Finland is about to embark on an extremely ambitious journey to test one of the most controversial economic theories of our time. The country’s social security institution known as Kela will be handing free money to thousands of jobless citizens on a monthly basis for the next two years. It’s a test of an economic strategy known as Basic Income, which at its core is essentially free money for every person once they reach a certain age, without any prerequisites.
The idea behind Basic Income is that by giving every individual a certain amount of money with which to keep themselves out of poverty, they are better off regardless of all other factors. If a person has a well-paying job, they still get Basic Income, just like everyone else, thereby creating a society in which every adult is above poverty and also continually contributing to the economy by spending money.
That sounds like a utopia, right? But there are other factors that create a lot of uncertainty, like whether or not free money will impact a society’s motivation to actually work. In the case of Finland’s experiment, individuals will be given a monthly payment of around $590, which is enough to prevent those individuals from becoming homeless, but obviously not enough to go clubbing on the weekends or live frivolously.
This is far from the first test of Basic Income, and in recent years many programs have sought to put the theory to the test, even in the United States. Y Combinator launched a small pilot program to test Basic Income in Oakland, offering 100 residents up to $2,000 per month just for existing. The program was small in scale and timeline, and many questioned whether or not it could possibly prove the theory one way or the other.
At its heart, that’s the problem with all test of Basic Income; When individuals know that it’s only a test and that the benefits aren’t permanent, they aren’t likely to change their behavior. If the test subjects in Finland find jobs and thrive, that doesn’t necessarily prove that they wouldn’t prefer to remain jobless if their Basic Income was promised for life. Whatever the case, it’ll be interesting to see how the large-scale test pans out over the next 24 months.