Cash transfers and ideology

A recent article in the Atlantic details an anti-poverty program recently designed by four graduate students. The program is designed to funnel cash as efficiently as possible to poor people in Kenya. If the Atlantic article is to be believed, its initial results are promising. This comes as no particular surprise for me: I have been advocating just giving poor people money for quite some time. My view is that the default presumption should be that you solve distributive problems by changing the distribution. In the areas where that proves inadequate, then different programs may be called for.

But this is not the view of most people, and sadly not the view of many of the people whose ideas count: domestic policymakers and NGO staffers. Their default presumption is always against unconditional cash transfers. Various sorts of in-kind benefits, conditional cash transfers, and other paternalistic measures come first. In trying to understand why they think this way, it is easy to be cynical, and rightly so.

Consider this paragraph from the Atlantic article:

“We had conversations with people [in the non-profit sector] who said there was a lot of internal resistance to unconditional transfers,” Niehaus told me. “If this works, what are we all here for? Why do we have jobs? There’s an industry that exists that tries to make decisions for poor people and determine what’s best for them.

Why do they dislike cash transfers? Well if you just transfer cash through cell phones, most NGO development workers immediately become unnecessary. And those NGO workers can’t have that. There needs to be some room for complex administration and on-the-ground work; otherwise they have no role to play. So in a cash transfer world, they would be out of an anti-poverty job, which would deal a blow both to their financial well-being and more importantly their self-concept and identity. They might have to get a more normal job, and then they would cease to receive admiring coos from the people they meet at dinner parties. The horror.

Cynical explanations don’t stop there. When it comes to domestic poverty, I suspect many of those nominally concerned about poverty reject the cash transfer approach because they have no other comfortable ideological option. Many are just ignorant and have no idea what they are doing of course (for example, Teach for America and education reform types). But there is also something very ideologically important about rejecting the notion that cash transfers can solve much of the problem.

To justify the sort of unbelievable inequality that exists in the United States, we need to have some story that is capable of blaming the impoverished for their position. Those in poverty need to have some sort of extreme defect, usually one manifested in their ability to make decisions. To accept that cash transfers could solve the problem requires rejecting the ideology that the existence of poverty and low-income households is the fault of particularly bad decision-making by the poor. If cash transfers solves the problem, then clearly the poor are able to make good enough decisions.

When cash transfers work, it becomes very clear very fast that the existence of poverty is not a default feature of the universe. It is caused by our distributive institutions, institutions that we could easily construct so as to generate more egalitarian outcomes. The success of cash transfers would mean that poverty is the result of decisions we have made as a society, not a naturally-existing phenomenon caused by the defects of the poor themselves.

You can see then why certain advocates for the poor (namely those who are not themselves poor) are very cautious about reaching this kind of conclusion. As Charles Darwin once wrote: “if the misery of our poor be caused not by the laws of nature, but by our institutions, great is our sin.” If cash transfers could solve most of the poverty problem, then, indeed, great is our sin. Such a conclusion would eat at the very fabric of the ideology that almost everyone in the United States subscribes to, and ideology that they must subscribe to in order to live mentally comfortable lives in the face of the poverty that surrounds them. Since our ideological comfort requires that poverty be the result of defective individuals, we must fashion our solutions on that assumption as well. And so that means no to cash transfers, and yes to in-kind benefits, vouchers, and other sorts of nonsense paternalism.