Cash Transfers, Poverty, and Paternalism

Many monetary transfers* from the wealthy/middle class to the poor involve distinct policy bias and outcomes. For a variety of reasons most countries have decided to target assistance to the poor through specific programs rather than cash transfers. For example, in the United States we recognize that an advanced society shouldn't have "hungry" citizens so we provide foot stamps (SNAP) to qualifying families. Likewise, we understand that we want to limit the number of people on the streets so we subsidize rent (e.g., Section 8) and heating bills (LIHEAP). We do this because we want to make sure our "money" is being spent on the intended policy outcome. This policy of targeted assistance leads to significant costs for our government and the people receiving the assistance (deadweight loss).

If we wanted to be much more economically efficient we would institute a policy of strict cash transfers. Thus, rather than giving $100 in vouchers the government would give $100 in greenbacks (and save on government overhead). As Matthew Yglesias states:

It sounds banal when you say it, but one of the main obstacles to people being less poor is that they don’t have enough money. If you give them money, they’ll have more of it. Will this be optimal in all cases? Of course not. But in the vast majority of cases, you’ll do some good. 

I agree with Yglesias that cash transfers are better and think that individuals are better at making decisions than the government, however, he and others have failed to highlight the one significant problem with cash transfers--living with the consequences.

Could we actually live with the consequences of program that though more efficient leads to "some" people make really bad choices and publicly suffering the consequences? Would we be able to say, "Well, he had his money, but decided to spend it on something else?" I don't think so (and to be fair I don't think Yglesias thinks so either). We want to talk tough, but like many things in the policy world, decisions are hard and all have consequences--foreseen or otherwise.

My Lack of Education

I'm a nerd, plain and simple. I like facts of all sorts and kinds. Facts about maps, facts about the distance between stars, facts about Peruvian llamas, facts about farm policy. As a child I read fact books before I drifted off to sleep. I might not have been the fastest kid or the cutest, but I did know lots of things about lots of stuff.

Unfortunately, as I've aged I've come to see a lacking in my education. I could talk to you for hours about the formation of mountains and the water cycle and the dominance of ferns during the age of dinosaurs. However, during a walk in the woods I wouldn't be able to tell an elm from an ash. The difference between a hydrangea from and a rhodendrum is greek to me. Socrates was done in by hemlock, but I couldn't tell you if I was eating a hemlock leaf right now.

This new awareness comes from my reading of Roger Deakin's Wildwood. In this fantastic book he traces his journey through his local (and far off) wood. And with me he is leading a blind man.

I Read Me Some "Battle Cry of Freedom"

On work trip to Sioux Falls a month ago I had joyful the opportunity to peruse a local used bookshop. Unfortunately, I have inherited from my father the need/compulsion to leave any bookstore with a new book. So I left the store with McPherson's Battle Cry of Freedom, a one volume history of the United States Civil War.

Over 800 pages McPherson covers the social and military history of the Civil War. He explains not only the hows and whats, but also the whys. And as we approach the 150th anniversary of the Civil War more and more talk has been had about the causes for the Civil War. Some talk, alas, has veered into complete silliness with slogans that the War was about "State Rights" and "Protecting Liberty" and "Fighting for the Homeland."

Of course, that's bunk. "State's Rights"only works in the sense that the state's seceded for the right to own slaves. To quote from Mississippi's "Causes of Secession" of 1861:

In the momentous step, which our State has taken of dissolving its connection with the government of which we so long formed a part, it is but just that we should declare the prominent reasons which have induced our course.

Our position is thoroughly identified with the institution of slavery - the greatest material interest of the world. 

Or from South Carolina:

The General Government, as the common agent, passed laws to carry into effect these stipulations of the States. For many years these laws were executed. But an increasing hostility on the part of the non-slaveholding States to the institution of slavery, has led to a disregard of their obligations, and the laws of the General Government have ceased to effect the objects of the Constitution.  

The Civil War was a horror for all involved. But it is important to remember why the states seceded.