- Jacob Goldstein discusses how one-time, no-strings-attached funding for the poor in developing countries can produce lasting improvements in their standard of living - while also highlighting the need for longer-term development:
A charity that gives away money, as opposed to, say, offering agricultural training or medicine, does seem a bit unusual. That’s partly because governments and philanthropists have emphasized solving long-term economic problems rather than urgent needs. But in the past decade it has become increasingly common to give money right to the very poor. After Mexico’s economic crisis in the mid-1990s, Santiago Levy, a government economist, proposed getting rid of subsidies for milk, tortillas and other staples, and replacing them with a program that just gave money to the very poor, as long as they sent their children to school and took them for regular health checkups.Cabinet ministers worried that parents might use the money to buy alcohol and cigarettes rather than milk and tortillas, and that sending cash might lead to a rise in domestic violence as families fought over what to do with the money. So Levy commissioned studies that compared spending habits between the towns that received money and similar villages that didn’t. The results were promising; researchers found that children in the cash program were more likely to stay in school, families were less likely to get sick and people ate a more healthful diet. Recipients also didn’t tend to blow the money on booze or cigarettes, and many even invested a chunk of what they received. Today, more than six million Mexican families get cash transfers....
Lots of people [in a Kenyan study] used the money in productive ways. An inordinate number, it seemed, used it to replace their thatched roofs, which are not only lousy but also weirdly expensive, as they need to be patched every few months with a special kind of grass. A metal roof costs several hundred dollars, but lasts for 10 years, making it a much better investment. Omondi was among those who bought metal roofs. He also purchased a used Bajaj Boxer, an Indian-made motorcycle that he uses to ferry people around, for a small fee; he is also currently paying off a second motorcycle, which he rents out. Now Omondi makes about $6 to $9 a day in his taxi operation, several times his previous income, and he works almost every day. Several of his neighbors also used the money to start businesses. One man bought a mill and charges villagers to grind their corn. Others became microretailers, buying goods like soap and oil at wholesale and reselling them at a markup.But while Omondi and his neighbors have metal roofs, their houses still have dirt floors and no running water or electricity. And their prospects for making it to the middle class are pretty bleak. “You give people cash to start a business or expand their business, and in a lot of cases, they shoot forward,” Blattman says. “Then they start screeching to a halt when they hit the next constraint.” If Omondi wanted to further expand, he’d probably find it hard to get a small-business loan from a bank. The problems holding Omondi and his neighbors back — underdeveloped financial systems, bad infrastructure — are the generic but defining problems of the developing world, and they won’t be fixed by a one-time windfall.
- Meanwhile, Michael Laxer highlights the avoidable mix of waste and want when it comes to food security in Canada.
- Michael Woods and Mike de Souza report on the Cons' latest damage to Statistics Canada, which has been forced to delay the release of National Household Survey data at the last minute due to previously-unidentified errors. And Stephen Gordon writes that the NHS has lost the benefit of any doubt.
- Jennifer Hoelzer discusses the attempts of some U.S. legislators to be honest with the public about NSA surveillance - and the the flat refusal of anybody associated with the program to allow for public debate.
- Which leads to another answer to the question of "why don't we like politics?" - as more and more important decisions are removed from the realm of elections and party politics. But that can only signal the importance of making a statement when we have the chance - and Duncan Cameron makes the case for Linda McQuaig as a progressive activist voice.