Finland’s experiment with every wonks favorite utopian program, the guaranteed income, seems to have failed.
The reason? Hard as it may be to believe, if you pay people not to work, they won’t work.
2 thoughts on “Perverse Disincentives”
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One argument that I’ve heard in favor of UBI is that it will almost pay for itself by being able to get rid of many of the people that currently are overseeing welfare, etc. The problem there, is that we won’t be able to get rid of those government employees. They’ll just have even less to do.
I’ve been able to have discussions (actual discussions) about welfare, UBI, and employment with some people on the other end of the political spectrum. One of the biggest problems I see relates to what Mitch brought up – if you pay people not to work, they probably won’t. And, how do you get the recipient back into the workforce?
If you get $2,000 a month from the government as long as you don’t work, what incentive is there to go out and get a job? At $15/hr, working 8 hour days, 20 days a month, you’d make $2,400 before taxes. And now you need to pay for transportation, probably more eating out, and possibly clothing for the job. Factor in time to and from work, and there’s 180 hours of your life for less income than you had previously.
I’d like to see programs like this disappear. But, it isn’t going to happen. And, I think the only way to help wean people (not all, but some will want to) is to allow people to work and still collect government aid while transitioning into the workforce. If unemployment numbers keep dropping, it might just become a necessity to do this. Or, just keep importing cheap labor.
We live in the era of Economic Man. If you are paying people to do nothing, what are they for? As a Christian I can answer this. In a society,dedicated to materialism, if you have an identifiable group of people who are consuming resources and returning nothing, well, sooner or later those people will be excised.