The subsidy vending machine

By one estimate, the US government spends more on subsidies to oil companies ($52B) than they do in non-military foreign aid to the entire rest of the world ($32B).

vendingThis must have been on my mind when last last night, in a dream, I found this vending machine on the street. Inside were all sorts of useful items. There were LED lanterns on the bottom shelf, microwave dinners on the next, bottles of pills on the next, voucher cards further up, and on the top shelf were crisp twenty dollar bills.

“Hrmph!” I said. “Who would buy a twenty dollar bill from a vending machine!”

Then a man walked up, inserted his photo ID. The machine said, “Welcome!” and changed the pricing on everything. The twenty dollar bill was now selling for $15.00.

The man fumbled with bills and change for a while. He looked like a panhandler. He found $15 and put it in the machine and took out $20. At the same time, the machine dropped a bottle of pills for him to take. They looked like vitamins, but they could have been medication for a mental illness. He walked away content.

Subsidizing people, not things

I woke up amazed at the possibility of a subsidy vending machine. It is microfinance in a box, complete with a way to track each user’s behavior and provide different incentives to each person who walks up. The machine probably matched the photo ID to their tax records to see whether they qualified. I could imagine this being used to incentivize parolees to check in regularly – because they get a rebate or discount on an item.

The subsidy vending machine teaches people how to save money and plan for the future.

That’s the secret to fighting poverty. International development aid fails when it just hands out twenty dollar bills indiscriminately, and fails even more when the World Bank takes all the money in the machine and hands it to the richest person, relying on this “leader” to build its own vending machine for the rest. Throughout history, rich people have exploited poor people. That’s why their great grandchildren are rich. We forget this because the American experience is an exception to the rule. But in Feudal Europe, Russia, Asia, colonial South America, and Africa, rich people in power exploited poor people without power. Many are still doing it today. They deserve nothing from the subsidy machine.

Giving subsidies to the richest corporations in the world is no better. Most of the top ten most profitable corporations are oil companies. They are also among the most heavily subsidized companies. They exploit tax payers when they lobby for support that comes from citizens. If the US wanted to keep gas prices low, they should instead give consumers a subsidy.

On the opposite end, our greatest successes in aid have come from matching $10 saved with $10 from elsewhere, or investing in a community when a community invests in itself. This literal vending machine idea would make a wonderful kickstarter, because as simple as it is, its flaws are fewer than other approaches.

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