What would happen if everyone got a monthly allowance? It was tried in a grand experiment in an impoverished village in Namibia.
The Basic Income Grant was a project in which some churches and NGOs gave N$100 to each resident under 60 years of age in Otjivero-Omitara, Namibia, between 2007 and 2009. They took care to get everyone registered as of a certain date so that new arrivals wouldn't qualify. Then they set up a system to pay an allowance to each of the registered residents each month.
The sponsors evaluated the program and reported it a success. Among the things resulting from the grants were the following (from the executive summary):
- the community organized a committee to advise the recipients how best to spend the money;
- there was a significant increase in population of the village after the grant program was implemented;
-- economic activity increased: "The rate of those engaged in income-generating activities (above the age of 15) increased from 44% to 55%;"
-- number of people with incomes below poverty level fell;
-- child malnourishment declined;
-- the recipients could afford more nourishing food and medicine;
-- school attendance rose and the drop out rate fell;
-- use of the settlement health clinic increased as the residents could afford the fee;
-- household debt fell and savings increased;
-- crime rates fell;
-- women were freed to some extent from "the pressure to engage in transactional sex";
-- no evidence that alcoholism increased, helped no doubt by agreements with the liquor outlets not to sell alcohol on the days the grants were paid.
All well and good, and the people in the project must have benefited, if for no other reason, from being able to put some food on the plate. But there's still not enough evidence to overcome the basic principle that handouts do nothing to instill a work ethic and do little else than develop dependencies. The welfare programs in the U.S. up to the mid '90s proved that. And it took welfare reform to turn that around.
The real cure for poverty would be an environment that protected property rights, allowed free trade, and allowed the individual to generate income with his/her own ingenuity and keep it.