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Comment by thefounder | Hacker News Reader

>> Instead of funding these morally bankrupt and self-interested startups, let's support effective generosity. Give today:

How is that sustainable? A low interest loan would seem more reasonable. And who wants free money?

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This is a long-contested debate in the field of international development. The model you propose is called microfinance, and has been attempted for decades. Here's a summary of the issue: https://blog.givewell.org/2013/01/04/cash-transfers-vs-micro...

In short:

- Microfinance programs that grant small, low-interest loans aren't sustainable. Administering those programs (especially in developing countries) carries massive overhead that isn't offset by revenue from interest.

- Furthermore, there isn't strong evidence that low-interest loans actually improve their recipients' well-being on net (considering the harm that indebtedness can cause).

- Evidence (from randomly-controlled trials) shows that direct cash transfers are effective in improving recipients' well-being on a number of metrics, and that recipients do not spend them on "sin goods" like alcohol or tobacco[0].

[0] https://www.princeton.edu/haushofer/publications/Haushofer_S...

It's sustainable because the amount of money that's life changing to people in the poorer parts of the world are a moderate purchase to people in the richer parts. Additionally the benefits last way longer than just the initial purchases made with the money, by giving it directly to people instead of giving them things it's injecting cash into the local economy where it circulates multiple times going through multiple people's hands. There's studies showing this kind of direct giving and the economic activity it generates is effective at improving people's lives. The goal of GiveDirectly is charitable after all so they're not trying to extract value from the population.

> And who wants free money?

Are you trying to say people won't accept free money?

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