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Learn from Finland

Apr 26,2018
The common thread among Thomas More, the author of political satire “Utopia,” Milton Friedman, an American economist who professed a free-market gospel, and Dr. Martin Luther King Jr. is that they were proponents of the so-called basic income, which refers to a welfare program in which all citizens receive a regular and livable sum of money from the government with no strings attached. The government hands out the money in cash without taking differences in incomes or wealth into account.

Instead, a government employing the system reduces existing welfare benefits. The liberals can expect it to reduce poverty and inequality, while conservatives believe it can save ever-increasing management costs involving the administration of complex social welfare programs.

Finland decided not to expand its basic income program since it kicked off the novel experiment last year. As a result, the government’s bold move to test the feasibility of a universal welfare program starting with randomly selecting 2,000 citizens aged between 25 and 58 and giving them 560 euro ($685) each month for two years will stop early next year.

The exact results of the ambitious experiment will be released after 2019, but its effect on reducing unemployment fell short of expectations. Some experts questioned if a welfare nation like Finland — where the government bears all medical costs, offers free university education and generous allowances for the jobless — would really need such additional benefits.

Though Korea’s case is not the same as Finland’s, there is some resemblance as the liberal Moon Jae-in administration seeks universal welfare as seen in its promotion of “livelihood wages” and “allowances for youth.” But creating jobs and increasing welfare benefits solely based on taxes have limits. The government must verify the effectiveness of such policies through pilot projects like Finland’s.

It is ludicrous for the Moon administration to push for hefty welfare programs to keep his campaign promises. We wonder if the administration is really trying to implement the president’s “income-led growth” — economic growth achieved by government-enforced hikes in the minimum wage — after sufficient verification. If it shuns evidence-based policy-making, Moon’s economic policy focusing on redistribution cannot succeed.

JoongAng Ilbo, Apr. 26, Page 34