Resource Curse Solution: Give Money Away : Planet Money The discovery of natural resources often leads to conflict and corruption, which in turn hurt economic growth. A handful of economists are pushing what sounds like a simple solution.
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Resource Curse Solution: Give Money Away

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Resource Curse Solution: Give Money Away

Resource Curse Solution: Give Money Away

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Now let's look a little more closely at what should be good news for Afghanistan's future - the reports that Afghanistan has huge deposits of valuable minerals. Natural resources can lead to conflict, though, as well as corruption, and they can leave poor citizens even poorer. Economists call this the resource curse. Some think they may have a cure. Chana Joffe-Walt of our Planet Money team has more.

CHANA JOFFE-WALT: Here's the pitch: take all that money that comes in from lithium in Afghanistan, or oil in Nigeria or Iraq, or natural gas in Bolivia take all that money and give it to the citizens. Literally a government official sits down with piles of cash, maybe with some international oversight, and divvies the money up.

Sort of like Alaska does with oil money every year, although they just hand out a portion of the money. Todd Moss is talking all of it, every last cent. He's with the Center for Global Development in Washington, D.C.

Dr. TODD MOSS (Vice President, Corporate Affairs, Center for Global Development): In the immediate term, you would get an immediately welfare boost. But what we would also hope is that the expectation that they would receive this on a regular basis would create an intense amount of public demand for accountability from the government. And if you received, you know $500 last year and this year it's only $400, you know, you're going to ask some pretty hard questions.

JOFFE-WALT: Todd Moss has a wing man in this cause, Arvind Subramanian. He's also an economist with the Peterson Institute. Todd has been pitching the idea to Ghana, where theyve just discovered oil. Arvind took Nigeria. And the thing that excites Arvind Subramanian the most is that this plan most likely leads to taxes - sweet, sweet taxes - to remind government who is boss.

With oil money or lithium money, governments dont need to tax the people. But if the money goes to the people, Subramanian says then they do.

Dr. ARVIND SUBRAMANIAN (Senior Fellow, Peterson Institute for International Economics): Taxation is the glue that connects the government and citizens. Because people dont like being taxed, there's pressure on the government to spend the money well from the taxes, otherwise, in a democratic system, they won't get elected.

JOFFE-WALT: So you get a government that wants to please the citizens, not the mining companies.

Dr. SUBRAMANIAN: And there will be teething trouble. But, you know, what I...

JOFFE-WALT: Did you say teething trouble?

Dr. SUBRAMANIAN: Oh, yeah. Exactly...

(Soundbite of laughter)

Dr. SUBRAMANIAN: I mean, you know, setting up a system. You know, you will have trouble, initially.

JOFFE-WALT: Ah, the teething trouble. Actually there are two big teething troubles with this plan, otherwise known as virtually insurmountable obstacles. The first one comes up right away.

Last fall, Todd Moss went to Ghana to excitedly pitch this new idea. And just listen to how a very polite director of the Institute of Economic Affairs in Accra, Jean Mensa - just listen to her summarize the public response.

Dr. JEAN MENSA (Executive Director, Institute of Economic Affairs): It sounded quite interesting. I must say that most people felt that we, Ghana as a country, was not there yet. It was difficult to tell who was a Ghanaian and who was a non-Ghanaian, because we dont have a database of Ghanaian citizens. There's a lot of confusion.

JOFFE-WALT: If you have no national database, no census, and maybe no strong banking system, it can be hard to evenly distribute billions of dollars to millions of individuals. Thats teething problem number one.

Number two: Remember Arvind Subramanian was trying to make the case to Nigeria? How'd that go?

(Soundbite of laughter)

Dr. SUBRAMANIAN: Not very well, Im afraid. Because I think there is a kind of basic problem with this proposal, which is that if the current guy in power does not want to give up power, then my idea has no hope of succeeding.

Dr. EMMANUEL EGBOGAH (Presidential Adviser, Petroleum Matters): So why would you do that? Why do you have governments?

JOFFE-WALT: This is Dr. Emmanuel Egbogah. He's presidential advisor on Petroleum Matters in Nigeria.

Dr. EGBOGAH: If you give it to the people, do you understand that the government builds roads, builds schools, hospitals, schools - does everything? And the government has to have revenue and the government is using that revenue to do all this.

JOFFE-WALT: The thing about this handout-the-money-to-the-people plan is that it is trying to solve a problem economists have not been able to solve so far. We know that countries that have strong democracies and government accountability are able to get richer. But that has mostly happened organically, or was written into the constitution from the start.

What we dont know is how to take countries that dont have those things and make government feel accountable, create democracy where it does not already exist. This might be the answer. But if it is, we dont know it yet, because so far no one has signed up.

Chana Joffe-Walt, NPR News.


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