Nova workboard

a blog from young economists at Nova SBE

Government Transfers to the Poor

In one of the first classes of Public Economics, a discussing arose about the relevance of social transfers. At some point I heard something like: “it’s important to guarantee, when we are giving money to poor people through government transfers, that people do not use it to buy beer or drugs”.

I am not even going to talk about of the huge prejudice that this kind of statement represents, but simply how it shows a pure conservative view from certain people that do not seem to realize the anti-libertarian (not just anti-egalitarian as some may think) spirit that is embodied on the thought that poor people do not know what to do with their money, therefore we, the tax payers, should give the as less as possible in order for them to not fall on idleness, keeping an incentive for them to find a job.

However, some statistics show, particularly in Portugal, in the case of the “Rendimento de Inserção Social (RSI)” – a government transfer to the poorest in the society that intends to supply poor households wth the minimum conditions of living, upon several conditionalities such as sending their kids to school – that part of the recipients of this kind of transfers are actually working people. Meaning, they are not just people that walk around during all day, jumping from bar to bar, from beer to beer. They are, indeed, people that mainly due to their households’ composition live in poverty despite having a job.

Of course that the cases that people notice the most are the ones that refer to people that, receiving this kind of government transfers, do not have what we may call a proper way of living. Nevertheless people should not forget that by imposing a bad charisma upon this kind of government transfers, we can be dissuading people that are needy of this kind of transfers but do not apply for them due to social embarrassment. Moreover, we should bear in mind that the average amount of RSI that poor households receive in Portugal is about 80 euros per month. Maybe is enough for some liters of beer, but not enough to provide children of a working family with proper education and health.

Rui Filipe Silva Rodrigues

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Author: studentnovasbe

Master student in Nova Sbe

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