CNN has a very interesting Reuters story demonstrating how poorly-targeted aid can hurt some while helping others.
A year and a half ago, terrorists took a school in Beslan, Russia, and and killed many of the students and teachers. More were killed in the crossfire when troops went in to rescue the hostages. Little Sveta Dzieva heard the gunshots and ran, saving her own life. But the shock — 186 of her classmates were killed — struck her mute for a month. Going to Moscow for treatment cost her mother, Albina, her job and their apartment. Ironically, a lot of aid from Russia and elsewhere poured into Beslan and made it harder on the Dzievas. Why? Because Sveta wasn’t killed or physically injured.
Sveta, her mother, and her brothers now live in a shack in a neighboring village. Why can’t they go back to Beslan?
Officials say the money — 1.45 billion rubles in the first year after the attack — has split many families in the poor North Ossetia region as they argue over how to share it. Albina said it had split the community as well. Those who received compensation had driven prices up, pushing those without compensation even further into poverty in a region where many already struggle to make ends meet.
“You can’t even rent an apartment any more. The owners now ask for a year in advance, and the prices have gone up so I can’t pay anyway,” said Albina.
Money isn’t wealth: just pouring money into the hands of victims means the prices for scarce supplies will increase. It’s worse in this case because the money is a one-time deal. Aid will slow and stop as memory of the tragedy fades. So no one will risk new construction to house those forced out by inflation. Unless some other source of wealth comes into town, my guess is prices will eventually fall, but not before a lot of harm is done to people like Sveta and her family.