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The idea of cash transfers—or just giving money to the poor—is gaining ground quickly. The use of conditional cash transfers as a way to assist the poor have shown pretty impressive results in Mexico and Brazil, leading to lots of other copycat programs in dozens of countries. Iran, and now India, are replacing inefficient and costly subsidies of basic goods with cash payments.
The cash-transfer model involves a leap of faith: the bet that people know better than bureaucrats how to use their money. This has made direct payments politically attractive to both the populist left and the libertarian right. What better way to push "power to the people" than to give them the money that was the source of elite dominance and corruption in the first place?
CGD blog posts reflect the views of the authors, drawing on prior research and experience in their areas of expertise. CGD is a nonpartisan, independent organization and does not take institutional positions.
One of the nearest real-world examples of Oil-to-Cash is Alaska, which has paid an annual dividend to every state resident since 1982. One of the presumptive lessons drawn from Alaska’s experience has been that once a dividend was in place, political forces aligned to protect it from politicians. Yet last week, Alaska Governor Bill Walker announced the first-ever cut to the Alaska Permanent Fund dividend.
The President of Gabon, a small petro-state wedged between Cameroon and Congo, has announced that he’s giving some of his inheritance back “to the people of Gabon.” It’s a good start, but surely he can do better.