5 ms·

Seems like a great experiment. I think this will do wonders for both the people, and our knowledge of how to best provide aid. 2 things I'm interested in seei

Seems like a great experiment. I think this will do wonders for both the people, and our knowledge of how to best provide aid. 2 things I'm interested in seeing: 1 - Does it make a difference if it's USD sent over, versus local currency? (Is it a cash shortage, or a foreign cash shortage?) 2 - How much inflation will occur?

skybrian 10y ago
1. The donations will likely be in local currency (via mobile phone payments), but the charity needs to exchange dollars for local currency. So it helps somewhat with the exchange rate if the country is short on foreign currency, but I'd guess the scale is not nearly enough to have any significant effect. 2. It doesn't increase the amount of currency in the country as a whole. Locally, if the economy is doing better, perhaps people will charge more for jobs, but they also trade with other parts of the country so that would tend to keep prices stable (if not too isolated).
- mathattack 10y ago
  So to be the devils advocate, why wouldn't the country print more money rather than rely on money from abroad?
  - skybrian 10y ago
    It's a western charity, not a government. They don't print the money. More generally, many countries need to make sure they have enough foreign currency to buy imports. Poor countries especially need to worry about this. Printing money to give away doesn't make sense when you can exchange it for something valuable.
    - mathattack 10y ago
      Right - it's a Western charity, but I'm asking - is it just solving a liquidity issue by pumping in the money? And if so, is the effect that different than if a central bank had done this? I buy the "You need foreign currency as a country to purchase imports" point, but if we are talking about local money to support local demand, how is sending $30mm in, and exchanging it for local currency for local projects that different than the government just printing that same amount of local money? There are inflationary effects of printing large amounts of money, but wouldn't this exist if you imported the same amount of money? I recently reread the babysitting co-op story [0] and it got me thinking about these monetary implications. Please note that I do agree that "giving people general support, and let them figure out what to do with it" is largely better than "I know what you need, so let me provide it for you" aid. II'm just working through the mechanics of this. [0] https://en.wikipedia.org/wiki/Capitol_Hill_Babysitting_Co-op https://en.wikipedia.org/wiki/Capitol_Hill_Babysitting_Co-op
- dragonwriter 10y ago
  I don't understand your responses here: this is a western charity putting in 10 million USD and soliciting (and not exclusively soliciting in the target country, which hasn't even been identified) another 20 million USD for the effort. Where do you get the idea that the donations would "likely be in local currency"?
  - skybrian 10y ago
    I don't know, but I've been watching GiveDirectly for a while and assume they'll handle this similarly to how they have before. This basic income experiment looks like a minor variation on what they already do. From https://www.givedirectly.org/basic-income https://www.givedirectly.org/basic-income "Location: To be finalized, but likely East Africa, where we have existing operations." They've paid people before using mobile phone networks and it's worked well for them.
    - dragonwriter 10y ago
      Okay, I think the miscommunication is on the word "donation"; you're referring to the payments to beneficiaries it sounds like, I took "donations" as the money going in to GiveDirectly.

skybrian 10y ago

1. The donations will likely be in local currency (via mobile phone payments), but the charity needs to exchange dollars for local currency. So it helps somewhat with the exchange rate if the country is short on foreign currency, but I'd guess the scale is not nearly enough to have any significant effect. 2. It doesn't increase the amount of currency in the country as a whole. Locally, if the economy is doing better, perhaps people will charge more for jobs, but they also trade with other parts of the country so that would tend to keep prices stable (if not too isolated).

mathattack 10y ago
So to be the devils advocate, why wouldn't the country print more money rather than rely on money from abroad?
- skybrian 10y ago
  It's a western charity, not a government. They don't print the money. More generally, many countries need to make sure they have enough foreign currency to buy imports. Poor countries especially need to worry about this. Printing money to give away doesn't make sense when you can exchange it for something valuable.
  - mathattack 10y ago
    Right - it's a Western charity, but I'm asking - is it just solving a liquidity issue by pumping in the money? And if so, is the effect that different than if a central bank had done this? I buy the "You need foreign currency as a country to purchase imports" point, but if we are talking about local money to support local demand, how is sending $30mm in, and exchanging it for local currency for local projects that different than the government just printing that same amount of local money? There are inflationary effects of printing large amounts of money, but wouldn't this exist if you imported the same amount of money? I recently reread the babysitting co-op story [0] and it got me thinking about these monetary implications. Please note that I do agree that "giving people general support, and let them figure out what to do with it" is largely better than "I know what you need, so let me provide it for you" aid. II'm just working through the mechanics of this. [0] https://en.wikipedia.org/wiki/Capitol_Hill_Babysitting_Co-op https://en.wikipedia.org/wiki/Capitol_Hill_Babysitting_Co-op
dragonwriter 10y ago
I don't understand your responses here: this is a western charity putting in 10 million USD and soliciting (and not exclusively soliciting in the target country, which hasn't even been identified) another 20 million USD for the effort. Where do you get the idea that the donations would "likely be in local currency"?
- skybrian 10y ago
  I don't know, but I've been watching GiveDirectly for a while and assume they'll handle this similarly to how they have before. This basic income experiment looks like a minor variation on what they already do. From https://www.givedirectly.org/basic-income https://www.givedirectly.org/basic-income "Location: To be finalized, but likely East Africa, where we have existing operations." They've paid people before using mobile phone networks and it's worked well for them.
  - dragonwriter 10y ago
    Okay, I think the miscommunication is on the word "donation"; you're referring to the payments to beneficiaries it sounds like, I took "donations" as the money going in to GiveDirectly.