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Universal Basic Income – A Setback?

Sigma Investment Counselors

May 2, 2018

We have previously commented on proposals by economists and political scientists that would substitute universal income polices as credible alternatives to existing social programs such as unemployment insurance.  (see blogs dated 2015-12-17 and 2016-11-22)

The idea is straight forward:  Provide citizens with a minimum allowance, without means-testing, that would give everyone the wherewithal to live with a basic level of dignity.

Finland was an early proponent of this concept and, for more than a year, has been testing the proposition that the best way to lift economic fortunes may be the simplest:  Hand out money without rules or restrictions on how people use it.  Finland’s experiment attracted global attention as a way to restore economic security during a time of increasing concern about inequality and automation.

Now Finland’s experiment is ending.  The country has chosen not to finance the project past this year, due to apparent public discomfort with the idea of dispensing government benefits without requiring recipients to seek work.

With the ending of Finland’s experiment with universal basic income, the underlying problem remains.  How do you provide an effective and dignified safety net for the temporarily or permanently disadvantaged, without creating an unacceptable career choice?

All comments and suggestions are welcome.

Walter J. Kirchberger, CFA

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