Food stamps are just capital controls for poor people

If you want to introduce higher prices for poor people, at least do it openly.

The Guardian's Patrick Butler reports that food stamps are to replace the cash payments currently received by vulnerable people in short-term financial crisis. He writes:

Rather than, as now, offering a cash loan, most councils will from April offer new applicants who qualify for emergency assistance a one-off voucher redeemable for goods such as food and nappies.

Many of the 150 local authorities in England running welfare schemes have confirmed that they will issue the vouchers in the form of payment cards, which will be blocked or monitored to prevent the holder using them for alcohol, cigarettes or gambling.

In classic economics-blogging style, here's another news story. Cyprus is to impose capital controls, for a seven-day trial period. The FT's Joshua Chaffin reports:

Capital controls will be deployed to prevent a stampede of withdrawals by panicked depositors when the banks reopen, possibly on Thursday, after a closure that has dragged on for nearly two weeks.

In broad terms, they will limit the ability to withdraw money, or shift it between accounts or across borders, according to officials. The measures might also delay the processing of cheques.

The link is that both measures won't have the absolute effect that their promotors might hope; rather, they impose a huge, uncontrollable and grey-market tariff on attempts to do what people are used to being able to do freely.

The Cypriot capital controls are the more obvious example of this. For the next week, a euro in Cyprus is worth less than a euro elsewhere. How much less, we don't know, and there will probably never be a clear market rate – especially if the controls are lifted in early April, which the people of Cyprus will surely be hoping will happen.

Nonetheless, if a Cypriot finds themselves urgently needing to get a large number of euros out of the country – say, to close a purchase on a house in the French Riviera – it's relatively obvious what they have to do. Offer someone in the "real" eurozone a quantity of euros in Cyprus to spend the money for them. The premium offered depends on the risk that the capital controls will not be lifted, as well as the value our outsider places on euros which can only be spent in Cyprus, but it's fairly doable from a technical point of view.

Of course, if the premium is too high – if you'd need to promise €5m (Cypriot) to get someone to spend €1m (non-Cypriot) – then you'll likely see movement from the grey market to the black market. In other words, suitcases full of money crossing the Adriatic.

Those effects are basically the same as what we will see if food stamps become widespread. It's best to think of food stamps as a separate currency; one which can only be used buy a certain list of items. Just like the Cypriot euro, it has "capital controls" – you can't just walk up to a bureau d'exchange and hand food stamps in and get pound sterling in return. But just like the Cypriot euro, there are ways – easy ways – of getting around them.

The legal way – analogous to the complicated deal to hand over money in two nations – is as simple here as offering someone a £20 food stamp for a £12 bottle of gin. Given most people buy food, that's a relatively good deal for the person who ends up with £8 profit; they essentially get a portion of their groceries paid for by someone in crippling financial need.

Since food stamps are useful for most people, the premium is unlikely to be very high. But if it is, we get to the suitcase-full-of-money option: find someone who'll take food stamps in exchange for "contraband". Given the ease with which 15-year-olds get drunk in this country, it's a fairly good bet that there are a few shops happy to sell booze to people they aren't allowed to. They might charge rip-off prices, knowing that the buyer's hardly going to complain, but they'll do it.

In the end, then, what is the outcome of food stamps? All things considered, they don't force people in financial difficulty to spend their money on "necessities" rather than "luxuries" (with the two categories odiously defined by government, rather than the individuals themselves). Instead, they impose a tariff on purchases of "luxuries" for those people.

The same economic effect could be had more directly by requiring shops to display two prices for booze and fags: a regular price, and a higher price for "poor people". Given the bizarre crossover between those in favour of welfare cards yet against minimum pricing because it hits the poor hardest – a peculiarly Tory type of libertarianism (fauxbertarianism? libertoryanism?) – perhaps making the doublethink explicit might change their minds one way or another.

US style food stamps. Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

Photo: Getty Images
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Let 2016 be the year that Ireland gives women the right to choose

As we commemorate and celebrate the centenary of the Easter Rising next year, we must remember that while the constitution was hard fought for it cannot be static. 

There is mounting pressure for the Irish government to look into decriminalising abortion. It has been growing since Savita Halappanavar’s death three years ago in a hospital in Galway due to complications during pregnancy. She was refused an abortion because Irish law forbids it. Earlier this month Irish women tweeted the Taoiseach Enda Kenny about their periods using the #repealthe8th in an attempt to bring attention to the issue. Now last Friday, Amnesty International published a letter calling for the decriminalisation of abortion internationally, signed by 838 doctors, most importantly this included some of Ireland’s leading healthcare professionals. This is the perfect time for political parties to commit to holding a referendum on the issue if elected they are elected and form the next government in 2016.

One part of the Irish legislative process I have always been proud of is the use of referendum and bringing serious questions to the electorate. It protects the constitution from changing on political whims or based on the beliefs of whatever party is in government. As such it remains a document of the people, it was after all put to vote before it was instituted in 1937. It also passes issues, which have proved contentious and in other countries have relied on the sympathy of lawmakers, by popular consent. Same sex marriage was legalised in a beautiful display of support, 62% of the electorate came out to vote for equality. Social media was full of pictures of Irish people living abroad going home especially for the referendum.

There has previously been a number referendums on abortion and following Savita’s death, the  Protection of Life during Pregnancy Act 2013 was brought in which allowed abortion if the mother’s life was in danger. It was important and a sensible measure to bring in. However it resulted in serious splits and some contentious situations. Lucinda Creighton defied Fine Gael’s whip and found herself stripped of her ministry and ostracised, leading to the creation of her new party Renua Ireland. Creighton was recently asked if she would agree with aborting baby Hitler. This is the ridiculous side of the debate which doesn’t help either side. Many thought that the 2013 act was too quickly done and not properly explained or understood. A referendum is the best way to avoid this. The question can be explained properly and debated to give people access to more information. Once passed, it is done so with consent from a majority of the electorate and this makes it much more difficult to argue against its legitimacy than if it is forced through. The result is also binding regardless of the current government’s stance, you can have a second vote but you can’t force people to vote the other way.

Public support for legalising or extending abortion rights is there. A RedC poll for Amnesty International in July showed 67 per cent of people thought abortion should be decriminalised while 81 per cent thought it should be allowed in more situations. 45 per cent were in favour of abortion whenever a woman wanted it. It is not an overwhelming figure but if 45 per cent of people believe this should be instituted then they ought to be listened to and the question brought to the country.

Realistically, nothing will be done before the next election which is expected to be held in early 2016. However now is an excellent time for political parties to examine their stance on abortion and look at holding a referendum and making it part of their manifestoes. The new government will then be in a position to announce a new referendum on abortion as soon as they are in power. The last one was held in 2002, meaning that many young people particularly women at the height of their fertility have never actually had a say on this matter.

As we commemorate and celebrate the centenary of the Easter Rising next year, we must remember that while the constitution was hard fought for it cannot be static. The world that its authors inhabited is not the same as the one we live in today. The constitution has changed to bring peace to Northern Ireland, to legalise divorce and same sex marriage, let 2016 be the year it changes to give women the freedom to choose.