123 – Unpacking the Question, “Why don’t we just give money?”

[00:00:00] Lucie: Hi, and welcome to the IDEMS podcast. My name’s Lucie Hazelgrove Planel. I’m a Social Impact Scientist, and I’m here today with David Stern, who’s one of the founding directors of IDEMS. Hi, David.

[00:00:18] David: Hi, Lucie. I’m looking forward to a follow up discussion today.

[00:00:22] Lucie: Yeah. So, I’d been listening through to one of the previous episodes. And there was a question which I felt just needed to be unpacked basically, because it’s quite a big question. So the question is, why don’t we just give money? And you had an interesting discussion exploring sort of, your own personal experience of why giving money can be a bit problematic.

But I wanted to take the time to really look at this question and to unpack the different elements of it, because it’s not very defined. It’s very ill defined in fact. And I think that means that there can be lots of assumptions within it.

[00:00:57] David: Yes.

[00:00:58] Lucie: Basically. And assumptions can be good, but they can also be difficult.

So, I mean, It starts off really well. The question, why don’t, it’s excellent to ask questions like that, to understand more what’s going on here. It’s a, a great start to a question. But straight away, we, Who’s we?

[00:01:18] David: In this particular question, I think it really corresponds to international development or aid, and we being those who have enough versus those who are in need. And I think there’s an element there where, we, as people who are living in high income countries, we give to charity and we give to causes, but we don’t tend to just give money. That’s sort of, I think, where this comes from. There’s, you know, a simple question which is something which has been considered very seriously in international development as to, well, a lot of money is spent, would it be better spent just distributed?

[00:02:07] Lucie: Rather than spending on activities and things like that.

[00:02:11] David: Exactly.

[00:02:12] Lucie: But I’m still not clear then, so you’re talking very generally in terms of people who have something. From what I’m hearing, you’re seeing the position as both not only IDEMS or not only individuals within IDEMS, but potentially also IDEMS as a company and other companies similar and other institutions.

[00:02:32] David: There’s different levels to think of the we, of course, and it we can be, as an individual, and I think this was part of what we did draw on in that particular case, that as people who work in low resource environments, when we’re there, it is possible to just give money to people who need it around you who don’t have as much as you. And, you know, would that be better than giving to charities let’s say in the UK or to giving to organisations to sort of do activities.

And that’s I think part of what we discussed before, that actually if you’re an individual and you just give money, who are you giving it to? Are you giving it to the person who needs it the most or are you actually creating inequality for who you’re giving it to by giving by convenience? There’s all sorts of other things which come up then around that.

[00:03:24] Lucie: And you gave a really nice example of remittances basically, where you give remittances in the sense that you do give money to family and friends who are more in need of that. So I think there’s something to acknowledge there that people do already give money also. There’s, you know, a well established way that individuals do give money to especially family and friends as a way of thanks for what they have already received.

[00:03:48] David: Not just as a way of thanks. I mean, this is something where I recognise that one of my privileges is simply that my family and friends are not in as much need as many of my students were. So in my studies, I did give to friends I had from when I was living in Niger, who needed help to complete their studies, and I did that as an undergraduate, even though I didn’t have much, I was able to support someone else through their own studies, who I used to play volleyball with and who was a friend.

And that was something which I was able to do, but it was a choice and the need wasn’t great. Many of the students who I’ve had since when I’ve been in Kenya and in many other countries where family situations are different, those students have had to, as soon as they have a scholarship or anything, there is an expectation for them to be supporting family through their own education. And so there is a need, which is explicit. And so that sort of remittance, as you put it, is such an important part of many societies around the world.

And It’s one of the most positive and difficult and challenging things that I’m aware of. It’s so complex. And I have so much admiration for the cultures where this is deeply ingrained, and I try to learn from that myself. And yet at the same time, I have students who have failed to reach their potential because they couldn’t choose opportunities that would have been better for their personal growth because of the demands on them, given where they’d got to.

And so it’s something which, in terms of, individual development versus collective development is very difficult. And I have so much admiration for societies which put the collective development first, even if it does hold back individuals in certain cases.

[00:05:58] Lucie: And this is what’s really interesting about the word give, too. I think people tend to assume or think that you know, giving is just a one way thing and there’s no other aspects of that relationship, of that giving relationship, whereas exactly like in your examples, it’s part of a whole, it’s generally always part of a whole cycle of exchange.

And there’s no free gift, basically especially in international development, there’s always ideas which are being promoted behind it, or there’s the creation of family links. Just the idea of giving itself is quite a complex one. It’s an interesting word.

[00:06:36] David: It is. And it’s something where having observed this in many different contexts, the giver in certain cases, can get more out of it than those who receive. It isn’t simple. It’s never simple.

[00:06:51] Lucie: And so what I find really interesting is like, you know, within IDEMS, we would use a different verb, because what our work is it’s about enskilling people, it’s about developing resources, and most international development nowadays, they don’t try to explicitly give something because that has been proven to be difficult.

[00:07:11] David: No, it’s not as simple as that, because actually this idea of just giving money, as I think I mentioned before, there are certain cases in international development where this has been shown to be highly effective.

[00:07:25] Lucie: In the sense of micro funds and things.

[00:07:27] David: Yes, exactly, and providing sort of safety nets in society, this idea of universal credit, actually having a universal minimum amount that people get benefits society immensely, because when you have lots of people who have small amounts, they tend to spend it locally, which stimulates local economies.

[00:07:49] Lucie: Is that though, is the important thing there the money though, or is it the system and the structure, like the sort of infrastructure basically?

[00:07:58] David: That’s a really interesting question. No, I think there is evidence in certain cases that small amounts, and small is relative of course, societies that have some form of safety net small amount which is there, this does have positive effects on local economies in most cases, not in all, research on this, I think is still inconclusive. But in many low resource environments that I’m aware of, the experiments on giving very small amounts do stimulate local economies.

And one of the ways to think of this is, if you have a lot, you don’t tend to spend it locally. You tend to get things from outside your environment. Whereas if you have a little, you go to your local shop, and therefore the local shop’s doing better, because you’re now spending things locally.

[00:08:58] Lucie: It’s enabling money to circulate more.

[00:09:00] David: Exactly. It’s enabling money to circulate. And in some sense, in other contexts, this is seen as consumerism. It’s enabling consumerism. It’s enabling you to consume the services and the products which are in your environment. If you have more, you tend to consume from global markets. But that very minimal amount tends to be consumed locally, which therefore stimulates the whole local economy.

And this is something where I know of studies which have shown this and shown this in positive effects in incredible ways. But the implementation of this is really difficult and really problematic. And this is where we had that very interesting episode, with a thought experiment about, who wants to be a trillionaire? And the question there about actually if you could have the infrastructure to just give a dollar a day. The point is that it’s very different to give lump sums on specific points in time than to have micro amounts given very regularly.

[00:10:03] Lucie: Definitely.

[00:10:04] David: Again, this question of why don’t we just give money? Because giving money in ways which are useful is maybe harder than just giving in certain ways.

[00:10:14] Lucie: Yeah, that’s a really good point.

[00:10:15] David: Giving usefully is hard for the giver, whereas the things which are easy for the giver are often not as useful. And that balance is so difficult to build, to actually have something which is convenient for the giver, but really effective for those who receive.

[00:10:33] Lucie: There’s the word just in the question too, the why don’t we just give money, which to me suggested something like that, that it’s convenient for the giver. It’s easy to just give money. But in practice, to set up a system is very difficult. Well, a system that works, to set up a system is perhaps not so difficult.

[00:10:51] David: And this is the key thing, that it’s, again, it’s this idea that a system that works, that might change over time. What works now might not work later, because the needs are different. This is the nature of these wicked problems, these really complex problems. If we were to eradicate absolute poverty, the world might not be a better place, because there will still and always be relative poverty.

[00:11:15] Lucie: Yep.

[00:11:16] David: And relative poverty, there’s poverty in the UK, a rich country. And it’s not clear to me that absolute poverty is always worse than relative poverty. There’s elements of relative poverty which are so much harder to deal with than some of the elements that exist in absolute poverty. I’ve spent time around people living in absolute poverty who are living a good life and are happy. It’s not as simple as this, whereas, relative poverty can be much harder to deal with.

[00:11:47] Lucie: Yep.

[00:11:47] David: In some ways, as societies, absolute poverty is an easier thing to solve. This is something where I believe as societies we should be solving absolute poverty, because it isn’t that hard to resolve it.

[00:12:03] Lucie: Yeah. And I was just thinking in terms of relative poverty, it’s like, you know, a child sort of seeing their best friend having the new iPhone or something, but perhaps either their parents don’t allow them or they don’t have the finances to pay and always upgrade to the new one. That’s a sort of example of relative poverty, which…

[00:12:18] David: That would not even necessarily qualify as relative poverty. There is a formal definition.

[00:12:24] Lucie: Exactly. It wouldn’t qualify, but it’s something that you’re not going to get rid of.

[00:12:28] David: Absolutely. Jealousy is a concept based on some having and some not having. That’s not going to go away. We’re not wanting everyone to be equal. That isn’t a society which is desirable either. And this idea of actually understanding which problems can we solve and what problems do we need to understand? How to build structures to live with them and how to actually, you know, mitigate them in certain ways.

A lot of these things are then different problems and difficult, this is the complexity, which we love working in. No problem working with these complex problems, but it is absolutely clear that the concept of poverty isn’t going to go away. The concept of absolute poverty is within our power as societies to eradicate.

And this was part of the Sustainable Development Goals. So part of the Sustainable Development Goals were to say we should be able to, you know, no hunger, no poverty, these are things that we as society should be able to achieve. And it’s interesting that 10 years ago when these started, I was really quite impressed and hopeful.

The progress that’s been made over the last 10 years is not what I would have hoped or expected. And these are hard problems, but actually some of these are not that hard problems, it’s just they haven’t been prioritised. The world has got consumed with other things. The Sustainable Development Goals never gained quite the prominence and importance, sustained prominence and importance, that I think one would have hoped they would have had.

[00:14:05] Lucie: Another aspect of the question that we haven’t really explored, we touched on it, but who are we giving money to? Who are the recipients here? And I’m obviously not using beneficiaries as a word, but recipients.

[00:14:17] David: Yeah.

[00:14:18] Lucie: In grant making organisations and everything like that, in terms of wording, because of this idea of just giving things being a bit problematic. Because do the people want whatever you’re giving?

[00:14:29] David: One of the things which is related to this, is the fact that actually for many, and the definition in certain cases is simply defined by absolute or relative poverty, that is often a form of indicator which is used for this, and which is a sensible question.

And in many cases, they would probably prefer you just gave money than giving the support in different ways. And this is why it can be quite complicated and hard, but actually this is a question where often if you look at the cost of implementing development activities and you then consider the beneficiaries, which is a word we don’t particularly like, but it’s the people who are the targeted beneficiaries of this, and you divide the amount of money spent, those beneficiaries would much rather simply have received the money, and would probably be better off simply having received the money.

Now, that’s not to say this is the nature of this question. That’s not to say that there aren’t all sorts of secondary benefits and all sorts of other things which are happening and there’s learning happening and so on. And maybe the longterm impact could be greater.

But the evidence doesn’t point in that direction. Because if you think about all the money that’s been spent in this way over the years, and think about what that would look like if instead of that being spent on international consultants coming in and getting good salaries to do this, then maybe it would be better to simply use that money to sort of say, well, okay, if we’re actually wanting to support people who are in poverty, why not simply give them the money, which means they’re not in poverty?

If your level of definition of poverty is two to five dollars a day, why not simply give people two dollars a day?

[00:16:38] Lucie: I would say there’s always a pipeline, even if you get rid of those international consultants. There’s always a chain of people in between the giver of money and the receiver of money.

[00:16:47] David: Of course.

[00:16:47] Lucie: And there’s always risks in that chain for the money to get diverted.

[00:16:51] David: I’m not saying that this is feasible. What I am saying is that that thought experiment, well, what you can do is you can try to stream down that chain of people, and you can try and put checks and balances in certain ways. We can use technology, there’s all sorts of ways now, you know, if somebody has a mobile phone in a low resource environment, they almost certainly have some form of money transfer associated to it. And so there’s all sorts of ways to trim that down and actually do it.

It is what is chosen to be done in certain cases, but it’s not the standard way. And if you look at it at that scale it’s challenging because if you are actually, if your main goal is to eliminate poverty, I think that could be effective.

[00:17:41] Lucie: But as you said, here we’re talking about financial poverty, whereas there’s a lot of other types of poverty. And, you know, is getting rid of financial poverty, is it going to actually help people in the sense of their… I’ve got the word, the French word in my head, their, general health and well being.

[00:17:59] David: Livelihood in general and so on. There’s all sorts of issues around that because one of the arguments against this in some sense is that you’re totally unbalancing the systems therefore.

Now, if you give, and I gave the example, I believe, in the other episode about where giving seed actually ended up having a negative effect. Although this is seen for farm and community, seed is a really important thing. But by giving seed, the question of how that seed was procured, the quality of that seed, all sorts of other things, was something which I know of cases where the NGOs giving the seed pay quite large amounts because they’re getting seed rather than grain. You understand the difference between seed and grain?

[00:18:49] Lucie: Seed, it can grow and it can be productive, whereas grain is just for consumption or something.

[00:18:53] David: Exactly, yeah, so grains you eat, and the seeds, they should have the quality that they can now be grown and so on. Whereas, actually, the NGOs were paying for seed, but the beneficiaries were using them as grain because they weren’t of a quality compared to the seed that they had.

[00:19:12] Lucie: Yes.

[00:19:12] David: And so essentially you’ve now got this huge markup where somebody’s making a big profit in the middle. So the big benefit is going, to not the beneficiaries who are now just getting essentially grain, a little bit of grain, which doesn’t really help them, whereas the person who is selling grain as seed, they are getting huge amounts of money.

So you’re now creating inequality in that context, because the people who can meet the needs of the NGO to provide seed, even if the seed they’re providing isn’t necessarily the quality or appropriate for the local use. And so these are really hard problems and nobody is necessarily having ill intent, although there is a question about some of the sort of commercial seed providers.

But in general, some of those systems where you’re giving something like seed, well intentioned as it may be, can have extremely negative effects because not only does it create these inequalities where actually a lot of the money’s been captured, but it’s also creating situations where actually people are trying to make a local business selling high quality seed are being, well, why would we buy seed when we’re getting given seed? And so you’re imbalancing the market.

[00:20:36] Lucie: Which suggests a way of it not just being isolated, a we from one place to they from another place, but working together to actually identify what…

[00:20:45] David: But even that is sort of complicated because you might have part of the society, this is what we want.

[00:20:50] Lucie: Yes, exactly.

[00:20:51] David: But it might not be what is best for the community. So these things are really hard. So this is where the context is really important because what might work in one context might not work in another for all sorts of different reasons. In certain contexts, it might be that actually having a small amount distributed by, using the mobile phone networks because everybody has access to mobile money works well. And in another context, that might mean that you’re actually excluding the people who need it the most because they don’t have access to that.

[00:21:27] Lucie: I was just thinking of people in the UK with heavy reliance on food banks.

[00:21:31] David: Yeah.

[00:21:32] Lucie: That a lot of those people wouldn’t have phones perhaps which have access to the internet and everything.

[00:21:37] David: In the UK, you don’t have mobile money. The banks haven’t allowed it. This is again where institutions have meant that sort of things which sort of work in one context don’t work in another. There’s good reasons behind this but it is different in one context from another.

The food banks in the UK is a really good example where the increased importance of food banks is something where this should be an indicator to society that relative poverty is a serious issue.

[00:22:07] Lucie: Yep.

[00:22:08] David: And this is not an easy problem to solve.

[00:22:11] Lucie: No, exactly.

[00:22:12] David: But I do think that if we look at that from a simple perspective of what are the indicators we have as society as to whether our systems are working well or not? Something like the increased need for food banks, which we’re observing at the moment, this should be ringing alarm bells in a way that I, don’t understand why this isn’t in different ways.

Because if the solution is then to just create food banks, then I’m not saying, you know, food banks are so important in our current society but why are we in a society where food banks are so important? This is a failing of the systems in our society. And there are people looking at this, but it does surprise me that it hasn’t been something where these systemic issues have been prioritised.

I’m not saying that other things aren’t important. I’m saying that this should lead to prioritisation in ways that doesn’t seem to have happened.

[00:23:17] Lucie: Okay thank you very much for having taken the time to think through the question and explore the different ways of how to do development.

[00:23:25] David: I’m really pleased you brought this one back as something to explore further because it is just a difficult one. And you’re coming from a much more human perspective than I often start in some sense. What’s your sort of take on some of this?

[00:23:44] Lucie: There are a lot of issues for which populations do want support in trying to solve, or like populations or communities. I don’t know if there’s, exactly as you said, I think each community has its different context. And so that needs to be taken into account.

I have seen a lot of projects though, which don’t lead to what they would like to lead to whether that’s through giving money or giving equivalent sort of things. Ideal situation is, which is that, solutions would come from the communities themselves. That they would say we need this in order to help us get to this. But often that isn’t possible.

[00:24:23] David: Who in the community? And this is the thing where that assumes you have a coherent sense of community, which in some places there are, and in many places there aren’t.

[00:24:32] Lucie: Yeah. So coming back to our example of food banks in the UK, I have no idea because the UK is somewhere which does have systems in place, there are larger systems there, it’s an example where there isn’t a community, with a leader or something like that. But it’s part of a bigger system, which does need to be reviewed in order to try and find how it can be made more beneficial to the people most in need.

[00:24:58] David: This is a really interesting example to come back. And I love the way you’ve brought this back because in many low resource environments where you have absolute poverty, you still have strong communities and therefore community based solutions can emerge from those communities.

The example you’ve given of the food bank, where part of the problem is that the community structures have fallen down and have broken in certain cases, and that’s why these needs have emerged in a way which is coming from the society rather than the communities. One interesting solution there might be to rebuild sense of communities in these communities so that they can actually find the solutions. But that then you need community centres. I’m not saying this is a solution, but it is interesting that in the UK, a lot of the community centres that I knew growing up have closed down and they don’t exist in the same ways. And there is a decline of those senses of communities of those centres of community.

It’s a really interesting question to say, and this comes back to why don’t we just give money? This is exactly one of those complications where maybe community, strengthening community, enables money that is given to be used in ways which actually resolve issues.

I don’t have answers to this, but I love the way you’ve brought back the question to actually this sort of question of community, and whether you are working with individuals or communities, at society level, what levels do we need to intervene?

[00:26:35] Lucie: I think that’s a great question to end on.

[00:26:38] David: Yeah.

[00:26:39] Lucie: Thank you, David.

[00:26:41] David: Thank you.