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Cash to the poor: Giving money directly works surprisingly well

economist.com

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Re: Cash to the poor: Giving money directly works surprisingly well

#11

Post by emiliobumachar »

frank_boyd wrote: post #2

As a matter of fact, society has not a single valid reason to allow concentration of excessive wealth on some kind of restricted group or "elite" (as, by the way, also promoted erroneously by the idea of the "American Dream"). Here are a few facts to explain that this concept is not sane at all: - Excessive wealth is usually hoarded (in bank accounts), not used: But if you want the economy to work the most (creating…

pg once pointed out there may be far fewer startups in a society that does not allow concentration of excessive wealth. That's at least one single valid reason.

http://paulgraham.com/inequality.html

"People start startups in the hope of becoming much richer than they were before. And if your society tries to prevent anyone from being much richer than anyone else, it will also prevent one person from being much richer at t2 than t1."

Re: Cash to the poor: Giving money directly works surprisingly well

#12

Post by pyoung »

ekianjo wrote: post #5
frank_boyd wrote: post #2

As a matter of fact, society has not a single valid reason to allow concentration of excessive wealth on some kind of restricted group or "elite" (as, by the way, also promoted erroneously by the idea of the "American Dream"). Here are a few facts to explain that this concept is not sane at all: - Excessive wealth is usually hoarded (in bank accounts), not used: But if you want the economy to work the most (creating…

> - Excessive wealth is usually hoarded (in bank accounts), not used: But if you want the economy to work the most (creating jobs, etc.), you need to make money circulate as much as possible (which is not what rich people usually do). Another economical fallacy. When you put money in the bank, it's not standing there doing nothing. Savings are invested, loaned, used to create additional value. That's why banks want y…

> The only thing society should do is ensure everyone has the same rights in regard to the Law no matter how rich, how poor, how different you may be.

No, society should seek to maximize widespread improvements in quality of life and further humanities cause through social, technological, and cultural investments. Nature may be unfair, but just because we were born from it does not mean we have to model out society after it.

Re: Cash to the poor: Giving money directly works surprisingly well

#13

Post by Gustomaximus »

Would this reduce administration cost also? We always hear of charities where 20 cents on the dollar actually makes it to the people. If this can reduce admin cost by not having to make, control or follow up on conditions it could really help more money get to where it is needed.

Re: Cash to the poor: Giving money directly works surprisingly well

#14

Post by joelrunyon »

georgemcbay wrote: post #9
ekianjo wrote: post #5

Earlier quoted context omitted.

> - Excessive wealth is usually hoarded (in bank accounts), not used: But if you want the economy to work the most (creating jobs, etc.), you need to make money circulate as much as possible (which is not what rich people usually do). Another economical fallacy. When you put money in the bank, it's not standing there doing nothing. Savings are invested, loaned, used to create additional value. That's why banks want y…

Nature may be unfair, but it is way more fair than modern wealth distribution. The richest 300 people in the world have more money combined than the poorest 3 billion people. You don't see deviances like that in genetics. Also, if you believe all Americans (also applies to all other nationalities) have the same rights in regard to the law, well I don't even know how to respond to that, because believing that would ma…

> You don't see deviances like that in genetics.

You don't? You don't think Lebron James is better than about a billion people at the game of basketball?

This is the 80/20 rule niched down about 10x.

Re: Cash to the poor: Giving money directly works surprisingly well

#15

Post by ekianjo »

georgemcbay wrote: post #9
ekianjo wrote: post #5

Earlier quoted context omitted.

> - Excessive wealth is usually hoarded (in bank accounts), not used: But if you want the economy to work the most (creating jobs, etc.), you need to make money circulate as much as possible (which is not what rich people usually do). Another economical fallacy. When you put money in the bank, it's not standing there doing nothing. Savings are invested, loaned, used to create additional value. That's why banks want y…

Nature may be unfair, but it is way more fair than modern wealth distribution. The richest 300 people in the world have more money combined than the poorest 3 billion people. You don't see deviances like that in genetics. Also, if you believe all Americans (also applies to all other nationalities) have the same rights in regard to the law, well I don't even know how to respond to that, because believing that would ma…

> Also, if you believe all Americans (also applies to all other nationalities) have the same rights in regard to the law, well I don't even know how to respond to that, because believing that would make you incredibly, desperately naive.

Where did I ever say that? I never even began to imply this. I'm just saying that that's what how the Law should be working as a central element of society.

Re: Cash to the poor: Giving money directly works surprisingly well

#16

Post by ekianjo »

georgemcbay wrote: post #9
ekianjo wrote: post #5

Earlier quoted context omitted.

> - Excessive wealth is usually hoarded (in bank accounts), not used: But if you want the economy to work the most (creating jobs, etc.), you need to make money circulate as much as possible (which is not what rich people usually do). Another economical fallacy. When you put money in the bank, it's not standing there doing nothing. Savings are invested, loaned, used to create additional value. That's why banks want y…

Nature may be unfair, but it is way more fair than modern wealth distribution. The richest 300 people in the world have more money combined than the poorest 3 billion people. You don't see deviances like that in genetics. Also, if you believe all Americans (also applies to all other nationalities) have the same rights in regard to the law, well I don't even know how to respond to that, because believing that would ma…

> The richest 300 people in the world have more money combined than the poorest 3 billion people

So, what is your point, exactly ? The world would be better place if everyone was as poor as the next ?

You could say that the Universe is incredibly unfair, after all, for all we know, Earth is the only planet with advanced life in the Milky Way, and would it be better if instead there was bacterian life everywhere instead ?

Besides, whatever your point is, it's moot, because the key thing you should look at is : is the life of the 3 billions people improving ? The answer is a vibrant "YES" and the world as a whole is getting out of poverty, thanks to the dark evil of capitalism, which incidentally also works pretty well to get everyone out of the shit hole.

Re: Cash to the poor: Giving money directly works surprisingly well

#17

Post by ekianjo »

pyoung wrote: post #12
ekianjo wrote: post #5

Earlier quoted context omitted.

> - Excessive wealth is usually hoarded (in bank accounts), not used: But if you want the economy to work the most (creating jobs, etc.), you need to make money circulate as much as possible (which is not what rich people usually do). Another economical fallacy. When you put money in the bank, it's not standing there doing nothing. Savings are invested, loaned, used to create additional value. That's why banks want y…

> The only thing society should do is ensure everyone has the same rights in regard to the Law no matter how rich, how poor, how different you may be. No, society should seek to maximize widespread improvements in quality of life and further humanities cause through social, technological, and cultural investments. Nature may be unfair, but just because we were born from it does not mean we have to model out society a…

> No, society should seek to maximize widespread improvements in quality of life and further humanities cause through social, technological, and cultural investments

That's just your point of view. "Society" is not a unique body, it should be based on the sum of the individual aspirations of everyone part of it.

Re: Cash to the poor: Giving money directly works surprisingly well

#18

Post by ddebernardy »

ekianjo wrote: post #5
frank_boyd wrote: post #2

As a matter of fact, society has not a single valid reason to allow concentration of excessive wealth on some kind of restricted group or "elite" (as, by the way, also promoted erroneously by the idea of the "American Dream"). Here are a few facts to explain that this concept is not sane at all: - Excessive wealth is usually hoarded (in bank accounts), not used: But if you want the economy to work the most (creating…

> - Excessive wealth is usually hoarded (in bank accounts), not used: But if you want the economy to work the most (creating jobs, etc.), you need to make money circulate as much as possible (which is not what rich people usually do). Another economical fallacy. When you put money in the bank, it's not standing there doing nothing. Savings are invested, loaned, used to create additional value. That's why banks want y…

> Another economical fallacy. When you put money in the bank, it's not standing there doing nothing. Savings are invested, loaned, used to create additional value. That's why banks want your money. (...)

Actually, it's the other way around. Banks loan money first. Only then do they worry about the amount of cash they have in their vault. The parent post is actually correct for the most part: excessive amounts of wealth tend to end up blowing asset bubbles rather than be put to good use in the economy.

You might find this talk by Steve Keen (of Debunking Economics fame) interesting if you've an hour or so:

http://www.youtube.com/watch?v=BPRdyVabiQk

Re: Cash to the poor: Giving money directly works surprisingly well

#19

Post by pyoung »

emiliobumachar wrote: post #11
frank_boyd wrote: post #2

As a matter of fact, society has not a single valid reason to allow concentration of excessive wealth on some kind of restricted group or "elite" (as, by the way, also promoted erroneously by the idea of the "American Dream"). Here are a few facts to explain that this concept is not sane at all: - Excessive wealth is usually hoarded (in bank accounts), not used: But if you want the economy to work the most (creating…

pg once pointed out there may be far fewer startups in a society that does not allow concentration of excessive wealth. That's at least one single valid reason. http://paulgraham.com/inequality.html "People start startups in the hope of becoming much richer than they were before. And if your society tries to prevent anyone from being much richer than anyone else, it will also prevent one person from being much richer…

His logic is a bit off. In a truly efficient market (big if), if taxes were raised so significantly as to have a major impact on the rewards, then you would get a corresponding reduction in risk. I.E. Instead of having a 1 in 10 chance of a startup making it (as he claims in the post) you would probably end up with a 1 in 8 chance (or something similar) as the smaller rewards would, in theory, reduce the number of competitors. You would still end up with the same number of winners however.

In reality, there are a number of intangible benefits to starting a business that will overpower any reduction in startups due to higher taxes. Autonomy, excitement, and having a large impact all contribute in the decision to take the risk. Additionally, starting a business is still one of the only ways to strike it rich (unless you get lucky in the athlete/musician/actor department). So for most people with sizable ambitions, a reduction in rewards due to higher taxes will not have any meaningful impact on their decision.

Re: Cash to the poor: Giving money directly works surprisingly well

#20

Post by ekianjo »

frank_boyd wrote: post #7
ekianjo wrote: post #5

Earlier quoted context omitted.

> - Excessive wealth is usually hoarded (in bank accounts), not used: But if you want the economy to work the most (creating jobs, etc.), you need to make money circulate as much as possible (which is not what rich people usually do). Another economical fallacy. When you put money in the bank, it's not standing there doing nothing. Savings are invested, loaned, used to create additional value. That's why banks want y…

> Another economical fallacy. What I meant is: this money is not used to promote consumption (which it were in the hands of poor people). It's consumption (of services or products) that creates jobs. Jobs get created because there is demand for something, not because some rich elite decides they can invest (because they have money). Investment does not depend on the existence of some rich elite. "Trickle down economi…

> Jobs get created because there is demand for something

In the modern society, you are beyond the natural "needs" of the population and you don't need any of the new products that are sold to you. Obviously nobody needed a iPhone pre-2007 and now suddenly everyone has to have one. There's nothing such as "fixed demand". Demand is created by new products, designed by rich elites or companies that can manufacture them and need significant investment to make them a reality.

And the "crowd" investment system already exists, by the way. It's been around for 300 years, it's called the stocks exchange.

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