Finland wants to give all citizens, rich or poor, a monthly payment

As it struggles with unabated unemployment and zero economic growth, Finland wants to try replacing its bureaucratic welfare system with a much more simple one: a monthly payment of €800, or $870, to every citizen, with no strings attached.

The Finnish government says it wants to launch a “universal basic income experiment” in 2017 to test the feasibility of this program, which would replace the country’s current benefits system.

The Nordic country is grappling with a nearly 10 percent unemployment rate, an aging population, and little hope for significant growth in the near future, said the country’s ministry of finance in a gloomy economic report this fall.

“The Finnish economy is in an extremely difficult situation,” wrote the ministry.

A basic income would encourage more people to work, the thinking goes, as opposed to disincentivizing them under the current system by taking away their benefits when they start to earn an income.

The experiment, which will be designed in the latter part of next year, will help the Finnish government understand whether this program would work on a national level, says Ohto Kanninen, an economist at Finnish think tank, Tänk, which is collaborating with the country’s government and several universities on the experiment.

"What would be the impact of a basic income to employment in Finland – positive or negative? We can't really foresee how people would behave with a basic income," Dr. Kanninen told the BBC.

Kela, the country’s social security administration, says 70 percent of respondents in its recent survey were in favor of payments of €1,000 per month. And Finns in April elected the country's Centre party, which campaigned in favor of a basic income, to a controlling position in the government, reports Mashable.  

Switzerland is considering introducing a universal payment as well, with 49 percent of Swiss supporting the idea.

The idea of paying citizens has been circulating for decades, with a handful of experiments conducted in the US and Canada in the 1960s and ‘70s to test the concept.

One of the most famous was in the Canadian city of Dauphin, in Manitoba, between 1974 and 1979, when all its residents received monthly payments.

According to University of Manitoba economist Evelyn L. Forget who wrote a report called, “The town with no poverty” in 2011, the payments helped reduce poverty and even some health problems in Dauphin.

In the US, libertarian economist Milton Friedman championed the idea of a “negative income tax,” where instead of paying the IRS taxes based on income, the government would pay citizens.  

Martin Luther King Jr. supported the program, as did president Richard Nixon, who unsuccessfully tried to pass the welfare reform in the late 1960s.

In a series of controlled experiments that the US government conducted around the country to test a basic income program during that time, it was found that the payments didn’t seem to affect poverty levels, and that participants receiving payments, particularly black families, appeared to divorce at much higher rates than the control groups, according to Dr. Forger’s paper.