tag:blogger.com,1999:blog-22031270.post3228439598204586730..comments2023-11-03T19:05:08.512+11:00Comments on Harry Clarke: Middle class welfare as a strategy to help poor countries developUnknownnoreply@blogger.comBlogger4125tag:blogger.com,1999:blog-22031270.post-88453578468789750542008-04-21T22:19:00.000+10:002008-04-21T22:19:00.000+10:00DD, I think that Carter was concerned with develop...DD, I think that Carter was concerned with developing countries where aid was directed to the absolutely most needy. The moral hazard implications you mention were there but the main issue was medium income people being subject to a catastrophe and falling into extreme poverty. <BR/><BR/>Carter was suggesting that the established poor were difficult to help and subject to triage problems. Those who recently fell from grace were better development prospects.hchttps://www.blogger.com/profile/13799594181016858701noreply@blogger.comtag:blogger.com,1999:blog-22031270.post-41711184834423609032008-04-20T20:31:00.000+10:002008-04-20T20:31:00.000+10:00There's confusion here because the term "poverty t...There's confusion here because the term "poverty trap" has two distinct meanings here. One refers to a highly unfavourable low-productivity equilibrium that a whole society is trapped in, due to failures of governance and low levels of human capital. The other refers to <B>individual</B> poverty traps, created by relatively generous but tightly means-tested help.<BR/><BR/>The former is a complex problem for which a welfare system of any design won't be more than a small part of the answer. The latter has well-known methods of amelioration, mainly by "tagging" - that is, targeting a proxy for need which is unaffected by the recipients' behaviour. For example, it may be much more efficient to give help to everyone in a slum (as living in that slum is a reasonable proxy for need) than to try and assess the means of every individual in that slum (which will cause the individuals to lie to you, and punishes those who've made an effort to better themselves). The classic formalisation of this argument is due to Akerlof.<BR/><BR/>Note that these considerations don't only apply in the third world - for example, we give blanket assistance to aboriginals as we assume aboriginality is a reasonable proxy for need.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-22031270.post-84551676783589614092008-04-18T19:22:00.000+10:002008-04-18T19:22:00.000+10:00I am the other way, I was very sympathetic to his ...I am the other way, I was very sympathetic to his story and policy conclusions. After decades of failed 'needs-based' aid creating dependence, an alternative should be given a chance.<BR/><BR/>His proposal (in the more sophisticated form that avoided the moral hazard) creates incentives for independence of economic subjects.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-22031270.post-20515230057789936712008-04-18T19:04:00.000+10:002008-04-18T19:04:00.000+10:00Much better, Harry :-). It's posts like this that ...Much better, Harry :-). It's posts like this that make it worth coming here, not the flim flam.Slimhttps://www.blogger.com/profile/02615664013110623397noreply@blogger.com