<div dir="ltr"><div><span style="color:rgb(69,129,142)"><span style="font-family:verdana,sans-serif">I'm sending this to the Working Groups with which I'm involved, but because of the topic and its broad application, the NGO Resource Center staff may wish to forward it to other Working Groups as well.<br>
<br></span></span></div><span style="color:rgb(69,129,142)"><span style="font-family:verdana,sans-serif">CHUCK </span></span><br clear="all"><div><div><div><div dir="ltr">
<p><b><i><span style="font-size:7.5pt;font-family:"Tahoma","sans-serif";color:rgb(153,0,0)">======================================<br>
CHUCK SEARCY<br>
International Advisor, Project RENEW<br>
Representative, Humpty Dumpty Institute (HDI)<br>
Vice President, Vietnam Enterprise Group (VEG)<br>
Vice President, Veterans for Peace Chapter 160 (Hoa Binh)<br>
U.S. Army enlisted 1966-69, Vietnam 1967-68<br>
71 Tran Quoc Toan, Hanoi, Vietnam<br>
Tel: � � � � � +844 3943 8061 � � �
� � ��� Fax: � � � +844 3943 8062<br>
Mobile: ��� +84 (0) 903 420 769 � � �� Skype:
� �chucksearcy<br>
Email: � � �� <a href="mailto:chucksearcy@yahoo.com" target="_blank">chuckusvn@gmail.com</a></span></i></b><a href="mailto:chucksearcy@yahoo.com" target="_blank"><br></a><b><i><span style="font-size:7.5pt;font-family:"Tahoma","sans-serif";color:rgb(153,0,0)">======================================</span></i></b></p>
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</p><p class="" style="margin-bottom:0.0001pt"><b style><span style="font-size:21pt;color:rgb(115,105,65)">Slate</span></b></p>
<p class="" style><b><span style="font-family:"Times New Roman","serif""><a href="http://www.slate.com/articles/business/moneybox/2013/05/unconditional_cash_transfers_giving_money_to_the_poor_may_be_the_best_tool.html">http://www.slate.com/articles/business/moneybox/2013/05/unconditional_cash_transfers_giving_money_to_the_poor_may_be_the_best_tool.html</a></span></b></p>
<p class="" style><b><span style="font-size:18pt;font-family:"Times New Roman","serif"">The Best and Simplest Way to Fight
Global Poverty</span></b></p>
<p class="" style><b><span style="font-size:14pt;font-family:"Times New Roman","serif"">Proof that giving cash to poor people, no strings
attached, is an amazingly powerful tool for boosting incomes and promoting
development.</span></b></p>
<p class="" style><span style="font-size:12pt;font-family:"Times New Roman","serif"">By <a href="http://www.slate.com/authors.matthew_yglesias.html">Matthew Yglesias</a><span style>� </span>|<span style>� </span>Posted
Wednesday, May 29, 2013</span></p><p class="" style><span style="font-size:12pt;font-family:"Times New Roman","serif"">Poverty is, fundamentally, a lack of money. So doesn�t it
make sense that simply delivering cash to poor people can be an effective
strategy for alleviating it?</span></p>
<p class="" style><span style="font-size:12pt;font-family:"Times New Roman","serif""><a href="http://www.slate.com/articles/business/moneybox/2012/09/winning_the_war_on_poverty_new_research_says_government_anti_poverty_programs_are_more_effective_than_you_realize_.html">Transferring
money to poor Americans has been a much bigger success than most of us realize</a>.
When it comes to the <i>global</i> poor�the hundreds of millions of
slum-dwellers and subsistence farmers who still populate the world�one might be
more skeptical. Perhaps the problems facing these unfortunates are simply too
profound and too complex to be addressed by anything other than complicated
development schemes. Well, perhaps.</span></p>
<p class="" style><span style="font-size:12pt;font-family:"Times New Roman","serif"">But there�s striking new evidence that helping the truly
poor really is as simple as handing them money. Money with no strings attached
not only directly raises the living standards of those who receive it, but it
also <i>increases</i> hours worked and labor productivity, seemingly laying the
groundwork for growth to come.</span></p>
<p class="" style><span style="font-size:12pt;font-family:"Times New Roman","serif""><a href="http://cega.berkeley.edu/assets/cega_events/53/WGAPE_Sp2013_Blattman.pdf" target="_blank">These results</a> come to us from Christopher Blattman of Columbia,
Nathan Fiala of the German Institute for Economic Research, and Sebastian
Martinez of the Inter-American Development Bank. They suggest both a promising
new approach to fighting intense poverty and bolster a refreshingly
old-fashioned account of its causes. The research comes from a 2008 initiative
in Uganda�s very poor northern sections. The government announced plans to give
roughly a year�s worth of average income (about $382) to young people aged
18-34. Youths applied for the grants in small groups (to simplify
administration) and were asked to provide a statement about how they would
invest the money in a trade. But the money was explicitly
unconditional�parceled out as lump sums with no compliance monitoring.</span></p>
<p class="" style><span style="font-size:12pt;font-family:"Times New Roman","serif"">It�s easy to see that a nice injection of cash would make
people better off. But in principle, the long-term impact could be ambiguous.
Give money to a person whose only job prospects are low-paying and unpleasant,
and perhaps he�ll simply respond by working less. That kind of income support
would increase human welfare, but not really create any economic growth. That�s
not what happened in Uganda. The government selected 535 groups�a total of
about 12,000 people�for the experiment. Of the 535 groups, about one-half were
randomly selected to actually get the money, and the rest were denied.
Blattman, Fiala, and Martinez then surveyed 2,675 youths from both the
treatment and the control group before dispersal of money, two years after
dispersal of money, and four years after dispersal of money. The results show
that the one-off lump-sum transfer had substantial <i>long-term</i> benefits
for those who got the cash. As promised, the people who received the cash
�invest[ed] most of the grant in skills and business assets,� ending up �65
percent more likely to practice a skilled trade, mainly small-scale industry
and services such as carpentry, metalworking, tailoring, or hairstyling.�
Consequently, recipients of cash grants acquired much larger stocks of business
capital and thus earn more money�a lot more money. Compared to the control
group, the treatment group saw a 49 percent earnings boost after two years and
a 41 percent boost after four.</span></p>
<p class="" style><span style="font-size:12pt;font-family:"Times New Roman","serif"">Those strikingly high returns are reminiscent of one of the
oldest and simplest accounts of economic growth there is. According to this
theory, poverty is caused by a lack of capital. Because the absence of capital
is so immiserating, the return on investment in poor places is extremely high.
Thus capital ought to rapidly flow from rich places to poor ones, rapidly boosting
incomes and inducing economic convergence. In practice, though, we don�t really
see this happening. That�s inspired a lot of complicated thinking about the
roles played by institutions, public policy, culture, epidemic disease, and
just about everything else under the sun.</span></p>
<p class="" style><span style="font-size:12pt;font-family:"Times New Roman","serif"">The Ugandan experiment suggests a simpler answer. Maybe
there�s just no feasible way for subsistence farmers and casual laborers in
rural Africa to get loans at reasonable interest rates. When young people get
money for free, they�re able to put it to such good use that it�d be well worth
their while to pay interest in order to get their hands on it. But there�s no
Ugandan equivalent of federally subsidized student loans for youth to
jump-start their tailoring careers.</span></p>
<p class="" style><span style="font-size:12pt;font-family:"Times New Roman","serif"">One of the most interesting results from the experiment is
that recipients of grants actually report 17 percent <i>more</i> hours worked,
suggesting that the money serves as a true bridge to economic opportunity.
Grant winners increase both the quantity and quality of labor supplied,
suggesting there should be at least some spillover benefits to the broader
community. No doubt there are major limits to how far up the development ladder
you can climb with this strategy: It might not work in moderately prosperous
countries with more access to capital. But these results are extremely
encouraging. A large share of poor people live in countries (India, for
example) that have enough financial resources to undertake transfer programs
all on their own. And people in the rich world can pitch in as well.
GiveDirectly is an exciting new charity model that <a href="http://www.slate.com/blogs/moneybox/2012/12/25/give_directly_the_new_charity_that_fights_money_by_giving_poor_people_money.html">lets
you directly transfer money to households in Kenya</a>. Overall, the message is
that taking a huge bite out of global poverty may be easier than most people
realize. Poor people just need more money. </span></p>
<p class="">�</p>
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