A Cure for Poverty: Money

In a famous literary exchange that apparently never actually occurred (Google it for details), F. Scott Fitzgerald said, “The rich are different from you and I.” Ernest Hemingway replied, “Yes, they have more money.”

The text for consideration for today is: The poor are the same as you and I, only they have less money.

Which, just maybe, means that the quickest and most efficient cure for poverty is giving the poor money.

Exhibit A: As Brady Dennis recently reported in the Washington Post:

http://articles.washingtonpost.com/2013-08-29/national/41584468_1_latest-study-cane-iq

--an interesting line of research suggests that the stresses and strains of poverty, by themselves, can cause a person’s intelligence to deteriorate. Rather than people being stupid, making unwise choices, and then ending up poor, it may be that people are just like other people, but that when they are poor they can’t think as well, and no surprise then if they end up making some unwise choices. The fact is that if I have not been poor myself, I probably have no clue at all as to how mentally taxing it is to figure out just how to survive from day to day.

Exhibit B: NPR reporter Jacob Goldstein, writing here in the New York Times magazine:

http://www.nytimes.com/2013/08/18/magazine/is-it-nuts-to-give-to-the-poor-without-strings-attached.html?_r=0

--discusses the work of GiveDirectly, a charity that makes direct cash payments (to villagers in Kenya in this specific case). Goldstein reviews other examples of direct cash payments to the poor that have been shown to produce excellent results in other settings.

Goldstein addresses the objections raised by the received view of charity—that you can’t just give money to the poor because they’ll waste it on frivolous things, whereas charities are extremely wise and will give people what they really need, like health care, or a fishing pole, or whatever. This seems at least some of the time to be false. Amazingly, the poor (even if their poverty renders them less smart than they’d be if they were not poor) might actually know exactly what it is that they need, and what would be the best use of a sum of money if they had it.

Goldstein gives the example of many of the Kenyan poor using their $1000 payments from GiveDirectly to buy metal roofs for their houses. This might seem a good example of profligate waste: Isn’t the old thatched roof just as good, and a lot cheaper? But when you drill down you discover that the grass roof is actually more expensive. It regularly wears out and then you have to go and get more grass to patch it, and the grass is a special grass that’s expensive to purchase. Having a grass roof is like taking out payday loans; it’s cheaper in the short run but bleeds you in the long run. Paying up front for the metal roof is actually a smart money-saver and reserves future cash for more important purchases.

Economism proclaims a number of things about the poor. It says that they must be poor because of their own unwise and possibly immoral behavior. After all, the market is a free market; everyone has an equal chance to go out and make a fortune; if you don’t get rich it must be your own darn fault. If you go back to the religious traditions from which (I argue in The Golden Calf) we can trace economism’s origins, we see the idea that the poor are poor because of God’s plan for the world; to try to do something for them in this world to relieve their circumstances is to go against the divine plan, and could end up sending the poor to everlasting hellfire anyway because their poverty is designed by God to make them repent and then to accept Jesus as their savior. Something of this view is reflected in the “everyday” version of economism as recently described by Philip Mirowski (Never Let a Serious Crisis Go to Waste: How Neoliberalism Survived the Financial Meltdown. New York: Verso, 2013), in which it is commendable for us as a society become openly sadistic in the pleasure we take in shaming and ridiculing the “losers” who fall behind in the Market’s race to riches.

It is therefore sobering to think that contrary to the wisdom of both the boosters of economism on the political right, and the gurus of so many charities in the political middle, things go very well when you make direct cash payments to the poor, treating them as reasonably smart people who know what to do with money, and treating poverty itself as a deficiency of money more than anything else. If one looks at how many social ills all seem to be directly associated with income inequality (see The Golden Calf, again) it is perhaps reassuring to know that we could do a lot to reduce income inequality merely by redistributing income—if only we would.