"while there were large economic gains for recipients (targeted as the poorest), gains for non-recipients were so substantial that the gap between the poorest and least-poor within villages widened slightly." Now that is a novel result!
Publicising that might be a way of overcoming the resistance of the large number of people who are mainly interested in their own relative status, and so dislike giving assistance to the poorest members of society. If you can show people that yes this intervention will help the poorest but it will help you more then those concerned mostly with their own relative status might be more likely to back it.
If you can show people that yes this intervention will help the poorest but it will help you more then those concerned mostly with their own relative status might be more likely to back it.
Folks have been trying this. When the poorest folks have enough money to spend on things, everyone tends to benefit - it isn't a new theory. But mostly, teaching folks this has failed. It is either that, or you need to settle on "people simply dislike giving others help, even if they reap rewards."
I think part of the issue is that the rewards aren't nearly as visible or shockingly impactful as actually being given money to thrive.
One important caveat is that in the study, as far as I can tell, the money is coming from a different country (presumably the USA) than the target country (Kenya), so there is a baseline effect of increasing the net wealth of Kenya. If the money is collected from and distributed to the same community, the results may not necessarily be the same. I think it would be very interesting to see a study along these lines, but I’m not sure how feasible it would be.
I think it would. There exists at least two economic systems in a country, the capital economy and the productive economy. The capital economy represents assets and wealth that aren't involved in day to day things. Inflated property values, portfolios of gold holdings, etc. The productive economy is the one where most people participate in with daily life. Its' the $7 you hand to a worker to transmute into a sandwich. The $80 a wage earner gets paid over a shift that is mostly parted out to things like groceries and rent.
Universal income promises to tax the capital economy and shift that money into the productive economy. In effect, you are taking gold that previously was sitting idle underneath the sleeping dragon and returning it to the village, increasing the real productive money supply by taking money that's just being sat upon and using it for real productive use.
The general trend of history seems to suggest this isn't true.
Why do you think it is?
I mostly see propaganda and lies directed at stopping this from happening rather than a basic human response to it.
Like say the 'welfare queen' myth, or the trope that 'giving people money will just cause them problems or make them lazy', seems you have to really stretch to convince people that helping the poor is a bad idea and the standard human response is to help.
> Like say the 'welfare queen' myth, or the trope that 'giving people money will just cause them problems or make them lazy', seems you have to really stretch to convince people that helping the poor is a bad idea and the standard human response is to help.
In my experience, these attitudes are more common among those who live around poor people than among those who don't. It's my wife who taught me the difference between "people who are good at being poor and ones who aren't." Coming from a privileged background, I had no idea.
It's a sociocultural adaptation to scarcity. Historically, whether you were in a Bangladeshi village or rural Oregon, even the rich don't really have sufficient surplus to help more than a few people. And there were no rich foreigners or central government to swoop in. In that scenario, anticipating and expecting help is maladaptive. Everybody in the village needs to be incentivized to work as hard as possible for themselves before relying on anyone else.
When did rural Oregon find out that there was in fact several layers of central government available to help them? Didn't they feel a bit foolish at that point?
It's great that they were all working so hard in grinding poverty and just letting the weak die or whatever, very inspirational, but being vaguely aware of reality might have served them better overall.
The New Deal agriculture subsidies must have really confused them if they didn't even know about the state government.
>In my experience, these attitudes are more common among those who live around poor people than among those who don't
It shouldn't exactly come as a shock that the people who have to live in proximity to the results of such systems have more to say about the downsides than those who can just observe from their ivory tower and can look at some spreadsheet, do a little math and say things like "net positive" with a clear conscience. Even if you have very good results the former group is simply going to be much more aware of the tradeoffs than the latter who will at best only know second hand.
"even the rich don't really have sufficient surplus to help more than a few people"
This wildly underestimates how rich some people are in the US. For example, just 5% of the wealth from only the 20 wealthiest Americans would cover all federal, state and local funding for housing support in a year.
My thought was, "I bet $100 billion is actually a pretty decent chunk of the US welfare state". Turns out, that's about as much as is spent at all levels of government on housing (primarily direct subsidies, legacy housing project upkeep and funding for newer tax-credit housing construction).
Then I wondered, "what kind of tax could cover that cost?" and I found a list of net worths and saw that about 5% of the wealth of the top 20 US billionaires covered that entire spending for a year. There's much more compelling comparisons to be made but I didn't have all day.
It not that simple. The same theory say that government should spend more money during recessions since that send more money into the hands of citizens, thus increasing peoples ability to consume more and drive up the economy. However, by doing so the amount of money in the system increase and thus you get inflation, forcing the government to spend even more money.
This doesn't happen every time as is demonstrated by this study, but history has plenty of example where it has and hasn't worked. The open question is to figure out when it work and why it doesn't work in other situations.
The cause of the inflation matters in how the response plays out. The inflation we're seeing currently isn't being driven by the general population having too much money but the response by central banks has been to act like it is.
Personally I view the two major factors to be post pandemic shipping costs and the Ukraine. A meaningful response from government could have headed this off but instead we're seeing energy producers hit record profits while large parts of society are going to be unable turn their heating on over the winter and on top of that rising interest rates are going to see every other aspect of their budget become even more expensive as well.
> The inflation we're seeing currently isn't being driven by the general population having too much money
Actually, it partially is. One third of the current inflation is demand driven according to the Fed (i.e. stimulus checks, unemployment payments, above-market wages due to unemployment checks, etc.) [1]. There are also supply shortages but it's hard to disentangle what part of the supply shortages are due to shipping costs vs. having labor shortages due to said unemployment checks.
We're seeing a lot of the price pressures calm down now as coincidentally, the labor force grows back to pre-pandemic size. [2]
> A meaningful response from government could have headed this off
Like what, putting a price cap on oil? That doesn't work and you and I both know it.
>(i.e. stimulus checks, unemployment payments, above-market wages due to unemployment checks, etc.)
Yours source doesn’t mention these at all. Unemployment stimulus ended last year at the latest. It mentions supply being half the cause, and demand, being a third.
This doesn’t deny your point, but your reasoning is unfounded. When are people going to stop blaming stimulus and unemployment that stopped happening years ago at this point?
> When are people going to stop blaming stimulus and unemployment that stopped happening years ago at this point
Because even though it stopped happening a year and a half ago, a lot of stuff was closed down still so people weren't spending yet. They were saving. Americans built up $2.7T in "excess" savings [1]. That money is being spent, and has been spent, over the last 6 months to a year. Notice that inflation really only started up after re-opening.
The article gives two examples, one of a public policy employee who got an extra $500/mo from the pause in student loan payments and built up substantial savings, and a family that was laid off but received equivalent funds from unemployment, and ended up with more money than they previously had due to stimulus+child tax credit. The family ended up spending money on dance/karate lessons for their kids.
So not only did a lot of people not seek alternative employment (e.g. in a different field) when laid off due to inflated unemployment benefits, but they also ended up being able to spend more than they could previously afford due to stimulus. What does that additional spending require? More labor, which there was a shortage of due to unemployment payments.
If it was only energy costs and supply chain that was causing inflation, we'd see substantially decreased consumption and few wage hikes. Wage hikes are driven by labor's supply relative to demand, not by cost of living (although CoL can affect supply). We are seeing relatively high demand relative to supply and increased bargaining power for a lot of labor, which implies decreased supply. Guess where that decrease came from?
There are multiple studies and theories being put out on why inflation occur, both now and in the past. I don't really see a major consensus on a single explanation.
The two major one that seems to make most sense to me is "net importing vs net exporter", and the other is the theory about low supply. For the first one, if a country is importing more than exporting, then the imports is being paid over time by the exports. Increasing the amount of money in such country does nothing since its the exported products that pay for the imports, not the currency.
The second theory is that in periods where demand exceed that of supply. In those situation people will bid to buy the limited resource, and if you increase the amount of money circulating then the bids will simply go up for the same limited resource. Natural gas is being used as an example in Europe, where the only way to reduce inflation is to reduce consumption. Reduced consumption however slows economic growth and thus a conflict between inflation and growth.
> There are multiple studies and theories being put out on why inflation occur, both now and in the past. I don't really see a major consensus on a single explanation.
I wasn't suggesting a general explanation for all cases of inflation. I'm saying that the current inflationary period has some easily identifiable causes and the measures that central banks take against general background inflation are actively harmful in this situation and instead should be tackled by government directly.
The second theory is the closest explanation for the current inflationary period and the measures are perfectly fine if you're talking about curbing the consumption of luxury goods and services. It falls down when you're targeting the necessities of survival because at that point you're effectively choosing to kill off some of your population because of a refusal to regulate.
Government can always respond by taking money back out of the system in the form of taxing wealthy people. You don't have to print money. You can just redistribute what's already there.
They might dislike rational helping because they see their own place in the economic game as irrationally hampered, and under conditions of perceived injustice, would rather get their own before extending access to others.
Some years ago I was talking with a friend of mine about how things were going badly in a particular country that is culturally of interest to us. I was saying something about how it would be so much better if they had better economic growth so that people there could be less poor, and she said something like "but then they would consume more!". She's not rich, but she's definitely not poor -- she's a divorced professional, she works at home, and she has a wonderful, large house in midtown Austin (in a great location) that she owns outright. Her house is probably worth a lot of money, but she and her ex-husband bought it decades ago. I probed a bit and she was not embarrassed by what she said. She consumes a fair bit, but she doesn't want others consuming more than they do, even though they consume a lot less than she does.
The problem is that the conservative perspective would largely rather go without these net benefits than see someone they think is undeserving, or worse "immoral" in some way, get any benefit.
That's why we have means testing at all: not to prevent people from needlessly getting benefits, but to prevent those who are undeserving of them from getting them.
A lot of things make more sense when you understand this imo, and stop trying to frame other people's views into your own moral framework (giving you the mistaken impression that they're hypocrites about it).
The conservative perspective is not, and has never been, that poor people deserve to stay poor. It is that I can and will give my money to poor people, and you're free to do likewise, but we're not going to point a gun at old Steve and make him do the same.
Now that gun-pointing redistribution programs are fully entrenched, some people are still trying to have some say - ANY say - in where their money goes.
> The conservative perspective is not, and has never been, that poor people deserve to stay poor.
It's a good thing I didn't say it was then, isn't it? I'll help you, if you really want to try to strawman what I said, it would be closer to: "the conservative perspective is that bad people deserve to be poor."
But I do think "poor people stay poor" is the net effect of conservative policies, because they prioritize other things over lifting people out of poverty, as you're doing in this post.
Instead they focus on lifting the "right people" out of poverty. Because that's the main reason to be able to pick and choose your charity: to make sure it goes to the people you think deserve it, or will use it right, or so on.
I think to be a conservative in this sense you actually have to first believe the myth that money you are taxed was yours to begin with, and you aren't merely a temporary holding container. After that myth dissolves, the whole anti tax conservative ethos logically falls apart. If you want more money, lowering taxes is objectively backwards. Just ask for a raise if you aren't happy with your pay or seek out a better job.
All allocation of property, including maintaining the status quo, involves the use of social convention backed by force. There are many people who would happily not live on the streets if a massive gun-pointing programme on behalf of property owners didn't evict them and deter them from finding another nice presently-unoccupied property.
(Smarter conservative arguments focus on utilitarian claims that [forms of] redistribution reduce incentives to grow the economy and build houses, rather than dubious moral claims that Uncle Sam pointing his tax collectors at Steve is somehow more immoral than Steve pointing his bailiffs at tenants)
Or trickling from the people who do nothing to the people who have to produce something nice for the lucky ones to buy. From the non-workers to the workers.
For capital gains, doing nothing to earn them is the rule. The fact that economic activity doesn't appear out of thin air and that someone has to pay those capital gains either by foregoing income or through higher prices is usually forgotten.
What really disappoints me is that Marxist don't follow a very simple idea, let profits and capital gains reach zero through market forces. That would fulfill the spirit but not the letter of communism.
Did anyone suggest it was? That seems like a very weak straw man of the very many sensible arguments from multiple angles, for why vast wealth inequality is a bad thing for society, including the members of the society with the extreme wealth but surrounded by poverty.
Supplying handouts does not affect the wealth gap - giving the needy some real capital like own housing, shops, etc would actually contribute to that goal. Handouts don't help enough because the money is spent on their necessities (which was the point), and obviously that means the money immediately flows to the rich ones that supply those items (housing, food, etc).
Reducing the wealth gap is crucial, I think you're severely misunderstanding.
Yeah, this is an unfortunate side effect of many social programs. Eg. housing assistance is just money that (1) goes directly to landlords and (2) removes market pressure and keeps prices for low quality housing higher than it should be.
Way more effective would be caps on rent, but for some reason politicians don't want to use this tool....
Let's imagine this in the most extreme form in a thought experiment. An identical twin is stranded in the desert. You have the means (water, transport) to save one of them. Is it better to save one (which one?) or leave both to die? (I have not settled on a firm answer so far.)
Any value system in which "save one person" is not obviously and objectively better than "save zero people", with no other tradeoffs or details present, seems objectively incorrect.
tbf real world tradeoffs are usually more like "save one person with high degree of likelihood of success" vs "attempt to save two people with significant likelihood of failure"
It's interesting, this is the sort of thing that Angus Deaton suggested when he argued against the EA program in a Rationally Speaking podcast[1]. His premise is that cash transfers to the needy won't work in a country where an oppressive government can just take the cash for themselves. Perhaps this is part of the effect here? (Bribes, taxation, etc.) I'm a bit skeptical that this is a knock-out argument against the GiveDirectly program, but it's definitely something to keep in mind and explore further.
But you can also say the opposite: handouts increase inequality and poverty.
Who is going to suffer because of the enormous covid handouts and subsequent inflation?
It was nice while it happened but a lot of rich people really benefited and a lot of poor people are going to go through the worst consequences of inflation and recession.
> Who is going to suffer because of the enormous covid handouts and subsequent inflation?
Don't know how it played where you live, but in my country, most covid handouts went to the rich, not to the poor.
1. Cash was given to companies they could then give to the people, instead of straight to the people.
2. Cheap/free loans were given to companies/rich people, not poor people, because poor people can't pay off loans so nobody gives them any.
The insane stock market profits were the result of this - rich people getting excess money. If it went to the poor people, they'd buy food and shelter, not stonks.
In the US 1 & 2 happened in a big way certainly, but there were also large direct payments to people below a certain income along with significantly bumping up unemployment benefits (to the extent that many were making more unemployed than they were when they had jobs)
The amount of fraud in the PPP program alone might be north of $80B. And the fraud in the other programs isn't inconsequential either. "large direct payments" is a joke, right? $2500 for a family? That's about one month's income for people who had lost their jobs. And many states decided not to extend their unemployment, or to limit it drastically because business interests started to complain about not being able to find enough wage slaves.
More for families, many state programs which added to this, hundreds of billions of federal funding to states for responses.
And much expanded unemployment payments, +$600 and +$300 *weekly on top of normal unemployment for long periods, as well as significantly expanded eligibility for who could get it and for how long.
Plenty of people made more money unemployed for significant amounts of time than they did with their jobs pre-pandemic.
Something like 10% of the population was on unemployment for a good while.
The people making more money from unemployment were not high wage earners to begin with. They were struggling to bet by. Look at this breakdown of the sorts of jobs that recieved more in benefits than wages and those that didn't. Skilled labor like nursing saw less earnings even with the CARES act under unemployment. The people who saw substantial gains were in fields like food service, not known to be a field that lets you get by in most high cost of living areas as it is.
One can so see how pandemic unemployment and other direct payments also substantially benefited existing businesses by not having demand for their goods and services drop, causing a cash crunch in otherwise healthy businesses.
> But you can also say the opposite: handouts increase inequality and poverty.
They didn't say anything that would let you conclude either of those things in the article, one they said the exact opposite of. Not read the whole paper yet though.
Even if I also have a hunch that your attribution of inflation to handouts is true, I do not believe that it has been established.
What is clear however, that increased prices for labor, wheat and energy, combined with post-covid logistics issues, have very clearly increased consumer pricing.
Inflation is due to the amount of money (over $10 trillion? hard to find a solid number that doesn't end in bickering about small details) created by the US Federal Reserve, in no small part in order to pay for handouts to people in businesses.
Or perhaps another way to say it is this: cash doesn’t matter. It’s all about capital. If you want to reduce inequality, give the poor some capital. Unfortunately, I think they’ll likely sell their capital to buy food or pay rent.
Capital is only valuable when your basic needs are met. If shelter, food, energy and transportation costs creep into you every week it's just logical you'd trade some capital for cash to meet those needs...
And homeowners are increasingly becoming massive companies rather than individuals. That's going to end up being feudalism, right? The ownership of these companies is going to be passed down through families.
We use handouts to prevent revolutions and political instability. You don't recognize the absolutely massive benefits that those payments have to everyone because they get to ignore the poor.
When the government was handing out money indiscriminately to everyone right after Covid, we just put the money in the bank. That helped us. But it didn’t stimulate the economy. When they gave the same amount of money to some people we knew that lost their jobs, they spent it on necessities - helping the economy.
Giving money to people who will spend it obviously helps everyone. But there have been plenty of studies showing that people will hurt themselves financially even if it will help other people. Especially if it helps “them”.
Publicising that might be a way of overcoming the resistance of the large number of people who are mainly interested in their own relative status, and so dislike giving assistance to the poorest members of society. If you can show people that yes this intervention will help the poorest but it will help you more then those concerned mostly with their own relative status might be more likely to back it.