
Let Them Eat Cash - sethbannon
http://www.nytimes.com/2014/06/30/opinion/let-them-eat-cash.html
======
rayiner
I don't disagree with the overall article, but I find this question puzzling:

> I haven’t spent any time with the homeless in the United States. Maybe I’d
> see that the differences are profound. But I ask myself: If homeless people
> and drug users in Liberia don’t misuse cash, why would we expect the
> homeless in New York to waste it?

Some percentage of people are homeless simply because they lack resources. The
others are homeless because they have trouble functioning in normal society,
either because of mental health issues, severe addictions, disabilities and
trauma from war, etc. I would not be surprised if, due to the disparity in the
overall wealth of the two places, homeless people in New York skewed much more
into the latter group than homeless people in Liberia.

Some statistics: [http://www.washingtonpost.com/wp-
dyn/content/article/2010/07...](http://www.washingtonpost.com/wp-
dyn/content/article/2010/07/09/AR2010070902357.html).

Note that the vast majority of the homeless are not what we think of as
"chronically homeless." But about 5-6% of them are, and that subset accounts
for about 60% of the resources spent fighting homelessness. And of that
subset, 30-40% have "severe mental illness."

~~~
panarky
The author answers that question with this:

    
    
      In 2010, Jim Rankin, a reporter for The Toronto Star, asked
      himself the same question. So he handed out five $50 prepaid
      Visa and MasterCard gift cards to panhandlers. What did they
      buy? Mostly food. Some phone minutes and clothes. A couple
      bought liquor as well.
    

By and large, people know what's best for themselves. Some will waste it, but
most will put the cash to good use.

Waste can't be completely eliminated, and giving the cash to an organization
also doesn't eliminate waste.

~~~
ja30278
Well...of course. Heroin dealers don't take Visa cards, so you wouldn't see a
line item for drugs on a Visa bill. You also wouldn't see that the prepaid
card had been exchanged for cash at a discount to someone that actually wanted
food.

~~~
aetherson
Heroin dealers don't take Visa cards, but liquor stores do.

------
nazgulnarsil
I would argue the "idle poor" meme is actually an artifact of how shitty our
current social programs are which often disincentivize work. I grew up on
welfare and often saw this dynamic first hand. Saving any reasonable sum of
money as a safety net will get you kicked off lots of programs that are hard
to get onto for example.

People put money to productive use when productive uses are available and they
won't be penalized for long term planning.

~~~
duaneb
In my experience, the bottleneck is often lack of stable work rather than
people choosing to be on welfare. Everyone is in different situations, though.

------
nemothekid
I saw this article earlier today and I had assumed that the Chen Guangbiao
(the Chinese Millionaire) had backed out of the promise (which confused me, he
had to have known how much it would have costed to so going in).

The first article never explained that he was blocked by the charity that
helped in the first place.

I'm saddened that the charity didn't go as planned. In most cases people know
what they need best, rich or poor.

~~~
bayesianhorse
In the case of homeless people in the US they often don't know what's best for
them. Many are schizophrenic or otherwise mentally ill. Many are veterans.
Even if they know they need treatment, who could give it to them? $300 might
not be enough for even the first doctor's visit.

~~~
nemothekid
I'm not 100% confident that those who are mentally ill would have the capacity
to attend such an event.

~~~
bayesianhorse
Mentally ill means stuff like PTSD, schizophrenia, addiction, bipolar disorder
or dementia. Not "mentally retarded" or "vegetables". There's nothing wrong
with most of their thought processes.

------
rictic
I'm in favor of direct cash giving, I donate to GiveDirectly. I don't know
much about homelessness in New York, but in San Francisco a large majority of
people who experience homeless will do so in a temporary way. I'm in favor of
direct cash giving to them too.

I'm more skeptical of the efficacy of cash for the chronically homeless, who
often suffer from debilitating conditions like profound schizophrenia that
intuitively one would think would need to be treated first. I say this with
compassion, I live at the edge of the tenderloin and have a number of
neighbors who are homeless and ill. That said, intuition is one thing and
experimental results are another. I think it's an experiment that should be
tried, and if a donor wants to do it I'm disappointed in an organization that
would get in the way.

------
jackschultz
This American Life had a story about giving cash to Kenyans. They didn't
exactly take a position, but talking to the different people involved is
interesting.

[http://www.thisamericanlife.org/radio-
archives/episode/503/i...](http://www.thisamericanlife.org/radio-
archives/episode/503/i-was-just-trying-to-help?act=1)

------
ArikBe
You can't really compare the category of homeless drug users in Liberia with
homeless drug users in NYC without adequate controls for the resources
available to these people as well what kinds of addiction are prevalent and
perhaps certain background characteristics that could influence decision
making. Here's a very crude hypothesis to illustrate my point:

In Liberia I can't imagine that there are many soup kitchens or organizations
like the NYC Rescue Mission. Thus, when an individual receives cash they will
spend it on items such as food and clothing because these are basic
neccessities. Perhaps the disutility of not having anything to eat or to wear
is greater than the utility gained from using drugs. This also depends on the
type of addiction.

Now imagine that you're homeless in NYC. Being homeless your standard of
living is relatively poor, however you can still scour the bins for pizza
leftovers or go to a place like the NYC Rescue Mission and get a meal.
Homeless people might not be adequately dressed to withstand winter, but they
do have _something_. So now when you get money, you spend it on your addiction
because while life is painful, it's not painful enough to give up drugs.

I haven't read through the 19+ studies implicitly mentioned in the article,
but this is definitely something that should be taken into consideration.

------
contingencies
I gave some small amount of money (100THB / ~$3.50) to a homeless person here
in Thailand yesterday. He was so happy he wept.

The jarring thing was that, only when I stopped to interact with him did I
discover that, while he appeared physically healthy and of a working age with
all limbs intact, he had an extreme speech impediment which was no doubt
largely responsible for his homeless predicament.

That was less than 10 hours ago.

Another time, I went to a homeless shelter in London and met an Iranian man
with a PhD and better English than most English people. He said he'd become
homeless for economic reasons, the government had never helped him to get a
foot in the door for another job, and nobody wanted to employ an older man
from what they perceived as a funny country. The guy I went with, an older
homeless dude I'd been chatting to now and then, used my presence to smuggle
spoons out of the place for heroin.

Where I normally live, in China, a good portion of the homeless are on the
street due to the lack of mental and other forms of health care.

Cash-in-hand, truth be told, fixes few of these problems... in every case the
problems are generally societal and related to an absence of decent health
care and government services, and logical drug laws.

------
danans
Related: I know a guy who, after working on reputable micro-credit schemes
overseas, tried to replicate the program in Detroit (where he is from).

When he handed out the micro-loans in Detroit (adjusted for local purchasing-
power), people just pocketed it and walked without any consideration of paying
back the loan. Hopefully, like in the article, they spent it mostly on useful
things for themselves, like food or toothpaste.

He had several possible explanations for why they didn't keep with the
program. One was cultural differences in entrepreneurship between the poor
communities in the developing world vs those in the US.

But a more interesting reason I thought of is that there may not be much room
for micro-financeable cottage industries in the US (like raising chickens for
egg distribution, etc).

Mass produced (and lower quality) food and other goods are so cheap here that
it's not clear how a micro-financed business could compete at the low end of
the market like they potentially can overseas in a less developed society.

In fact, I think most cottage industries I've seen exclusively cater to the
high end (maca root chocolate truffles made in handmade in Marin county,
anyone?)

EDIT: wording

~~~
canjobear
From the way you described it, it sounds there weren't any consequences to not
paying back. In that case, paying back is a waste of money. Maybe the people
overseas paid back because they had been taught to be more obedient to
authority than people in Detroit.

~~~
PhantomGremlin
Perhaps it's not an issue of "more obedient to authority". Instead, at least
some microloans overseas succeed because of "solidarity lending" [1], which
involves "peer pressure, mutual support and a healthy culture of repayment".

But not here: "Efforts to replicate solidarity lending in developed countries
have generally not succeeded."

I think it could work here among the right groups. E.g. in the last century
credit unions were very popular. These weren't just formed by employers and
unions, but also by various immigrant groups in the big melting pot cities
like New York. Those immigrants weren't desirable customers by existing banks,
and so they were forced to form their own banks for both deposits and loans.
And were quite successful.

What "qroup" did the borrowers in Detroit belong to?

[1]
[http://en.wikipedia.org/wiki/Solidarity_lending](http://en.wikipedia.org/wiki/Solidarity_lending)

------
bayesianhorse
The article ignores that the recipients of Chen's charity are not comparable
to those of the handout studies. The latter are a general population in a
developing country - in other words most have a family, many have some work,
most have a modest home.

The "NYC homeless" on the other hand often are mentally ill, have no ties in
the community, no home (duh...) and are usually unemployed, quite a few are or
have been addicts.

The idea that these people could use the money for drugs and alcohol is
actually a lot more warranted than in the general case.

Homelessness in developed countries is a completely different problem from
poverty in developing countries. Still, it's hard to imagine that this charity
is doing a better job with the money than they could do for themselves.

~~~
aetherson
Did you read the entire article? It explicitly mentions this objection, and
points out that in fact they did in fact try cash grants to "men who were
homeless or made their living dealing drugs or stealing," many with substance
abuse problems. It's not all comparisons between US homeless and developing-
world general-population.

------
AnthonyMouse
These are essentially the same arguments that are made in favor of a basic
income. It's the free-market solution to welfare. Assume that people are _not_
idiots and know better what they themselves need than a paternalistic
bureaucracy.

------
pratyushag
A few things that come to mind:

1\. Giving cash to individuals or targeted groups in need is called cash
transfers in the nonprofit sector. More specifically, conditional cash
transfers or CCTs and governments spend more than $50 bn a year on this
(depending on the definition, this can go up to $400bn a year!)

2\. It would make sense for a lot of nonprofits to NOT EXIST in their current
forms and instead be there to identify individuals and give them cash. If
philanthropy was treated as a science with the objective of finding a method
to maximize impact per dollar, there are good arguments to say that the null
should be cash transfers for many cases. It's sad that that's not at all the
case, especially for organizations funded by small private donors.

3\. There are very few organizations/nonprofits/NGOs that do cash transfers in
a way that you can reasonably know that almost all of your money is going to
the poor: GiveDirectly and New Incentives.

GiveDirectly gives unconditional cash transfers (no strings attached) to
people in need. New Incentives gives conditional cash transfers (based on
fulfilling pre-defined health goals) to poor pregnant women with HIV.

4\. The biggest issue with giving cash to the poor is to make sure that most
of it goes to the poor instead of spending on either verifying these
transfers, or transferring the cash to the beneficiaries. This may sound easy
but since cash is so liquid, it has a tendency of getting "lost" with very
little of it actually making it the beneficiary.

Very often people argue that poor people are poor because they don't know how
to manage money and that they will do the same with the money you give them.
Maybe they will, most likely they won't. They will likely use it in a way that
benefits their life the most - to fulfill their greatest needs - which very
often is food, shelter, and clothing. Still, if that's your only argument,
than it should make sense to give to the very poor in developing countries who
have likely not had the chance to escape the rigid cycle of poverty.

\--

If you think this article has merit beyond just being a great read, I would
encourage you to donate to organizations doing cash transfers:
www.newincentives.org www.givedirectly.com

------
Tycho
I feel quite uneasy about the idea of telling people not to give money to the
homeless. It may or may not be true that you are just enabling their
addictions but what about the broader implications of training people to
suppress their natural sympathetic and generous instincts and undermining the
ability of givers to make their own judgement and for the needful to ask for
help.

~~~
zo1
" _I feel quite uneasy about the idea of telling people not to give money to
the homeless._ " If that makes you feel uneasy, I'm curious to know how you'll
feel about the things this search will show you:

[http://lmgtfy.com/?q=illegal+feed+homeless+people](http://lmgtfy.com/?q=illegal+feed+homeless+people)

------
chaqke
i wonder what the charity's overhead is, compared to the theoretical "loss"
rate to addiction/booze/whatever we want to decree an ineffective use of
someone else's money.

~~~
ceallen
That sort of thing is easily available for any reputable charity:
[http://www.charitynavigator.org/index.cfm?bay=search.summary...](http://www.charitynavigator.org/index.cfm?bay=search.summary&orgid=5015#.U7Mg96YpB2Q)

Looks like administrative costs are about 10% of overhead (fundraising is a
net positive, so I wouldn't hold it against them).

~~~
AnthonyMouse
> fundraising is a net positive, so I wouldn't hold it against them

Disagree. Fundraising is net positive for the financials of an individual
organization but not for society. Donors have a finite amount of money to
donate to charity so convincing them to give it to you often just means they
don't give it to someone else.

And even in the alternative that the donors would have spent the money in the
general economy, that has obvious societal benefits as well, e.g. job creation
or easier access to capital. It is better to have half as much money going to
charities that spend 90% of it on programs than to have twice as much going to
charities that only spent half of it on programs, because in the first
alternative the other half of the money is at least going to something
potentially productive rather than a zero sum competition between charities
for donors.

~~~
ars
> Donors have a finite amount of money to donate to charity so convincing them
> to give it to you often just means they don't give it to someone else.

That's not always true. Sometimes a potential donor doesn't give at all, so if
you convince them to give, then this is a donation that would not otherwise
exist.

------
akilism
vice did a short about this

[https://www.youtube.com/watch?v=yDH4C0B956Y](https://www.youtube.com/watch?v=yDH4C0B956Y)

------
Bangladesh1
I love the title

------
VLM
The purpose of the fight against poverty is to give the middle class warriors
in the fight something to do. Its a jobs program not a welfare program. The
welfare of the poorest segment of the population is almost accidentally
improved, but that's never the intention. This is tied in with the first
priority of a bureaucracy being the perpetuation and expansion of that
bureaucracy.

There is a side dish of distraction. You don't want bored masses of poor
people wondering why the system picked them to be the bored masses of poor
people. Better, cheaper (in the long run) to have them wait in line for 8
hours per day to get some .gov cheese. Why are all our people so poor? Who set
us up to fail, and set them up to win? Who cares man, get in line for the
cheese with the rest of us, only another two hours in line, I can taste that
cheddar already.

~~~
jordan0day
So in your opinion is the bureaucracy actively oppressing the poor? Or just
being intentionally incompetent? Because I'm not sure that you really answer
this question "why the system picked them to be the bored masses", either.

