Finland recently concluded a nationally funded basic income experiment, focused on people receiving unemployment benefits. We got the first wave of findings from the data, and dove into the results with Ylikanno Minna, Senior Researcher at Kela. We discuss the data, what it means, what we can learn from this experiment (so far) and what we can’t.
In this episode, which initially aired last October, Jim and Owen answer listener questions from how to pay for basic income, which country will implement a basic income first and how we will get there. You can send your questions to the Universal Income Project on Facebook or Twitter, or tweet at Owen (@owenpoindexter) or Jim (@dr_pugh).
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Owen: Hello and welcome to the Basic Income Podcast. I’m Owen Poindexter.
Jim: And I’m Jim Pugh.
Owen: A while back we asked you for questions about the basic income, and a number of you responded. In this episode, we are just going to go through a few of those.
Jim: Unfortunately, we’re not going to be able to get to everyone’s question, but we did have a few that we thought would be good ones to start with. Here goes.
Owen: Alright. The first one is from Abigail Irwin, it came in through Facebook, “Here is the one big question I keep getting: how is it going to be funded?”
Jim: I would say for me as well, this is a question that people ask all the time. Since we’re talking about such a big program, people are naturally curious about, “Alright, where does the funding come from here?” One thing that I’ve mentioned before that I think is really important to remember is a lot of the conceptions we have right now about what the government “can or cannot afford” are really not based on reality.
That if you look at our economy and how much it’s grown over recent years, there’s actually so much money out there. Our Gross Domestic Product over the last 15 years has grown by four trillion dollars. Just taking a big picture snapshot, it’s important to know that there is money out there.
Owen: Yes and on top of that, I’ll say that while I think it’s important to talk about how are we going to pay for things, the government is very willing to drop billions of dollars on some programs without having this discussion. It’s only around new big programs where we do say, “Okay, well, where is that money going to come from because we haven’t already baked that in.”
Jim: We do see often around things like military spending, spending tens of billions of dollars ready at the drop of a hat is not uncommon, but as soon as we talk about billions or even hundreds of millions of dollars for social programs, people suddenly get very nervous about how we’re going to actually afford that.
Owen: And getting more into, “okay, how is it going to be funded?” — obviously, there are a number of ways you could do it. If you structure it as a negative income tax, you could just have a tax that runs backwards essentially. At a certain income level, you receive money instead of pay money in. That’s one way to do it where you don’t have to touch anything else.
Jim: Something I would add to that is, with negative income tax, one concern that I know people have is that if you’re actually not giving the same amount to different people, that could complicate the logistics figuring out, “alright, how do we actually assess someone’s income in the moment and decide alright, how big is the check we mail to them?” You can actually accomplish exactly the same thing using the tax code. You can structure it so that you give everyone the same amount of money every month regardless of how much they’re making but then make sure that you’re actually clawing back more of that money earlier on, based on how much they’re making when you’re actually assessing taxes. The same way you do now as far as withholding from paychecks.
Owen: Right, and just to offer a crude version of that, you could impose a flat tax and the revenue from that would just be turned into a dividend that would go equally to everyone. So everyone is paying the same percentage of their income into the basic income fund, but the way it works out is that at a certain point, you are paying and receiving about the same amount, and everyone above that ends up paying more, but they still get the dividend.
Jim: To give some more specific, since I want to actually make sure that we do give an answer to this question, there are actually a lot of different ideas for how we fund this out there. Depending on who you ask, you’re going to get different answers. Some of the most common ones that I hear proposed, one is the idea of — I think, particularly as the starting point — looking at the Carbon Dividend.
We’ve talked about that in the past. There was a proposal in California. There is currently, in fact, a campaign in Washington, DC around taxing carbon and paying out to revenue that comes in as a universal income, as universal dividends to people in the region. That could at the very least provide us with a powerful first step towards basic income by saying, “alright we’re setting up the system that gives everyone equally regular payments of money.”
Owen: I think that Carbon Dividend idea is my favorite in this whole space because it does start to address climate change as well. It takes this idea that we have shared resources, in this case, the air and the environment and that we are all invested in this whether we want to be or not. By taxing the use of the environment essentially which is a shared resource then we can all benefit from it.
Along the same lines, though very different, is the Financial Transactions Tax. That’s another one that gets thrown in periodically. We all benefit from the infrastructure of our financial system, and some businesses and people use that quite a lot to conduct business, trade stocks, whatever. By having just a very small fee on financial transactions, you could also do the same thing and fund the basic income.
Jim: Another one that often gets discussed is the idea that a Land Value Tax, where you’re assessing the value of any given piece of property that either a person or a corporation might own, and then saying, “we’re going to set some low level of taxation so that every month or every year, you are paying a certain amount based on the value of that piece of land.” Not just the land itself, but what’s actually on the land.
One thing that I think is really interesting about the Land Value Tax is it actually starts to get closer to the idea of a wealth tax. Something that is taxing not just how much money people are bringing in, but how much they actually own. Land isn’t a perfect measure of someone’s wealth, but it tends to be pretty close a lot of the time. That could help not only with providing the support that you get from basic income but also to share prosperity and share wealth across the country by really looking at that as the source of the funding.
Owen: Right. I think this is an important concept because while income is easy to track, or easy enough, a lot of the disparity that we see in the world is through wealth, and an actual wealth tax is very hard to administer because unless you have some way to track all forms of wealth, people are going to be able to move it around to not be taxed. But land is always there. You can’t pick it up and move it somewhere else. It does tend to be a good proxy for a holding place for wealth, especially in California, where we are.
Lastly, we can touch on general progressive taxation. We mentioned the income tax before but it doesn’t have to be a flat tax. It could be a progressive tax that increases as you go into higher income levels. There’s also a capital gains tax and perhaps others that you could mention.
Jim: Yes. Touching on the capital gains, right now we have the level of that set considerably lower than income. What that’s effectively doing is saying, sitting on wealth, you and the amount of money you get from that, you’re actually paying less in taxes and someone who’s working for the money.
Owen: You see those incentives pretty clearly in the market.
Jim: Right, exactly. That’s actually encouraging people to hoard rather than to spend. Also, again, if you look at the various campaigns that are going on around different policies, you’ll hear people talking about closing tax loopholes as well, particularly for corporations. There’s a lot of ways that companies are able to avoid what is the supposed tax rate that they might owe, due to how complex the tax code is in many places.
Owen: Hopefully, that gives you a sense of how we might fund the basic income. There are a lot of paths to do it, a lot of different sources you might look to. It should be said there’s no one answer to this. I’ve said this before the first step in creating a basic income is deciding that we want one. Once you have that destination, there are a bunch of paths to get there.
Jim: Right. I think it’s important to remember that oftentimes when we talk about these big bold policies, we know they’re going to cost a lot, but in most cases, we don’t necessarily have to go through all the math right upfront. It’s important to just know that yes, the funds exist out there. Let’s think about what this is going to do for people and then if this is actually something that’s going to help folks, let’s fight to make it happen.
Owen: Okay. Next question comes from Darcy Lengthier — hoping I’m pronouncing your name right, Darcy. “Which country will be next?” I have a couple guesses, and they’re pretty unoriginal.
[laughter]
Jim: Yes, we’ll probably have similar answers here. I would say any country that’s currently doing a pilot for basic income is probably pretty high on the list for ones that have potential to enact one. We talked about this before, but Finland launched their pilots in the last year. Ontario in Canada just launched their pilot. We do have the pilot happening in Oakland through Y Combinator, but it’s a little bit of a different situation since it’s a private entity funding it. I wouldn’t read quite as much into that as these programs that are actually being initiated by national governments and what that signifies as far as intentions.
Owen: I think my first pick in the draft would be Canada because they’re doing a pilot, and it feels like this federal government that seems like it would be ready to try something like this at least in terms of a Carbon Dividend or even like an Alaska style, natural wealth kind of thing.
Jim: That said, I think that there certainly are other countries out there talking seriously about it. Particularly for some of the smaller countries, if the people in power decided alright, this is a priority for us, if it was a country that was in a situation that have a reasonable amount of wealth or a lower cost of living for their population, they could potentially move pretty quickly to enact something.
Owen: I wouldn’t put Switzerland at the top of the list right now, but they have already had the referendum. It’s a small country with a lot of wealth. The math is a little easier there.
Jim: I think the big answer is, we don’t know. I think as far as what country will do pilots next, we haven’t talked about it much, but Barcelona is in the process of getting a pilot going. I do know there’s a lot of others that are in these discussion phases if not quite ready to launch.
Owen: The one last thing I’ll throw in there is, if you were to say the five most likely countries or the field, I’m probably going to take the field. I could see this coming out of somewhere unexpected or somewhere we’re not figured out right now.
Jim: Absolutely. Our third question is, “what kind of timeline are we looking at for America as a whole to implement basic income?” That came from Tim Kelly on Twitter.
Owen: Maybe December, January?
[laughter]
Jim: They’re just about there.
Owen: More seriously, I think one step might be to have this become more mainstream within the Left / Democratic Party in the US. If and when the Democrats take back power, maybe we could see something like a Carbon Dividend. I could see that happening in the 2020s, to give a decade.
Jim: If we can have it in 2020, I would be very happy. That is probably a little sooner than I was–
Owen: It’s a bit aggressive.
Jim: I would say, I generally tell people that if those of us who support the policy approach this right, 15 years seems like a reasonable timeline. That said, I think this is a kind of policy where it’s going to be very, very far off until it’s not. I think that there’s going to be nothing linear about the progression of the basic income movement. It’s going to be those of us who are in the space talking about it, getting more people hearing about it. Really writing the playbook for how this might happen, and then it’s going to be a question of when is that moment.
When is that moment when suddenly people are like, “Oh, we need something really different. We actually need to guarantee fundamental economic security for people. How do we do that?” If at that point, we have really set the stage for basic income, it could happen really, really fast.
Owen: I agree. I used to think of self-driving cars and trucks as the moment when everything was going to flip. I have actually backed off that a little bit just because they’re already on the road. This is already happening, and it hasn’t really catalyzed a discussion in a way that means policy is going to happen very soon, but I think we might see something at some point where one day Amazon lays off thousands or tens of thousands of workers. It’s them, plus Google, plus others, and it creates some amount of desperation where people are looking for a policy fix.
Jim: I will say, I don’t think we haven’t seen any significant amount of layoffs around self-driving vehicles.
Owen: Right. That could still happen.
Jim: It’s something that I know at this point, a lot of people think could be coming relatively soon, but how that will actually proceed? I think we’ll have to see. I will say I think I’ve been struck by how much people’s perception about the fundamental characteristics of work have changed in the last couple of years. That two years back, I felt like most people believed that the way that we do work would stay — I think stay is actually the wrong word because it was already shifting at that point, but could remain similar to how we did that in the 20th century.
Now, I think more and more people recognized that that model for how our labor space operates just is — there isn’t a way to go back. We are in uncharted territories here. We do need to be thinking more outside the box as far as what are the right policies to provide people with security they need.
Owen: I think just to add a little bit onto that. The moments that might catalyze something might just be something where we realize that we are in uncharted territory, the collectively “we.” Because I think we’re already there. We are already into the woods, and we’ve lost our map. But you don’t necessarily know that until some day, you woke up, and you realize you’ve lost the path. Sort of a strange metaphor for us [laughs].
I think it’ll be as much a realization of where we already are than something where we get to a point and, yeah, we are there.
Jim: We’ve meandered a bit from the original question here. So if we had to name a timeline, I would say I’m going to stick with 15 years.
Owen: Okay, I’m going to go Price Is Right style and just take the under on that one.
Jim: [laughs] 14 years?
Owen: Aggressively optimistic there. On the Price Is Right, you say one year and then you get all the years below that, the below years. This is a very dated reference, I’m realizing. I don’t know think that show is even on the air anymore. Haven’t watched TV in a while. Okay, related question, also the final question, “how do we get there?” So, Jim, how do we get there?
Jim: Well, this is asked by StepUpBG on Twitter, and we covered a little bit of this in the last question. I truly believe that the right approach to move towards basic income is to say that right now, we are laying groundwork. We are doing the things that make basic income more familiar, more understood and so that once we get that moment, we can say, “Alright, we got this. We know what this is. We’re ready to go. Let’s make this happen.”
Owen: I think you find, at least in America, that often the first time people hear of this policy — maybe less so, I’m getting this reaction less and less — but the most common first reaction is some amount of shock towards the idea of just giving people money unconditionally. I think people do need to sit with the idea for a little bit, and it needs to penetrate into more circles and become something that people are less afraid of talking about.
Jim: Right, I think part of that is just talking to more people about basic income and what it might do, having it be a more familiar concept that people they know and trust actually think this could be a really good solution and I think part of that is looking at what are the stepping stone policies that, in practice, can actually show people more what this is about. I think what to makes sense to go back to here is looking at the Alaska model and how the fact that everyone there is getting an unconditional payment every year is actually something that makes this whole thing make more sense to people a lot of the time.
Owen: Yes, and along that, I’m very excited about the trials in Ontario that just started and the upcoming one’s run by Y Combinator because those will be real trials, real stories, real people who are benefiting, so then it’ll be that much less abstract and that much closer.
Jim: I think those stories are going to be important and then what I would really like to see is for some city or state in the US to enact some small universal dividend in the same style as the Alaska model because I think that it’s that combination of hearing the stories of people who are getting full basic income and then yourself receiving this smaller additional income. Suddenly the intellectual leap between everyone getting basic income is much, much less than it is today.
Owen: I’m of the mind that $100 a month, even though we usually talk in terms of around 1,000, something like a 100 could be transformative for a lot of people and, if not transformative, would make a big difference. You would feel it.
Jim: If you’re scraping by, 100 a month is a game changer.
Owen: Yes, and speaking from my own experience, I wouldn’t say I’m scraping by, but I’d love $100 a month. [laughs] That wouldn’t be nothing.
So, how do we get there? I think a lot of what we’re already doing, and hopefully more trials, more support, more talking about it, more and more podcast episodes.
Jim: I think this is one where all y’all listeners can actually play a big role here. Again, make sure you are talking to people about this, looking for ways that you can push the idea forward. That’s actually what’s going to help make this happen.
Owen: So thank you to everyone who sent in questions. Please keep those coming, you can send them to myself @owenpoindexter at Twitter or Jim, you’re @dr_pugh there.
Jim: Or just tweet out the Universal Income Project, @UIProj on Twitter. We’ll get them there too.
Owen: Or you can find the Universal Income Project on Facebook as well.
Thank you so much for listening to the Basic Income Podcast. Thank you to our producer, Erick Davidson. Again, please tell your friends, talk about basic income, talk about the podcast. This could be a good conversation starter for them. Subscribe if you have not already on Apple Podcast or the service of your choice. And while you’re there, please do leave us a rating or review. It’ll help more people find the podcast. See you next week.
Recently, there have been a lot of media reports on Finland’s basic income trial, some stating that it is ending, that it failed, or something along those lines. The reality is much different. To get an understanding of what’s actually going on, and what caused all those news stories, Owen spoke with Aleksi Neuvonen, cofounder of Demos Helsinki.
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Owen: Hello, and welcome to the Basic Income Podcast. I’m Owen Poindexter.
Jim: And I’m Jim Pugh. Many of you may have read headlines in recent weeks claiming that Finland’s basic income experiment had been canceled. Now, for those of you who took time to dig in a bit, you probably discovered that was not correct.
The Finish experiment, in fact, is continuing as originally planned and the quote unquote cancellation actually referred to a proposed expansion of the experiment.
Owen: So we thought it would be good to get into the details about what’s actually going on there. And find out, you know, if the experiment is not cancelled, what is happening.
So, I got to speak with Aleksi Neuvonen. He’s the founder of Demos Helsinki and someone very close to the situation. And he gave a really good take on what’s going on there.
Owen: Welcome, Aleksi.
Aleksi: Thank you.
Owen: So, to start, could you just remind our listeners what the original basic income program in Finland was and what its goals were.
Aleksi: The basic income experiment in Finland is one of the twenty-seven policy experiments that the current coalition, government coalition in Finland is running. And they started their program in 2015. And basic income experiment is the biggest of all these politics experiments.
I would say the reason why they decided to experiment basic income is that there has been, for 15 years practically, an intention to renew the Finnish welfare system, which different types of committees during each election term trying to come up with certain suggestions on how to modernize the welfare system, which is a rather big system, takes quite a big chunk of the budget in the Finnish government with no results for the past 15 years.
And now, when Finland elected new government, or new Parliament, three years ago, there was an idea of changing the way they do policymaking. Then they introduced the idea of going towards experimentation culture. And as welfare reform was one of the key areas, they decided to try it with a new policy tool, which is an experiment which would last two years from the beginning of 2017 till the end of 2018.
Owen: Okay. Yeah. So, in the last couple of weeks, as I said, there have been a lot of reports about some changes to the experiment, that it’s ending, that something’s different. Has anything about the experiment changed?
Aleksi: No, actually, there has been no changes whatsoever. The current experiment comprises of two thousand people being selected to the experiment. Those people still get the basic income of 560 Euros per month. And that will run till end of this year. No analysis on the impact of the basic income or changes in the benefits that they receive have been done. And that was the intention from the beginning.
They will start analyzing the results at the beginning of 2019. So nothing has changed in the experiment itself. And from the beginning, there was a plan to make it a two-year experiment with some speculation on whether they could extend it to last longer.
Actually, the group that did the pre-study and design of the experiments suggested that, based on previous experiments, usually it takes from three and a half to four and a half years before you start getting positive well-being impact on the people participating in such an experiment, hence it should be longer, but no one promised it to be a longer.
However, there were plenty of discussions on whether they could extend it but apparently now politicians especially have come into a conclusion that there are no means of extending the experiment from the current length.
Owen: And so that’s what caused all the reports, is the decision to not extend it?
Aleksi: Sure. So it has been done somewhat official, actually that happened already last fall around November when they put out a press release saying that now they are approaching the midpoint of the of the experiment, and it looks like it won’t be extended, which was not stated very clearly, but anyhow, rather implicitly stating that it won’t be extended.
Owen: I see. And so, the basic income pilot was focused on the unemployment system. And, am I correct in thinking that there were some changes to Finland’s unemployment benefits system?
Aleksi: Yes. I mean, the system of of unemployment benefits comprises of number of different types of benefits regarding on for how long have you been unemployed or what has been your previous work history like. So people currently receive some unemployment benefits that are proportional their previous wages for almost almost two years. And now there has been some changes for this, these benefits.
So the idea is to incentivize people to be more active in taking job, while they still enjoy this much, much larger benefit than the basic income is. So they are conditionalizing those benefits by requiring people to send a certain amount of job applications or participating in different types of trainings during that period of time, which is, I would say ideologically somewhat quite opposite to what we’ve been thinking of basic income to be.
So it’s more about motivating people to seek for jobs, especially that they would get immediately quite soon, instead of, with the basic income, to pursue some other paths in their career.
Owen: I’m wondering what your reactions and maybe the public reactions as well have been to to these reforms?
Aleksi: The public reaction to these these reforms has been somewhat infuriated, I mean, there’s been big, big demonstration against the initiatives, for good reasons, I would say. It was prepared in a really fast pace. There are several contradictions, which would make it very difficult to be implemented point-by-point.
So there are… and it’s somewhat contradictory also to some other parts of legislation. And, of course, there are quite different types of situations where it doesn’t necessarily work that nicely. And probably, one of the underlining questions there is whether that should make people to move from from one town to another if they wish to get employed, which in Finland is a rather new thing.
We’ve had an idea of providing employment in all part of the country. And now with this new piece of legislation it would require people to commute longer distances or go from their hometown to seek job.
Owen: I see. And are there other problematic aspects of the new reforms that are causing a lot of uproar?
Aleksi: Yeah, I would say it’s over, of course, quite opposite to what people think of their what contemporary world should look like in how detailed some type of supervision there is on what you do when you are unemployed. And, I mean, really encouraging people to get jobs really fast instead of, I mean, look for some other some other opportunities in life.
And I mean, there are different types of people, I mean, reacting to this in a really, really negative manner. There are plenty of very highly educated people who think that once they’ve received good high quality education, they should be allowed to search for a job that somehow would meet their skills.
And then there are less educated people who feel that they are now already having quite difficult situation in their life. And now their benefits are getting even narrower becasue they always are at threat of meeting the sanctions.
And overall, I think this type of a sentiment that people feel that they are continuously being supervised or that they are in a constant threat of losing their benefits, it’s not necessarily the way of making people more motivated and to improve their skills. We know very well that threat is not necessarily the best motivator in very many things. It doesn’t make them necessarily very productive,
Owen: Right. One thing we talk about sometimes in the US is that, you know, we have people who are on many different benefit systems, and it almost becomes a part-time job just to stay on those benefits.
Aleksi: Yeah, there is pretty good scientific evidence on that happening, that people who really fall on benefits, they, I mean, first of course realize that they have to spend quite a lot of time sorting out these different forms and so on. And also, then feel that they are being disempowered because they are in a constant threat of losing those benefits.
And actually, that was one of the founding ideas of the basic income experiment that, would it help those people to become employed if they wouldn’t be stressed out because those burdens of constantly feeling the problems or being kind of, having these conditional benefits that require quite a lot of time applying them and waiting the benefits to be paid.
Owen: And getting back to the basic income experiment. While, I know it’s not completed and the official analysis is not been conducted yet, do we have any data or any stories even from the experiment so far?
Aleksi: There is no official data. It is actually based on the Finnish law that the officials cannot cannot give out any data on people because it’s all based on the official unemployment benefits system, and you cannot give out any kind of details on that.
And also that the one of the founding principles of the experiment was that it should be kept as a closed laboratory for the period of an experiment. In some of the previous experiments in the 70s, some of them were failing because there was so much things intervening. People were interviewed quite constantly and getting other people contacting them constantly, so that somewhat hampered the experiment itself.
There has been some stories on a couple of people who are participating in the experiment. So some journalists have searched for people. And at least these stories have been rather promising. So people who’ve been, I would say, rather prototypical people who have certain level of education, not necessarily in a field which would provide very secure or a long-lasting job opportunities, but is somewhere between freelancing and entrepreneurship and occasionally some opportunities of getting employed for long periods of time.
For instance, a person works having a training in as a professional dancer. And it has implied that the experiment seems to be offering her better opportunities for getting certain level of income where she is not in a threat of falling between different types of benefits, or she can do some freelancing and even have a private company while receiving the basic income as a benefit.
Owen: Yeah, for freelancers, I think the benefits are pretty obvious. From your estimation, do you think basic income is more popular in Finland now than than it was when the experiment started?
Aleksi: Probably. I assume that at least the overall understanding and knowledge on basic income is much, much better.
There has been so many articles on that in the newspapers, of course. Overall, things seem to be rather positive on basic income, of course, depending on how lucrative the basic income would be. So what level of benefit it would be finally when introduced. Quite a few people are, would allow people to have, let’s say, 800 or 900 euros basic income are rather okay for having that 600-700 still per month.
But there hasn’t been any kind of a survey on that over the past half a year, which would have been the probably a good time of polling that. And I’m really interested in hearing what the levels that they will be at the end of 2019 when people are being exposed to so much information on basic income for the past couple of years.
At the same time, political debate around basic income as a possible solution after the next elections hasn’t been that, the level of that discussion hasn’t been that high, which is somewhat surprising I would say.
Owen: Yeah, that is surprising. Well, those are the questions that I had for you. I’m wondering if there’s anything else you would like to add?
Aleksi: I would say that… Two things: the first is that the basic income experiment in Finland wasn’t initiated because any of the political groups in coalition had any ideological stance for basic income.
It was more merely thought to be one way of advancing some type of social security reform in the coming years. So, I’m quite sure there will be some reforms, some discussion on some type of reform, which, in a way or another, will resemble basic income over the next few years in Finland. It will be discussed after the next parlimentary elections which take place April next year.
It might resemble more, for instance, negative income tax or universal credit, which is now being tested in the UK. But there will be something which will continue the idea of reforming social security system to meet the needs of our age better.
Owen: So the idea is far from dead in your country. It sounds like it’s alive and well.
Aleksi: It is alive and well. And at the same time, there are no technical reasons why the experiment wouldn’t be relaunched after the elections and after the new coallition has been formed next year.
So there’s, according to my understanding, a full technical capacity to restart it, let’s say, at the beginning of 2012 with a bigger and more diverse amount of people. And then in Finland, we would have also a dynamic online income register in place, which would make it easier to combine those benefits with taxation.
So then they could also test different taxation levels combined with the basic income. Some experts say that with the current experiment, one of challenges is that we cannot be assured which thing are we actually testing? Whether the freedom from all the types of bureaucracy, of applying for welfare, really incentivize people to seek job better or whether it’s just the mere free benefit that they receive, which is tax-free, that incentivizes system.
So they’re actually two things which both have some type of effect on these people. And we don’t know, which are we testing right now? And when we could combine it with taxation, it doesn’t have to be then a tax-free benefit, which would then be, lets say, a more realistic way of implementing it as a permanent solution.
Owen: I see. So, you can start to move towards something where it could be, you know, something that’s a stable part of the government going forward.
Aleksi: So it would be much, much more a realistic real-life experiment than what it is now as a rather robust robust solution.
Jim: That was Aleksi Neuvonen, founder of Demos Helsinki, on the Basic Income Podcast.
Owen: So what struck me other than just that, how wrong the media has been about this, because you know you… I’ve had so many people come up to me and say. “I heard the Finland thing didn’t work out”, and it’s just not true. But moving beyond that, what struck me is just how this is an incremental fight on so many different levels both in term in current benefits like the unemployment system in Finland, the fight they’re having their now, and also the SNAP system here.
But also over the experiments that were doing because, you know, that is going to be an ongoing battle
Jim: Yeah. Policy is complicated. To actually set up anything, not just logistically in applying the policy, but actually to make sure that you’re aligned with all the different organizations and key stakeholders, that just takes a lot of work, and that’s pretty much always true.
And so it doesn’t really matter even if you have a super simple policy of handing out cash, that’s still gonna have a lot of complicated steps in the process to make it happen.
Owen: Right. And it is encouraging, you know, even if it does make the whole thing take longer, that there is a real desire to do it right, and to have these sorts of experiments.
And also, I was encouraged by the fact that there was a big public outcry to the, you know, the changes in the unemployment system and to the fact that they’re maybe not continuing the basic income pilot. Usually changes to the social benefits system, they can kind of pass mostly unnoticed.
Jim: Yeah. It’ll be really interesting to see how things progress there, particularly when we get to 2019 and can actually see the results. Will that actually change the conversation? Will the government there suddenly become more amenable to the idea of expanding and continuing on with that trial in order to to see how it might apply to different groups and over the longer term?
So I’ll be curious to see what ends up happening with that. I also think that this really points to how important it is and will be to frame conversation around experiments, because as we said, a lot of these details, there’s so much complexity there. And that’s going to be true of results as well.
When we actually start seeing that quantitative data coming out, depending on how you look at it, it can it can say many different things. There’s the old quote “Lies, damn lies, and statistics,” and I think that can certainly apply here. And so I think that not only thinking about how do we talk about the experiments leading into it? And then how does that translate into our interpretations of the results coming out of it?
Owen: Yeah. It’s going to be fascinating, and I think this episode really shows that, how just the initial round of journalism was, a lot of it was just inaccurate. And so yeah, there’s gonna be a lot of, you know, diligent work to be done to find out what actually is going on in these experiments.
Jim: Well, that’ll do it for this episode. Thank you for listening. Thank you to our producer, Erick Davidson. If you like what you hear, please do rate and review us on Apple Podcast or the podcast service of your choice.
And please do share with your friends. We’re always looking for more listeners. We’ll talk to you next time.
Jim and Owen answer listener questions from how to pay for basic income, which country will implement a basic income first and how we will get there. You can send your questions to the Universal Income Project on Facebook or Twitter, or tweet at Owen (@owenpoindexter) or Jim (@dr_pugh).
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Owen: Hello and welcome to the Basic Income Podcast. I’m Owen Poindexter.
Jim: And I’m Jim Pugh.
Owen: A while back we asked you for questions about the basic income, and a number of you responded. In this episode, we are just going to go through a few of those.
Jim: Unfortunately, we’re not going to be able to get to everyone’s question, but we did have a few that we thought would be good ones to start with. Here goes.
Owen: Alright. The first one is from Abigail Irwin, it came in through Facebook, “Here is the one big question I keep getting: how is it going to be funded?”
Jim: I would say for me as well, this is a question that people ask all the time. Since we’re talking about such a big program, people are naturally curious about, “Alright, where does the funding come from here?” One thing that I’ve mentioned before that I think is really important to remember is a lot of the conceptions we have right now about what the government “can or cannot afford” are really not based on reality.
That if you look at our economy and how much it’s grown over recent years, there’s actually so much money out there. Our Gross Domestic Product over the last 15 years has grown by four trillion dollars. Just taking a big picture snapshot, it’s important to know that there is money out there.
Owen: Yes and on top of that, I’ll say that while I think it’s important to talk about how are we going to pay for things, the government is very willing to drop billions of dollars on some programs without having this discussion. It’s only around new big programs where we do say, “Okay, well, where is that money going to come from because we haven’t already baked that in.”
Jim: We do see often around things like military spending, spending tens of billions of dollars ready at the drop of a hat is not uncommon, but as soon as we talk about billions or even hundreds of millions of dollars for social programs, people suddenly get very nervous about how we’re going to actually afford that.
Owen: And getting more into, “okay, how is it going to be funded?” — obviously, there are a number of ways you could do it. If you structure it as a negative income tax, you could just have a tax that runs backwards essentially. At a certain income level, you receive money instead of pay money in. That’s one way to do it where you don’t have to touch anything else.
Jim: Something I would add to that is, with negative income tax, one concern that I know people have is that if you’re actually not giving the same amount to different people, that could complicate the logistics figuring out, “alright, how do we actually assess someone’s income in the moment and decide alright, how big is the check we mail to them?” You can actually accomplish exactly the same thing using the tax code. You can structure it so that you give everyone the same amount of money every month regardless of how much they’re making but then make sure that you’re actually clawing back more of that money earlier on, based on how much they’re making when you’re actually assessing taxes. The same way you do now as far as withholding from paychecks.
Owen: Right, and just to offer a crude version of that, you could impose a flat tax and the revenue from that would just be turned into a dividend that would go equally to everyone. So everyone is paying the same percentage of their income into the basic income fund, but the way it works out is that at a certain point, you are paying and receiving about the same amount, and everyone above that ends up paying more, but they still get the dividend.
Jim: To give some more specific, since I want to actually make sure that we do give an answer to this question, there are actually a lot of different ideas for how we fund this out there. Depending on who you ask, you’re going to get different answers. Some of the most common ones that I hear proposed, one is the idea of — I think, particularly as the starting point — looking at the Carbon Dividend.
We’ve talked about that in the past. There was a proposal in California. There is currently, in fact, a campaign in Washington, DC around taxing carbon and paying out to revenue that comes in as a universal income, as universal dividends to people in the region. That could at the very least provide us with a powerful first step towards basic income by saying, “alright we’re setting up the system that gives everyone equally regular payments of money.”
Owen: I think that Carbon Dividend idea is my favorite in this whole space because it does start to address climate change as well. It takes this idea that we have shared resources, in this case, the air and the environment and that we are all invested in this whether we want to be or not. By taxing the use of the environment essentially which is a shared resource then we can all benefit from it.
Along the same lines, though very different, is the Financial Transactions Tax. That’s another one that gets thrown in periodically. We all benefit from the infrastructure of our financial system, and some businesses and people use that quite a lot to conduct business, trade stocks, whatever. By having just a very small fee on financial transactions, you could also do the same thing and fund the basic income.
Jim: Another one that often gets discussed is the idea that a Land Value Tax, where you’re assessing the value of any given piece of property that either a person or a corporation might own, and then saying, “we’re going to set some low level of taxation so that every month or every year, you are paying a certain amount based on the value of that piece of land.” Not just the land itself, but what’s actually on the land.
One thing that I think is really interesting about the Land Value Tax is it actually starts to get closer to the idea of a wealth tax. Something that is taxing not just how much money people are bringing in, but how much they actually own. Land isn’t a perfect measure of someone’s wealth, but it tends to be pretty close a lot of the time. That could help not only with providing the support that you get from basic income but also to share prosperity and share wealth across the country by really looking at that as the source of the funding.
Owen: Right. I think this is an important concept because while income is easy to track, or easy enough, a lot of the disparity that we see in the world is through wealth, and an actual wealth tax is very hard to administer because unless you have some way to track all forms of wealth, people are going to be able to move it around to not be taxed. But land is always there. You can’t pick it up and move it somewhere else. It does tend to be a good proxy for a holding place for wealth, especially in California, where we are.
Lastly, we can touch on general progressive taxation. We mentioned the income tax before but it doesn’t have to be a flat tax. It could be a progressive tax that increases as you go into higher income levels. There’s also a capital gains tax and perhaps others that you could mention.
Jim: Yes. Touching on the capital gains, right now we have the level of that set considerably lower than income. What that’s effectively doing is saying, sitting on wealth, you and the amount of money you get from that, you’re actually paying less in taxes and someone who’s working for the money.
Owen: You see those incentives pretty clearly in the market.
Jim: Right, exactly. That’s actually encouraging people to hoard rather than to spend. Also, again, if you look at the various campaigns that are going on around different policies, you’ll hear people talking about closing tax loopholes as well, particularly for corporations. There’s a lot of ways that companies are able to avoid what is the supposed tax rate that they might owe, due to how complex the tax code is in many places.
Owen: Hopefully, that gives you a sense of how we might fund the basic income. There are a lot of paths to do it, a lot of different sources you might look to. It should be said there’s no one answer to this. I’ve said this before the first step in creating a basic income is deciding that we want one. Once you have that destination, there are a bunch of paths to get there.
Jim: Right. I think it’s important to remember that oftentimes when we talk about these big bold policies, we know they’re going to cost a lot, but in most cases, we don’t necessarily have to go through all the math right upfront. It’s important to just know that yes, the funds exist out there. Let’s think about what this is going to do for people and then if this is actually something that’s going to help folks, let’s fight to make it happen.
Owen: Okay. Next question comes from Darcy Lengthier — hoping I’m pronouncing your name right, Darcy. “Which country will be next?” I have a couple guesses, and they’re pretty unoriginal.
[laughter]
Jim: Yes, we’ll probably have similar answers here. I would say any country that’s currently doing a pilot for basic income is probably pretty high on the list for ones that have potential to enact one. We talked about this before, but Finland launched their pilots in the last year. Ontario in Canada just launched their pilot. We do have the pilot happening in Oakland through Y Combinator, but it’s a little bit of a different situation since it’s a private entity funding it. I wouldn’t read quite as much into that as these programs that are actually being initiated by national governments and what that signifies as far as intentions.
Owen: I think my first pick in the draft would be Canada because they’re doing a pilot, and it feels like this federal government that seems like it would be ready to try something like this at least in terms of a Carbon Dividend or even like an Alaska style, natural wealth kind of thing.
Jim: That said, I think that there certainly are other countries out there talking seriously about it. Particularly for some of the smaller countries, if the people in power decided alright, this is a priority for us, if it was a country that was in a situation that have a reasonable amount of wealth or a lower cost of living for their population, they could potentially move pretty quickly to enact something.
Owen: I wouldn’t put Switzerland at the top of the list right now, but they have already had the referendum. It’s a small country with a lot of wealth. The math is a little easier there.
Jim: I think the big answer is, we don’t know. I think as far as what country will do pilots next, we haven’t talked about it much, but Barcelona is in the process of getting a pilot going. I do know there’s a lot of others that are in these discussion phases if not quite ready to launch.
Owen: The one last thing I’ll throw in there is, if you were to say the five most likely countries or the field, I’m probably going to take the field. I could see this coming out of somewhere unexpected or somewhere we’re not figured out right now.
Jim: Absolutely. Our third question is, “what kind of timeline are we looking at for America as a whole to implement basic income?” That came from Tim Kelly on Twitter.
Owen: Maybe December, January?
[laughter]
Jim: They’re just about there.
Owen: More seriously, I think one step might be to have this become more mainstream within the Left / Democratic Party in the US. If and when the Democrats take back power, maybe we could see something like a Carbon Dividend. I could see that happening in the 2020s, to give a decade.
Jim: If we can have it in 2020, I would be very happy. That is probably a little sooner than I was–
Owen: It’s a bit aggressive.
Jim: I would say, I generally tell people that if those of us who support the policy approach this right, 15 years seems like a reasonable timeline. That said, I think this is a kind of policy where it’s going to be very, very far off until it’s not. I think that there’s going to be nothing linear about the progression of the basic income movement. It’s going to be those of us who are in the space talking about it, getting more people hearing about it. Really writing the playbook for how this might happen, and then it’s going to be a question of when is that moment.
When is that moment when suddenly people are like, “Oh, we need something really different. We actually need to guarantee fundamental economic security for people. How do we do that?” If at that point, we have really set the stage for basic income, it could happen really, really fast.
Owen: I agree. I used to think of self-driving cars and trucks as the moment when everything was going to flip. I have actually backed off that a little bit just because they’re already on the road. This is already happening, and it hasn’t really catalyzed a discussion in a way that means policy is going to happen very soon, but I think we might see something at some point where one day Amazon lays off thousands or tens of thousands of workers. It’s them, plus Google, plus others, and it creates some amount of desperation where people are looking for a policy fix.
Jim: I will say, I don’t think we haven’t seen any significant amount of layoffs around self-driving vehicles.
Owen: Right. That could still happen.
Jim: It’s something that I know at this point, a lot of people think could be coming relatively soon, but how that will actually proceed? I think we’ll have to see. I will say I think I’ve been struck by how much people’s perception about the fundamental characteristics of work have changed in the last couple of years. That two years back, I felt like most people believed that the way that we do work would stay — I think stay is actually the wrong word because it was already shifting at that point, but could remain similar to how we did that in the 20th century.
Now, I think more and more people recognized that that model for how our labor space operates just is — there isn’t a way to go back. We are in uncharted territories here. We do need to be thinking more outside the box as far as what are the right policies to provide people with security they need.
Owen: I think just to add a little bit onto that. The moments that might catalyze something might just be something where we realize that we are in uncharted territory, the collectively “we.” Because I think we’re already there. We are already into the woods, and we’ve lost our map. But you don’t necessarily know that until some day, you woke up, and you realize you’ve lost the path. Sort of a strange metaphor for us [laughs].
I think it’ll be as much a realization of where we already are than something where we get to a point and, yeah, we are there.
Jim: We’ve meandered a bit from the original question here. So if we had to name a timeline, I would say I’m going to stick with 15 years.
Owen: Okay, I’m going to go Price Is Right style and just take the under on that one.
Jim: [laughs] 14 years?
Owen: Aggressively optimistic there. On the Price Is Right, you say one year and then you get all the years below that, the below years. This is a very dated reference, I’m realizing. I don’t know think that show is even on the air anymore. Haven’t watched TV in a while. Okay, related question, also the final question, “how do we get there?” So, Jim, how do we get there?
Jim: Well, this is asked by StepUpBG on Twitter, and we covered a little bit of this in the last question. I truly believe that the right approach to move towards basic income is to say that right now, we are laying groundwork. We are doing the things that make basic income more familiar, more understood and so that once we get that moment, we can say, “Alright, we got this. We know what this is. We’re ready to go. Let’s make this happen.”
Owen: I think you find, at least in America, that often the first time people hear of this policy — maybe less so, I’m getting this reaction less and less — but the most common first reaction is some amount of shock towards the idea of just giving people money unconditionally. I think people do need to sit with the idea for a little bit, and it needs to penetrate into more circles and become something that people are less afraid of talking about.
Jim: Right, I think part of that is just talking to more people about basic income and what it might do, having it be a more familiar concept that people they know and trust actually think this could be a really good solution and I think part of that is looking at what are the stepping stone policies that, in practice, can actually show people more what this is about. I think what to makes sense to go back to here is looking at the Alaska model and how the fact that everyone there is getting an unconditional payment every year is actually something that makes this whole thing make more sense to people a lot of the time.
Owen: Yes, and along that, I’m very excited about the trials in Ontario that just started and the upcoming one’s run by Y Combinator because those will be real trials, real stories, real people who are benefiting, so then it’ll be that much less abstract and that much closer.
Jim: I think those stories are going to be important and then what I would really like to see is for some city or state in the US to enact some small universal dividend in the same style as the Alaska model because I think that it’s that combination of hearing the stories of people who are getting full basic income and then yourself receiving this smaller additional income. Suddenly the intellectual leap between everyone getting basic income is much, much less than it is today.
Owen: I’m of the mind that $100 a month, even though we usually talk in terms of around 1,000, something like a 100 could be transformative for a lot of people and, if not transformative, would make a big difference. You would feel it.
Jim: If you’re scraping by, 100 a month is a game changer.
Owen: Yes, and speaking from my own experience, I wouldn’t say I’m scraping by, but I’d love $100 a month. [laughs] That wouldn’t be nothing.
So, how do we get there? I think a lot of what we’re already doing, and hopefully more trials, more support, more talking about it, more and more podcast episodes.
Jim: I think this is one where all y’all listeners can actually play a big role here. Again, make sure you are talking to people about this, looking for ways that you can push the idea forward. That’s actually what’s going to help make this happen.
Owen: So thank you to everyone who sent in questions. Please keep those coming, you can send them to myself @owenpoindexter at Twitter or Jim, you’re @dr_pugh there.
Jim: Or just tweet out the Universal Income Project, @UIProj on Twitter. We’ll get them there too.
Owen: Or you can find the Universal Income Project on Facebook as well.
Thank you so much for listening to the Basic Income Podcast. Thank you to our producer, Erick Davidson. Again, please tell your friends, talk about basic income, talk about the podcast. This could be a good conversation starter for them. Subscribe if you have not already on Apple Podcast or the service of your choice. And while you’re there, please do leave us a rating or review. It’ll help more people find the podcast. See you next week.
We talk a lot about hypotheticals when it comes to the universal basic income, but with Finland, we don’t have to. Finland is instituting a basic income on a trial basis in place of unemployment benefits for certain citizens. Roope Mokka, Cofounder of Demos Helsinki, explains why this move will encourage recipients to find work, and what is next for the basic income in Finland.
Jim Pugh, Sandhya Anantharaman and Owen Poindexter discuss the key stepping stones needed to bring the basic income from an idea to a reality. From media exposure, to pilot studies, to political pressure, they explore various ways to move the UBI movement forward.
