How would you (concrete and specifically) proceed if you were Bill Billionair and suddenly decided that you want to give $1, 2 or 10 billion to the “poor”
Giving money away to the poor is easy … doing it in a way that would maximize the benefit of the poor (and society as a whole) is not as easy, it seems …
Problems I can visualize:
extreme market distortion (e.g. our goodwill garments wiping out the incipid textile industry in the whole of africa)
poverty traps (e.g. people starting to rely on billionaire transfers, hence being less likely to get a regular but low paying job, hence never advancing in life)
perverse incentives (e.g. people “chosing to become” poor to get free money, or at least overreporting/exaggerating their poverty)
so, how’d you drop those $10,000,000,000.00 in the most efficient way?
The main issue is that half of poor people, unfortunately, simply do not have the acumen to handle a large sum of money. The other half are indeed savvy and merely need someone to get them over a hump, but some would just blow it on things that have no long-lasting value.
I might first start out with each poor person being required to write a plan (in their own words, 2-3 pages) as to how they would handle the money. Then I’d have hundreds of financial experts review each plan and only authorize checks being written to those who have demonstrated financial know-how and a good plan for the $$. And the checks would start out small at first, then gradually grow if the individual has shown good handling of sums.
That’s not to say it couldn’t help someone someplace. The known best ways of doing that is to know your recipients. Will they be poor in America or poor in other parts of the world. If in America, why are they poor and what do they need to get out of that hole? A UBI? How about free health care? (SSI costs $65 billion a year and the bureaucracy is atrocious.) If in other parts of the world, get a seriously deep understanding of the culture first. Focus on a particular problem. End a disease. Build home solar cells. Bankroll small businesses. Think long-term and don’t expect results for years. The countries won’t have a democratic structure. Here’s an idea. Sink a billion into bribing leaders with the promise of another billion only if you see that the rest of the money hasn’t been wasted or skimmed off.
Or bribe warlords to stop their wars. Wars create poverty, need, health crises, and unemployment.
There are people who have spent their entire lives attacking this problem. Read my link above for what lessons they have learned and act accordingly.
Heh. Use the $10 billion to construct a bunch of modest housing units and make them affordable to the the lower socio-economic class by pricing them within their budgets even if that means selling them at cost or below (because I’m a billionaire I don’t need to a profit and hey, if I want to sell houses cheaper than they cost to build that’s my “problem”). The people getting the houses would still have to pay for them, but it would be a price they could pay rather than having them priced out of the market. Require they live in them at least 5 years before selling (unless they totally screw up and are foreclosed). It would help give people a leg up and if you do it in a sufficiently savvy manner you’ll put the brakes on ballooning real estates costs. Which will piss some people off, of course, but I’m a billionaire, right? What do I care?
Alternatively, purchase existing building stock in big cities, rehab/modify into affordable housing, and basically do the same thing. If I spent 500,000 (including build-outs and financial losses from selling below market) on each unit that’s 20,000 units. Drop that into a big city with a lack of housing and see what effect that has. The people profiting from Real Estate speculation will squeal but, again, what do I care? I’m a billionaire.
no prob … the premise is you could give them away for free if that were your best bet …
and - just to expand on that - that is actually and intersting approach, as there will be postive ripple effects (dare I say: trickle up ) for “slightly above poor people” as well, as rents for those might actually decrease as you now have a lower demand that hits a given supply of (low end) real estate, hence bringing prices/rents down.
Downside:
possibly inexpensive houses might lose value, once you hit the 5 year threshold … (lots of inexpensive houses in the sell-market)
At least in Elon Musk’s case, he’s spending billions on a project unlikely to ever pay off in his lifetime but which he believes will be of incalculable benefit to humanity in the long run: creating a launch capacity (Starship) capable of supporting a Mars colonization effort. Now lots of people have strong doubts about whether colonizing Mars is desirable or even possible; but in the process he’s building something that government won’t for institutional reasons and which no one but a hectobillionaire can: a robust, minimum cost heavy lift launch capacity. Already Falcon, a mere proof of concept for Starship, has transformed the space industry and a Starship that meets its cost and performance goals would revolutionize it.
I certainly wouldn’t be giving anyone any cash. And I wouldn’t try to solve the homeless problem. I would try to help in one specific area that is a problem for many poor people – access to healthy groceries.
So I would found a non-profit company designed to run modest supermarkets in poor “food desert” neighborhoods. The charter would be to keep costs realistically low, especially management compensation, in order to keep grocery prices low. There are quite a few issues that would have to be resolved for such a company to survive, and to make sure it is serving its intended customer base. It would probably require people smarter than I am to come up with solutions to these issues, so I won’t try to detail them here.
Lack of access to healthy food is one of the ways that the deck is stacked against poor people, and I hope such stores would help with that.
You would basically have to run the stores as tax write-offs, that would never operate in the black. Unfortunately there are reasons why private industry simply can’t make a go of stores in food desert neighborhoods. I’ve seen a number in my part of town go under.
I like the idea of building affordable housing. I don’t like the religious aspects of Habitat for Humanity but they seem to have a good model so perhaps I might give them a big chunk of cash, though I’d first meet with them to see how they might use the money. Perhaps sell people affordable housing with a restriction on how much upside they can earn on reselling it?
Rather than letting people buy cheap housing (which invites speculation and fraud even with the best of safeguards), it might be better to just rent under-rate. Build tens of thousands of good cheap apartment units and rent them out for something like just $500/month. Not only would this be affordable, but you would be able to crash renting rates in the local market, adding even more beneficial effect. Force the greedy landlords and renting companies to keep pace with you or risk going under.
Around here, that’s been fraught with issues. The city can’t seem to get grocery store chains or investors to come do it- the places they open always shut down quickly- a combination of really high theft and low sales tend to do them in quickly.
I think I’d also do something along the lines of community improvement- specifically I’d set up a foundation or non-profit to do various sorts of financial transactions with relaxed credit requirements and/or interest rates, etc. so that lower income people can do things like home repairs/improvements, start businesses, etc. without having the problem of being a low income person with poor/no credit trying to get a loan to repair a roof, or start a business, etc.
They’d still have to have credible and thought-out business plans, as well as plans/quotes in hand, for example, but the idea is more that if they had a busted roof, they’d be able to get the money to fix it and pay it off when they’re able. Or if they wanted to start a small business, they wouldn’t have to jump through the same hoops or over the same height hurdles that say… I would, being a middle class white man with graduate degrees and a professional job.
Not necessarily- my son bought a co-op apartment in a limited equity development. What that means is that in return for tax abatements the shareholders can’t sell at a real profit - if he wants to sell, he has to sell it back to the development which will in turn resell it. It was built in 1962 and my son bought a studio for 70K two years ago. In Chelsea, a fairly expensive neighborhood in Manhattan.
That’s one of the things I would do if I were a billionaire - build housing. I’m not sure if it would be rental or something else (not sure if co-ops are a thing anywhere else - but maybe an HOA could serve the same purpose)
I know it’s been tried with for-profit companies, and the for-profit business models are why they don’t work. These are indeed among the kinds of issues that would have to be figured out. But a non-profit would have a very different kind of business plan, the whole purpose of which would be to make it work so they could stay open. There would be no investors to please. I think it would be much more likely to survive and keep going if profit is taken off the table.
but why would you disallow poor people the benefit of rising real estate. (I agree, a cool-off period should be in place and you can only take part in the program once in a lifetime (or 10 years or so) …
If they can flip their house after e.g. 5.1 years for good money, why not allow them to take it? Let’s not be too paternalistic here, the guy might be on his way to his first million.
I really like the idea, but this would also keep “former poors” out of the most appreciating asset class there has been in the past decades - Real Estate.
def. sirves a purpose … maybe do something like a rent-to-buy model, where the could become owners after - say - 10 years for a reasonable lump-sum-payment (donno: 30-50k or so). This might also help with “upkeep” (taking care of your OWN condo vs. a rented one).
but good idea, overall, I might throw 2 or 3 billions into that!
What I was describing sounds like what @doreen’s son purchased and she described as a “limited equity development”. Here is a page that talks about limited equity cooperatives.
AI tells me: The spending patterns of low-income households can vary significantly by region and individual circumstances, but common categories where they typically allocate their income include:
These percentages can fluctuate based on individual situations, local costs, and available assistance programs.
SOOOO … it really makes sense to tackle housing, as it has:
a.) the highest % of spendings (and hence have the highest impact)
b.) and can be reasonably easy controlled (rental-contracts, registry of ownership, etc…) … as opposed to food which might be more prone to misuse
It isn’t a question of profit; it’s a question of being able to make enough on sales to cover operating costs. Maybe if it was staffed by volunteers and as a charity got a break on property taxes. But the elephant in the room no one wants to mention is that stores in low-income neighborhoods are plagued by shoplifting, theft and vandalism. The already small margins that grocery stores operate on vanish when theft of merchandise exceeds a critical factor. The absolute killer is when riots cause massive looting and arson of businesses; here in Minneapolis the George Floyd riots pushed numerous stores under.
The problem is that poverty isn’t simply the result of bad luck; there is a “poverty culture” with a set of outlooks and mindsets that tends to self-perpetuate.
Sure - but if I’m donating money ,why would the store have to cover operating costs?
About the theft- my husband spent years working in a retail store in a low-income community. His store had less theft than the other stores because the neighborhood didn’t see the owner as a rich man coming into their neighborhood to exploit them . He was “Howard who lets me buy on credit and donates to my church and hired my son etc”. The stores owned by faceless corporations- they had a bigger theft problem. The man was 100% not suited to running a business - and that’s why he no longer does.
Security is surely an issue that would have to be addressed, among others. But as I am as unlikely to be donating billions of dollars to help poor people as (I presume) you are, it is perhaps a moot point whether any effort in this direction would be helpful.
For my part, I think a lot of the so-called “poverty culture” is a result of hopelessness, and that a poor person shouldn’t have to find some way out of their poor neighborhood before they can have access to necessities such as food.