A long time ago, P.J. O’Rourke wrote in Parliament of Whores (probably the best book he ever wrote, and it’s been mostly downhill, albeit gradually, for him ever since) that “you can’t get rid of poverty by giving people money.” And this has, for many policymakers, been an accepted truth for a very long time.
And it looks like it might be wrong.
Parents are now able to pay tuition, and the proportion of children attending school rose to 92 percent last year. The school has used the additional revenue to buy paper, pens and ink for its printers. The rate of malnourishment among the children has plunged from 42 to 10 percent. The local police crime statistics show a decline in theft and poaching. People with AIDS are responding more effectively to treatment, now that their nutritional needs are being met more consistently. “Suddenly the children were wearing shoes,” says the teacher. A man went to see Dirk and Claudia Haarmann. Beaming from ear to ear, he asked: “Don’t you see?” They asked him what he meant. “Don’t you see? I now have trousers and a t-shirt. I am now a person.”
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Next time, on stunning revelations: beer makes people drunk, and fire is hot.
I take no pleasure in saying it, but Otjivero is going to be very hard to sustain.
I guess it depends on how easily corruption can permeate the social, economic and political structures. People looking for a loophole will generally find one.
The next generation of people deal with the benefits of this prosperous communism will be the most likely to abuse the system.
“The next generation of people deal with the benefits of this prosperous communism will be the most likely to abuse the system.”
I think that’s the nub of the problem right there. If you’re going from having nothing to having a bit of money, you’ll be grateful and want to make the most of it, if you’ve always gotten a bit of money, you’ll wonder why you can’t have more money.
In short, human nature sucks ass.
I agree that this is something that could be fraught with issues, but for now I’m going to take pleasure in the fact that somebody decided to try the simple solution and that it’s working.
“Don’t you see? I now have trousers and a t-shirt. I am now a person.”
Oh, if only you could see my sad face right now.
Otjivero won’t be hard to sustain, the method they’re bringing “prosperity” is unsustainable right now. Tax based income subsidy has a name: welfare. Any incarnation of welfare will end up looking like the one we’ve got; the only reason it looks different there is because everybody else in the country is even poorer. It’s the equivalent of starting a “Neo-Welfare” test program in Winnipeg that gives 1000 people $30,000/month.
A healthy economy looks like an electric circuit; any given dollar can trace a path from any person back to that same person through business transactions. Otjivero can’t do that. The stove Frieda bought is a great example of entrepreneurial spirit, but the money for it has vanished as far as that community is concerned. On top of that, the people buying her bread only have money because of this program – progam ends, so does the bakery. The community needs to do one of two things: Create a self sufficient and self contained economy, or produce something the outside world wants to buy.
I’m betting they don’t have the resources for the latter; and don’t have the direction for the former.
I’m betting they don’t have the resources for the latter; and don’t have the direction for the former.
Wrong. They were not permitted to do either by the encircling enclosed-land rancher/farmers. They’re not even permitted to start from nothing (subsistence farming)!
Regardless of the intentions of the surrounding landowners, the village doesn’t have the resources to build a Nike factory. Any economy they make without foreign industry investment is going to be necessarily a shot at a self contained market.
But you are right, the surrounding farmers have no incentive or interest in developing the area, as their standard of living is likely delivered to them from outside the continent. That’s why the village is in that situation in the first place (aside from probable overpopulation).
But then, what’s the solution:
Global embargo to force local development?
Mass revolt or civil war?
Alien mind control?
Wish I could say.
the experimenters are ignoring another problem thats right in front of their faces…some of the local farmers self worth is dependent on looking much better and more civilized than the villagers..if the villagers do better and do not conform to the farmers view this will cause the farmers worldview/self worth to change. some people will kill and destro to keep that from happening.
For all the people saying this is unsustainable, I can only reply: people are eating, who used to starve. That’s one in the win column right away, for however long it lasts.
@Hard Reality: did you miss the bit about the woman who bought a couple of chickens, and has been selling their offspring ever since? Sure, the money has an outside origin, but it’s very quickly establishing circuits within Otjivero. If the money dried up tomorrow, some would be screwed, yes, but others have built themselves enough of an economic base to survive even going back to barter.
How do we know if it’s unsustainable? Have anybody tried? I know there’s been a lot of debate now and again about a ‘citizen’s salary’ over here in sweden, something to replace the welfare system without the stigmata and bureaucracy.
We already have a the first vestiges of it since over 60 years, something called a children’s grant. Basically the government pays every about $150 per child a month to help with the costs of raising a child. Everybody gets it, the rich and the poor alike. It’s a brilliant system.
I think that what people are lacking is a fundamental faith in people. Sure, a lot of people are going to drink things away, or squander it. But a lot won’t. Give people the chance and they will take it, I’d rather give eight people money who will squander them just to have two of them better their lives. It’s the same thing as innocent until proven guilty in my book, better let out two guilty people than jail one innocent.
The world needs more optimism.
The chicken lady, and the baker are great. But I don’t have enough optimism to believe that of the village of close to 1000 people, there are 200 some-odd of those entrepreneurs (assuming a 4-5 person family unit, maybe a high assumption due to famine/disease). Once the free money dries up, the only people who can barter with eachother are the ones with a small business set up. So chicken lady, and bread lady can trade chickens and bread, but if 60% of the village isn’t set up for the barter system I give it 2 weeks before some guy who can’t remember where his last meal came from steals all the chickens and bread.
Which is what I mean about the guidance. Having somebody come in and design a system by which the whole village can sustain itself on internal barter and possible trade with a nearby population center would be the keystone to such a plan. You can’t just throw money at it and expect the situation to resolve itself though.
“The problem isn’t people being poor, the problem is people not having any money.”
— Ronald Wilson Reagan, noted liberal economic thinker.
This is great and has one huge flaw. I don’t know anything about this specific location, but generally programs that incentivize the poor to have more children lead to people having lots more children. Where it has happened, runaway population growth in Africa tends to put a huge strain on the environment and its resources.
Goddamn, the unpaid HARD economists are out in force.
I do this for a living, and “A healthy economy looks like an electric circuit; any given dollar can trace a path from any person back to that same person through business transactions,” is nonsense. Complete bogosity. Something you might find under a windshield wiper in ALL CAPS. Too stupid to bother to refute.
This: “generally programs that incentivize the poor to have more children lead to people having lots more children,” is also nonsense, although it’s been part of right-wing propaganda for decades, so its repetition is more understandable. Part of a big lie campaign against the Aid to Families with Dependent Children program in the United States that’s been naturalized around the English-speaking world.
Think about it. There are countries that would *love* to have an increasing birth rate, because they’re strongly nativist, their population is about to decline, and they have a lot of old people to support per young worker: Japan, Italy, Spain. All they have to do is set up a dole and wham! more kids! Why didn’t they think of this?
(The original freak-out was about unmarried mothers having kids, but somehow it got turned into THE NEGROES ARE BREEDING LIKE RATS, I can’t imagine why.)
Carlos, could you give us links to some research proving your points?
I found the Otjivero story extremely encouraging. Like microloans, this micro-welfare seems to be doing exactly what it’s intended to do, which is lift a population out of absolute poverty.
Oh, and for everyone here pissing and moaning and shaking your heads about how it’s unsustainable and about how awful this is – bite my liberal ass. You and I are the recipients of *far* more value from our societies than these people are getting. We just get it in the form of water, electricity, transportation, et bloody cetera. We’ve got what is sometimes called the “safety net” so that whatever our misfortune, we don’t have to live in near-starvation in corrugated tin shacks.
The worst I can see from continuing and expanding the Otjivero experiment is that they may be trading up from the problems of absolute poverty to problems of relative poverty. That’s still an improvement.
@Hard: You say that like Strong Steve isn’t going to go to Bread Lady and Chicken Lady and say “hey, for some bread and the occasional chicken, I’ll keep Shifty Dan away from your stuff.” Bam, community police force. People have been banding together around shared skills and resources since the stone age, they just need to have something around which to band. Now, they’re starting to.
@Rattsu: A “stigma” is a negative association. A “stigmata” is a miraculous self-causing wound which mimics a famous injury done to a saint or similar figure. I used to get them mixed up, too.
Carlos, could you give us links to some research proving your points?
I don’t know what and when we’ll hear from Carlos, but the “Overpopulation ZOMG” thing has been refuted by, just one random example of a noted left wing thinker, P. J. O’Rourke. Putting the science of history to the meme is Matthew Connolly, _Fatal Misconceptions: The Struggle to Control World Population_ (Cambridge: Belknap, 2008; 978-0-674-02423-6).
Thing is, even if people besides Chicken Lady and the Baker don’t get much out of the loan, that still raises the overall economy of the community. You have sustainable businesses, which can expand and create jobs, which means more people making money.
Basically, handing money to the poor isn’t always the solution, but sometimes it’s just what someone needs.
I do hope the best for them, but the story doesn’t give the hard fact of how much of the village is involved in productive work. Our disagreement is only one of faith in humanity. Sadly, I’m sure we’ll find out when the money dries up. Here’s hoping you’re right though. 🙂
From the population stats I could find, something like 600M Africans are in that state of poverty; if spending a few hundred billion over the course of a couple years would just up and solve the entire starvation issue, I’d be al for it. It’d still be cheaper than the Bank of America bailout. 😉
PS to Carlos: Your involvement in economics explains a lot about the current global recession. The idea of circular flow is a basic concept introduced in every post-secondary economics textbook. But then “I do this for a living” from your post probably refers to internet trolling, rather than economic analysis.
Which part? Hard’s craziness is so crazy, I don’t even know where I should begin. You might consider where your own personal dollars come from and where they go. (Canada’s economy has never been self-contained, not even in the days y’all were paid in playing cards and tire coupons. Neither has Namibia’s.)
But the welfare != swarms of the poor is well-documented. See Moffitt, “Incentive Effects of the U.S. Welfare System: A Review”, Journal of Economic Literature, 1992.
“For these reasons, the evidence does not support the hypothesis that the welfare system has been responsible for the time-series growth in female headship and illegitimacy. It has also been noted that birth rates for women in general, both low-income and high-income and both welfare and nonwelfare, have been secularly declining for approximately 30 years.”
In fact, your more knowledgeable right-wing crazy person will claim Europe’s more extensive social safety net is responsible for the decline in the (white — it’s always white with them) European birth rate.
“Hard”, you’ve taken a concept that properly applies the totality of an economy and applied it to a village and to a pocketbook. (And you omit government transfers, trade, investment, and savings.) I’m not the troll in this discussion. Or the idiot.
“Totality of an economy” is an entity of arbitrary size, recognizable by the fact that much like a physics system, it is closed.
Their village *is* the totality of their economy. Until baker lady finds a foreign market for sardine loaves, no money will be coming into the village from any source other than this income assistance. So their appetite for stoves, pants and Nikes creates huge currency siphon. They need to establish a circular flow within the village (of currency, or a barter base), or once the grant money dissapears all the benefits go with it.
I kind of hate people who say things like, well this only seems nice, but we shouldn’t do it because the future moneyed generations will be corrupt.
For one, what the fuck?
For two, YOU are a fucking moneyed generation. Give back your money, then. Who are you to decide that it’s ok for you to have money, but these OTHER people could not handle the responsibility? That is some pompous bullshit.
Like I said, it’s hard to know where to begin. Namibia is not a closed system. That village, where people wear Chicago Bulls caps, is not a closed economy. That German-Namibian farmer with the prize bulls, he’s not raising them for local consumption.
As a thought experiment for non-crazy people, let’s estimate how much money is available within that village by itself. It has a thousand people. According to the BIG report, 76% fell below the food poverty line in late 2007. That’s about a US dollar a day. Let’s give the rest of the people twice that, which fits with UN estimates. That would be a yearly income for the village of (760 * $365) + (240 * $730) = $453K.
(I’m not counting debt. According to the report, the average household debt in the village was about US $150. Absolutely crushing, considering the income levels.)
If they were all willing to scrimp and save right up to subsistence level, they would have a grand total of $88K to invest in themselves.
Let’s assume this money is used perfectly, in some life-improving piece of local infrastructure. Although it’s hard to quantify, a good ‘return’ might be 10% on the investment. This might sound a little high, like a bubble stock before it bursts, but many of these places are starved for very basic things, and so the ‘return’ once they get them is correspondingly large.
In measurable terms, that works out to a $9K return, or an extra US $9 per person in the village. Village self-contained sufficiency über alles! [1]
Under the BIG program, they’re getting about US $150 extra per person per year. They could take some of that, invest it in whatever as above, and use the rest to not nearly starve, to pay off their insane debt load, to go to school, et cetera. Which is exactly what they’re doing.
[1] Sane people will note this strategy could eventually produce significant growth. Unfortunately, there usually aren’t that many low capital, high return projects of broad benefit.
Do villages not trade with each other anymore? Forget foreign or even nationwide trade for a moment, let’s assume they don’t have the transportation infrastructure set up yet, the village down the road can use a few extra chickens, yes?
I apologize Carlos, you’re not a troll. I’m still having difficulty reconciling your ideas though.
This “life-improving piece of local infrastructure”… what are you thinking about there?
Whatever it is can’t be built with outside materials or again you run into the trap of one way currency flow; anybody providing construction materials or equipment to them likely doesn’t need a chicken or sardine loaves. What are they going to build to bring in that outside cash?
On the flip side, I’m sure the neighboring villages might love if Otjivero built a well, or a public bath, or an amusment park for that matter… but what do they have that the people of Otjivero want? Certainly not money.
I cannot for the life of me see how this village is going to establish a trade relationship with the country as a whole without involvement from the surrounding farm owners. The only real commodity they can produce is food, and I’m willing to bet all the local farmland is already claimed.
Why would chicken or bread not be viable trade commodities?
Hard, currency is meant to be traded. That’s what it is, standardized exchange tokens. You’re assuming hoarding a stock of currency is best, like the mercantilists did in the 17th century. More than that: it’s as though you think currency flow is immoral in itself. And that’s weird.
So some basic infrastructure projects. Setting up Honda generators and a working grid, maybe hiring an electrician from Windhoek, or better yet training some of their own. (They can’t make the generators, no. Can your local community of a thousand?) Setting up a sustainable water supply. The area has semi-desert ranching run by honchos of colonial German mindset: any local aquifer is probably drying out. Setting up a decent sanitation system. Improving the public health and school system. Namibia has a harder row to hoe because of the high rates of HIV infection, but there are things that can be done.
The alcoholism rate and the obvious high levels of loansharking are harder to deal with. Those are more purely social issues, not problems of scarcity. Microloans would fall somewhere between the two.
What can the local village economy sustain? Auto repair. Those ranchers have trucks. Produce markets. Small mixed goods stores. More people will make expeditions to the city to bring back stuff for resale. There’s going to be at least one cassette shop. Fabric, magazines, cigarettes, candy. A chunk of the village probably already works on the ranches. Since they’re not starving on their feet, they might be better workers now. (And this may be a reason why the rancher was so against the program: having another source of income undercut the minimal wages he was willing to pay.) Depending on the local liquor laws, bars or speakeasies. Homemade beer in discarded import bottles. Some of this stuff might already have happened.
All pretty boring, and still rather poor by African standards. But not Malthusian poor. A little bit further, people will start owning bicycles and cell phones — mobility and communication. Someone will somehow get a car and start a taxi service, the way poor communities in the “developed” world did when car ownership was rare. And so on.
All the things you list are great, my concern is with export goods. Without export income, you can’t sustain import expenses.
I have no idea how that gets construed as being anti-money.
And the plans are very vague on how they get money into the community to pay for the generator, or the taxi gas, or the candy for the store… etc.
Auto repair could work, if it weren’t for the fact people with cars probably live in the city, and would rather get it fixed there than travel all the way out to the village.
The ranchers/farmers know that they don’t need to raise wages because they’re the only game in town, and once the BIG payments dry up they’re the only source of incoming cash.
Every source of cash I can think of is defeated for one of 3 reason: The consumers don’t have any money, the products aren’t competitive in their market, or the business model can’t be sustained without the BIG payments.
That’s why I go with a plan of internal sufficiency. Once the town itself is stable without BIG, pressure is put on the farmers to increase wages, which hopefully becomes a catalyst for further development as the “export” cash from farm workers can be used on better imports (ie. generators and cars). That’s the method to growth I see. But what I don’t see is how they get is self sufficiency.
For what it’s worth, Carlos, being vehemently arrogant and dismissive of a contrary viewpoint does not make you right. Nor, Lawnmower Boy, does the fact that other people agree with you (though I’m not sure how a book on the history of mistakes in population control actually contradicts the idea that overpopulation is a problem). I haven’t read the article Carlos cited, but I have worked for social service agencies, and it’s been pretty evident that when welfare recipients are incentivized to have more kids, they take full advantage of that. Please don’t make me peruse right-wing websites for research proving that.
Your argument that pregnancy incentives in well-to-do industrialized nations* with declining birthrates are ineffective is not at all analogous to the situations in developing countries where rising populations do put a stress on the environment (*and yes, I do think those policies are straight-up racist). Great, they don’t work in France. That tells me about their effect in Namibia how? Especially since there’s already pressure to have more children in developing nations?
It’s pretty clear the best way to control population growth in the long term is to increase quality of life, and I’m all for giving people gobs of money if that gets it done, but why not have a cut-off at 3 kids and increase the total per person?
Nor do you anywhere address the issue that population explosions actually do strain environmental resources. Do you disagree with that premise, or do you claim that there is no such growth?
Dev, there’s a vast difference between anecdote and statistics. Show there’s an effect by plowing through the data.
If you read demographic studies, you would know that growth rates in most of the Third World has been falling like a stone for over a generation. Africa has a 2.4% growth rate, which is less Canada’s in 1955. Namibia has a slightly higher 2.6% growth rate, but a 20% HIV infection rate. You tell me what’s going to happen there.
The key issue isn’t quality of life, but women’s education and contraception.
If I sound arrogant, it’s because this is stuff you could find in about three seconds *IF YOU WERE TRULY INTERESTED AND NOT JUST POSTURING*.
As for environmental strain, it’s important, but do you know what has virtually zero environmental impact? A corpse. The hygienic self-extermination of humanity would reduce the environmental impact of our species very quickly, though not immediately to zero.
So I’m a little skeptical about using environmental strain as a measure of worth.
Hard, trade deficits are a worry at the national level, not the village level.
The things I’ve mentioned are all things I’ve seen happen in very poor parts of the world. Expert advice isn’t required (and that sort of micromanagement is notorious for failing badly in development projects anyway). People figure these things out.
I think I’m getting the model you have in your head. But it’s based on the assumption this village is very isolated and requires primary production to succeed. No, it’s just off the main road and surrounded by dicks with electric fences that are using it as a cheap supply of cowhands. It’s still part of Namibia. People move in, people move out, people visit their relatives when they can afford it.
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This idea is not new, although it’s encouraging to see such positive results coming from a pilot scheme. The concept of a basic income has been studied for years by social scientists: see the journal Basic Income Studies for scholarly papers on the topic.