Finland will soon hand out cash to 2,000 jobless people, free of bureaucracy or limits on side earnings. The idea, universal basic income, is gaining traction worldwide.
No one would confuse this frigid corner of northern Finland with Silicon Valley. Notched in low pine forests just 100 miles below the Arctic Circle, Oulu seems more likely to achieve dominance at herding reindeer than at nurturing technology start-ups.
But this city has roots as a hub for wireless communications, and keen aspirations in innovation. It also has thousands of skilled engineers in need of work. Many were laid off by Nokia, the Finnish company once synonymous with mobile telephones and more recently at risk of fading into oblivion.
While entrepreneurs are eager to put these people to work, the rules of Finland’s generous social safety net effectively discourage this. Jobless people generally cannot earn additional income while collecting unemployment benefits or they risk losing that assistance. For laid-off workers from Nokia, simply collecting a guaranteed unemployment check often presents a better financial proposition than taking a leap with a start-up in Finland, where a shaky technology industry is trying to find its footing again.
Now, the Finnish government is exploring how to change that calculus, initiating an experiment in a form of social welfare: universal basic income. Early next year, the government plans to randomly select roughly 2,000 unemployed people — from white-collar coders to blue-collar construction workers. It will give them benefits automatically, absent bureaucratic hassle and minus penalties for amassing extra income.
The government is eager to see what happens next. Will more people pursue jobs or start businesses? How many will stop working and squander their money on vodka? Will those liberated from the time-sucking entanglements of the unemployment system use their freedom to gain education, setting themselves up for promising new careers? These areas of inquiry extend beyond economic policy, into the realm of human nature.
The answers — to be determined over a two-year trial — could shape social welfare policy far beyond Nordic terrain. In communities around the world, officials are exploring basic income as a way to lessen the vulnerabilities of working people exposed to the vagaries of global trade and automation. While basic income is still an emerging idea, one far from being deployed on a large scale, the growing experimentation underscores the deep need to find effective means to alleviate the perils of globalization.
The search has gained an extraordinary sense of urgency as a wave of reactionary populism sweeps the globe, casting the elite establishment as the main beneficiary of economic forces that have hurt the working masses. Americans’ election of Donald J. Trump, who has vowed to radically constrain trade, and the stunning vote in Britain to abandon the European Union, have resounded as emergency sirens for global leaders. They must either update capitalism to share the spoils more equitably, or risk watching angry mobs dismantle the institutions that have underpinned economic policy since the end of World War II.
Universal basic income is a catchall phrase that describes a range of proposals, but they generally share one feature: All people in society get a regular check from the government — regardless of their income or whether they work. These funds are supposed to guarantee food and shelter, enabling people to pursue their own betterment while contributing to society.
A Silicon Valley start-up incubator, Y Combinator, is preparing a pilot project in Oakland, Calif., in which 100 families will receive unconditional cash grants ranging from $1,000 to $2,000 a month. Voters in Switzerland recently rejected a basic-income scheme, but the French Senate approved a trial. Experiments are being readied in Canada and the Netherlands. The Indian government has been studying basic income as a means of alleviating poverty.
“The last two years, there’s been an explosion of interest in basic income,” says Guy Standing, a research associate with the School of Oriental and African Studies at the University of London, and a co-founder of the Basic Income Earth Network, an institution created to promote the idea. “The elites realize that the inequalities are becoming politically dangerous.”
For generations, policy makers have sought the magic formula for so-called full employment, with nearly everyone who wants a job able to find one. Traditional unemployment insurance schemes were devised in an age when the cyclical nature of factory life was dominant. Workers who were idled in lean times could pay their bills using unemployment benefits while awaiting the inevitable return of flush ones…