Are Poor Countries and Rich Countries Exactly Alike? No, They’re Not.

 

The government of Somaliland, a state that is not recognized as sovereign by the international community, is, unlike many extremely poor countries, almost entirely dependent on local tax revenues, and so, according to Eubank, it has had little choice but to develop inclusive, representative, and accountable political institutions.

By Reihan Salam

Earlier this week, I wrote a column for Slate making the case for work requirements for able-bodied recipients of cash welfare, and more broadly for making a distinction between those women and men who do what they can, consistent with their skill level and life circumstances, to support themselves and those who do not. My premise, drawing on Amy Wax’s work on “conditional reciprocity,” is that while society ought to do everything it can to help those who are doing what they can close the gap between what they are capable of earning and what they need to maintain a decent standard of living, society’s obligation is not as great for those who choose not to work despite having the ability to do so. I believe in this idea of conditional reciprocity even if it entails devoting more resources to anti-poverty efforts than if we simply disbursed funds to all individuals, regardless of whether or not they work or are seeking work consistent with their abilities. Suffice it to say, my moralistic argument was not universally embraced.
Yet I should note that there is an evidence-based case for what I call “no-strings-attached” money. It happens that this case rests upon outcomes in the world’s most impoverished countries. Dylan Matthews of Vox helpfully brings this evidence to light, yet he also conflates two quite different issues:

As solutions to global poverty go, “just give poor people money” is pretty rock solid. A recent randomized trial found that Kenyans who received no-strings attached cash from the charity GiveDirectly built more assets, bought more goods, were less hungry, and were all-around happier than those who didn’t get cash.
But voters and politicians generally prefer giving people specific goods — like housing, food, or health care — rather than plain old cash, for fear that the cash might get misused by unscrupulous poor people. Maybe the recipients will just blow the cash drinking! This particular concern comes up both in domestic and global poverty conversations; Fox News is obsessed with the possibility of people using federal government benefits like food stamps to buy fancy seafood or hang out at strip clubs, but mainstream global development experts often express these concerns too. As Paul Niehaus, the founder of GiveDirectly, once put it, “It is pretty ironic the number of conversations I have had with development people about the poor and their drinking—over drinks.”

The trouble is that there is a big difference between the conditions that give rise to poverty in a domestic context, where brute survival is not generally at stake, and in a global context, where it is. My argument rested in large part on the legitimacy of the welfare state. Work requirements for the able-bodied poor help ensure that the beneficiaries of public assistance are perceived as deserving. This matters in societies in which a broad base of employed middle-income taxpayers help finance transfers. It matters less in societies in which transfers are largely funded by outsiders, via government-to-government transfers from affluent countries, or through the exploitation of point-source natural resources, like oil and gas.

As Nicholas Eubank has observed, historians of state formation in early modern Europe have long seen the rise of the representative state as the result of a compromise between autocratic governments that needs tax revenues to finance military conflict and other endeavors and citizens who were only willing to consent to taxation in exchange for greater responsiveness from the state. The government of Somaliland, a state that is not recognized as sovereign by the international community, is, unlike many extremely poor countries, almost entirely dependent on local tax revenues, and so, according to Eubank, it has had little choice but to develop inclusive, representative, and accountable political institutions.

In weak states that aren’t funded by local tax revenues, the “legitimacy” question doesn’t arise in the same way, particularly when it comes to the disbursement of public assistance. The communities that benefit from direct assistance aren’t divided between those who fund direct assistance, and who work, and those who benefit from it, and who might or might not work. Rather, it is more common that the funds are coming from outside of the community, and virtually everyone “works,” albeit in the informal sector. That said, norms around “conditional reciprocity” do indeed obtain in many poor societies — but these norms operate through the kin-based social networks that the dominant mode of social organization in traditional societies.

Modern societies, in contrast, are dominated by non-kin-based social networks, and the most successful states, or rather the states that do the best job of cultivating solidarity among citizens, appear to be, and this is my subjective judgment, those that build in norms of conditional reciprocity into their institutions.