99% Invisible - 276- The Finnish Experiment

Episode Date: September 20, 2017

Around the world, there is a lot of buzz around the idea of universal basic income (also known as “unconditional basic income” or UBI). It can take different forms or vary in the details, but in essence: UBI is the idea a government would pay all citizens, employed or not, a flat monthly sum to cover basic needs. This funding would come with no strings attached or special conditions, which would remove any potential stigma associated with receiving it. In short: it would be free money. There’s been a lot of recent excitement around the idea, especially after an experiment launched by the Finnish government started in early 2017. It has the public and the media wondering: how will recipients react to getting this unconditional source of income. The Finnish Experiment

This is 99% invisible. I'm Roman Mars. People all over the world are flirting with an idea called basic income. Basic income. Basic income. Basic income for all. The idea behind the basic income is that each citizen receives a payment every month as a right without conditions and paid individually. Basic income. Also known as universal basic income or unconditional basic income or UBI. That's producer Avery Trouffleman. Very very roughly defined, universal basic income is this idea that a government would

pay all their citizens. And everyone would get a flat sum of money every month to cover their basic needs, whether or not they have a job. And this money would be no strings attached with no conditions, and this would hopefully remove any stigma from receiving it. It's free money, basically, it's free money. The logic behind it is this.

A lot of jobs don't pay enough money for people to even make rent or buy groceries. You can work full-time and still be below the poverty line, so it's easy to understand why people on the left would advocate for a guaranteed income. But also, a version of this concept is popular in libertarian circles. They see basic income as a way to shrink the welfare state. For example, you could take away food stamps, Medicare, and housing subsidies, and replace all of it with one flat sum. People in tech are also interested in the concept of basic income, and they feel a certain

urgency about it. Robots are coming for our jobs, they say. And basic income is the best way for humans to maintain a decent lifestyle when our labor is increasingly obsolete. Our generation is going to have to deal with tens of millions of jobs replaced by automation like self-driving cars and trucks. But we have the potential to do so much more than that. That's Mark Zuckerberg, giving a commencement speech

at Harvard. And what he's getting at is, in a world where jobs are scarce, everyone will need a financial cushion. And then, by his logic, if people don't have to worry about food and shelter, maybe they'd feel freer to innovate. Maybe they'd start a new company or go back to school. We should explore ideas like universal basic income to make sure that everyone has a cushion

to try new ideas. Listen to that Harvard crowd, they're just eating it up. Elon Musk has also advocated for UBI, and the startup incubator Y Combinator will soon begin its own pilot experiment right here in Oakland to study what happens when they give a group of people a basic income. It's actually an idea that's been around for a long time, and there are many different variations on it. But recently, there have been a number of experiments with forms of basic income happening around

the world. A nonprofit is running an experiment with UBI in Kenya and Ontario, Canada just launched a test in three different cities. But this recent excitement about basic income experimentation is largely focused on Finland. Finland will be the first country in the world to find it a basic income. Finland's experiment with universal basic income. Is it a great idea?

Is it just Finnish, financial, folly? In the beginning of 2017, the Finnish government began an experiment with a basic income. Is it a great idea? Was it just finished financial? Follow. In the beginning of 2017, the Finnish government began an experiment with a basic income. And this news about the Finland experiment was really exciting. Maybe we will learn what people will do if they can make money without work. Will they just hang out at home? Will society grind to a halt?

How will people find meaning in their lives and how will they evaluate success? And that's of course the big question. It's the kind of the acid test of basic income that we're receiving basic income make people more or less active. Whatever the activity is, whether it's just walking around

or whether it's taking care of your neighborhood's kids or applying for work. This is Rope Muka. Founder of DemoSeltsinke, we are a Helsinki-based team, thank. And here's what I learned talking to Rope and other people in Finland about this experiment with basic income. To talk about basic income in Finland started before the understanding of what the outcomes of automation would be for the employment market.

The Finland experiment is not about robots, and it's not to see if people will stop working when they get free money. The experiment is to find out if giving people basic income will actually help them start working. And this whole experiment is especially interesting to us here at 99PI, not just for what Finland is testing, but how they are testing it. Finland is trying out a unique design-oriented way of thinking about government.

Rather than just rolling out laws on a massive scale, they are trying to craft legislation in stages with user feedback, like a piece of design. Because every good design is made to fill a need or solve a problem. And this is the problem. I hate it to be unemployed. Right now in 2017, the unemployment rate in Finland is at 8.8%. And that's about double the US unemployment rate. And that rate is worse than smaller finished cities like Yo-N-Soo.

Yo-N-Soo is in Eastern Finland. Eastern Finland has always been poorest parts of the country. This is Sana Leskenin, resident of Yon Su, which is about an hour's drive away from the Russian border. She's 39 and she's been unemployed for a little over two years. Unemployment has been here bigger than say in southern or western Finland because we are far from bigger cities where are much, much, much, much more job opportunities.

Sana has a master's in history and she worked as a researcher until her project ran out of funding. And all over Finland, there's been a massive decline in manufacturing work. Ever since Nokia was crushed by Apple and Android phones, Nokia's phone parts used to be made by contractors and companies all around the country.

My mom actually worked in that factory that kind of went down when Nokia sat at Go Down, so I kind of know part of that story pretty well. In the US, depending on the state, you can generally collect unemployment for about half a year after losing a job. In Finland, you can generally collect unemployment for about half a year after losing a job. In Finland, you can collect unemployment for about two years. And then there are different kinds of social assistance and allowances you can apply for.

If you still don't have a job. But here's the catch. If you're collecting unemployment assistance in Finland, you generally cannot earn additional income or you risk losing those benefits. And then you'd have to reapply, which is a massive drag. You cannot take like part-time job because then you are gaining money even though very, very little. Then it's counted against you. And so you lose that little bit of support money you were already gaining. So unemployed fins don't want to risk that loss. They don't want to pick up temporary

gig work or part-time jobs or freelance work. So it's really, really difficult situation. This actually happened with the person we hired to record Sana. We asked what his rate was, and he said he couldn't charge us because he is also an employed and would lose part of his allowance if he took on money from freelance work. So he did it for free. Thanks, Yana. Basically, the government of Finland realized that something had to be done about this system, that they were accidentally disincentivizing citizens from getting small jobs, or maybe even starting businesses of their own.

And these are citizens who want to work like Santa. Being unemployed makes me feel anyway sort of, I don't know, unimportant. I mean, doing a job would make you feel like you're doing something for, you know, a purpose in something. But being unemployed, you're just hanging around and just not being very important to anything, anybody. So this welfare system clearly needs to be changed, and this could be done in a few different ways, like with an earned income tax credit, but first they wanted to try out something simpler and go from there. And this is where we get to design. They wanted to design and test policy in a process very similar to the way designers come up with new products.

You would design policies that you would think about policies as kind of design objects or design services. And that means that you could do iteration and tests. That's Robyn Mokka again, founder of Think Tank demo's Helsinki, and the Prime Minister's office turned to them. So the Prime Minister's office approached us and asked us how can we employ design thinking on a national level? How can we do like governmental level design thinking?

Design thinking. It goes like this. First, there is a challenge or problem that must be solved. Then designers express, test, and cycle. Express. That means designers come up with a few ideas in prototypes. Test. They try those ideas out, maybe with a model or a sample.

Get feedback and understand what actually happens, what are the outcomes. And, cycle. Incorporate that feedback to make changes and revise the design. Then the process begins again, and again, and again, in different iterations. Couple years ago, this is how the Finnish prime minister decided he wanted to design legislation. Also, the prime minister, I mean,

he's not a radical necessarily, right? He's like a centrist. Yeah, absolutely. I think this is the most interesting part of the story that there was a true frustration among policymakers that they don't know what a particular law or tax would cause, whether it actually would work. So demos helped establish an experimentation unit, which is an actual office of the Finnish Prime Minister. The Prime Minister's office is experimentation unit. It's the first unit that was like designs policy is in the kind of design thinking meaning of the word. There are other governments that are interested in experimentation,

but here's what makes Finland different. They want to create prototypes of laws and then change and scale and update them dynamically as the results of their experiments show what's effective and what's not. And in order to run these experiments Finland actually had to pass a law to ensure that they were not in violation of their constitution. Because all the constitutions of democratic countries in the world they say that you have to treat people equally. And by definition if you're running experiments you're not treating people equally. Because they, the people who are part of the experiments, are not being treated equally. So they need to be a special law that outlined that, okay, how do the experiments fit in the constitution that says that people need to be treated equally?

And one of the first experiments, the Finnish government decided to do, was with basic income. Because the welfare office is extensive and complicated and rather than rejiggering one part of it and changing a bunch of stuff around and reworking their normal operations, the basic income experiment just kind of chugs along that zone. We have automated and partly automated our processes so everything is run by computers. The money, the basic income, just gets deposited in participants bank accounts every month automatically.

The program is currently overseen by Marjuka Turunen, who works for a government institution called Kella. Kella, so that's a social insurance institution here in Finland, so I was in charge of implementing this basic income experiment or head of it, project leader. There's not a lot of stigma about welfare in Finland. Everyone goes to this office every now and then in life, because there are 40 different kinds of benefits that Thins can receive,

including student support, paternal care, maternal care, pension subsidies, and of course, unemployment. So in January of 2017, Kela picked 2,000 unemployed fans at random from all over the country. In this experiment we have 2,000 people who are getting this basic income, 560 euros per month. And so they have to be between 25 to 58, so they are not students or young people, and they are not those kind of people who will feel out their pension age during this experiment. So this is kind of like the profile of these people.

Participants didn't volunteer for the experiment. Kelli just told them that they would now be receiving 560 euros a month. The news came in a letter. I got a fat, fat male and this said that, okay, you happy Joe said to be one in this basic income experiment and I was like, oh, what's that? Sana, the unemployed researcher in Yohansu, hadn't really thought about basic income until she read that big fat packet that came in the mail, which outlined the experiment for her. And I was going to have the certain amount of money to my bank

account every month. It's not big, but it's stable money. Five hundred six years a month would be a little less than SANA would get on unemployment, but you'd also be able to work and not worry about losing it. So I was happy about it because two years that experiment lasts, it's gonna be that money every month. And I don't have to stress that much because I am a big stressor person. I stress a lot. And finding a job was very important to me. So now I'm able, if I find a job, in like a part time job, I could take it and not lose the support money that usually would, if I wasn't part of this basic income experiment.

Some of the participants have been talking about their basic income with the press, but Sana has kept it a secret. I feel embarrassed about it because it feels like I have this advantage. So I haven't been very excited about spreading that information and now as I'm participating this, your podcast is like, okay, not many, many people in Finland are probably hearing about this, so I could be open to put it. I'm sorry to put it this way.

I'll have you know, we are huge in Finland, Sauna. Sauna doesn't know anyone else involved in the study, and most people in Finland don't. Her friends get kind of star-struck when she tells them her secret. I get people, you know, of God with that. So, oh, you're part of that. You're the first one I've ever met. So, it's like, he's kind of funny, really.

When you collect unemployment in Finland, you have to go to these job training meetings and check-ins every couple of months. But these 2000 participants scattered around the country don't have to do anything at all to get this 560 euros every month. Even though they're part of this experiment, they also don't have to report how they spent it. And at the end of the experiment, Kelo will look and see if this group of unemployed people who got basic income took on work

and compare it with their control group, which is the rest of the unemployed people of Finland. 175,000 people who are in the same profile than these 2,000 people are, but they are not getting this basic income. So we are comparing these two groups of people in this two years period and see what is happening to these. How are these people behaving when they get this basic income and how are these people behaving not getting the basic income? And then when they compare the results, basic income might just might get one step closer to becoming a reality. Well, if you play with the idea that this basic income would actually come a universal basic income here in Finland, which is kind of like the idea that I don't actually believe

that he's going to happen. Yeah, thank you. Well, I think that there are lots of people who are not thinking this is a good idea. Yes, the person currently overseeing the experiment for basic income believes it won't work. I think that it would be true dramatic. So we would wipe out all of this social security system that we have been building up for decades and then just replace it with one benefit. Toto and I imagines that not everyone would prefer a flat income rate. Some people do need more

than one based sum. Like, what if you have children or parents with special needs who you have to take care of all day? In that case, you don't have the capacity to start picking up gig work. The basic income wouldn't be enough for you. And of course, who would pay for it, so who would finance it? It's really hard to say how much basic income would actually cost the average taxpayer, were it to be instituted. And we don't quite know how it would affect the economy or inflation rates. It's all dependent on a number of factors and there's no exact math on this. If someone truly claims that they know how much more

expensive basic income would be, I think they're lying. It's such a systemic shift that if we decide to start paying everyone a lump sum of money it will change the economy in such way that the whole system changes. It's like once again something we have to experiment. Rope says that, yes, basic income would save money by cutting back on bureaucracy, but it would probably still be expensive to fund. But that's almost technical.

If you need money, you raise money. It's like what politicians do. They change the way budgets are arranged. If basic income makes citizens become more active and engaged, Gropa has faith that governments will find a way to pay for it. Because an excited and activated population is generally good for the economy,

he says that's why they have to test before anything else if basic income would really increase productivity and improve general well-being. At this point, they're testing to see if it'd be worth more investigation. I really, really, really hope that this will continue and to spread out that more people are involved. This experiment has invigorated sauna.

Even though she gets slightly less money than she would on unemployment, she is free to do whatever she wants. I am trying to find a job. I am sending a blog application and take possibly a part-time job. She feels like she's about to start a new chapter, and she's ready for what's next. A tranquility of a mind, it brought that to me. And it sounds funny because the amount of money is not that big. But

give people hope, give people a chance to take a moment away from their stress and that panic of do we survive. It's really important to keep in mind that Son is just one participant in a very small study. And basic income may have helped her search for part-time work, but when I spoke with her, she had yet to actually find employment. And also, you probably noted that this form of basic income is not universal basic income. If it were universal, it would be money

for every citizen employed or not. In this particular experiment, the basic income is only for unemployed people. Yeah, I think what we're experimenting now would be called partial basic income. This is a limited experiment. I don't know how relevant it is because a lot of groups are missing. If we want to see what people do when they don't have to work anymore, Ropeus says they should next see what happens if basic income is given to people who are already employed

to see if they then quit their jobs. Critics of the experiment also argue that 2,000 people is too small a sample size. Two Finnish economists published an op-ed in the New York Times called, Why Finland's Basic Income Experiment Isn't Working, and said it had the potential to incentivize people to accept low-p pain and low productivity jobs. It's an experiment that's far from perfect, but it's not supposed to be a be-all-end-all. Ideally, it's a first draft. We cannot just consider that, you know,

let's give this amount to some thousands of people and then we'll know for sure that's going to be other experiments before we can find out how to renew social security. Basically, if this experiment is at all successful or even if it's not, it should lead to another experiment and then another and then another. In Finland, isn't just as onion experiments with basic income, there will be experiments for what languages to teach in schools

how to change childcare, everything. According to their website, the experimentation office is working on 26 key projects nationally. And slowly, hopefully, Finland will use the design process to figure out if it's possible or worthwhile to try radically new ideas. Express, test, and cycle. Well, we ever get a basic income experiment right here in the U.S. It turns out we already had one decades ago. Avery explains after the break. So a lot of people here in the United States are talking about universal basic income and

arguing about why it's good and why it's bad, but to me it just seems like it's just not on the table at all. I just feel like there's something about the U.S. that makes it so it would never happen here. That basic income is basically something that could only be tested in Nordic welfare states. Yeah, it's the crazy thing about basic income is it's actually this very American idea and it was first proposed

or at least kind of first mentioned by American founding father Thomas Payne. It's like, as American as Apple Pie, and in terms of basic income experiments, we've actually been down this road before as a nation here in the United States. We did some studies with basic income back in the 70s. I shall ask to change the framework of government itself. So we can make it again fully responsible for the needs and the wishes of the American

people. That's Richard Nixon. Richard Nixon wanted to see if you could guarantee a family of four $1,600 a year, which is equivalent to like $10,000 today, and he hints at it in this state of the Union address. Let us place a floor under the income of every family with children in America. Let us provide the means by which more can help themselves. Wow. And so yeah, and then he decided to really try and do it.

Tens of millions of dollars were budgeted so that more than 8,500 Americans could be involved in experiments all around the country. And there were a bunch of different ones. And they were all had different people running them. And they tested like different variations of basic income and different ideas around it. And there was one in Seattle and one in Denver and one in Gary Indiana and one in North Carolina, just like, all kinds of places all over the country. And so why haven't I heard of these at all? I have no knowledge of this. And what did they find out?

Well, the results were kind of screwy because it wasn't like in a perfect scientific bubble, there were all these variations happening, all at the same time, and some of them were like different marginal tax rates and like different benefit levels and all those different kinds of stuff which makes it really difficult to just identify the effects

because you are testing so many different versions of it. And then actually the really big pitfall, like they did find some stuff, but the reason that it has been pretty much discarded to the sands of time was because people started analyzing the results before all the data was in. And so there were like these rumors swirling around that people were dropping out of the work force and just like enjoying this basic income. And it wasn't actually a statistically significant trend. It was just kind of a rumor, which can sometimes be more powerful than a fact. And there were also all these reports of increased separation and divorce rates. And that was considered really

scandalous and set off a lot of opposition. But then when the data was actually analyzed, it wasn't as large as it seems. There weren't that many more divorces. There were a few, but this wasn't necessarily a bad thing. Totally. Yeah. It just stopped the economic slavery of women. Exactly. Exactly. That's not so bad.

Yeah, but the American public didn't have the patience for nuance, and they were like, this will be the end of the family unit, so we can't tolerate it. And it's all just because they started chatting about it before they had- For the actual results. Yeah, before they had the numbers. It was kind of disregarded,

before we really had a chance to fully analyze the data. I think that's certainly a challenge that we're keeping in mind. This is Elizabeth Rhodes, and she is the research director of a basic income study that is happening at Y-combinator Research, which is a nonprofit research lab created by a startup accelerator called Y Combinator and she works like right down the street from

our office and she is helping to launch a basic income experiment nearby here in Oakland. We are in the process of we're doing a sort of a pre-pilot, a small group to sort of test some of the logistics and work through some of the questions around that and preparing for a larger randomized control trial that we hope to launch next year. After that local test, they want to really expand it. We're actually looking to do two US states in broader regions within two states. They have definitely learned from these early experiments to start small, expand slowly and to not promise too much

Because you know they want to wait for this experiment to fully play out Unlike Finland they are definitely doing this because of the robots and because they're based here in the Bay Area Which is like home of the gig economy and then just wanna see if this will make people happy in an era where robots take over all of our jobs. Right. Or jobs are not like jobs that are today. Like, they're gig jobs and therefore, having a basic income would ameliorate

a kind of economy that a lot of the Silicon Valley is helping to create. Exactly. But then on the other side of it, there a startup accelerator, they help businesses grow, and they're like, if this is what it takes, if they need a basic income in order to innovate, capital I, let's see if it'll work. I see. Yeah, and they just want to make sure that they don't set expectations too high. The study is going to run for several

years, and so I don't expect to see changes overnight in any way. And so I think we really need to give it time. So in doing this research about basic income, I've come across a thousand polarizing think pieces that are either like, you be eyes a great idea and we should do this right now. Or like, this is a terrible idea and we need to stop it. But realistically, it's going to be years before we know what we can learn from this privatized American experiment, or from the finished experiment for that matter. Because most of the arguments we're having about basic income at this point in time,

in all of basic incomes, many different definitions and variations, it's all based in speculation. We're having a debate without data. And no one has solid answers yet about what basic income would mean for the national tax code or inflation or unemployment rates or the economy or the robots or our happiness and well-being. And right now all we know is that different experimenters

all around the world are trying to figure out some answers. We just don't know them yet. So this is gonna end like all radio stories and which is Time will tell. Only Time will tell. But for now Time will tell. Well thanks Avery. Thanks woman. 99% of visible was produced this week by Avery Trouffleman, mixed and tech production by Shereefusif, music by Sean Rial. Our senior producer is Katie Mingle. Kurt Colstead is the digital director.

The rest of the staff is Delaney Hall, Emmett Fitzgerald, Taren Mazza, and me Roman Mars. Special thanks this week to our fixer, Ali Sulu Puisto, and Yana Svonin, who recorded Sana for free. Thanks also to Tim Wong,

Kara Rose de Fambio, Asmo Suloranta, Yuha Le Penin, and Vili Vecco Polca. We are a project of Dunne 1.7K, I'll W in San Francisco, and produced on Radio Row, in beautiful, downtown, Oakland, California. 99% of visible is part of radio topia from PRX, a collective of the best most innovative shows in all of podcasting. We are supported by the Night Foundation and Coin Carrying listeners, just like you.

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