Economists like Raghuram Rajan, Abhijit V Banerjee and Manmohan Singh, as well as politicians like P Chidambaram and Yogendra Yadav, have advocated for more money to be put in people’s hands. But they didn’t say “How?” “, ” How much ? “And” At what price? “

Synopsis

Economists like Raghuram Rajan, Abhijit V Banerjee and Manmohan Singh, as well as politicians like P Chidambaram and Yogendra Yadav, have advocated for more money to be put in people’s hands. But they didn’t say “How?” “, ” How much ? “And” At what price? What is the magic number of the fiscal deficit appropriate to balance the macroeconomic consequences of direct cash transfers (CSDs)?

The concept of direct cash transfers was debated extensively by economists during this economic recession. A study in Canada gave homeless people in Vancouver a single cash transfer and tracked their spending habits for a year.

They found that the transfers created net savings for local authorities by reducing the need for emergency services. The study was led by Claire Williams, CEO of Foundations for social change and teacher Jiaying Zhao from the University of British Columbia.

WILLIAMS: This was a randomized controlled trial, in which we gave $ 7,500 to 50 people who had recently become homeless. Direct cash transfers are a straightforward intervention that involves paying a one-time lump sum to help people move forward with their lives.

Improvements after one month

We selected people based on their degree of functionality, so we eliminated anyone with significant substance use, alcohol, and mental health issues. That’s not to say that an intervention like this couldn’t work for this population, but we wanted to start small and safe and then expand our metrics as we move forward. We also had a control group to assess the impact of our intervention.

EDGE: Have you compared it to other direct cash transfer studies that have taken place around the world and found any major differences?

ZHAO: We first did a thorough review of existing studies on cash transfers and compared our results to theirs. There are several important differences. We saw improvements one month after the cash transfer in housing stability, food security, subjective well-being, cognitive function, savings, assets and slight improvements even in employment, and finally cost savings for society.

Since we only recruited people who met our selection criteria, we have no data indicating whether this approach would work for other populations as well, but our results suggest that it may be an effective approach to reduce roaming.

An economy for governments

EDGE: What do you mean by cost savings for society?

ZHAO: We looked at the social and health services that participants had access to for 12 months for both the cash participants and the cashless control group. What we found is that over one year, cash participants saved $ 8,100 by reducing their reliance on shelter use. So there was about a net saving of $ 600 per person per year.

This study shows that when given the opportunity, people can make wise choices and know precisely how to move their lives forward.

EDGE: Did you share this discovery with the local authorities?

WILLIAMS: We reported to the government, which was one of our first funders. Hopefully we will see more interest in terms of collaboration and eventual funding from the government. I believe that at the end of the day in Canada, it is the government’s responsibility to increase the income floor for everyone. But until then, we also firmly believe that it is the responsibility of charity and philanthropy to advance meaningful risk-taking to advance social change.

EDGE: Is there a role for companies in this space?

WILLIAMS: I absolutely think so. Neither I nor Jiaying come from a space where we have worked with homeless people. I was a consultant in environment and sustainable development; Jiaying works in behavioral sciences and psychology. And yet, this has its advantages.

We really bring lean business practices from the entrepreneurial space, from the academic space, and apply those ways of thinking, these paradigms, to an age-old problem. And I think that’s why we see the impact we have, because we think more creatively and differently about the matter.

ZHAO: I think our project is essentially about innovation. It is a highly innovative and disruptive solution to homelessness, and innovation is at the heart of businesses. So I would invite companies that want to work with us to push forward with our expansions to reduce roaming on a larger scale.

Help people plan for the future

EDGE: What was the biggest surprise for you from this study?

WILLIAMS: We’ve seen people make wise financial choices, with a 39% reduction in spending on drugs, alcohol and tobacco. This is important for challenging the prevailing stereotype and narrative about people living in poverty or homeless people, that they will ‘waste money’.

This data point shows that this is simply not true. It shows that when given the opportunity, people can make wise choices and know precisely how to move their lives forward.

In British Columbia, you receive assistance of $ 700 per month, of which $ 375 is allocated to your accommodation, so you have $ 300 and change left. If I had $ 300 and change to go through the month, I would probably look for ways to self-treat because I can’t move into accommodation, and living in a shelter is an incredibly traumatic experience. And especially if you are a woman, you are often exposed to violence, to the threat of sexual violence. People use alcohol to stay warm, they smoke cigarettes to calm their nerves, and they use substances to stay awake at night so they don’t risk violence.

So you are in survival mode when you have such a small amount of money. You can’t think of housing, you can’t think of training. Your thinking process is immediate here and now, as research shows that if you give someone a larger amount of money, it provides them with that stable basis to move forward, to start thinking about their things. goals and aspirations and start planning for the future. .

BHOPAL: Madhya Pradesh Chief Minister Shivraj Singh Chouhan on Tuesday announced that his government would transfer Rs 4,000 to the state’s farmer bank accounts in two equal installments over a fiscal year. The benefit would be granted to those enrolled under the Pradhan Mantri Kisan Samman Nidhi (PM-KISAN) program.
“From a perspective of overall development of farmers, we have decided that programs being managed in their interests, such as relief under RCB6 (4), Prime Minister Kisan Samman Nidhi, zero interest loan and Prime Minister’s crop insurance, we will implement all programs as a whole, ”Chouhan said in a series of tweets.
In the first phase of this series, the CM Farmers Welfare Scheme is launched in the state, he said.
“Under this program, all eligible beneficiary farm families covered by Prime Minister Samman Nidhi will receive a total of Rs 4,000 in two installments during a fiscal year. The welfare of farmers is the goal of my life, ”Chouhan tweeted.
The chief minister said his government will help farmers double their income by 2022.
“We re-implemented the zero interest rate loan program. Full benefits of Kisan Samman Nidhi and Bima Yojana have been granted. Over Rs 27,000 crore has been paid to farmers for the purchase of food grains. . We will spare no effort to double farmers’ incomes. By 2022, “he said in another tweet.
Earlier today, Chouhan, as part of a program here, transferred loans worth Rs 800 crore to the state’s farmer accounts at zero percent interest.
Under the PM-KISAN scheme, the Center transfers an amount of Rs 6,000 per year, in three equal installments, directly to farmers’ bank accounts, subject to certain exclusion criteria related to higher income status.

Bhopal, September 22

Madhya Pradesh Chief Minister Shivraj Singh Chouhan on Tuesday announced his government would transfer Rs 4,000 to the state’s farmer bank accounts in two equal installments over a fiscal year.

The benefit would be granted to those enrolled under the Pradhan Mantri Kisan Samman Nidhi (PM-KISAN) program.

“From a perspective of overall development of farmers, we have decided that programs being managed in their interest, such as relief under RCB6 (4), Prime Minister Kisan Samman Nidhi, zero interest loan and Prime Minister’s crop insurance, we will implement all programs as a package, ”Chouhan said in a series of tweets.

In the first phase of this series, the CM Farmers Welfare Scheme is launched in the state, he said.

“Under this program, all eligible beneficiary farming families covered by Prime Minister Samman Nidhi will receive a total of Rs 4,000 in two installments during a fiscal year.

The welfare of farmers is the goal of my life, ”Chouhan tweeted.

The chief minister said his government will help farmers double their income by 2022.

“We have re-implemented the zero interest loan program. The full benefits of Kisan Samman Nidhi and Bima Yojana were given. Over Rs 27,000 crore was paid to farmers for the purchase of food grains. We will spare no effort to double farmers’ incomes by 2022, ”he said in another tweet.

Earlier today, Chouhan, as part of a program here, transferred loans worth Rs 800 crore to the state’s farmer accounts at zero percent interest.

Under the PM-KISAN scheme, the Center transfers an amount of Rs 6,000 per year, in three equal installments, directly to farmers’ bank accounts, subject to certain exclusion criteria related to higher income status. PTI

Updates from the US economy

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The writer, co-founder of Facebook, co-founded the Economic Security Project and is a senior advisor at the Roosevelt Institute

It has been a bleak summer in Washington. In the midst of a pandemic, millions of Americans have seen their unemployment benefits dramatically reduced by congressional inaction, pushing many into financial insecurity or poverty. Small businesses, still grappling with a huge drop in business, are also wondering if critical emergency funds will ever arrive on time.

There is a way forward. Democrats and Republicans already largely agree on the need for a new round of stimulus checks, similar to the funds deployed in the spring. Congress should authorize these payments, make them recurring until the end of this crisis and, most importantly, put them on autopilot to be triggered in the next recession. If that doesn’t happen now, the next president, be it Donald Trump or Joe Biden, should put it high on his agenda.

Economists have long defended the role of “automatic stabilizers”. When an economy stagnates, these fiscal policies take effect immediately, without any approval from Congress, and provide counter-cyclical economic stimulus. Last month 156 independent economists called on Congress to implement such a program, using direct cash payments.

These have already become staple policy for Republicans in times of crisis. Three times in the past 20 years, Republican presidents, with bipartisan support, have authorized stimulus payments during recessions – in 2001, 2008 and again this year. Democratic lawmakers have backed them every time, while urging their implementation alongside stronger unemployment insurance and support for state and local governments.

Congress should build on this bipartisan agreement, pass immediate relief checks now, and define direct cash payments as a permanent policy triggered whenever unemployment rises rapidly. All of the past six recessions have started with a sudden rise in the unemployment rate by half a percentage point, according to Claudia Sahm of the Washington Center for Equitable Growth. She suggests that as soon as unemployment rises by half a point, the government should send direct cash payments. These would continue until the unemployment rate falls to a level no more than 2 percentage points above the start of payments.

Many lawmakers who support this idea, such as Senators Kamala Harris and Ed Markey, want the payments to arrive on a monthly basis. They see that a one-time check is not enough when unemployment is rising rapidly. Payments should also target families in the lower half of the income spectrum, who spend the money the fastest, thereby boosting the economy.

How much would such a program cost? The size of payments can be compared to gross domestic product, with proposals ranging from an annual ceiling of 0.7% of GDP to several multiples thereof. I propose a level of 3 percent of GDP, equivalent to about $ 600 billion – about a quarter of total spending so far in this crisis. These are robust expenses, and that is exactly the point. We want large and efficient cash flows to struggling households in times of contraction to stimulate spending and cushion the downturn.

The experience of the last 20 years shows that direct cash payments work. From the 2001 and 2008 payments, the researchers concluded that they helped families avoid eviction and short-term hunger, and gave a significant boost to household spending.

They also help struggling families when the unemployment insurance system is overwhelmed – as happened in this year’s crisis, when a record number of Americans applied for unemployment checks. On average, it took over 50 days for a quarter of applicants to receive an eligibility decision. In contrast, direct cash transfers evolve very quickly, as most recipients receive the money by direct deposit.

Equally important, putting direct cash payments on autopilot means avoiding the inevitably long delays it takes to agree on the necessary stimulus policies during a recession. (Five months have passed between Lehman’s collapse in 2008 and the approval of a stimulus package.) Since every recession is different, there will always be decisive political negotiations. But having direct cash on autopilot at least allows discussion of other emergency measures and avoids leaving millions of dollars embarrassed.

It’s time for Congress to help millions of Americans struggling today and create a trusted framework to support them in the next emergency.

Letter in response to this article:

India leads the way with social protection / De Sanjay G Reddy, Associate Professor of Economics, The New School for Social Research, New York, NY, USA