Why Not Just Give Poor People Cash? (Preliminary)

Matt Yglesias links over to my post about dredging the submerged state surrounding student loans.  Yglesias notes: “Why not dismantle the submerged state exactly as Konczal suggests, and give the money to poor people? Then people could use the money to buy higher education services or not according to whether or not they thought vendors of said services were, all things considered, offering a reasonable value proposition.”

It’s a good question.  We were talking about the relative merits of private or public provisioning of a good.  Yglesias, building on some of the other writing he’s done, argues that the more egalitarian thing to do would be, instead of the state providing certain merit goods, to just give the cash equivalence to poor people and let them use it as they see fit.  We argued before on efficiency grounds why you might not what to do that, an argument similar to the original submerged state post.  There’s another set of related arguments about how certain public goods require coordination, and simply giving people money will under-provision them.  But what else can we point to?

I’m still trying to think through this question, but to focus my thoughts I’m going to post three approaches against “giving poor people money” as a baseline approach to the welfare state.

Liberal Paternalism

The first comes from Franklin Delano Roosevelt’s 1935 State of the Union.  Ushering in a second stage of the New Deal, this State of the Union proposed a bill for unemployment insurance and old-age pensions alongside a giant jobs program that would become the Works Progress Administration.  Why was a new jobs program needed?  Roosevelt:

A large proportion of these unemployed and their dependents have been forced on the relief rolls…We have here a human as well as an economic problem…The lessons of history, confirmed by the evidence immediately before me, show conclusively that continued dependence upon relief induces a spiritual and moral disintegration fundamentally destructive to the national fibre. To dole out relief in this way is to administer a narcotic, a subtle destroyer of the human spirit. It is inimical to the dictates of sound policy. It is in violation of the traditions of America. Work must be found for able-bodied but destitute workers…

I am not willing that the vitality of our people be further sapped by the giving of cash, of market baskets, of a few hours of weekly work cutting grass, raking leaves or picking up papers in the public parks. We must preserve not only the bodies of the unemployed from destitution but also their self-respect, their self-reliance and courage and determination….

Hippie-punching, 1930s style!  I do not know if this was a genuine concern of Roosevelt’s or a way of pitching both an expansion and a pivot in the New Deal’s war on the Great Depression to a broader audience.  But either way, it’s similar to conservative argument against the welfare state (this passage makes an appearance in Paul Ryan’s Roadmap under the subheading Erosion of American Character).  The difference here is that the government needs to step up, where in the conservative critique it doesn’t.

It’s useful to think of this as a liberal paternalism, and critiquing it is a place where both a Proper Left and a Left-Neoliberalism’s concerns and priorities would overlap.  Peter Frase, for instance, has written against this tendency in liberalism – see his The Case Against Jobs, or his response to Reihan Salam’s argument that wage labor for the poor is fulfilling because it allows them to “overcome an obstacle that arises naturally and authentically in [their] path.” (Do poor people not have enough obstacles in their lives?)  I don’t find Roosevelt’s claims here particularly convincing – most of what is difficult with being poor could be fixed by people not being poor and cash-constrained – but I think that it motivates most of these discussions.

What Claims Do We Owe Each Other?

A second approach would say that if we as a society think that certain merit goods are necessary for a free, full life – education, food security, etc. – we have an obligation to provide these to each other.  But what we don’t have is an obligation to provide a different good on the basis that an individual would prefer that good more.  Here’s TM Scanlon, Preference and Urgency:

The strength of a stranger’s claim on us for aid in the fulfillment of some interest depends upon what that interest is and need not be proportional to the importance he attaches to it.  The fact that someone would be willing to forgo a decent diet in order to build a monument to his god does not mean that his claim for aid in his project has the same strength as a claim for aid in obtaining enough to eat (even assuming that the sacrifices required on others would be the same).  Perhaps a person does have some claim on others for assistance in a project to which he attaches such great importance.  All I need maintain is that it does not have the weight of a claim to aid in the satisfaction of a truly urgent interest even if the person in question assigns these interests equal weight.

 Let’s try to translate that a bit; here’s Murphy/Nagel’s The Myth of Ownership:

But in either case there seems something to be said for providing some of these things in kind, rather than doing it all in fungible cash….

The most important is that described by T. M. Scanlon in Preference and Urgency. Even if the reasons for helping those in need are frankly redistributive, the measure of value that is relied on by a conception of distributive justice ought to be itself objective enough to be accepted from the point of view of the diversity of value systems represented in the society. The satisfaction of individual preferences, whatever they might be, does not meet this standard. We may feel we owe each other the conditions of fair equality of opportunity, or a decent standard of living, but that does not mean we owe an individual help in obtaining something else instead, just because the individual values it even more.

In Scanlon’s example, if someone would gladly forgo a decent diet in order to build a monument to his god, that doesn’t mean that if we feel obliged to contribute to his getting enough to eat, we should also feel obliged to contribute an equivalent amount to the cost of his monument instead. Insofar as in-kind provision discourages such trade-offs and ensures that redistribution will be carried out in a common coin of value, it has an advantage over monetary redistribution.

I think this is correct, which is why I see arguing that a baseline level of material support as part of the essential rights we need to enjoy full freedom is essential for a longer strategy of “giving people money” to work.

Against Pity-Charity Liberalism

Check out this amazing post by Kristin Rawls on student loans and the new professional poor on Killing the Buddha, titled F*** Your Prayer, Show Me Solidarity, that ends “I don’t want crumbs from your share of the non-profit industrial complex charity, I want you to fight with me for a world where I don’t need charity.”

If “giving cash to the poor” functions as a type of charity it can often be counterproductive.  Pity is fleeting in tough times and charity always has strings attached, but more because we want to create the conditions where charity isn’t necessary.  The point of egalitarianism isn’t to compensate the losers but to create the conditions for their freedom.  The Kristin Rawls piece points to what Jonathan Wolff would call “shameful revelations”:

Essentially the argument is that the implementing luck egalitarianism requires society to filter out would-be free-riders, but to do this will often have costs (in self-respect) for those already at the bottom of the heap. In some cases they will have to declare that they lack employable talents others have, and this can be humiliating for them. I do not argue that it is necessarily humiliating, or that we couldn’t imagine a society where no one is humiliated by having to admit to themselves and others that they lack employable talents, but that in the circumstances of real societies this is likely to be a fairly common response. In that paper I argued that policies required in the name of fairness can undermine self-respect, and therefore we have to accept that the egalitarian ethos can have conflicting elements which need to be accommodated in some way.

In case you can’t tell, I’m trying to flesh this debate out in real-time.  What’s your take, and what would you recommend reading and engaging with?

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42 Responses to Why Not Just Give Poor People Cash? (Preliminary)

  1. Philip says:

    I’d recommend a look at Charles Murray’s book, In Our Hands, http://www.aei.org/book/society-and-culture/poverty/in-our-hands-book/, or see this generally positive review at Crooked Timber, http://crookedtimber.org/2006/06/01/charles-murrays-in-our-hands-left-or-right/, which also suggests some other reading. This is a big-think kind of proposal to do away with the welfare state altogether and replace it with straightforward cash redistribution on a massive scale–a kind of “big government libertarianism.” I think it’s really worth thinking through.

  2. Ultimately there is no good reason to not give poor people cash. However, we should not “just” do that. Government’s role is to provide the architecture of prosperity – giving people the tools they need to realize their own potential. That includes providing, free of charge, things like universal health care, universal (and good) education through college, housing, food, a job, and other things. In other words, cash alone won’t solve the problem.

    But there will be times where cash is helpful, and we should be willing to provide it to the poor as part of a bigger program of building a 21st century social democracy. The state’s job is to not be paternalistic, but to be an enabler (in a good way).

  3. Milton Recht says:

    Abhijit Banerjee and Esther Duflo, the authors of “Poor Economics: A Radical Rethinking Of The Way To Fight Global Poverty,” wrote a short piece in The Economist last April, “Remembering to respect the preferences of the poor” about their research and their book. The following quotation from their article I think will go a long way to explain why government does not want to give cash to poor people (http://www.economist.com/blogs/freeexchange/2011/04/banerjee_and_duflo_1):

    One feature, in particular, stands out. The life of the rural poor is extremely boring, with repetitive back-breaking tasks interrupted by periods of enforced idleness; it is far removed from Marie-Antoinettish idylls of Arcadia. As the authors remark, villages do not have movie theatres, concert halls, places to sit and watch interesting strangers go by and frequently not even a lot of work. This may sound rather demeaning to the poor, like Marx’s comment about “the idiocy of rural life”.

    But it is important to understand because, as the authors remark, “things that make life less boring are a priority for the poor”. They tell the story of meeting a Moroccan farmer, Oucha Mbarbk. They ask him what would he do if he had a bit more money. Buy some more food, came the reply. What would he do if he had even more money? Buy better, tastier food. “We were starting to feel very bad for him and his family when we noticed a television, a parabolic antenna and a DVD player.” Why had he bought all this if he didn’t have enough money for food? “He laughed and said ‘Oh, but television is more important than food.’”

    Nutritionists and aid donors often forget this. To them, it is hard to imagine anything being more important than food. And the poorer you are, surely, the more important food must be. So if people do not have enough, it cannot be because they have chosen to spend the little they have on something else, such as a television, a party, or a wedding. Rather it must be because they have nothing and need help. Yet well-intentioned programmes often break down on the indifference of the beneficiaries. People don’t eat the nutritious foods they are offered, or take their vitamin supplements. They stick with what makes life more bearable, even if it is sweet tea and DVDs.

    The preferences, needs, desires and wants of those on the receiving end of government largess often does not match the preferences of those in control of the funding. Even if cash is given, follow up studies of how the cash was used would question the necessity and effectiveness of the program because it is highly likely the funds will be spent in ways that the givers find unnecessary, wasteful or distasteful.

  4. John Carney says:

    One problem with what Milton Friedman called the “negative income tax” is what we do about people who squander their money. Suppose we supply the poor with an income to alleviate their poverty. A certain subset of the poor will almost certainly squander this money and find themselves homeless and hungry again. These people will have to be helped out in some way since we are unwilling to let them starve. And the solution cannot, of course, be to just give them more money.

    Some of this problem can be avoided through payment paternalism. You dole out the money in small amounts, make it inalienable (that is, forbid taking out loans against it), and perhaps proscribe certain kinds of very wasteful spending. But this gets very paternalistic, very bureaucratic, very quickly. Which undoes a lot of what you hoped to achieve by just paying the poor in the first place.

    Also, the proscription from taking out loans on the income stream means that the poor would have limited opportunities compared to those who earn their money, and therefore can take out loans to start business, buy houses, etc.

  5. Peter Frase says:

    There’s another argument that this doesn’t really cover, and it’s the reason I don’t endorse “give people money, full stop” as an adequate demand. Ensuring that everyone has a baseline level of money is only an egalitarian solution if everyone’s needs are roughly the same. But that’s not true–for example, some people need way, way more health care than others, due to accidents or genetics and through no fault of their own. Here’s an old post I did on this: http://www.peterfrase.com/2011/04/health-care-and-the-communism-of-the-welfare-state/

  6. ramsincanon says:

    Mike, Great work as always. I doubt I could share anything you don’t already know or haven’t thought through. But in the spirit of your post, a few:

    I think the starting point for left neoliberals is an inborn assumption that it is better for the market to allocate wealth through generally free exchange, and use coercive power to redistribute wealth to compensate for areas of market “inefficiency” or failure–the provision of health care, housing, etc. The “pity-charity liberalism” you describe. The problem with this is as you point out that generosity, charity, or altruism are terribly weak incentives on the one hand and that “social entrepreneurship” of the Eli Broad/Bill & Melinda Gates type requires dilution of self-determination for its “clients”: this is why schools “reform” movements take as first principles things like eliminating parent government of schools, Mayoral control of systems, and intense standardization and commodification of curricula.

    Any program that relies on a modern form of noblesse oblige won’t be sustainable and degrades the civic spirit that republican government needs.

    Wealth can’t be allowed to accrue so intensely in the first place. Any other program or policy or even structural change will atrophy over time and collapse back into oligarchy precisely because it rests on the good intentions of those who hold the reigns of the state’s coercive strength. That means really deep “big think” reforms of the legal regimes that structure economic activity: including property rights, tort liability, speech rights, rights of assembly, etc. Arguments about the need for maximum “flexibility” notwithstanding, stronger employment property rights are a place to start.

  7. Fmb says:

    In kind giving is also a form of price discrimination, perhaps helping to distinguish truly needy from not.

    On the other hand, for most, in kind giving doesn’t change consumption much, just adds hassle.

  8. Good response!

    aside from efficiency claims for public provision and all those other critiques that you make, I think there’s a danger, maybe, in depoliticizing these sorts of things (and it /is/ depoliticizing it; these neoliberal types say ‘politics’ like it’s a dirty word).

    I think just doling out cash makes the whole enterprise into something distinctly different from a welfare state, in a bad way. something discomforts me when we stop saying, in this case, for example, education is a right and instead just give someone enough cash to buy education. the former instills the idea that as a member of society you’re both entitled to and expected to be a productive member of society, that you are owed certain things by society and that you owe certain things to society. cash transfers might end up eliminating that. and maybe (actually, come to think of it, probably) Yglesias wants that sort of ethos to accompany it. me, I’m not yet sold. if we don’t convince people that they are owed and that they owe, what stops the cash transfer from being rescinded as soon as Bush III comes around, if it’s not a cultural value? relatedly, on a practical level, it doesn’t seem politically feasible or stable (I believe this general critique of Yglesias’s stuff has been made repeatedly, by you or Henry Farrell at CT.)

    There’s a big difference between being legally entitled to something and having a rich uncle buy you stuff. besides economic reasons (coordination problems like you said or, in other cases, natural monopoly type situations), there are some pretty good social and political reasons to dislike this, namely that it wants to basically get rid of the idea of politics and political awareness. by making it simply a money transfer, it structures it almost more like a gift then a fulfillment of a right, which discourages people from making more radical claims or adjusting their claims if authorities stray from fulfilling them or even thinking of it as a claim on society rather than charity. it certainly dampens radical possibilites. the more i think about this, the more i don’t like it.

    As for who to read — the guys at thecurrentmoment write about this and I think maybe one of them is also a Roosevelt 2.0 fellow? i think in one post in particular specifically discuss rights-based vs. debt-based provision (which Y. isn’t proposing but it delves into some of the issues that I brought up)

  9. Arthur Boman says:

    A well-educated citizen causes positive externalities to society that the citizen cannot capture the value of. Giving him money and letting him optimize completely misses this main point.

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  12. Several issues here. One might think of giving money to the poor versus giving it to the banksters. What is the true Federal deficit, including the Federal Reserve creating money? The Fed’s acts and deficit (if any) are under the radar, when we should be doing this openly. And Fed money creation goes to the banksters.

    Second, maybe we want a certain paternalism to avoid the spendthrift problem. If we give money to the poor, we want them to use it for food, health, education, maintenance, and the like. Perhaps a small fraction for items that make life worth living such as entertainment. (Is anything really wrong with a cheap television and a cheap DVD player and a cheap computer with cheap internet access?) But we don’t want the poor to blow the money off and still starve their families.

    Third, what about the actual benefits of productivity, and a certain fairness? People often don’t realize that productivity has a denominator. It is production per worker, or production per hour worked. In the more optimistic past, it was thought that increased productivity would mean more leisure time. Instead, with the benefits of growth going only to the wealthy (with perhaps half going to the extreme wealthy, the overclass), increased productivity meant increased unemployment and race-to-the-bottom labor markets.

    We might want the benefits of increased productivity to go primarily to the producers. My own idea is that this would mean a much shorter workweek (say 20 hours) with either minimum wage or EITC of $20/hour. Certain industries (design engineering, lawyering, business management perhaps) don’t benefit from dividing among numerous workers. So allow overtime (beyond 20 hours/week) but require employers to pay through the nose — say $60/hour.

    But of course, nothing’s going to happen as long as the overclass is in control or otherwise free to claim the benefits of increased productivity. It won’t happen until it’s recognized that the overclass are an unproductive dead weight on society.

  13. One of the biggest problems with just giving cash, as opposed to say universal healthcare, universal free bachelors degree, universal preschool, a secure Social Security pension, public health, safety, and community recreation,…, is positional/context/prestige externalities.

  14. nemi says:

    “Why Not Just Give Poor People Cash?”

    Assume that you lived in an (somehow magically) working anarko capitalist state.
    Assume that you wanted to sign up for a welfare insurance.
    Assume there is two to choose from.
    Assume that both have the caracteristic that you pay a progressive part of your income and that this money then is redistributed between the insurance holders.

    Assume one of them simply gives money to every insurance holder.

    Assume that the other only give a minimum of cash, but pay for human capital ivestments such as healthcare and education.

    Which one would you choose to join?

  15. reason says:

    You left out a big one here – market failure in market insurance. The adverse selection problem. This is particularly a problem in education and health.

    But in generally I think giving more money to poor people is the solution. And the cheapest and cleanest way to do it is to give it to everyone, and then tax them. (And it solves some of the other issues.) I like to call it a national dividend, but you could call it a citizen’s income or a negative income tax and it would be the same thing.

  16. Tim Worstall says:

    One major reason why we don’t just give cash to the poor is well, if we give the poor cash then they won’t be poor any more will they?

    This is specifically a US problem, because poverty is measured by market income plus direct cash transfers. All of the things that are offered in kind (food stamps, medicaid, section 8 housing vouchers) and throught the tax system (EITC for example) are not counted when we determine who is poor.

    Thus, if we simply converted all of these things into cash we’d find that the number of poor would shrink dramatically. And politically, that’s not really quite what some people would like to happen.

    Note that no actual change in total consumption would happen, but converting to cash would, as we measure it, reduce the number defined as in poverty. Quite politically damaging for some that would be.

    As an example, it’s not that difficult to construct scenarios where some of those who are currently defined as being in poverty actually, when you add up goods in kind etc, have gross incomes over household median income.

    And where would be the rhetoric about how appallingly America treats the poor if that news got out?

    • nemi says:

      “Note that no actual change in total consumption would happen, ”

      Sure it would. You can argue that the utility from consumption would increase if you think people make intemperally rational choices, but the notion that total consumption (or GDP) would stay the same is absurd.

      The main reason why total consumption would change is that some would choose to not invest in human capital, and thus will not get that later payoff (which, furthermore, quite possible will have external effects on other as well)..

      • Tim Worstall says:

        No, I’m making the assumption purely that the resources already currently going to the poor go to them as cash, not goods in kind or through the tax system (I’ve not mentioned education at all). This would, given the US poverty statistics and they way they are calculated, reduce the number of poor in the US. But make no difference to how much is being sent to the poor nor how much the poor are receiving.

        I’m pointing to the perverse effects of the way poverty is calculated, little more.

      • nemi says:

        Ok – and that is a very strange way to calculate it indeed.
        It is almoast as if everyone agrees that beeing offered something in kind is not the same thing (i.e. not as good) as beeing offered it in cash – which of course is trivially true for the recipient (at least in the short run).

        Everyone would choose to get cash instead of e.g. free education – but most people (at least me) would rather be included in a insurance agreement where peopled were helped to get a higher income (and thus could protect us if/when we needed it) than one where people simply were paid to stay at home.

        It is better to learn a person to fish than …

      • Jake Lopata says:

        The idea of converting in-kind benefits to cash sounds like a simple solution to solving poverty, an accounting trick perhaps.

        But as John Carney pointed out, people would squander this cash. Intuitively, people in poverty are probably not the best at maintaining their finances and budget (maybe that is how/why they are living in poverty).

        If you start handing out free money, people will simply treat it as a source of income, they will become reliant upon it. This is the biggest fear of social programs. Social programs are only suppose to be temporary.

        By only offering in-kind benefits, it restricts an individuals monetary freedom, but provides basic essentials. We all strive to be financially free, its essentially why we invest in education, in hopes of obtaining financial freedom. So by only offering in-kind benefits it restricts an individuals monetary freedom, this hopefully gives them the motivation and incentive to better themselves by seeking employment.

        I believe that simply offering cash would thus provide a free ride with no strings, giving an individual no incentive to better themselves. If you try to attach strings to that money, you might be walking a fine line on discrimination.

  17. denim says:

    Giving out cash to the poor is as bad giving out cash to the wealthy. Who know how to use it? An analogy: why would you give out cars to people who could not drive according to the rules of the road? It would be better and safer to give out rides at no charge.

  18. Hannu Tanninen says:

    I just suggets you to read

    Is the Price System or Rationing More Effective in Getting a Commodity to Those
    Who Need it Most? by Martin L. Weitzman in The Bell Journal of Economics, Vol. 8, No. 2. (Autumn, 1977), pp. 517-524.

    or

    Partha Dasgupta’s (1986) positive freedom, markets and welfare state in Oxford review of economic policy (also in Helm Economic borders of state OUP)

  19. Min says:

    Do the preferences of the poor matter? That is an interesting question. But I think that there is a more basic question. Do the poor matter? As human beings?

    To be sure, there are problems with simply giving money to the poor. As a friend says, the liquor stores would do very well. And the experience with lotteries shows that money by itself is not enough to bring people out of poverty. Adults, anyway.

    But there are problems, as well, with other kinds of aid, and with giving money with strings attached. Not the least of which is paternalism. Treating people as if they were irresponsible children and intruding into their lives does not foster responsibility, on the whole. Rather it promotes dependency and diminishes human dignity.

    I have no solution. These problems have been with us for centuries. But I do think that it is not an ether/or. There should be some aid with strings attached, and some unconditional aid, as well. That is how we subsidize the rich. We give them money for doing or not doing certain things, and we also just give them money. We do not treat them in a degrading manner. Should we treat the poor any worse, as human beings? Maybe a negative income tax would be a good idea.

    I do think that there is a different problem that faces us now. We have a good reason to give money to poor people that has nothing to do with charity. We should give them money to benefit the rest of us. We should exploit the present-time orientation of the poor and their propensity to spend. One problem with our recent stimulus is that it was not well targeted. A good bit of it went to saving. Big business is not spending enough, banks are not lending enough. We need to have more money in circulation. Not that we should not have infrastructure projects, and other programs, but they take time to set up. The quick and easy way to get money into circulation is to give it to poor people.

  20. OGT says:

    As others have pointed out above there is a significant wedge between what donors want to give and what recipients want to receive, the Dufflo example and Scanlon scenario are telling. I think it’s worth considering why there are virtually no charities that just give the poor money, virtually all of them solicit money to provide goods or services.

    It would be a nice research experiment to set up two charities with one with a pitch to give in kind donations to poor people or provide education and another with a pitch to give poor people cash. My hypothesis would that the in kind charity would be significantly more successful. The wedge between donator’s preferences and recipients suggest that there would be an under provision of aid.

    In addition, in specific categories of aid there are significant market failures such as adverse selection in health care and unemployment insurance positive externalities in education. But, at heart, I think its a social contract issue, people have an evolved inclination to think of rights and duties in relation to their social group. Well designed and sustainable government programs will utilize and reinforce those inclinations.

  21. OGT says:

    One other counter idea is bolsa familia, which did give poor people money, but only if they met certain conditions such as sending their kids to school. (And only to the mothers so the fathers wouldn’t drink it).

  22. negative fed hedge says:

    Giving money away is no real solution. The takers eventually become arrogant enough to feel entitled to much more. Like wasting energy just because you can afford it, and feel entitled to it. My folks go crazy on 74 degree days. Soon as it hit 72, turn on the heat, once its 76 back to the A/C. They can use enough energy in one month, that I use all year long.

  23. Charles says:

    It sounds contrived, but I honestly treat work as an opportunity, if not a primary reason, to live.

  24. Kaleberg says:

    Giving cash isn’t a bad idea, but the problem is that there are goods that we think that everyone deserves in a decent society – food, health care, protection, shelter – and we are going to have to provide them anyway if we are going to consider ourselves decent people. This goes whether the recipients consider these goods important or not. For our own reasons, we do not kill the suicidal or beat up masochists, despite our actions being contrary to their desires.

    From an economics point of view, I think you are confused with regards to agency. The active agents making an economic decision in this case are the taxpayers and their representatives who are heavily influenced by an ethic that mandates helping those in need by providing for those basic human needs. They can do this by providing for those needs in kind or by providing cash, but the latter is less economically efficient as cash is so fungible and can be diverted from its purpose.

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  27. Daniel says:

    Two points
    1) There is a cultural aspect about generational poverty – when multiple generation are poor they have cultural habits of making “bad choices”. Give them cash and they might not know how to spend it. The most successful anti poverty programs (head start, Harlem’s children zone etc) are education programs that attempt to change the culture of the poor – money cant solve that.

    2) There is a political backlash to hand outs. The people that are being taxed to fund the cash for poo people will focus on any and all miss use of the money and begin resisting the transfer. The program will not have long term political support that will need to have long term impacts. The relationship cannot only be examined by its effects on the receiver but also on the giver.

  28. Jim Z. says:

    Few commenters here have mentioned that children are a large part of the poor population (of the US, and of most countries). A cash-only system potentially places millions of children at risk if their parents do not use an appropriate portiion of that cash to provide for the education, health care, decent housing, personal safety, healthy diet, etc. of their children. Children have no vote, whether that vote be at the ballot box or “dollar votes” as cast by their parents with cash stipends. many poor parents do not understand the importance of some of these basics to the future of their children. Many might have a general idea, but do not have the specific intellectual or experiential capital or will power to translate that concern into correct choices on behalf of their kids. And then there is the phenomenon of sharks who will always have new ways to separate people, especially the uneducated, from their money (I can just see these scumbags salivating over the prospect of a cash-only system; heck, much of the financial industry in place today is little more than that). I’m not saying that all poor adults are ignorant or irresponsible, but frankly one reason for minimum sodietal standards for kids is to protect them from their own parents. I’m willing to give up a measure of “freedom” in order to ensure that each new generation is provided the best conditions in which to thrive. I’m certain that a cash-only welfare system will not accomplish that.

  29. brian says:

    instead of giving poor people cash, we should give them guns. you know the saying: give a human cash and (s)he eats for a day; give her a gun and (s)he can rob for a lifetime.

  30. “A cash-only system potentially places millions of children at risk if their parents do not use an appropriate portiion of that cash to provide for the education, health care, decent housing, personal safety, healthy diet, etc. of their children.”

    I think that this is one of the most persuasive objections to simply handing out cash and it’s one reason (Peter Frase raises another) why I don’t think “just hand out money” is the answer to everything. However, Mike’s specific proposal was to unravel the submerged state for higher education finance and redirect the funds to direct provision of free higher education. My counterproposal is to unravel the submerged state for higher education finance and redirect the funds to needy 18 year-olds to spend on college or whatever seems worthwhile to them. I don’t think the “think of the children” objection has force in this particular context.

  31. Heather says:

    Giving individuals cash has its problems (e.g. might be used up on impulse shopping or addiction before it can feed hungry children)

    Having some disconnected charitable giver decide how it can be spent can also be problematic (e.g. shipping blankets to Guatemala thereby putting local weavers out of business)

    How about giving cash to groups of say about 50 people, rather then separately giving to the 50 individuals? They could then use some democratic process like a General Assembly to decide how to use it.

  32. Jim Z. says:

    It’s pretty clear that the gist of this column is to offer a sort of libertarian alternative to traditional welfare programs, cash vs. in-kind. It’s not clear to me that in-kind programs, considering their complexity and the magnitude of the problems left behind by US-style capitalism, have been all that ineffective. We currently have a mix (food stamps – which Friedman called “funny money,” housing subsidies, TANF, child care subsidies and tax credits, EITC, Medicaid, school lunches, and more. I think the idea of wiping all these away in favor of “give them money” may more than anything, satisfy a citizen’s itch to put the issues of poverty and inequality out of sight, out of mind.

  33. Heather says:

    A few more thoughts:

    -How resources are distributed helps to determine what is privately owned and what belongs to the commons. Giving individual poor people money doesn’t add to the commons.
    -The way resources are given to the poor helps strengthen the idea of the undeserving poor. Yet far more resources are directed by government to the wealthy without corresponding scrutiny towards the undeserving rich.
    -Government give-aways can masquerade as being primarily for a certain segment of the population, but actually do more to fill the pockets of some small politically well-connected segment. Mike’s recent article on student loans points this out beautifully. Cash-for-clunkers, Medicare Part, and the Morgage Interest Deduction are more examples.

  34. Jim Z. says:

    Indeed – why so little focus on tax expenditures that overwhelmingly favor the well-off?

    “Pay no attention to this corporate welfare over here – look instead at those undeserving poor!”

  35. Mark says:

    These are all ultimately arguments for elitism. The Scanlon line of argument explains what “we” don’t have to do, a negative proposition, but it doesn’t justify what we choose to do, the affirmative proposition, where “we” choose to supply a set of goods contrary to recipients’ preferences. The Liberal Paternalism point, which is really a descriptive phrase and not a coherent justification, just says “we” who have reached the stage of society where “we” influence decisions, know best and that’s the end of it, don’t ask us to justify why what we want is best for you, it just is.

    One question that none of these address (i know – it”s not a book, just a blog post) is, if it is justified to ignore tne preferences of the poor, does the same principle justify ignoring the preferences of the non-poor and, if not, what principle privileges the preference of the non-poor over the poor?

  36. Jim Z. says:

    In fact it is the extremely wealthy who control virtually all levers of the polity. Maybe the first order question needs to be, “on what basis does a society agree to that (or are we now talking about raw power, leaving philosophical niceties behind)?” It is typical of libertarianism to claim that a progressive society mainly harms the poor, somehow overlooking the social and political damage to them of pure capitalism. Yeah, corporate capitaism is the poor’s friend, sure enough….

  37. Pingback: I’m reading Technological Grotesques | william j. moner

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