Universal basic income trial in Finland

Arthur Daley · 11-02-2019 11:10am

Liberty Proud Rank wrote: »

Corp tax, and upper earnings. Closing loopholes and evasion, which is commonplace.

Yes the Corporates benefit from significant cost savings from automation and AI, so they need to be taxed more as a result to fund the UBI. The biggest taxpayer group should shift from labour to wealth/capital, as the labour taxes will certainly be eroded. Existing levels of Corporate welfare will also need to end as big government will simply not have the resources to prop up various 'industries' anymore. We will have to cut our cloth.

Water John · 11-02-2019 11:30am

'UBI is a silly concept' Quote.
That really added to my knowledge on the subject. I am leaning towards it but open to persuasion on various points.
There are different models. That is what we are doing, teasing it out, hoping to add to our understanding of the positives and negatives.

conorhal · 11-02-2019 11:36am

Well the Finn's have concluded their experiment and the results are in, showing that UBI had no impact on the employment rate of the recipients. It simply didn't encourage any higher participation in the workforce by those given a basic income and told any work they took wouldn't impact their benefits, so the theory that it would seems not to be true.

klaaaz · 11-02-2019 11:39am

conorhal wrote: »

Well the Finn's have concluded their study and the results are in, showing that UBI had no impact on the employment rate of the recipients. It simply didn't encourage any higher participation in the workforce so the theory that it would seems not to be true.

It's not as simple as that. Factors like lack of employment opportunity, the geography on the availability of jobs and the level of pay in those jobs as well as ageism in the hiring process affect Finland just as it affects here.

Water John · 11-02-2019 11:43am

Any new concept, or agency, from my experience needs about 3 years up and running for it to catch with the public. I think any trial would have to run for 3/5 years, without political interference.

conorhal · 11-02-2019 11:44am

klaaaz wrote: »

It's not as simple as that. Factors like lack of employment opportunity, the geography on the availability of jobs and the level of pay in those jobs as well as ageism in the hiring process affect Finland just as it affects here.

Those factors also effect the unemployed that were not part of the experiment, it STILL had no impact on employment rates, and that's about what you'd expect.

What's your motive to take a bad, lowpaying, back-breaking job to top up your earnings if you don't have to?

Ush1 · 11-02-2019 11:53am

conorhal wrote: »

Those factors also effect the unemployed that were not part of the experiment, it STILL had no impact on employment rates, and that's about what you'd expect.

What's your motive to take a bad, lowpaying, back-breaking job to top up your earnings if you don't have to?

Not to mention doing it at such a small scale would not have the very real problem of hyper inflation was it to be applied "universally".

Dohnjoe · 11-02-2019 12:11pm

Liberty Proud Rank wrote: »

Costs would be roughly the same, some folks with a dozen kids who get large welfare payments now, would be much worse off. National productivity would be vastly improved, thus +GDP.

This is not correct

Current cost, including pensions for social is 20 billion

For UBI in Ireland of 800 EUR per month for all over 18's would be approx 34 billion, excluding pensions and administration

Corp tax, and upper earnings. Closing loopholes and evasion, which is commonplace.

Possibly, but with no figures it's vague/random speculation. Where do they get the extra 15 to 20 billion from? With figures

Leave the country for 3/12mths and your payments cease.

Can easily live in Eastern Europe and fly back every 3 months to "sign on". The administration required to check everyone would be astronomical

Small sample group, maybe they were in locations where enterprise/work was limited no matter the resources. Maybe they knew it was a time-limited trial and didn't want to jump on the work-train knowing they'd loose benefits when the temporary track ended.

Perhaps, but these are the tangible results we have. They are real vs your guesswork/speculation

The thing is more and more countries realise it's on the way, hence the preperations and trails increase.

It's your personal opinion. In reality however countries/parties may reject the notion (as too costly/economically risky) Switzerland has rejected it in a direct vote.

I have come across a lot of wishful thinking/speculation but little in the way of solid economic reasoning for such a project

klaaaz · 11-02-2019 12:26pm

conorhal wrote: »

Those factors also effect the unemployed that were not part of the experiment, it STILL had no impact on employment rates, and that's about what you'd expect.

What's your motive to take a bad, lowpaying, back-breaking job to top up your earnings if you don't have to?

That's not the fault of the unemployed, that's the employers taking advantage of the subsidy(the UBI enrolled)and generally not paying good enough wages for the non-UBI enrolled.

conorhal · 11-02-2019 12:39pm

klaaaz wrote: »

That's not the fault of the unemployed, that's the employers taking advantage of the subsidy(the UBI enrolled)and generally not paying good enough wages for the non-UBI enrolled.

Not true, those taking part could take some part time work, get a bit of extra spending money, ease their way back into the jobs market without risking a shortfall in income by doing and yet they chose not to at any greater rate then other non participants.
If those on UBI are disinclined to take a low paid job to suplement their income or work their way up the ladder, your suggesting seems to be, well then those employers need to hike up wages to make those jobs more attractive. As has been pointed out, that would lead to massive inflation as burger flippers suddenly need to be paid 20 euro an hour instead of 10, well that cost will get passed on to the customer and suddenly your UBI payment can't meet basic living costs.

klaaaz · 11-02-2019 12:51pm

conorhal wrote: »

Not true, those taking part could take some part time work, get a bit of extra spending money, ease their way back into the jobs market without risking a shortfall in income by doing and yet they chose not to at any greater rate then other non participants.
If those on UBI are disinclined to take a low paid job to suplement their income or work their way up the ladder, your suggesting seems to be, well then those employers need to hike up wages to make those jobs more attractive. As has been pointed out, that would lead to massive inflation as burger flippers suddenly need to be paid 20 euro an hour instead of 10, well that cost will get passed on to the customer and suddenly your UBI payment can't meet basic living costs.

The UBI ran for a very short period of time, that part time job would have been useless when the UBI trial ended. I don't know of many people who can "work their way up the ladder" in a burger joint, that is just stereotyping just like saying "it's their choice not to work"

And it is also stereotyping that workers would be seeking double pay to just flip a burger, they like many low pay workers realise it's low pay and just want to be paid a living wage just like Lidl and Aldi have implemented here. Both discount stores have not seen a huge rise in consumer prices just to pay their staff a living wage. By the way Lidl have a minor presence in Finland(unlike here), Aldi do not exist there at all.

Dohnjoe · 11-02-2019 1:17pm

klaaaz wrote: »

The UBI ran for a very short period of time, that part time job would have been useless when the UBI trial ended. I don't know of many people who can "work their way up the ladder" in a burger joint, that is just stereotyping just like saying "it's their choice not to work"

And it is also stereotyping that workers would be seeking double pay to just flip a burger, they like many low pay workers realise it's low pay and just want to be paid a living wage just like Lidl and Aldi have implemented here. Both discount stores have not seen a huge rise in consumer prices just to pay their staff a living wage. By the way Lidl have a minor presence in Finland(unlike here), Aldi do not exist there at all.

The UBI trial ran for 2 years. More than enough time for the "gig" economy and temp working. Even part time work (I've known several on 6 month to 1 year contracts)

Geuze · 11-02-2019 2:20pm

Dohnjoe wrote: »

1. Cost of UBI in Ireland. With rough calculations, it would work out at about 34 bn a year excluding administration and pensions, something the country can't afford - or would have to make dramatic cuts to health/schools/justice/transport/other

3. Which taxes and how? ("tax the rich" is not an answer). There would have to be a very significant rise in taxes to cover the astronomical cost of such a program

4. Only residents get it, so what's stopping Irish people claiming it and going abroad and living comfortably? an army of administrative people to make sure that doesn't happen? (800 euros of guaranteed free cash per month is significantly higher than the average wage in many countries)

5. UBI clearly doesn't encourage people to take up unemployment (Finnish findings)

I've dipped into a few of these UBI threads and they always seem to be high on speculation and very low on actual details/maths/economics

1. 2015 SJI study, cost = 31.3bn.

2. Yes, SJI study means all tax credits and SRCOP abolished, replaced with a single 40% income tax rate. Also er PRSI increased.

5. Yes, the Finnish result isn't supportive of the employment take-up aspect.

Geuze · 11-02-2019 2:21pm

Key Figures (€m)

https://www.socialjustice.ie/sites/default/files/attach/policy-issue-article/4642/spcpresentationrevised.pdf

SJI figures

Total cost of UBI payments 31,298
Cost of welfare payments maintained under UBI, and Administration 3,843
Total cost of UBI 35,141

Total savings under UBI in other Departments 729
Net cost of UBI 34,412

Total expenditure of Department of Social Protection in 2015 19,893
Current funding from Income Tax, PRSI, USC etc. in 2015 26,763
Surplus of Income Tax over DSP expenditure 6,870

Funding requirement: Net cost of UBI + surplus of existing system 41,281
Employer PRSI 7,704

Yield required from a single rate of income tax on all personal income 33,577
Rate of Income Tax required on all personal income 40%

4068ac1elhodqr · 11-02-2019 4:18pm

Dohnjoe wrote: »

Current cost, including pensions for social is 20 billion.
For UBI in Ireland of 800 EUR per month for all over 18's would be approx 34 billion, excluding pensions and administration

Costs are irrelvant if they can be met, through savings, GDP (+national productivity levels), taxations, closing loopholes etc.

Dohnjoe wrote: »

Can easily live in Eastern Europe and fly back every 3 months to "sign on". The administration required to check everyone would be astronomical

When you leave a country you pass something called the 'passport desk', citizens can easily be identified anyway of location via numerous means, by numerous agencies.

Dohnjoe wrote: »

Perhaps, but these are the tangible results we have. They are real vs your guesswork/speculation

The only way to test would be in it's 'natutal environment at full-scale'. Small independent remote nations should try this e.g. Iceland.

Dohnjoe wrote: »

It's your personal opinion. In reality however countries/parties may reject the notion (as too costly/economically risky) Switzerland has rejected it in a direct vote.

The Swiss is a landlocked nation with high variance of political ideals and migration issues, not to mention a holiday destination for folks with large deposits to make into secret accounts, they would not favour a fair tax system.

Dohnjoe wrote: »

I have come across a lot of wishful thinking/speculation but little in the way of solid economic reasoning for such a project

Automation replacement by itself is reason enough. Then theres wealth equality, crime, the coming economic surrender to China etc etc.

Dohnjoe · 11-02-2019 7:06pm

Liberty Proud Rank wrote: »

Costs are irrelvant if they can be met, through savings, GDP (+national productivity levels), taxations, closing loopholes etc.

Which loopholes and what is the gain in each case minus the negative effect of closing that loophole? (backed by proper sources), otherwise the above is pure speculation

To again put the figures in some perspective

3.5 mm people collecting 800 euros a month in "UBI" is around 34 bn annually. Add in pensions and administration (tracking 3.5 million people, all of their travel abroad, tracking all immigrants to make sure the system isn't abused, etc). We could be looking at close to 40bn

40bn is what the Irish government currently spends on the entire health service, all education, justice, agriculture, the entire transport system with 5 bn left over

Essentially UBI would cost the country more than all those put together. I wouldn't have much hopes on any party touching that notion with a bargepole.

mvl · 11-02-2019 7:11pm

Dohnjoe wrote: »

Which loopholes and what is the gain in each case minus the negative effect of closing that loophole? (backed by proper sources), otherwise the above is pure speculation

To again put the figures in some perspective

3.5 mm people collecting 800 euros a month in "UBI" is around 34 bn annually. Add in pensions and administration (tracking 3.5 million people, all of their travel abroad, tracking all immigrants to make sure the system isn't abused, etc). We could be looking at close to 40bn

And what if the pension is meant to replaced by UBI in the end - they don't call it universal for nothing

4068ac1elhodqr · 11-02-2019 8:20pm

Dohnjoe wrote: »

Which loopholes and what is the gain in each case minus the negative effect of closing that loophole? (backed by proper sources), otherwise the above is pure speculation

If you want every single incidence/type of avoidance and every single corporate/person listed out for you on a spreadsheet maybe invest in a 'genie in a lamp' to rub.

One quick example, from Techcrunch:

18 Sep 2018 - Apple has finished paying $15 billion European fine. Apple has finished wiring billions of euros to pay back 'illegal tax benefits' to the 'Irish government' according to Reuters. Overall, Apple has paid $15.3 billion (€13.1 billion) for the original fine as well as $1.4 billion (€1.2 billion) in interests.

Equally it's pure speculation that costs of UBI (can't) be recovered or balanced out by reducing some current benefits, or that national productivity (wouldn't) receive an enormous boost, increasing overall GDP and improving standards of living.

It's also (very wild) speculation that millions living abroad would magically avail of it, easily lining their pockets on tepid beaches of Thailand, discos of 'Frisco or manbags up in Moneymore.

Water John · 11-02-2019 8:31pm

I wouldn't see under 18s availing. It would be UBI or pension or other state and EU payments, is what I would favour.
Not sure what the net cost of that would be.

Geuze · 11-02-2019 9:44pm

Water John wrote: »

I wouldn't see under 18s availing. It would be UBI or pension or other state and EU payments, is what I would favour.
Not sure what the net cost of that would be.

UBI can replace CB.

There can be different age-related rates of UBI.

Geuze · 11-02-2019 9:45pm

NBER article on UBI published this month:

https://www.nber.org/papers/w25538#fromrss

Universal Basic Income in the US and Advanced Countries
Hilary W. Hoynes, Jesse Rothstein
NBER Working Paper No. 25538
Issued in February 2019
NBER Program(s):Children, Labor Studies, Public Economics

We discuss the potential role of Universal Basic Incomes (UBIs) in advanced countries. A feature of advanced economies that distinguishes them from developing countries is the existence of well developed, if often incomplete, safety nets. We develop a framework for describing transfer programs, flexible enough to encompass most existing programs as well as UBIs, and use this framework to compare various UBIs to the existing constellation of programs in the United States. A UBI would direct much larger shares of transfers to childless, non-elderly, non-disabled households than existing programs, and much more to middle-income rather than poor households. A UBI large enough to increase transfers to low-income families would be enormously expensive. We review the labor supply literature for evidence on the likely impacts of a UBI. We argue that the ongoing UBI pilot studies will do little to resolve the major outstanding questions.

11-02-2019 9:55pm

Copy of the publication https://eml.berkeley.edu/~jrothst/workingpapers/w25538.pdf

Dohnjoe · 13-02-2019 12:43pm

Liberty Proud Rank wrote: »

If you want every single incidence/type of avoidance and every single corporate/person listed out for you on a spreadsheet maybe invest in a 'genie in a lamp' to rub.

Nope, just account for the "loopholes" you mentioned and the what areas of tax you would increase and the amounts they would raise (and the negative net effects of those rises)

This isn't squeezing a few hundred mm from the economy, it's an eyewatering 15 to 20 bn. Your vague "down the pub" calculations don't mean anything if they aren't based on any actual figures

Dohnjoe · 13-02-2019 12:51pm

Deleted User wrote: »

Copy of the publication https://eml.berkeley.edu/~jrothst/workingpapers/w25538.pdf

Thanks. Summary for those who don't want to read the whole thing -

VIII. Conclusion
Interest in universal basic income is on the rise in the U.S. and other advanced countries.
Decades of wage stagnation and concerns about automation, robots, and job destruction, as
well as discontent with the current social safety net, provide the foundation for interest in this
area. Support for UBIs has led to several pilot programs and policy proposals in the U.S.,
Canada, Finland and Switzerland. Despite all of this, there is a lack of clarity on what makes a
UBI, what problem it is meant to solve, whether the social safety net can or is providing these
benefits, and what (if anything) can be learned from the pilot programs that we don’t already
know from the decades of existing research on individual and household responses to the social
safety net, and wages and income opportunities more broadly. Our paper seeks to fill this gap.
A “pure” UBI (providing a set benefit to all regardless of income, age, etc.) funded to meet basic
needs for a household without earnings would be extremely expensive, about twice the cost of
all existing transfers in the U.S. Funding this would require substantial new revenue. The source
of the new funds is a first order issue, and will have substantial impacts on the distributional
effects of the policy and its ability to target those most in need of assistance. In particular,
replacing existing anti-poverty programs with a UBI would be highly regressive, unless
substantial additional funds were put in.
Much about the effects of a UBI on labor supply, income and family wellbeing can be gleaned
from the existing research, which we briefly review here. We identify a few outstanding
questions, such as the impact of a truly universal program (presumably without stigma) as well
as the effects on human capital and, hence, labor supply in the longer run. Unfortunately, the
planned and ongoing pilots are not well suited to answer these questions. Experimentation
aimed at identifying parameters and mechanisms (Deaton and Cartwright 2018; Ludwig, Kling,
and Mullianathan 2011; Rothstein and von Wachter 2017) would be more useful than
evaluations of small UBI pilots

Water John · 13-02-2019 1:01pm

Basically saying, full blown UBI would have very significant cost that is a major stumbling block.
Really doesn't look at various levels of UBI.
Also the pilots don't answer the key questions.

Conclusion: this desk top study doesn't offer any insight.

4068ac1elhodqr · 13-02-2019 2:38pm

Dohnjoe wrote: »

This isn't squeezing a few hundred mm from the economy, it's an eyewatering 15 to 20 bn. Your vague "down the pub" calculations don't mean anything if they aren't based on any actual figures

Nope, your vague 15-20bn (ah sure what's 5bn) 'down in the pub figure' could nearly be cleared by one single corporation.

Apple has finished paying $15 billion European fine. Apple has finished wiring billions of euros to pay back 'illegal tax benefits' to the 'Irish government'

Even BillGates yesterday was complaing to the press that he felt he never paid enough taxes.

Whilst tax 'avoidance' is currently perfectly legal (unlike evasion) it depends simply on moral outlook. But shareholders/stakeholders don't want morals, they want dividends returns.

Irish 2017 GDP was $333.7bn, with +5% 2018, and forecast +4% 2019 ($14bn) it's an ideal time to consider. If UBI can add another 4% to GDP, it would be getting past Chinese growth levels.

Dohnjoe · 13-02-2019 3:01pm

Liberty Proud Rank wrote: »

Nope, your vague 15-20bn (ah sure what's 5bn) 'down in the pub figure' could nearly be cleared by one single corporation.

Not correct. The Apple tax bill is a one-off, a single amount representing over a decade. Apple (and other corporations) could leave Ireland - there can be a negative net of closing "loopholes"

You didn't disagree with the UBI calculations, which I have shown (on the conservative end) It's not hard to calc the basic cost when its a rudimentary "set amount" for everyone over 18. EUR 800 x [population over 18] x 12 = minimum annual cost

The minimum cost of such a program is not possible unless immense sacrifices are to be made to almost every other program (health, education, etc) and/or some extreme hypothetical tax overhaul (which you are suggesting). However you haven't demonstrated the tax savings/maneuverings to raise that astronomical amount merely alluded to them

4068ac1elhodqr · 13-02-2019 3:05pm

Lobster Book wrote: »

What will happen in reality is a major recession, or even a depression. People need an incentive generally speaking to be productive. There is no better incentive than avoiding hunger and homelessness. Take that away and the economy implodes.

Yes, and no.

Maslow’s hierarchy of needs shows that yes indeed physiological needs such as food shelter are primary demands. But once they are met, new needs arise.

2. Safety (bigger cars, housing in better areas) then 3. social (social activities, travel, outings) 4. Esteem needs: various but incudes 'esteem' (reputation and respect), and so on.... up towards full self-actualisation.

Ask a chap in an old Ford Mondeo would he like to upgrade to a AudiR8 for little money (some slight cost, but at very large discount) and you can presume his immediate response.

Summary: Everyone want's a bigger TV irrelevant of current size.

4068ac1elhodqr · 13-02-2019 3:13pm

Dohnjoe wrote: »

Not correct. The Apple tax bill is a one-off, a single amount representing over a decade. Apple (and other corporations) could leave Ireland - there can be a negative net of closing "loopholes"

You didn't disagree with the UBI calculations, which I have shown (on the conservative end) It's not hard to calc the basic cost when its a rudimentary "set amount" for everyone over 18. EUR 800 x [population over 18] x 12 = minimum annual cost

(Net) UBI costs have to be offset by cost savings (which you ignore) and GDP/Productivity growth estimates (which you igonre). All figures are complex so not worth you, me or anyone trying to pin a figure on them.

Closing 'loopholes' is occuring as we speak (the Dutch sandwich isn't as tastey), and sweetners are 'no longer as sweet'.

Even if the 12.5% CT was raised by 2% would the extra income not be in the 'bn's'. And would Ire still have one of the lowest rates in the world: yes & yes.

Essentially UBI presents the option to add 127,600 (nov 18) people instantly to the new gig-economy, not to mention pensioners and even perhaps those with some lower levels of sickness or disability.

Water John · 13-02-2019 4:55pm

It would take a good bit of time for a significant section of the population to change to the notion of work not just being defined as 39 hr/wk.
I know some one who recently moved to another country. The first question they were asked by their new employer was, how many hours per week do you want to work? The person replied that they would work the full 39 hour week. The employer said, nobody here does a 39 hour week.
I think it would take some time for most to adopt this type of thinking.
UBI would create that environment. Depending on your circumstances at any time, you'd vary your work hours, without damaging your position, standing and promotional prospects.

Universal basic income trial in Finland

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