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

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

#171

Post by dragonwriter »

home_boi wrote: post #142

The study won't be valid unless they wait at least 2 generations after UBI is implemented. People born before UBI grew up with the scarcity on their minds, shaping the way they act with UBI. People born right after UBI is implemented will be biased by parents who grew up wirh scarcity, like the children of American immigrants. The study can only be valid when the parents of the person to be observed has UBI for their…

UBI doesn't eliminate scarcity, so that whole argument is grounded in a false premise.

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

#172

Post by s_q_b »

okket wrote: post #39
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…

Just giving money will not work, see Saudi Arabia. They have all the money they can dream of and did not evolve. If you want it to work it needs 3 things: 1) Free Education 2) High Taxes 3) Strong Unions Sounds leftist? It may astonish you which countries have the highest ratio of rich persons per capita live. This and a good explanation can be found in "Where in the world is it easiest to get rich? (TEDxOslo)" https…

1) Free Education

The Saudi's have a recently reformed education system, complete with a freshly built full-fledged research university: King Abdullah University of Science and Technology (KAUST.)

KAUST has a more Western model of education, instruction in English, American and European faculty, partnerships with multiple Ivy League institutions. The current President of KAUST is Jean-Lou Chameau, who was previously the president of Caltech.

Perhaps most significantly, the university is granted greater freedom of speech and thought than probably anywhere else in Saudi Arabia. Saudi royalists politically protect the University, while the campus's isolated location prevents random acts of "law enforcement" by the religious police.

KAUST has an endowment of $20 Billion USD, which puts it in the same league monetarily with H/Y/P and is about twice the endowment of Oxbridge.

So the Saudis are investing in the right things in advanced education at least: alternative energy, desalinization technology, chemical engineering...

They're also building a series of new model commercial cities along the coast where they will attempt the same thing on a city-state scale. The religious rules will be less strictly enforced in these model cities, but far more importantly (for commerce), they will have independent judiciaries (still based on sharia fiqh law), but with written standardized laws of contract (uncertain contracts have put a strain on the Saudi economy.) They're also considering relaxing the onerous permitting regulations required to start a business.

It seems like the Saudis' want to have their cake, and eat it too. On the one hand, they want the benefits of Western higher education and economic systems. But on the other, they want to maintain a fundamentalist religious monarchy.

I cannot really see that being successful. The academic freedom needed to conduct meaningful research is diametrically opposed to the restrictions on thought and expression in a repressive theocracy.

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

#173

Post by kogepathic »

pbhjpbhj wrote: post #91
kogepathic wrote: post #40

Interesting concept. I'll be interested to see if it works. I worked with a company building AC mini grids in East Africa. They connected around 130 households in each village to a 220V grid. The expectation was that people would use the electricity for basic needs (e.g. light, cell phone charging) but also for productive uses (e.g. grinding grain to flour, air compressors, saws, etc). The expectation was that as peo…

Your analysis seems largely as expected but this part to me seemed a bit wrong-headed: >The vast majority though will waste the money on things which benefit them in the short term, but provide no long term economic benefit // Things like having a TV? Do you have a TV, is it a _waste_ of money too? Would you say most of the people who own TVs would describe them as a waste of money? After you've got a bed, clean wate…

> Do you have a TV, is it a _waste_ of money too.

Yes I do, and yes, since it brings me no economic benefit and I could easily live without it, it is a waste of money.

By comparison, my smartphone allows me to send emails, make phone calls, and generally communicate with my colleagues. This creates value. Watching TV or Netflix creates no economic value.

It might create social value, but the OP is about creating economic value.

> Did you address that with your projects - like if you bought this apparatus for this amount you could process millet and run a company earning this amount.

Yes! Of course they realized that people might not have the ideal or the capital to go and buy one of these machines. They worked on a hire to own scheme with local partners, and offered a lower energy price to those who wanted to buy one.

Again, only a tiny percentage of people were interested in doing this.

> setting up a TV in a communal building

This is quite difficult to achieve. You cannot be seen as picking favourites, it's really not something that works from a business perspective in these communities. People get envious really quickly.

So, communal buildings. Well, there aren't any. The government has basically no presence in these places, and asking them to build a building would probably take 5 years, if it happened at all.

The only buildings that really exist are businesses, and if you set up a TV there, the guy running it will charge people to watch it. You're playing favourites!

You could give every business a TV, but then everyone will rush to set up a "business" so they can benefit from the scheme as well.

This company itself cannot set up a TV or build a community structure because quite frankly, it will be vandalized for parts. Also the legal situation in these countries w.r.t. copyright and statements against the governments is appalling. So there is a huge liability toward providing services to the community (e.g. internet, distributing content on SD cards)

> How was the power being generated?

Small scale PV array built in the village with supporting equipment housed in a structure. The scale of these projects was Look. I'm not trying to sound negative. I want Africa to develop. They absolutely have the chance to be the next China and become an economic power house.

Unfortunately, I don't see that happening with the current political and regulatory environment there.

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

#174

Post by kogepathic »

jonlucc wrote: post #123
kogepathic wrote: post #40

Interesting concept. I'll be interested to see if it works. I worked with a company building AC mini grids in East Africa. They connected around 130 households in each village to a 220V grid. The expectation was that people would use the electricity for basic needs (e.g. light, cell phone charging) but also for productive uses (e.g. grinding grain to flour, air compressors, saws, etc). The expectation was that as peo…

If I remember correctly, this charity already does monetary donations to people using the local mobile pay system (I think it's Mpesa?). If this is that organization, there is a Planet Money episode about the founders and why they went this way.

That's probably the most efficient way to distribute the money.

Unfortunately it means fat margins for the MPESA provider (typical transaction fees range from 3-10%, depending on the size of the transaction).

Also it's probably going to turn into a tax nightmare for the company handling the payments. I could go on for a while about how ridiculous VAT rules are in these countries. Processing a transaction worth ~$0.005 for VAT purposes...

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

#175

Post by kogepathic »

MicroBerto wrote: post #62
kogepathic wrote: post #40

Interesting concept. I'll be interested to see if it works. I worked with a company building AC mini grids in East Africa. They connected around 130 households in each village to a 220V grid. The expectation was that people would use the electricity for basic needs (e.g. light, cell phone charging) but also for productive uses (e.g. grinding grain to flour, air compressors, saws, etc). The expectation was that as peo…

The pareto principle is everywhere. 90% of the productive activity will come from 10% of the people in a situation like that - if not more heavily slanted. So is there a better way of finding that 10% and investing in them directly, without ridiculously wasteful organizations?? Do you force them to make ROI? You are being downvoted because your real world experience violates the increasingly liberal tenets amongst HN…

> So is there a better way of finding that 10% and investing in them directly, without ridiculously wasteful organizations??

Probably not.

> Do you force them to make ROI?

No, because first you would have to teach them what an ROI is, and secondly because the local economy is so variable, any estimates would probably differ wildly from reality.

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

#176

Post by kogepathic »

kogepathic wrote: post #40

Interesting concept. I'll be interested to see if it works. I worked with a company building AC mini grids in East Africa. They connected around 130 households in each village to a 220V grid. The expectation was that people would use the electricity for basic needs (e.g. light, cell phone charging) but also for productive uses (e.g. grinding grain to flour, air compressors, saws, etc). The expectation was that as peo…

If anyone wants to talk to the company building these microgrids in East Africa, because you would like to work with them, or even for investment, feel free to drop me an email:

HN username @ gmail.com

I'll put you in touch with these guys.

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

#177

Post by babayega2 »

mwambua wrote: post #124

I'm a Kenyan and I can tell you that this will do more harm than good. NGO money has been distorting our economy for years now... giving people livelihoods they can't sustain, making job opportunities that create no value and making our government vestigial. The poor people that you're supporting elect the same corrupt politicians every year because they have no idea that the government is supposed to be supporting t…

I'm Burundian in East Africa and there is a saying in my country that "free things make you stupid". NGO had been giving almost free loans to households ( $50 to $100) and some have been addicted to free stuffs and now that most NGOs have left the country, that's when we find out our true poverty : poverty starts in the head. We were stupid.

But naturally, The Pareto principle [1] made that 20% of clever households acquired business minded practices and they're economically independent now. But the rest is still begging and waiting the return of NGOs.

[1] : https://en.wikipedia.org/wiki/Pareto_principle

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

#178

Post by nilstycho »

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…

Just the other week I was talking to the director of Poverty, Inc, Mark R. Weber, about UCTs. He's skeptical of cash transfers, for most of the same reasons that he's skeptical of goods transfers.

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

#179

Post by scotty79 »

Integer wrote: post #109
scotty79 wrote: post #100

Earlier quoted context omitted.

I think UBI will fare way worse int the West because of how many people rent places to live. UBI will get mostly sucked by landlords.

How about Eastern Europe? There are some extremely poor, yet relatively educated countries, and due to the Soviet legacy, the majority owns the places they live in.

Yes. This should work. Maybe even in Poland, surely east of Poland.

In the west I think UBI won't work well unless people who own a lot of real estate are incentivised to sell some with progressive real estate tax.

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

#180

Post by scotty79 »

nostrebored wrote: post #106
scotty79 wrote: post #95

Earlier quoted context omitted.

> Who knows what unintended side effects of UBI will be? Care to make a guess?

Increases in the prices of goods in a 1:1 fashion with income, especially staples? Creating a dominate telco market where having a phone is necessary (and therefore phone prices will be disproportionately higher?)? These are just some reasonable non-catastrophist concerns, which I'm sure there are a number of.

> Increases in the prices of goods in a 1:1 fashion with income

For locally produced goods should be fine because producers are poor too.

For imported goods it might be harmful because UBI cash could get sucked back out of the poor region really quickly. What I'm hoping is that sucking cash out with imports will correlate with increased volume (that it won't be 1:1 exactly) of imports of useful equipment that is not manufactured locally.

> Creating a dominate telco market where having a phone is necessary (and therefore phone prices will be disproportionately higher?)?

Don't they already use phones for small banking like money transfers?

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