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> "The cash transfers were something like 17% of total local income — local GDP," So basically they gave entire communities 17% of a years salary and looked at
by username90 7y ago
> "The cash transfers were something like 17% of total local income — local GDP,"
So basically they gave entire communities 17% of a years salary and looked at what happened to the community afterwards. My naive reaction is that this would funnel significant amounts of goods from nearby communities to these enriched communities because it was such a huge amount.
These extra goods would let people spend more time enriching it, creating more economic activity here but less in neighboring communities who sold their goods. For example, the mill, it didn't have enough grain to mill before but now they had money to buy grain. Doesn't this mean that some other miller somewhere else in Kenya now has less grain to mill? Or is Kenya importing grain? So to me it seems like this study ignored the externalities by just looking at the effects on the local community and not the entirety.
I don't really buy the argument that more money increased economic activity, then the problem would easily be solved by just printing money. Many countries have tried that and failed.
- username90 7y ago> Kenya ranks among the world's six most corrupt countries. Bribery and fraud cost Kenya as much as US$1 billion a year. Kenyans pay some 16 bribes a month, for two in every three encounters with public officials Could it be possible that the improvements they saw in these communities were the result of better ability to bribe officials? That they couldn't get the supplies they were entitled to without spending extra cash? Source: https://en.wikipedia.org/wiki/Economy_of_Kenya#Challenges https://en.wikipedia.org/wiki/Economy_of_Kenya#Challenges
- ncmncm 7y agoKeynes identified criteria under which printing money does not create runaway inflation. An excellent example was 2008, when printing $800B did not cause inflation. Printing $1.2T would also not have caused inflation, and would have ended the recession, but the Senate preferred to extend the recession, to blame on Obama, instead.
- aaron695 7y ago> Or is Kenya importing grain? Yes, their grain mill example is strange. But what they imply is yes. Either more is imported, or not exported or created/grown. A better example is the clients buy a TV, then the benefits like family planning from watching things like soapies come through, which stops the destruction of wealth. Don't get the printing money link. Money from outside the country is given which allows them to import things they want or hire unemployed people to to create, who then might import things with their wages. Rather than giving TV's you allow them to chose, so houses don't end up with two TV's, they might spend the money on schooling or a phone rather than a second TV.
- chillacy 7y agoMight be useful to distinguish between cash transfer and printing money. In this case the economic resources are coming from outside Kenya.