Development with Dignity

Human dignity is the central focus of a fascinating new book written by Tom Palmer and Matt Warner Development with Dignity–Self-determination, Localization, and the end to Poverty.  They spotlight the treatment of every person with the dignity due all people as a critical factor in unleashing the innovation and entrepreneurship that has dramatically raised the standard of living to virtually the whole world over the last three hundred years after thousands of years of no progress. The book is rich with interesting examples.

Palmer and Warner argue that the top-down approach of most development agencies and aid projects of “teaching them how we do it in our developed countries,” often fails as a result of overlooking and/or ignoring the knowledge and ways of social organization found in the local communities aid is meant to uplift.  Such knowledge is important to understand where the problems are and what is working well in a community. Any improvements must start from there and be embraced by the people we want to help. The IMF calls this “ownership.” It must start with treating every individual with dignity.

A wonderful example of the importance of understanding and building from local knowledge and practices is provided by Jennifer Brick Martazashvili and Ilia Martazashvili in their recent book on common law property rights in the villages of Afghanistan: “Land, the State, and War –Property Institutions and Political Order in Afghanistan.”  They argue very convincingly that the common law traditions of many Afghan villages can provide satisfactory property rights until there is a central government that can be trusted and has sufficient administrative capacity to administer the registration of legal land titles.

Both books reflect an attitude toward individuals and the importance of their agency for prosperous, liberal societies. I am struck by the similarity of attitudes in the above approaches to development aid and our approaches to social welfare in the United States. Our Federal, State, and local governments provide a wide range of programs to assist the poor or temporarily unemployed.  The food stamp program, for example, epitomizes the attitude that people “on the dole” can’t be trusted to make their own decisions about how to use such assistance. I don’t want to ignore the fact that there are people we shouldn’t trust to make their own decisions (drug addicts, the emotionally unstable, etc.). But the view that government can make better decisions about how food aid should be used than the hungry who receive it is at the heart of the Palmer – Warner discussion about the importance of dignity.

Those of us who support Universal Basic Incomes (UBI) are on the side of those who believe that most people know better than government bureaucrats or even well-meaning social workers what their needs are–i.e., how best to spend their money. UBI payments are made to every person with no strings attached. Unlike current unemployment assistance and other safety net programs UBI would not diminish the financial incentive to work, though the incentives to work include more than just money. With a UBI any additional income from work is kept. The UBI is not reduced by work. See my: “Our Social Safety Net”

Pilot tests of the impact on recipients and on their incentives to work are being carried out in a number of countries and cities with generally very promising results. A two year pilot that was recently concluded in the Washington DC area is typical:

“Placing money into people’s hands without restrictions empowered them to address their needs, program administrators said, and removed the typical layers of bureaucracy and eligibility requirements that can frustrate recipients and hamper the effectiveness of aid efforts. The study’s quantitative and qualitative data showed that “participants often struck a thoughtful balance between addressing immediate survival concerns like paying rent and longer-term concerns like accumulation of debt,” analysts concluded. Recipients surveyed for the study, which was released Thursday, reported lower rates of mental health stressors and food insecurity than people with comparable incomes in the District and nationally.” “Guaranteed basic income-dc-poverty thrive”

When Universal Basic Incomes are combined with the replacement of income taxes (both individual and corporate) by a flat consumption tax, the result is a nicely progressive tax rate relative to income. See rough estimates here:  “Replacing Social Security with a Universal Basic Income” It also simplifies the process of financing the government expenditures that we want.

Trusting the choices of individuals about their own lives doesn’t mean that we (government or private institutions) shouldn’t offer information to help inform and guide their choices. But it does mean that we do not make those choices for them. We give them the dignity with which free societies can and have flourished.

Author: Warren Coats

I specialize in advising central banks on monetary policy and the development of the capacity to formulate and implement monetary policy.  I joined the International Monetary Fund in 1975 from which I retired in 2003 as Assistant Director of the Monetary and Financial Systems Department. While at the IMF I led or participated in missions to the central banks of over twenty countries (including Afghanistan, Bosnia, Croatia, Egypt, Iraq, Israel, Kazakhstan, Kenya, Kosovo, Kyrgystan, Moldova, Serbia, Turkey, West Bank and Gaza Strip, and Zimbabwe) and was seconded as a visiting economist to the Board of Governors of the Federal Reserve System (1979-80), and to the World Bank's World Development Report team in 1989.  After retirement from the IMF I was a member of the Board of the Cayman Islands Monetary Authority from 2003-10 and of the editorial board of the Cayman Financial Review from 2010-2017.  Prior to joining the IMF I was Assistant Prof of Economics at UVa from 1970-75.  I am currently a fellow of Johns Hopkins Krieger School of Arts and Sciences, Institute for Applied Economics, Global Health, and the Study of Business Enterprise.  In March 2019 Central Banking Journal awarded me for my “Outstanding Contribution for Capacity Building.”  My recent books are One Currency for Bosnia: Creating the Central Bank of Bosnia and Herzegovina; My Travels in the Former Soviet Union; My Travels to Afghanistan; My Travels to Jerusalem; and My Travels to Baghdad. I have a BA in Economics from the UC Berkeley and a PhD in Economics from the University of Chicago. My dissertation committee was chaired by Milton Friedman and included Robert J. Gordon.

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