Basic income for everyone

The Finnish government is getting serious about the idea of a national basic income. It has commissioned KELA, the national social insurance provider, to study the concept, calculate the costs, and run an experiment in 2017 to judge the feasibility of rolling it out across the country. If, eventually, the government were to approve of such a plan, Finland could scrap all existing benefits and instead hand out a monthly stipend to everyone. According to some reports, the monthly payment could be €800 ($870).

Whereas several Dutch cities will introduce basic income next year andSwitzerland is holding a referendum on the subject, there is strongest political and public support for the idea in Finland.

A poll commissioned by KELA showed that 69% support (link in Finnish) a basic income plan. Prime minister Juha Sipilä is in favor of the idea and he’s backed by most of the major political parties. “For me, a basic income means simplifying the social security system,” he says.

But for those outside Finland, the plan raises two obvious questions: Why is this a good idea, and how will it work?

 It may sound counterintuitive, but the proposal is meant to tackleunemployment. Finland’s unemployment rate is at a 15-year high and a basic income would allow people to take on low-paying jobs without personal cost. At the moment, a temporary job results in lower welfare benefits, which can lead to an overall drop in income.
 Previous experiments have shown that universal basic income can have a positive effect. Everyone in the Canadian town of Dauphin was given a stipend from 1974 to 1979, and though there was a drop in working hours, this was mainly because men spent more time in school and women took longer maternity leaves. Meanwhile, when thousands of unemployed people in Uganda were given unsupervised grants of twice their monthly income, working hours increased by 17% and earnings increased by 38%.

One of the major downsides, of course, is the cost of handing out money to so many people. Liisa Hyssälä, director general of KELA, has said that the plan will save the government millions. But, as Bloomberg calculated, giving €800 of basic income to the population of 5.4 million every month would cost €52.2 billion a year. Finland only plans to give the basic income to adults, not every citizen, but with around 4.9 million adults in Finland, this would still cost €46.7 billion per year. The government expects to have €49.1 billion in revenue in 2016.

Another serious consideration is that some people may be worse off under the plan. As a proposal hasn’t been published yet, it’s not yet known exactly who might lose out. But those who currently receive housing support or disability benefits could conceivably end up with less under national basic income, since the plan calls for scrapping existing benefits. And as national basic income would only give a monthly allowance to adults, a single mother of three could struggle to support herself compared to, for example, a neighbor with the same government support but no children and a part-time job.

Finally, this raises the question of whether it’s really fair to give a relatively better off individual the same amount of welfare as someone who’s truly struggling. Finland’s constitution insists that all citizens must be equal, though, of course, equality can be interpreted in many different ways. So far, there’s no definitive answer as to whether national basic income will create a more or less equal society.

Correction (Dec. 5): An earlier version of this article questioned whether it was fair for millionaires to get the same level of welfare as those who are struggling. As wealthier people still pay tax, a millionaire would technically get €800 per month but would not get net support from the government. The article also cited non-seasonally adjusted unemployment data, which has been changed to the seasonally adjusted figures, and stated the cost of providing basic income for every citizen rather than every adult.
Correction (Dec. 8): An earlier version of this article did not explain that KELA is conducting a study to explore the possibility of a implementing a basic income program. There is no government plan to introduce a basic income for all adults at this time.

Helsinki’s plan to make cars obsolete

Helsinki, Finland, has proposed a strikingly ambitious mobility on demand system that presents the logical extension of current innovations in passenger travel. The city plans to create a subscriber service that would let users choose from, and pay for, a range of transportation options through their smartphones. The options will include conventional public transit, carsharing, bikesharing, ferries, and an on-demand minibus service that the city’s transit authority launched in 2013.
The major innovation that makes this work will be an integrated payment system. This part of the scheme may prove the most complicated to implement, but it is the final piece of the puzzle that makes this scheme truly transformative. No longer forced to choose between the on-demand capability of private car ownership versus the eco-friendliness of shared transit, Helsinki residents will be able to easily get where they want to go, when they want to get there, without needing a car.
I’ve been using the phrase mobility as a service for this phenomenon, but it looks like the mobile phone companies may have claimed that moniker already. Whatever the name, the concept is the transportation version of other businesses that are moving from selling a product to selling the service or utility the consumer wants from that product. Planned obsolescence no longer makes good business sense, and consumers can benefit from constant improvements in technology. This is most common in information technology (in cloud computing and storage, for instance), but it’s also happening in the energy sector – especially for clean technologies like solar, where leasing programs offer a way to overcome the upfront price premium barrier.
Share, Don’t Buy
Globally, carsharing membership has grown around 28% since 2010, with Europe as the leader in this sector. Navigant Research’s report, Carsharing Programs, forecasts that global carsharing members will surpass 12 million in 2020. The rise of on-demand ride services, such as Uber, Lyft, and Sidecar, are also transforming the way city dwellers use taxi services. Taking on the highly regulated taxi business, these companies face considerable opposition, but at this point, it will be hard to put the genie back into the bottle. Bikesharing and even scooter share services are also spreading. Today’s young urban dwellers expect to be able to use an array of transportation options to suit an array of needs, at the touch of an app.
Helsinki’s program has the potential to tie into other transportation innovations, such as the rise of electric vehicles (EVs) – more carsharing programs are deploying EVs as a selling point for their service – and autonomous vehicle technology. Wireless charging would also support schemes like Helsinki’s by ensuring that shared EVs are recharging when parked, rather than relying on the driver to remember to plug in.
Faced with dwindling demand in mature markets like North America and Western Europe, automakers are exploring a range of new services to offset lower demand and to gain a competitive edge. Farsighted companies will look to begin selling mobility as well as vehicles, changing transportation as much as the IT and energy sectors have changed.