David Kestenbaum:
Lots of people, in fact, used the money in productive ways. An inordinate number, it seemed, used it to replace their thatched roofs, which are not only lousy but also weirdly expensive, as they need to be patched every few months with a special kind of grass. A metal roof costs several hundred dollars, but lasts for 10 years, making it a much better investment. Omondi was among those who bought metal roofs. He also purchased a used Bajaj Boxer, an Indian-made motorcycle that he uses to ferry people around, for a small fee; he is also currently paying off a second motorcycle, which he rents out.
[…]
But while Omondi and his neighbors have metal roofs, their houses still have dirt floors and no running water or electricity. And their prospects for making it to the middle class are pretty bleak. “You give people cash to start a business or expand their business, and in a lot of cases, they shoot forward,” Blattman says. “Then they start screeching to a halt when they hit the next constraint.” If Omondi wanted to further expand, he’d probably find it hard to get a small-business loan from a bank. The problems holding Omondi and his neighbors back — underdeveloped financial systems, bad infrastructure — are the generic but defining problems of the developing world, and they won’t be fixed by a one-time windfall.
Could this be the future of social justice? It’s an interesting intersection of capitalism and socialism.
Incidentally, I’m a huge fan of the work David and Adam Davidson have done on NPR’s Planet Money. If you haven’t yet heard it, do yourself a favor and listen. I recently finished listening to the whole back catalog — the coverage of the 2008 financial crisis was northing short of amazing.