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Comment by mcherm | Hacker News Reader

If the aid programs can easily afford to simply give out the average annual income to each person, then why on earth don't they just do that already?!

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Because building wells is more effective at improving access to clean water.

Do you really think giving people more money would make developing countries develop faster? It would just create incentive for companies to keep things as they are, so they can extract that money in exchange for things like bottled water. Those companies would seek to corrupt local governments to do so. That leads to widespread aid redirection and skimming.

I think giving people (not local governments) money would typically help them develop faster than deciding for them what to spend the money on. But a country can’t develop without decent institutions and I agree that you have to work around the constraints created by governmental corruption.

I agree on the principle: giving money to people whose personal development is hindered by poverty obviously allows them to overcome the hindrance.

However, this does not mean that giving money to people is going to make those people want to develop themselves and their surroundings, unless they are already in the process of doing so.

The British ca. 1910 would certainly agree.

>I think giving people (not local governments) money

And what stops the local government from trying to take a big cut?

good question, maybe you give the money continuously (every month or so) and commit to stop giving it if the local government tries to take too big a cut – then their incentive to start taking a cut would be limited

corruption.

You realize corrupt indivisuala and governments get their fingers into the specific aid that flows through NGOs as well right?

Of course. But you plant an liquid asset somewhere and the best they can do is tax it. You move fungible stuff like money or staple grains around and a lot more is going to evaporate along the way.

They can force you to hire their contractors for construction and delivery, at an exorbitant price to fund kickbacks. They can have you install infrastructure on public land and then seize that land and use it for an aristocrat's private residence. They can restrict the places you can build infrastructure to provinces that recently favored the ruling party to curry political favor. There are plenty of ways for despots to profit off of "development" projects beyond taxation.

look up your senators' investments!

There are instances where direct cash aid has proven very effective vs traditional aid. Notably in food aid where giving people and farmers money instead of just distributing food lifts the whole community up. With traditional food aid where it's just given away it doesn't help local farmers because it's just satisfying some of the need for food keeping them from really advancing economically. When cash is given instead the ability to buy food goes up, farmers can invest in better equipment or more workers, and the money circulates through the community. Giving money greases the wheels and kickstarts a little economic boom.

It's not a perfect solution because it needs a certain level of stability and existing things to boost but it's a fairly robust way of helping people become less reliant on outside aid in the long run.

https://www.theatlantic.com/international/archive/2015/09/we...

Great question. There is a study on a program in Kenya from a company called GiveDirectly that tries to analyze that very question: https://files.givewell.org/files/DWDA%202009/Interventions/C...

Here is a more readable reference "Does it Work?": https://www.givewell.org/charities/give-directly#Does_it_wor...

Per capita GDP is not income, especially in pre-industrial countries like Burundi where the bulk of economic activity wouldn't be captured by the metric.

Look at what happened to the US when people were given free money.

Money is ultimately numbers on a piece of paper. It's inherent worth is equal to that of monopoly money. It takes a lot of effort to keep that from happening.

> Look at what happened to the US when people were given free money.

I like how in this worldview giving money to the capital class of society is fine and dandy, but giving money to labour class is disasterous. Seems suspiciously convenient.

Giving money to the capital class means that Manhattan high rises cost more than the average millionaire makes in a decade.

Giving money to the working class means that such luxuries as lettuce double in price.

The rich have been dealing with ridiculous cost of living inflation since 2000. No one particularly cares because fuck em. But if you think that the middle class can survive the same inflation you're in for a rude shock.

20% interest rates are the best thing that can happen to the economy now.

> such luxuries as lettuce double in price.

Only if the supply of lettuce doesn't keep up with the increase in the supply of money.

https://www.vox.com/future-perfect/2019/4/16/18251646/modern...

The supply kept up just fine, farmers were literslly destroying food a few months ago because our 'efficient' market system wouldn't pay them and store this food for a rainy day, and now we have shortages and inflation.

But it's heresy to blame the market for being shortsighted, and to suggest any kind of long-term planning is needed.

https://www.businessinsider.com/food-destroyed-farms-amid-co...

> few months ago

This was 2 years and a few months ago, at least the article is.

> wouldn't pay them and store this food

In the article the plant pictured being plowed over is an eggplant, which has a storage life of about a week if stored properly. How exactly can we store this food for a rainy day when it spoils so quickly? Grains can be stored for long durations, but fresh fruit and vegetables cannot be stored to save for much longer than a few weeks.

Then you’re also ignoring the costs. If they won’t be able to sell some crop, why keep dumping time and materials into it? You’re just exacerbating your losses.

You can make eggplant flour, canned, salted and pickled vegetables, like this is something our ancestors worked out hundreds of years ago. Anyway you dont need to preserve everything, the point is the bigger picture.

Thats exactly the point of my critique that for the individual farmer it doesn't make sence to invest so much effort, but as a society wouldn't it be nice of we didn't waste what we had, we'd have something to fall back on.

> You can make eggplant flour, canned, salted and pickled vegetables.

Farmers grow food, they don’t process it outside what a combine does. This further increases costs as now you need mass grinders, canners, and pickling machines.

> Thats exactly the point of my critique that for the individual farmer it doesn't make sence to invest so much effort, but as a society wouldn't it be nice of we didn't waste what we had, we'd have something to fall back on.

Yes I get your point, but I’m a realist. Things expire, things can’t store as long. It’s not feasible to have a farmer be the entire, or even a majority of, the food supply chain. You’ve clearly never grown anything at scale.

> The rich have been dealing with ridiculous cost of living inflation since 2000

I hate the constant conflation of rich and wealthy. People who earn a lot of money vs people who own a lot of money. A lot of criticism about inequality, by politicians and economists alike, is about rising wealth inequality, but they only advocate and undertake policies to hurt the higher income class. Why is there no wealth tax, but the govt is funded primarily by income and payroll tax. Why is the federal reserve always worried about falling asset prices. And again here, rising house prices benefited the wealthy, and hurt the high income class, but you didn't differentiate between them either.

Will the wealth tax be negative when assets drop in value?

Does the tax on corporate profits go negative when you make a loss?

Does income tax become negative when I loose money?

Do you lose money up to every other second?

Wealth is not income until you realize the gains.

If your car goes up in value you can't sell 1/100th of it to cover the your tax obligations.

Weird, that never stopped property tax. Why can't one have a wealth tax too.

Maybe we can tax only productive assets. And you don't need to sell a small proportion, just let the government own that tiny bit

I thought assets give positive return in the long run. Why should they not pay appropriate taxes for an economic system that increases inequality

>A lot of criticism about inequality, by politicians and economists alike, is about rising wealth inequality, but they only advocate and undertake policies to hurt the higher income class

"I didn't think they were gonna tax me" says the guy who <checks HN demographics> is in the top 10% of income by almost any measure and who's FAANG monopoly bucks are exactly why the plumber gets priced out of the Boulder/Austin/Seattle housing market.

It's pretty pathetic how disaster relief is viewed as a handout too. A whole lot of people needed that money to help to keep food on the table and a roof over their heads. They needed help paying down the debt that had to rack up after not being able to work or to restore the savings they lost. If anything it wasn't enough "free money" for a lot of Americans. It might have been better if more rich people were excluded from getting the funds, but it's not as if an extra couple thousand means anything for most of them anyway.

Don't give people money for disaster relief, give them goods and services.

I'm perfectly happy for a government food program to give people food. Much less so for giving people money during an incredibly inflationary period. You still end up with people not having food, but also not having gas, rent or health money either.

> perfectly happy for a government food program to give people food.

A- Can I pay my landlord with a box of apples?

B - How does your second point about 'people end up without food if you give them money' work?

Either government or people buy the same food, either there is enough food or isn't.

C - If the government has made it illegal for me to work, why should I eat the loss but banks and landlords shoups never loose money? We are told they are earning their interest and rent because they are taking the risk, but when the time comes, the risk is always passed on to someone else.

As to point 1, the government is ultimately in control of the rules, so, yes, it could force your landlord to accept barrels of apples. Indeed, it already forces your landlord to accept digital numbers as payment.

>Either government or people buy the same food, either there is enough food or isn't.

That you can't even imagine a government owned integrated vertical food system not run for profit is extremely sad, but completely expected given that you speak English.

If you look at my post history. I am quite pro public oanershio of nessesities of life.

However in this case I was making a point about the stuation we were already in when covid hit.

>I like how in this worldview giving money to the capital class of society is fine and dandy, but giving money to labour class is disasterous. Seems suspiciously convenient.

Pretty bold of you to derive his world view from such a short statement of opinion. Just because he didn't like the 'rona stimmy payments doesn't mean he's fine with with pumping asset prices by buying assets.

I and many other people dislike both those things but for me personally they're a drop in the bucket compared to my hatred for the kind of unsound logic that underpins the strawman you built.

People talk about handouts as if most of them went to families and individuals.

They didn't. The inflation we see is from money printed and given mostly to corporations.

I’d wholeheartedly disagree, some citizens were receiving $2-3k a month from having dependents in areas where that would cover 2 entire families bills. This in turn created massive free cash flow, which was then mostly spent.

My understanding was that this generally improved a lot of indicators of personal and family well-being.

In the same way that the American diet would improve the well being of Eritreans in the first six months after its introduction. Long term results may vary.

Not that I'm particularly familiar with the average Eritrean's diet, but going out on a limb here: are you implying that starvation is better for a person's well being than an overly calorie-rich, generally unhealthy but plentiful diet?

The U.S. passed through a global pandemic and most people stayed fed and housed.

Seems like the plan mostly worked to me.

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