The Blockchain Could Support Finland’s New Basic Income
Finland is embarking on a two-year social experiment to provide a tax-free €560 ($587) monthly payment to be spent with no imposed restrictions. The 2,000 participants, who were randomly selected on January 1st, had to already be receiving unemployment benefits or an income subsidy in order to be considered. If successful, the program would potentially be expanded to include other eligible Finnish citizens such as low-income groups consisting of freelancers, small-scale entrepreneurs, and part-time workers.
The government’s rationale for the program is that a universal income offers economic security in a technologically advanced world where automation will soon reduce the need for human labor. The program will also grant Finland’s unemployed the option to take on part-time work or official employment through odd jobs, without losing their welfare benefits. This is crucial because, under Finland’s current welfare system, even a small boost in income can result in the cancelation of benefits. For this reason, alone, many people who are out of work avoid taking on part time opportunities for fear they will lose their financial aid.
Olli Kangas from the Social Insurance Institution of Finland, KELA, which is responsible for the country's social benefits, states:
“It's highly interesting to see how it [basic income] makes people behave. Will this lead them to boldly experiment with different kinds of jobs? Or, as some critics claim, make them lazier with the knowledge of getting a basic income without doing anything?"
This dichotomy is at the core of this universal income debate, with one side arguing that a basic income allows people to become entrepreneurs and pursue personal passions, and the opposition believing that initiatives like these create a culture of apathy. Regardless of where one stands on the issue, many experts are looking to blockchain technology to facilitate the complex distribution of payments required for a universal basic income to work. With the properties of an immutable ledger and auditable transparency, the blockchain is ripe for countries to keep a record of who has been paid and how much.
A basic income system running on the blockchain would allow for an efficient and streamlined distribution of financial benefits in various forms of cryptocurrency. Not only can money be distributed through smart contracts, but the transactions can also be recorded on the blockchain. Besides the distribution of wealth, taxes could also be collected through smart contracts and decentralized taxation protocols on the Ethereum network. Bitnation founder, Susanne Tarkowski, believes that a voluntary basic income system is possible through the blockchain and will become a reality in the coming years. She and other proponents see blockchain as the key to securing a welfare state free of corruption and disorganization.
Whether or not this will actually occur is anyone’s guess. For now, Finland’s lead into this uncharted territory will need sufficient time to collect data on the results of their experiment. It is worth noting that other nations such as Canada, Iceland, Uganda, and Brazil are discussing similar pilot programs to test and procure their own results on how basic income affects their national economies. As more basic income experiments occur, the forging of the blockchain and universal income may become an accepted system that ends up saving costs to both citizens and their respective governments.
The idea of a “universal basic income” has long been discussed ever since Thomas More published his work of fiction and political philosophy, Utopia, in the 16th century. However, it hasn’t been until now, that an automated basic income could be feasible. Today, places like Alaska and Livorno, Italy have issued cash payments to their citizens either as an incentive for relocation or to help support the nation’s poor. With blockchain technology, the concept of a basic income could potentially become a worldwide reality.