Universal Income?

By Richard Nelson

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August 9, 2018

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If a political idea sounds too good to be true it probably is. Two years ago Finland implemented Universal Basic Income (UBI). The idea was to pay people who are not working to further encourage them to work and to provide money for them to cover food or housing expenses. But Finland discovered that the payments reduced incentives for the unemployed to find jobs. So they're ending the program. Finland has a low labor participation rate. Only 71 percent of the working-age population is employed. Maybe this will discourage U.S. Presidential candidate Andrew Yang to pull back from his proposal of a "freedom dividend" where he'd give every U.S. citizen between the ages of 18 and 64, $1,000 a month. If we've learned anything from Finland, it's that "free money" undermines the incentive to work.

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Director, Commonwealth Policy Center