112 – Why don’t we just give money?

[00:00:00] Lily: Hello, and welcome to the IDEMS podcast. I’m Lily Clements, a Data Scientist, and I’m here with David Stern, a founding director of IDEMS. Hi David. 

[00:00:14] David: Hi Lily. What’s the topic today? 

[00:00:18] Lily: Why don’t we just give money? 

[00:00:20] David: Ah, I think I know where this one’s coming from. Go on. 

[00:00:22] Lily: We do a lot at IDEMS. It’s not coming from anywhere in particular, it actually initially came from a discussion I had with you maybe about two years ago, where we spoke about experiences, and I said about when I go to Kenya or Africa, but at this point it was mainly Kenya where I was traveling to, and feeling very guilt ridden that I wasn’t giving people just money. And you made a really wonderful point to me, which I carry to this day, which is the most valuable thing you can give someone is your time.

But I guess just opening the conversation on, okay, why don’t we just give money? 

[00:00:56] David: And this is a really difficult topic, because there has been some research that has shown that for people in very difficult environments and difficult contexts, cash transfers are really effective. But this is a societal level. 

[00:01:15] Lily: Okay. 

[00:01:15] David: Rather than an individual level. So if you, as an individual, just go and start handing out cash, then who are you handing it to? Are they the right people to be handing it to? Or are you creating imbalances? Are you creating inequalities? And I know plenty of cases, and I’ve been guilty of this myself. When I lived in Kenya, there was a particular motorbike taxi driver, he was really appreciated by some visitors that came who were visiting the university where I was working for a number of months. And there were a number of situations where he helped them out, really in important ways with nothing really expected in return. 

And he did… And he did so just because it was his character. And then he had his motorbike stolen, but it wasn’t his motorbike, it was somebody else’s motorbike that he was driving.

[00:02:08] Lily: Okay.

[00:02:09] David: And so he now was out of a job and he owed money because this was somebody else’s motorbike that got stolen and so on, and there was all sorts behind this. And I was leaving the country two days later and I just couldn’t figure out what to do but you know why don’t we just give money, it’s a problem he needs a motorbike to make his living, well okay why don’t I lend him the money to be able to carry on and make his living? And then he’s got a motorbike he can be using.

[00:02:37] Lily: Sure. 

[00:02:38] David: I was leaving the next day, so we went to town and we bought him a motorbike. It was a life changing amount of money for him in a sense, and it was something I could afford, a hundred pounds or whatever it was. And it seemed like, well, given, I don’t have time to think about this more, this is the current situation, if I leave, I’m gone for three months, who knows what could happen. If I can do anything to help, why don’t we just give money, he’s somebody I know, I know he’s been good and now I’ve known him, this was over ten years ago, and basically that action probably destroyed his life in certain ways.

He wouldn’t, he certainly doesn’t blame me for it, on the contrary, he’s so grateful still. But it created all sorts of other problems because of course the person from whom the bike was stolen, whose bike he was using, then said how come you suddenly got a bike? And now he had problems with the police because the person thought he must have then stolen the bike himself or been involved in stealing the bike. 

So there was all sorts of local issues, big jealousies that came about because he isn’t someone who should have just been able to magically get a bike like that. So where has it come from? How did this happen? You know, the trust level in the local community was totally destroyed and actually, for all sorts of reasons, he then went on a downward spiral of guilt and so on because he wanted to repay me for the bike but he couldn’t because now he was in all sorts of other troubles in other places because he had to repay for the other bike. 

And it was just the nature of the context of just giving money as I did in a well intentioned way, I believe fundamentally at that point in time this led to a sort of cycle of consequences, which in the end I believe was detrimental for him. Now, I keep meeting him whenever I go back and so on, and he remains very grateful, and I’m delighted that he’s got, I think, on top of his drinking problem, which he had, and he’s now back and he’s got other bits of work, but he had many years where it was just very sad to see, and it really hurt me to see him sort of going on that downward spiral and feeling that maybe it would have happened anyway, even if I hadn’t tried to intervene.

But certainly, intervening with money at that point, an injection of cash, it didn’t solve things for him. On the contrary, it might have exacerbated things which went on that downward spiral. And I couldn’t have predicted that. 

Now, that is as an individual. So you going as an individual, seeing a problem and saying, oh, a little bit of money could solve it. It could, but it could also then have negative knock on effects later, because of unintended consequences of that and all sorts of different ways.

As a society, and I have a wonderful example of this from Malawi, where giving small cash injections to the poorest in society identified well can be transformatively positive. Not just for them, because if you get a small amount of money in a rural community, you spend it in the local shops. You’re not just stimulating them, you’re stimulating the whole economy around them.

That means that the shops were doing better, which means that they were buying things. And the whole community was starting to do a little bit better, because there was an injection of funds coming from people who previously didn’t have any funds. And that was helping the whole community to work. Amazing. 

So, I am not saying that giving cash isn’t good, it’s all about the context. It’s all about, are you able to do so in a way which has these positive ripple effects, or is it something which might actually lead to jealousies and inequities and so on?

[00:06:36] Lily: I was going to say for your example in Malawi, does it scale though? Or can that then lead to… 

[00:06:42] David: So that particular question was the killer question for that and in that particular case at that point in time when the results came out the decision was no, it couldn’t scale, and they shut the whole thing down. And that again was traumatic. Now it was worse than if you hadn’t done it. So giving false hope is terrible as well. In that particular case, the people who were chosen for this were, if you want, people with no hope. They were grandparents looking after young children where the middle generation had been lost to AIDS.

[00:07:18] Lily: Sure. 

[00:07:19] David: It was a form of social security for the most vulnerable in society. And as I understand it, the pilot on it was extremely successful but the cost of scaling it to the nation was deemed too much to be able to adopt it at scale and then therefore they shut it down.

[00:07:40] Lily: And then what was the effect of then shutting it down? Because if certain communities had this injection of cash, were they able to continue sustaining themselves in these different communities? No. Okay. Sorry, you’re shaking your head. 

[00:07:53] David: Yeah, so no, I was not involved in this directly, but it is close colleagues who had to be the ones who went round and tell people that this was going to stop as an intervention. They were heartbroken and they were saying, they had people standing up in the meeting saying, look, I’m proud now. You do realise of the role I’m playing in society and how I’m looking after my grandchildren. But without this, you realise that you chose us because we had no hope. So we will just be waiting to die. 

This is something where the long term consequences of this I haven’t got the information on that. But that hope which is created and then taken away can sometimes be worse than nothing, than it not being there at all. This is another reason to not just giving cash. 

[00:08:49] Lily: Sure. 

[00:08:50] David: If you are at a low resource environment, really low resource environment, you can never have enough, just because the environment doesn’t have enough. If you have a little bit more, you don’t use it for yourself, you use it for your neighbour’s, brother’s daughter who’s sick and who might die if they don’t get a bit of money. And you give what you have, because you want to help. These communities look after one another in ways which are incredible. The social network there is just so powerful. 

And so if you have a little bit more in that society, generally it gets used. So if you get used to having a bit more and then it’s taken away, it means that people don’t stop coming to you because you are the one who used to have a bit more. So your role in society, your identity can be taken away, even if you didn’t need it for yourself, you were often using it for those around you. 

Now, I don’t have the answers to this at all, but I did love this thought experiment that I did with Lucie, it was a previous episode, where we discussed truly universal basic income. What if there was, throughout the world, a universal basic income? How much should it be? The answer to that is pretty easy. Probably given the number of people in the world, which is a good number of billion if you started at 1 a day per person, that would be a game changing universal basic income for those most in need, and it would have absolutely no effect in high resource environments. 

But this is a really interesting thought experiment. You couldn’t actually implement it. But if you did have really universal basic income, then that’s what it might look like. And really universal basic income, this might be a way of actually building a world which has slightly less inequality because truly universal basic income might even be self-sustaining.

What if you had a way for those who don’t need that $1 a day for then saying I don’t need it. I’ll put it back into the pot. Well, maybe you could go a step further, for those who really don’t need it, they could say well, actually, I could contribute a dollar a day, or maybe even more, back into the pot.

[00:11:26] Lily: Sure. 

[00:11:27] David: Now, if you had a sort of way of actually balancing out the universal basic income, where some people are contributing to it, and some people are receiving it then, for those for whom a dollar a day makes a difference, this would be a lifeline. And for many, even in low resource environments, for whom a dollar a day would make no difference, they could feed it back in, or not take it, or actually add to the pot.

As a thought experiment, it’s wonderful because you could actually get this sort of balance, where really universal basic income, if suddenly the pot’s getting bigger, maybe you go to $1.50 a day, maybe you go to $2 a day. Now at $2 a day, somebody who wasn’t taking it before could say, wait a second, $2 a day, now that would make a difference to me.

And so actually the scales would keep changing, and this would be something totally impossible to implement. But as a thought experiment, a really interesting way of thinking about universal basic income, not as something which depends on a government or on a UN agency, or whatever it is.

It would depend on all those things for implementation. It couldn’t be implemented, but that’s a separate issue. But as a thought experiment of what really, truly universal basic income could be as a cash donation, oh, that would be nice. At what point would universal basic income be enough that actually your homeless population in Europe, that it’s enough to help them? A dollar a day wouldn’t help them. Ten dollars a day? If it did get up to that? No, that’s still not very much. But that might make a difference there, or it might not, do you know what I mean? But this is the sort of thing where, you know, who knows at what point this would start resolving other problems in the world, which are closer to home.

One of the things which is so difficult is that these things are totally contextually dependent. But one of the powerful things with this thought experiment is, it’s not culturally dependent in the sense that if a universal basic income would make a difference, then if you do it at a country level, then you’re actually increasing inequality because your wealthier countries are going to have higher universal basic income.

So if you think about universal basic income on a global scale, then suddenly this is something which could work at changing the way we see the world, changing the way extreme poverty affects. Now it would not be enough to solve all problems. It’s not trying to solve all problems. It’s universal basic income. It’s solving a very specific problem, which for those who really are struggling in the world, this would give them a very minimum basic income. Interesting thought experiment. Anyway. 

[00:14:33] Lily: That’s very, it’s one of those ones where, as you’re saying it, you’re like, okay, I need to give more thought here. Obviously, you’ve been able to have that opportunity to have that thought. 

[00:14:42] David: I’ve been thinking about this one for a while in different contexts. 

[00:14:45] Lily: Yes. 

[00:14:46] David: And it’s one where this simple question of why shouldn’t we just give cash? The simple answer to that is as an individual, if you give cash, you’re more likely to be increasing inequality than you are decreasing it because you’re unlikely to be able to have enough knowledge to know who to give it to in such a way that it actually reduces problems more than creating them.

[00:15:09] Lily: Yes. 

[00:15:09] David: Don’t get me wrong, I’m guilty of it. 

[00:15:11] Lily: No, and I remember I spoke to you about this a year and a half ago, a while ago, it was after there was a big earthquake in Turkey where homes were completely lost and destroyed and communities, and I was living with someone who was Turkish at the time and their partner’s home, and I’ve met their partner many times, and she was a lovely person, but her family’s home was gone.

So she opened up a GoFundMe type thing, and I said to you I want to contribute, but at the same time is this then creating inequalities? And I think you said no, the inequality is already there. 

[00:15:46] David: Yeah, they just had their home destroyed by something totally out of their power.

[00:15:50] Lily: Yeah, the inequalities are already there. Yeah, exactly. And if you were to give and then maybe this one person in that community, because their daughter lives in the UK, they were able to build up their home, they would probably share it out just knowing the kind of situation that they’re all in. 

[00:16:08] David: Yes, exactly. That would then be a lifeline to others, they would probably help others. Now, this is not creating inequality. The inequality, as we say, is already there, and you’re not solving that problem in an equitable way. But that’s the best you can hope to do, even if you gave it to someone else in another context, that wouldn’t work.

I give cash, regularly, almost every couple of months to somebody in Niger who I’ve known since I was a child. 

[00:16:36] Lily: Yeah. 

[00:16:37] David: This is not fair, there’s many people who are in more need, but I know this person in need and I understand them. And it’s a very personal connection. And so being able to support individuals is something which is wonderful. Is it the best way to solve the world’s problems? No, but you’re not trying to solve the world’s problems in that case. You’re trying to contribute as you can. And there’s a big difference between these two things. 

And there is danger in doing so because I know cases, including myself, where with good intention I’ve contributed, as I gave the motorcycle example, as I could, and the long term impact has been negative. And therefore I am very careful with how I do it and when I do it. But I don’t always get it right, and I won’t always get it right. And I won’t stop doing it just because I don’t get it right all the time. But I will be generally careful about when I do it and how I do it. Trying to make sure that I don’t do harm. And that’s hard. But we can only do what we can do. 

What I would do professionally rather than personally is try to work at the big problems, the general systemic problems, because that’s the only way to really solve this. If you solve this for individuals, then it is possible that they may go on to be able to solve it for their community in their context and at a higher level. But that’s a big ask of them. 

Why are we asking more of them who are already in a difficult situation than we’re asking of ourselves who are working to support that? Changing systems is hard and I’m not saying I know how to change the systems, but I am saying that working towards good functioning systems is something which we try to work towards, and as a whole, there needs to be more thought going into this.

And I think the place I’d like to finish this is simply actually the inequality that we’re getting in the world, which is increasing, and there’s data on it increasing, it’s also leading to individuals who have a lot of work trying to get involved in solving some of these things.

The obvious example is the Gates Foundation and they have done a lot of excellent work. But they’ve also done bits of work which have been a lot less successful. And that question of how much should individuals be trying to do this versus institutions and systems actually trying to work towards this? How much should you be, as somebody who can give, because living where we are, in the context of the world, we all can give, how much should you be using the fact that you can give, to try and influence them to the way you think things should be done? And this has been huge parts of the problem, as well as parts of the solution.

It’s hard, it’s complicated. Some people who have the power to actually provide the finances would really be well served by either spending time not giving but learning. Or actually getting the right people who have really deep learning about systems and so on, to be having a voice which is listened to and heard. And that’s hard because what we see in our experiences and to be able to build a culture of critique where, I hope we do in IDEMS, where the thoughts, the visions are being heavily criticised by everybody involved, not in a negative way, but based on people’s learnings and thoughts and where they’re coming from. Even just these sorts of discussions we’re having, these are the sorts of discussions which are so healthy.

It’s not that there’s necessarily an easy right or wrong. And so why shouldn’t we just give money? Actually, in some cases, it would be great if there was just money given in the right way. But in other cases, just giving money can do a lot of harm. 

[00:21:07] Lily: Yeah. 

[00:21:08] David: That’s the simple answer. And to be able to work in that complexity, you need to be so open to critiquing, understanding when you’re veering from one to the other. Anyway.

[00:21:22] Lily: Really, really interesting. Thank you, as always, David. 

[00:21:25] David: Thank you for such an interesting question. 

[00:21:27] Lily: Thank you very much.