Just give em the money.

[RonBoyd]

Free money - The Boston Globe

But the central thing they lack is money. That is what makes them, by definition, poor: International aid organizations define the “very poor” as those who live on less than a dollar a day. Despite this, the global fight that governments and nongovernmental organizations have waged against poverty in the developing world has focused almost entirely on changing the conditions in which the poor live, through dams and bridges and other massive infrastructure projects to bring commerce and electricity to the countryside, or the construction and staffing of schools and clinics, or subsidizing fertilizer and medicine, or giving away mosquito nets or cheap portable water filters.

In the last decade, however, the governments of the nations where most of the world’s poorest actually live have begun to turn to an idea that seems radical in its simplicity: Solve poverty and spur development by simply giving out money.

On a broader scale, some development experts argue that giving the poor more money to spend expands consumption and markets, and can boost local and national economies. Cash transfers don’t just lift people out of poverty, in other words, they lift entire countries as well. In the process, they may render superfluous large swaths of today’s aid industry.

But wouldn't that put thousands of Aid Workers out of work?

 

[travelover]

I think that historically the problem has been keeping money given to poorer nations out of Swiss bank accounts.

 

[ERD50]

Here's a counter-point to that, from Paul Polack. I read this in the heifer.org mag a while back and commented here. I thought it was a very refreshing look at the problem:

Desiging New Technologies for a Better Life

And, says Fisher, products that increase income should be cheap, but not free. At f rst glance, this seems grossly unfair. If a person is so poor that it takes a year to save for a treadle pump, why not just give it to them? But simply awarding an item to someone and asking nothing in return, say Polak and Fisher, only perpetuates the problem.

“To begin with,” says Fisher, “it’s not really fair. How do you pick one person and not another? Also, it’s not sustainable. It creates dependency.” He explains that people who buy or work for things tend to be much more invested in them than people who receive them as outright charity.

And as Polak has observed, a system that subsidizes low-cost goods to give to the poor is vulnerable to corruption. Demand is much greater than supply, so the goods may go to people who have connections, or who have bribed the suppliers. Setting up a supply chain, on the other hand, creates jobs and is much more sustainable.

A little background on that treadle pump - some group was providing expensive pumps, and Polack says he found them not being used a year later. They were too complex and expensive to maintain. His treadle pump is cheap enough and simple enough for people to buy, and it also creates a small local industry.

-ERD50

 

[donheff]

It does seem that if a million people are living at $1/day a few hundred million would mean the world to them and might actually have a "stimulus" effect. But I worry like ERD that it would be a transitory burst that would have no sustained effect. I have contributed to KIVA, one of the NGPs providing micro-loans around the world (I think we talked about them on another thread). I have been amazed at the difference a small loan can make to a third world entrepreneur and almost all my loans eventually get repaid. This isn't a give away, the recipients have to have a business plan and repay the loans.

 

[RonBoyd]

Here's a counter-point to that, from Paul Polack. I read this in the heifer.org mag a while back and commented here. I thought it was a very refreshing look at the problem:

Desiging New Technologies for a Better Life

Seems like both articles come to the same conclusion:

What companies like KickStart and IDE are banking on is the idea that the single most effective way to promote a region’s development is to increase personal income. Building an entrepreneurial middle class, these companies say, can be an effective way to do that. Clean water, housing, education — people will naturally spend money on these as their income increases. And once a community is richer, it will work to get better roads, better schools and so on. In small numbers, they say, they have seen this happen.

... about efforts by the government to transfer slum-dwellers out of their slums and into new subsidized housing. A man living in the slums was asked if he was looking forward to the move. He wasn’t, he said. In his new place, he would have electric bills, water bills, all the things that he couldn’t afford currently in the slums. What the government should do, he said, was show him how to make money.

“My problem is not housing,” he told the reporter. “My problem is money. If I had money, I wouldn’t be living here.”

The difference being whether to give the folks cash, directly, to make their own decisions or to give them things -- whether giant dams or treadle pumps -- developed, directed, and administered by others.

 

[Westernskies]

It's the old adage:

Give a man a fish and he will eat for a day
Teach a man to fish and he will eat for a lifetime

 

[BigNick]

The difference being whether to give the folks cash, directly, to make their own decisions or to give them things -- whether giant dams or treadle pumps -- developed, directed, and administered by others.

Part of the problem in many developing countries is that corruption is so endemic that it's not actually practical for most people to start businesses. Those of us who live in countries where government official basically do their job (with all the inefficiencies, etc) without creaming 25% off every transaction for them and 55% for the five levels of boss above them, don't know what we're missing. Aid organisations don't always help, but in some cases it can be a better outcome to have the pump at all, albeit without an ideal ownership arrangement, than to have it taken and sold for scrap to pay a bribe or keep protection rackets (to which the police turn a well-greased blind eye) at bay.

 

[Westernskies]

Part of the problem in many developing countries is that corruption is so endemic that it's not actually practical for most people to start businesses. Those of us who live in countries where government official basically do their job (with all the inefficiencies, etc) without creaming 25% off every transaction for them and 55% for the five levels of boss above them, don't know what we're missing. Aid organisations don't always help, but in some cases it can be a better outcome to have the pump at all, albeit without an ideal ownership arrangement, than to have it taken and sold for scrap to pay a bribe or keep protection rackets (to which the police turn a well-greased blind eye) at bay.

As a taxpayer, I have a problem about the US funding aid without accountability. No one wants to see starving kids; I do believe we need to provide the necessities for those truly in need, but there needs to to be consequences downstream for the despots, warloads and wackos who put them in that position.

 

[Payin-the-Toll]

Response to Westernskies: " Give a man a fish and he will eat for a day. Teach him how to fish and he will sit in a boat and drink beer all day!"

 

[Westernskies]

Response to Westernskies: " Give a man a fish and he will eat for a day. Teach him how to fish and he will sit in a boat and drink beer all day!"

..but at least if he falls out of the boat and drowns, the payments stop.

 

[skyvue]

Don't we already have a system that gives money to our poor....welfare?

 

[BigNick]

As a taxpayer, I have a problem about the US funding aid without accountability. No one wants to see starving kids; I do believe we need to provide the necessities for those truly in need, but there needs to to be consequences downstream for the despots, warloads and wackos who put them in that position.

Yep, but historically, successive US (and other Western) governments have tended to prop up those despots because, in FDR's words, "he may be a son of a bitch, but he's our son of a bitch".

BP is coming under fire right now for having lobbied to have Megrahi sent back to Libya (whether or not he was actually guilty is another matter entirely), but it's just the latest in a story of complicity in dictatorship that goes back decades, whether it's France's involvement in the genocide in Rwanda, the US's role in replacing Allende with Pinochet in Chile, or the whole of the West propping up the feudal Saudi regime for the last who knows how many years. I'm not very political, but it makes me feel a little uneasy when I see how cosy our governments, of all political colours, can get to some of these dreadful people, simply because of unquantifiable economic interests.

 

[RonBoyd]

the US's role in replacing Allende with Pinochet in Chile,

Or even further back, the Shah of Iran. Oh! And Saddam Hussein. The Philippines! I must have missed someone also.

 

[MikeD]

It's the old adage:

Give a man a fish and he will eat for a day
Teach a man to fish and he will eat for a lifetime

I like this one better:
Build a man a fire and he'll be warm for a day;
Set a man on fire and he'll be warm for the rest of his life.

Mike D.

 

[Sarah in SC]

ERD50, I am a big fan of Paul Polak, having, like you, read his piece in Heifer's magazine (love supporting their work). Have you read his book, Out of Poverty?
Very inventive and interesting man. Thanks for sharing his ideas with the forum and I agree, he's identified the point where capitalism can really outperform handouts in solving the persistent poverty problem.

 

[ERD50]

ERD50, I am a big fan of Paul Polak, having, like you, read his piece in Heifer's magazine (love supporting their work). Have you read his book, Out of Poverty?

When I checked, our library did not have it, or it was out, I can't recall. I need to go check again, I think the heifer piece captured his ideas a bit better than what I saw on his web site.

-ERD50

 

[harley]

It's the old adage:

Give a man a fish and he will eat for a day
Teach a man to fish and he will eat for a lifetime

I thought it was

“Give a man a fish; you have fed him for today. Teach a man to fish; and you can sell him fishing equipment.”

or was it

“Give a man a fish; you have fed him for today. Teach a man to fish, and he will sit in the boat and drink beer all day.”