https://www.npr.org/sections/goatsandsoda/2019/12/02/781152563/researchers-find-a-remarkable-ripple-effect-when-you-give-cash-to-poor-families
Dan just made a startling discovery. He just discovered that unregulated capitalism actually works.
The above NPR story references one unpublished study that simply gave $1,000 in cash to about 10,500 families, with a control group of 50,000 families receiving nothing, and that those families spent that money on goods and services in the local economy. Shockingly enough, this boosted the local economy for a short period of time.
The conclusion of the authors of the article seems to be that giving all of the worlds poor a direct cash, one time, gift will stimulate the economy of the areas where the poor live.
Now, on the surface, I don't disagree. It makes perfect sense that if you give the poorest of the poor a one time gift that they will spend it on the things they need to improve their chances for survival.
However, the article raises several questions that are interesting.
"I'd be curious to see if they persist in the longer run," asks Eeshani Kandapal (an economist with the World Bank). I agree. Supposing that a one time gift will spark long term economic growth doesn't seem realistic. Which raises one of my questions: Wouldn't the goal be to help people find a job that provides an income over the long term, rather than a one time gift? Would making these gifts on a regular basis, help or hurt these families in the long run?
"But were those income gains simply washed out by a corresponding rise in inflation?"
In this one time, small scale study the answer seems to be that inflation wasn't as much of a factor as they thought. However, on a larger scale, longer term study it seems as though supply and demand would become an issue and would increase inflation. The article notes that a similar study in the Philippines did show significant inflation because supply of certain things couldn't keep up with demand.
The article hints as the conclusion that this sort of direct aid is much better than the more traditional foreign aid that has been given in the past. As demonstrated in the book Dead Aid, one of the major failings of most traditional foreign aid is that it goes to powerful individuals in the government and never actually reaches those it's intended to help. Or it is used to fund projects the only benefit the already rich and powerful. This raises the question of why would those in power sit by and allow groups to pass out large amounts of money that doesn't enrich those in power?
As the authors of When Helping Hurts conclude, the best way to help those in need long term is not to do for them, what they can do for themselves. In other words, don't spend thousands of dollars flying 50 blancs into Haiti to build houses or paint schools, when you could hire Haitians to do that for themselves. Obviously, this doesn't mean that it's bad to send highly skilled and specialized people into these countries to provide scarce medical services, or other specialized services.
Personally I think that the folks at OI have a much better and more sustainable model than simply handing out one time cash gifts. In short, they deal in micro loans combined with business training to help families and communities build economies that should result in long term growth for the community.
Finally, I can't help but want to put this is the context of the massive reduction in global poverty over the last 30 years or so. While this is really good news, it doesn't mean that there isn't more that can be done.
But, in short we now see through what OI and other micro loan ONGs are doing and this study, that capitalism does actually work to alleviate poverty.
17 comments:
Actually, as I read it, it was proposing more of a monthly donation of approximately what is needed to eat regularly. A guaranteed income, as it were, for a more extended period of time. The examples showed that the people used that extra money rather efficiently, getting enough to eat, clothes and schooling for the kids they should never have conceived and managing to keep a bit on the side to eventually do things they never could because they had no cash. Kinda like what a job would provide if they lived in countries that had an economic system similar to ours.
Some of the examples (really the only examples any of Dan's links presented) were of those who did indeed use the new income to eventually start up little businesses which provided more income, thereby elevated their economic situation. That sounds like a good thing, but who pays? Some type of crowd funding could likely keep this type of thing going so as to allow for the more entrepreneurial to flourish and be self sufficient. But what of the rest? Again, they only chose the best examples based on positive outcomes. They don't say how they ensure slackers aren't given dough, though there was one example of a dude who doesn't have skills and asked him what will happen when the program ends and his monthly income stops. He had no answer. Neither did the authors of the article or the researchers who are pushing the policy.
I'm not at all against helping the downtrodden, as most of my humble donations go to such. But more important than my charitable contributions is the economic environment resulting from government policy. Our current administration has made life harder for everyone, and it was getting better before this asshat took office on the pretense he was clearly the better choice. What a joke! Only morons believed that blatantly stupid notion, or pretended to believe it because of their irrational hatred for the guy who was making things better.
If a government doesn't promote policies which allow for success of the private sector, there will be fewer funds to pass of to the most needy. If a government has a clue, there is always fewer needy people. NPR doesn't get that historically proven fact. Neither does Dan.
He just discovered that unregulated capitalism actually works.
That's LITERALLY not the point of this story. There's nothing in this data that says anything about "unregulated capitalism." It DOES speak to removing rules that hinder poor people specifically from using their money to best serve them, IF they had money.
But it's not saying they can use that money to create a business that results in polluted streams, for instance. Which polluted streams inevitably cause more harm and thus more expense to poor people, thus making their lives more difficult to afford, not less.
For one example.
But I've always been abundantly clear that I think capitalism has some advantages and that I'm specifically NOT a socialist. In spite of how many on the right like to paint progressives, we're not typically socialists. Democratic socialists who are in favor of reasonable regulations and people having the freedom to use their money within those reasonable regulations, yes. And having programs that offer assistance to the poor and marginalized, that, too, is consisted with progressive policy. And we're FINE if that money comes - with NO strings attached - from non-profits and private groups, but we're also fine with using tax dollars from we the people to invest in these sorts of programs because they ultimately pay for themselves.
For what it's worth.
Wouldn't the goal be to help people find a job that provides an income over the long term, rather than a one time gift? Would making these gifts on a regular basis, help or hurt these families in the long run?
I agree, these are good questions to ASK, but not good presumptions to HOLD. Let's look at the data and keep our minds open to what works, not what fits a partisan political preference.
Seems to me.
But, in short we now see through what OI and other micro loan ONGs are doing and this study, that capitalism does actually work to alleviate poverty.
A well regulated capitalism that limits the harm that comes to poorer and marginalized people disproportionately, yes. But not a laissez faire, burn it all to the ground for a profit capitalism, no.
Folks in our church have promoted and been involved in low- and no-interest microloans for decades now.
And to be sure, the data for microloan success is mixed.
https://www.npr.org/sections/goatsandsoda/2016/11/01/500093608/you-asked-we-answer-can-tiny-loans-lift-women-out-of-poverty
Regardless, the point I'm mainly making is that this research is saying nothing about wholly unregulated capitalism. At all.
Reading for understanding is important.
"That's LITERALLY not the point of this story."
I never said that it was.
"There's nothing in this data that says anything about "unregulated capitalism." It DOES speak to removing rules that hinder poor people specifically from using their money to best serve them, IF they had money."
1. This bullshit of pretending as if the lack of a specific term means that the concept embraced by the term doesn't exist is getting old.
2. They literally allowed them to spend the money with no restrictions for whatever they felt would benefit the recipients. Which, coincidentally benefited the community economy.
3. You have absolutely zero idea what the study actually says, it hasn't been released.
"But it's not saying they can use that money to create a business that results in polluted streams, for instance. Which polluted streams inevitably cause more harm and thus more expense to poor people, thus making their lives more difficult to afford, not less."
You have absolutely zero idea what the study said, it hasn't been released. At best this is a rule that you've made up and pretended like it was included in the study you haven't read because it hasn't been published.
Self serving bullshit, not worth my time.
"For what it's worth."
Nothing.
"Wouldn't the goal be to help people find a job that provides an income over the long term, rather than a one time gift? Would making these gifts on a regular basis, help or hurt these families in the long run?"
Wow, the notion that it's better for the individual and the economy that they earn income through work rather than subsist on gifts and charity is a "partisan political preference" is quite the claim.
"I agree, these are good questions to ASK, but not good presumptions to HOLD. Let's look at the data and keep our minds open to what works, not what fits a partisan political preference."
the problem is that the data that's been released over the last decade or so shows that facilitating people to earn income through work is better long term than through gifts or charity.
"Seems to me."
Well, if it "Seems to" you, then it must be absolutely True and beyond questioning.
"Regardless, the point I'm mainly making is that this research is saying nothing about wholly unregulated capitalism. At all."
Since you have absolutely zero idea what the research says since it hasn't been published yet, and since the concept of "unregulated capitalism" can exist without the term being used, this is simply bullshit.
Obviously micro loans aren't 100% effective, no one is claiming that they are, but they certainly build interdependence and a community economy more effectively than a one time, or limited time cash gift which gives a temporary boost at best.
Art,
I didn't get that impression at all. But even if you are correct, the reality is that this 18 month experiment will not provide long term economic growth once the cash stops flowing.
Of course the very fact that people are surprised that those in dire economic straits use this gift in ways that primarily benefit themselves says a lot about people. Of course people without, will focus on Maslow's hierarchy of needs first it's not rocket science.
I believe that my point still stands though. The notion that it's feasible to build long term economic success on temporary charity or gifts seems like a pipe dream.
"The researchers identified about 65,000 households across an impoverished, rural area of Kenya and then randomly assigned them to various groups: those who got no help from GiveDirectly and a "treatment group" of about 10,500 families who got a OME-TIME cash grant of about $1,000."
Art,
It looks like the article Dan referenced was clear that it was a one time gift.
One think I find interesting in this situation is that it sort of parallels as situation I experienced in Haiti. While we were there, we would attend church at one of the churches supported by the mission because it was right across the street. We were always cautioned not to put large (by Haitian standards) gifts in the offering. The rationale was that it disturbed the relationships between the churches because this one regularly got large infusions of cash. I feel like this random distribution of cash gifts to a small percentage of the population doesn't increase dissent between the lucky few and the unlucky many.
I also can't help but wonder how this extrapolates to people groups who are not near a subsistence level of existence. For example, in the US where poverty entails much more material wealth, I suspect that you'd see the gift recipients not spending their bounty quite so "wisely".
the problem is that the data that's been released over the last decade or so shows that facilitating people to earn income through work is better long term than through gifts or charity.
???? OF COURSE, IT IS! I've never said otherwise. Indeed, MY JOB is all about helping the marginalized acquire jobs to be more self-sufficient. Why are you stating the obvious as if I disagree with it?
THE POINT is that many of the poor and marginalized do not have access to the basic starting points of success and so, it behooves society to assist folks with that start up money.
THAT IS THE POINT OF PROGRESSIVE POLICIES. DO you not understand this?
I suspect that you'd see the gift recipients not spending their bounty quite so "wisely".
I get it. Conservatives think the US poor are undeserving, lazy, dishonest and shiftless. THAT is the point of conservative policies and we all understand that.
The thing is, we don't hold such a low view of the poor and marginalized as conservatives do.
Well, I read them twice already and I'm not up at present for reading them again. But I'm certain they did speak of a regular guaranteed income situation which lasted for an extended period beyond a one time donation. The main thing was that like the $1000 giveaway, it put the cash in the hands of the people directly, rather than to some organization which would supply things they could buy themselves if they had the money. Now, it could be that the $1000 was all there was throughout all three of Dan's links, but I don't think so. In any case, they're both limited and what happens when the spigot is turned off is what matters most. If any of them managed to use the cash (however much there was) to begin some kind of business, can they sustain the business when the payments stop? Certainly some will last for some period of time, mostly based on the economy of the area and the demand for the product or service created by the recipient of the payments. If that's not disturbed, it's all good. If either goes south, so does the new business and the recipient is in need once again.
As to this country, I totally agree. Those who aren't on the brink do not regard newfound wealth in quite the same way. It's like my grandparents and parents who lived or were born during the Great Depression. They had an entirely different level of appreciation for their income and possessions once they were able to acquire them, than those of later generations. In this country, government economic policy does so much more than handouts do.
"???? OF COURSE, IT IS! I've never said otherwise. Indeed, MY JOB is all about helping the marginalized acquire jobs to be more self-sufficient. Why are you stating the obvious as if I disagree with it?"
I'm sorry, you are the one who said that believing that helping people work for their income was a "partisan political preference", not me.
"THE POINT is that many of the poor and marginalized do not have access to the basic starting points of success and so, it behooves society to assist folks with that start up money."
No, that is A point, not "THE POINT". The problem is that simply giving people a one time, or limited time, gift doesn't guarantee a functioning economy over a long term.
"THAT IS THE POINT OF PROGRESSIVE POLICIES. DO you not understand this?"
Nope, I've never heard any "PROGRESSIVE POLICIES" that explicitly state that this is "THE POINT". It's amazing how you can announce multiple times that multiple things are "THE (singular) POINT".
"I get it. Conservatives think the US poor are undeserving, lazy, dishonest and shiftless. THAT is the point of conservative policies and we all understand that."
No, you don't. Although I did play your prejudices to get you to respond that way. "THE POINT" is that in the US the poor already have most, if not all, of their basic needs provided and when faced with a windfall are less likely to spend it on their basic needs and more likely to spend it on wants. Of course, you totally missed the other ironic point which was that it's amusing to see you and some leftist intellectuals passing judgement on what these folks spent their gifts on.
"The thing is, we don't hold such a low view of the poor and marginalized as conservatives do."
The things are... 1. You don't represent or speak for anyone but yourself and your use of the royal we makes you look stupid. 2. Your prejudices drove you to draw an incorrect conclusion about all conservatives based on my comment which your prejudices drove you to misinterpret.
Art,
I literally quoted the article in question. There might have been another program, but I was referring to the one mentioned in the article.
I understand that the point was to put cash in the hands of those who need it with minimal intervening groups. I agree with that point, and addressed it indirectly when I referred to Dead Aid and the authors research into how much current aid gets siphoned off into the coffers of those in power. However, if one considers that there are many corrupt governments, government officials, and local strongmen, how long would it be until they started to dip into this new pool of resources. Isn't it possible that these programs actually draw attention to these people with newfound resources and expose them to increased risk?
The point of my post is not to disparage anyone who wants to use private money to jump start economic conditions in poor countries. My point is that the way this group seems to have done so is to prime the pump, remove any restrictions, and allow capitalism to work. Very free market.
I suspect that you are right, in concluding that these payments could foster some degree of dependence where they are made, and that the lack of a broader economy or natural resources would likely limit the long terms success. But it's interesting to see this attempt an unregulated capitalism be tried.
I agree.
Essentially what this new study shows is that if people have income, they will spend it in ways that benefit themselves and their families (what the study organizers characterize as smart), and that this spending will benefit those who they spend their money with. Honestly it's not particularly surprising that people who don't have their basic needs for survival met, will spend their windfall on those needs. The two problems with extrapolating this study are as follows.
1. It doesn't address the negative aspects of people becoming dependent on these gifts over the long term.
2. It doesn't address what happens long term after this one time gift has been spent.
3. Some will likely assume that this behavior will stay constant if this same methodology is applied to poor people in the US.
If the conclusion being drawn is the foreign aid should be distributed to individuals as opposed to corrupt, despotic, government officials in order to be more effective, then I'm shocked that it took a study to come up with this common sense conclusion.
"1. If I'm striving, deliberately, for more gold, then I'm placing myself in the place of a trap for deceit and evil. "Do not store for yourselves treasures here on earth..." IF one is one to take Jesus fairly literally, that's a serious warning (along with all the others)."
This is a bizarre and interesting take. If one was to follow this logic, then one would never seek jobs that pay more, nor raises. The notion that seeking more money for the express purpose of giving it to the poor is a bad thing boggles the mine. Of course if you define "giving more money to the poor" as "storing up treasure on earth", I can see why your tortured logic would lead you astray.
"2. "Charity," as far as it goes, is what it is."
This statement sounds like it's supposed to be some sort of profound wisdom, but instead is simply an inane generality. Of course, coming in response to a post where the author lauds a new study that confirms the notion that giving money to certain poor people with no strings attached (charity) is an excellent way to help the poor and boost their economy, this seems contradictory at best.
"But it's not justice. Me giving to the poor and marginalized puts us in a "I'M the giver and YOU are the poor recipient. Receive my largesse and be Better for it..." It's not as healthy as merely helping/allying with the poor and marginalized to get the justice due to them."
Again this seems to contradict this previous comment, " I heard another story about this line of research that's been going around for a long time - that the data shows in multiple studies that the easiest and most effective way to assist the poor is just to give them money, no strings attached. From NPR:". To claim that the "most effective way to assist the poor" is simultaneously bad seems strange. It's also strange that the goal seems to be this vague, undefined, concept of justice rather than things like food and shelter. It also ignores the likelihood that those who's basic needs are being met, are more likely to care about things like justice. It's almost like some middle aged, white, rich guy from America telling the "poor", brown and black folk from Africa and South America that he knows what the need better then they do. That he's going to sit with them as they remain in poverty and tell them that they really need justice.
"I tend towards working for justice in alliance with the poor and marginalized, as opposed to me, the Great White Hope, giving of my great abundance TO them."
Because Mr "great white hope" telling them that they really want justice instead of food isn't condescending at all. One wonders how much time Mr "Great White Hope" has spent on the ground in Africa or South America actively working for "justice" for these poor black and brown folks? One wonders why they want food and shelter more than they want "justice"? One wonders why these black/brown folk don't know that "justice" is what they really need?
'It has to do with justice and decency and comradery, as opposed to humiliating "charity...""
And yet the entire post is extolling the virtues of charity.
There are other issues the study fails to address. It's not just the limitations of the charity. It's the time frame limitations. Can these people use the money to lift themselves out to a sustainable level which would forever relieve them of their dependence upon the charity? They speak of two or three who had started little businesses which indicated a potential of self-reliance. But did they truly achieve that level of self-reliance? I don't recall reading in any of Dan's links any of the recipients were followed long enough to confirm such potential was realized by any of them. There must have been a few, but the links don't say. I certainly hope so, but so long as the charity was still in play and in need, it's only hope.
There's no doubt that having the money distributed directly to those in need would be used in a rather efficient manner. As I said elsewhere, my grandparents endured and brought forth my parents during the Great Depression. They didn't squander a nickle once the economy improved and they could make a living again. That was passed down to my parents who were also frugal in their use of their income...income derived from one parent while the other raised the kids at home. So the idea that those who've experience poverty would not take income for granted is...as you say...not something which required a study to understand.
I don't understand where the trope regarding "justice" comes into play here. Poverty is rarely a matter of "justice", but is rather a matter of pure economics...particularly, how a government deals with resources available to produce an economy at all!
But Dan looks at such things from the perspective of 1st World problems. The 3rd World doesn't think like Dan and his ilk, nor would they ever, because that's crap. They're starving to death. They just want to provide. If there's no means by which one can develop on income or to produce one's own food and clothing, how does "justice" fill their bellies? Clearly, Dan's true concern to be regarded as more caring than we "white privilege" people he's invented. Platitudes don't get it done.
Art,
I agree that this study seems to have some major issues that would prevent it from being used to justify this sort of charity on a larger scale. Which we've addressed, and Dan has ignored. One that springs to mind is the probability that the families who spend their charity "wisely" when they were needed minimum amounts of necessities, will start to spend their money "less wisely" at some point after their basic needs are met. Further, the notion that a group of 1st world academics get to decide what spending is "wise" for those in desperate poverty reeks of privilege, paternalism, and condescension.
I agree that people who are desperate and destitute will spend their money on the things that alleviate their immediate needs. The question is what happens after those needs are met, and the charity keeps flowing? Wouldn't it make sense that they'd start spending on wants rather than needs, and that those choices might not be applauded by those in control of this study? What if a family chose to have a large number of children, as both African and Muslim families regularly do? Would they consider that a wise choice?
Obviously Dan looks at things through a 1st world, liberal, lens as one who's firmly entrenched in the top 5% of the worlds wealthiest people. He has no problem passing judgement on the wisdom of other's choices and loves to recommend that others spend their money in ways that he approves of.
Agreed.
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