It’s an unprecedented – and massive – experiment: Since 2017 the U.S.-based charity GiveDirectly has been providing thousands of villagers in Kenya what’s called a “universal basic income” – a cash grant of about $50, delivered every month, with the commitment to keep the payments coming for 12 years. It is a crucial test of what many consider one of the most cutting-edge ideas for alleviating global poverty. This week a team of independent researchers who have been studying the impact released their first results.
So poverty, which is caused by a lack of money, is solved by giving people money. Who knew?
But importantly, how that money is given is important to the outcome. It looks like lump sums are better than regular payments at creating new enterprise.
Most importantly is that money given to the poor is put directly back into the local economy vs squirreled away in an offshore account.
https://www.npr.org/sections/goatsandsoda/2019/12/02/781152563/researchers-find-a-remarkable-ripple-effect-when-you-give-cash-to-poor-families
It’s interesting, because this is a widely known concept in the finance world. Lump sum investing in the stock market is more profitable than dollar cost averaging that same amount over time ~66% of the time. It seems that holds true in non-stock market investments into people as well. They’re better off getting a lump sum investment into their accounts than having that money DCA’d to them.
The belief that poverty is caused by incompetence, laziness or rogue spending is still very widespread. A lot of aid programs are based on the idea that it takes western wisdom, education and discipline to really lift people out of poverty. Teach farming techniques to people who have been farming that land for generations. Give water saving advice to people who use a tenth of what westerners use. “Teach a man to fish” when that man has been living at the coast for all his life but never been able to afford a fishing boat.
It’s good to see clear evidence that it’s not a lack of education, discipline or intelligence that causes poverty, it’s that the system is rigged and people who start out in poverty can never escape it because you need to have money to make more money.
To be successful in capitalism you need some capital to start with. It’s in the damn name. That’s why behind every billionaire is a bunch of rich parents who bankrolled them.
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Truly a cutting-edge idea.