GiveDirectly Planning to Give $30M in Basic Income to East Africa • Hacker News Board

Re: GiveDirectly Planning to Give $30M in Basic Income to East Africa

#21

Post by blairbeckwith » Fri, May 06, 2016, 6:49 PM UTC

nicksellen wrote: post #15

troycarlson wrote: post #4

Recently fascinated by the thought of piping donations directly to poor populations and allowing them to use it as they wish. I watched the documentary Poverty, Inc. [0] regarding the "poverty industry" and how endless foreign aid in these countries is killing the economy. If Toms shoes dumps 1,000 pairs of shoes in the city center every week, how the hell would a cobbler stay in business. Or if the U.S. pumps an end…

You can extend this argument to banking though: If the U.S. pumps an endless supply of money into Haiti, how could Haitian banks hope to compete with their loan offers?

I don't think this works. Presumably cash has a lot more utility than rice or shoes, for example. These people can always use more money (i.e. bank loads in your example), but once they have x shoes or y rice, the utility of new shoes or rice is very low.

Re: GiveDirectly Planning to Give $30M in Basic Income to East Africa

#22

Post by JamilD » Fri, May 06, 2016, 6:49 PM UTC

nicksellen wrote: post #15

troycarlson wrote: post #4

Recently fascinated by the thought of piping donations directly to poor populations and allowing them to use it as they wish. I watched the documentary Poverty, Inc. [0] regarding the "poverty industry" and how endless foreign aid in these countries is killing the economy. If Toms shoes dumps 1,000 pairs of shoes in the city center every week, how the hell would a cobbler stay in business. Or if the U.S. pumps an end…

You can extend this argument to banking though: If the U.S. pumps an endless supply of money into Haiti, how could Haitian banks hope to compete with their loan offers?

Banks generally do better when people have more money, not less. They'll get more deposits, and hopefully more loans that can actually be paid back.

Re: GiveDirectly Planning to Give $30M in Basic Income to East Africa

#23

Post by awt » Fri, May 06, 2016, 6:50 PM UTC

mbil wrote: post #14

awt wrote: post #7

Earlier quoted context omitted.

This implies that they're not wealthy because they don't have access, would you agree? Is it possible they're not wealthy because of some other reason?

I find it hard to imagine that if you're struggling to attain your own bare necessities you're going to have the energy or wiggle room to generate more wealth (e.g. to start a business)

But why are they struggling so? Is it simply because of a lack of money?

Re: GiveDirectly Planning to Give $30M in Basic Income to East Africa

#24

Post by LanguageGamer » Fri, May 06, 2016, 6:51 PM UTC

troycarlson wrote: post #4

Recently fascinated by the thought of piping donations directly to poor populations and allowing them to use it as they wish. I watched the documentary Poverty, Inc. [0] regarding the "poverty industry" and how endless foreign aid in these countries is killing the economy. If Toms shoes dumps 1,000 pairs of shoes in the city center every week, how the hell would a cobbler stay in business. Or if the U.S. pumps an end…

I agree, though it seems a distinction needs to be drawn between aid that's providing goods and services that could be produced locally, vs aid that's providing medical goods and services that couldn't emerge from the local economy fast enough to help those being helped (such as perhaps the Gates Foundation does).

Re: GiveDirectly Planning to Give $30M in Basic Income to East Africa

#25

Post by tn13 » Fri, May 06, 2016, 6:51 PM UTC

Letting markets function has helped poor countries like India, China and even North Korea. Making decisions on behalf of poor people has hurt poor even in the richest countries like USA. Common sense to me.

There is always an issue of law and order though. If theft is a common problem then this may not work.

Re: GiveDirectly Planning to Give $30M in Basic Income to East Africa

#26

Post by mathattack » Fri, May 06, 2016, 6:52 PM UTC

Seems like a great experiment. I think this will do wonders for both the people, and our knowledge of how to best provide aid.

2 things I'm interested in seeing:

1 - Does it make a difference if it's USD sent over, versus local currency? (Is it a cash shortage, or a foreign cash shortage?)

2 - How much inflation will occur?

Re: GiveDirectly Planning to Give $30M in Basic Income to East Africa

#27

Post by troycarlson » Fri, May 06, 2016, 6:53 PM UTC

nicksellen wrote: post #15

troycarlson wrote: post #4

Recently fascinated by the thought of piping donations directly to poor populations and allowing them to use it as they wish. I watched the documentary Poverty, Inc. [0] regarding the "poverty industry" and how endless foreign aid in these countries is killing the economy. If Toms shoes dumps 1,000 pairs of shoes in the city center every week, how the hell would a cobbler stay in business. Or if the U.S. pumps an end…

You can extend this argument to banking though: If the U.S. pumps an endless supply of money into Haiti, how could Haitian banks hope to compete with their loan offers?

I'm not an economist so I'm sure there are variables I'm not accounting for, but here's my opinion. I think the difference is that an endless supply of money (we know it's not truly endless, but a large influx of cash) allows commerce to occur and people can buy/sell more than commodities. The mere existence of a bank doesn't improve the lives of citizens if said citizens have no money to purchase food/goods and no assets to offer as collateral to take out a loan in the first place. There needs to be some sort of economy in place before a bank will benefit a population anyway. The bank could also benefit because residents now have assets to leverage when seeking cash above and beyond their basic income since I'm assuming starting a business may cost more than donations or a basic income would provide.

I would love to hear others' opinions on this.

Re: GiveDirectly Planning to Give $30M in Basic Income to East Africa

#28

Post by awt » Fri, May 06, 2016, 6:57 PM UTC

mac01021 wrote: post #16

awt wrote: post #5

While initially in favor of basic income due to the income trap created by the traditional approch, I have come to oppose it due to a better understanding I now have of the nature of money. Consider that basic income works when you think of money in the micro context as a means of exchange for goods and services, but not when you think of it in the macro context as a reflection of the wealth of a society. Simply tran…

Why doesn't transferring money from you to me make me wealthier? It allows me greater access to goods and services, which seems to me to be almost the definition of greater wealth.

The wealth of a society is a reflection of the quality of the people in the society. 10 million in my hands isn't worth as much as 10 million in the hands of warren buffet.

Re: GiveDirectly Planning to Give $30M in Basic Income to East Africa

#29

Post by DougWebb » Fri, May 06, 2016, 7:00 PM UTC

awt wrote: post #18

ThrustVectoring wrote: post #12

Earlier quoted context omitted.

Money is not wealth - it is debt. That's what the fundamental purpose of money is: instead of trading your stuff for other things, you trade it for a certain value of things at an unspecified later time. With this perspective, there's no distinction between micro and macro contexts for money. It's all a unit of account for how the economic output of a society gets distributed. Transferring money from one group to ano…

So let's say you give 1 bar of gold each to a group of 50 year olds, and 1 gold bar each to a group of 12 year olds. Each group is now equally wealthy and could each produce a cathedral of the same quality?

Yes, they could each hire a cathedral builder for 50 gold bars.

Re: GiveDirectly Planning to Give $30M in Basic Income to East Africa

#30

Post by skybrian » Fri, May 06, 2016, 7:05 PM UTC

mathattack wrote: post #26

Seems like a great experiment. I think this will do wonders for both the people, and our knowledge of how to best provide aid. 2 things I'm interested in seeing: 1 - Does it make a difference if it's USD sent over, versus local currency? (Is it a cash shortage, or a foreign cash shortage?) 2 - How much inflation will occur?

1. The donations will likely be in local currency (via mobile phone payments), but the charity needs to exchange dollars for local currency. So it helps somewhat with the exchange rate if the country is short on foreign currency, but I'd guess the scale is not nearly enough to have any significant effect.

2. It doesn't increase the amount of currency in the country as a whole. Locally, if the economy is doing better, perhaps people will charge more for jobs, but they also trade with other parts of the country so that would tend to keep prices stable (if not too isolated).