too small a sample size. Two Finnish economists published an Op-ed in the New York Times called “Why Finland’s Basic Income Experiment Isn’t Working.” They accused it of being poorly designed and over-hyped, citing its potential to drive people into low-paying jobs.
The experiment is far from perfect, but it’s not supposed to be a final product. Truly, it’s the first draft. If this test yields meaningful results, it should lead to another experiment, then another and another.
Finland isn’t just designing experiments with basic income. There will be experiments for what languages to teach in schools, how to change childcare and other things. According to their website, the experimentation office is working on 26 key projects nationally.
Slowly, Finland will use these experiments to solve problems, and express, test and cycle new ideas in this iterative, design-minded way.