Bending the odds with social policy

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I became familiar with the work of two of the most recent winners of the Nobel Prize in Economics about seven years ago when I started volunteering with Outreach International, a non-profit organization that works in ten countries around the world to help communities find sustainable solutions to end extreme poverty. Nobel awardees Abhijit Banerjee and Esther Duflo wrote an excellent book entitled Poor Economics (2012) which summarizes their research at MIT and their process for determining what does and does not work in addressing “third world” extreme poverty. Outreach International has long worked at cost-effective solutions to poverty and has in recent years redoubled its efforts to quantify its outcomes for optimal distribution of limited resources.

I define social policy as trying to change society’s ills through collective action of some sort, and I have evolved this basic rule about it:  Nothing works all the time. But some stuff works some of the time, which can often be measured on a probability curve. And some stuff “bends the curve,” significantly altering the future for the better in the affected communities.

As politicians are forced to present their policies in 60-second sound bites to tackle complex social issues, I retreat to this rule for evaluating which candidates I will support. Mostly I am looking for people who (1) care passionately about social inequities and (2) are realistically confronting the probabilities of success and failure for their proposals.

Universal Basic Income (UBI) is an example of such a proposal. I plan to write more in a future post about UBI, which is mostly associated with Democratic candidate Andrew Yang, but I can summarize my take on it using my stated rule above: (1) it would not be a panacea, (2) but it would significantly change some people’s lives for the better, and (3) it has the potential to significantly and permanently “bend the curve” on the issue of poverty for many people and their communities. What we don’t know yet are the odds of success and the downside risks for different demographics and communities. But it is certainly worth getting more data, and in the Banerjee and Duflo model, coming up with quantifiable tests.

Bending the curve

In Poor Economics, Abhijit Banerjee and Esther Duflo look at the existing data, as well as looking at ways to get more data, in numerous real-world tests in order to find this probability of success that I noted above for various social programs. They also found that some policies work better than other policies, but cultures vary and success rates vary, and that is the point. When you begin to understand the differences, you better understand the causes of deep poverty and the best prescriptions for addressing it.

Banerjee and Duflo also note that, while Americans tend to hold a view that much of the world is stuck unending poverty, there are now numerous examples of countries and communities that are demonstrating a significant “bend” in the rate of people escaping the lowest levels of poverty, where the lives of people change dramatically in less than a generation. I have seen this myself in communities in the remote, dry Bolivian Andes mountains where technology as simple as a better irrigation system or a modest mud-brick greenhouse can double a family’s cash income in just a short time. If done right, the progress is sustainable for both the family and the community.

Anisela-and-Roberto

Roberto in Vacas, Bolivia, telling how this greenhouse helped to buy new clothes for his daughter. Photo by the author.

The irony is that Americans have created several of their own “bending the curve” social programs in their past, but usually fail to acknowledge their successes. My father left a declining mining town in Northern Michigan to serve in the Pacific Theater in World War II after nearly a decade as an adult trying to survive the Great Depression. Following the war he enrolled in college using a federal program popularly known as the “G.I. Bill” and bought a modest suburban bungalow in Jerry Ford’s home district using the government’s “V.A. Loan” program in which to raise his new family. This same story would have been found in many homes in my neighborhood, with post-war young children like me everywhere, in the 1950s.

For sure, these two programs had their failures. Like much of the 1950s experience, racial minorities were often shut out of these programs, either directly or via neighborhood “red-lining.” My mother and millions of other women, who had actually run the stores and factories during the war, were pressured to retreat “back into the kitchen” in much of middle-class America. And finally, a significant percentage of returning soldiers failed to either achieve their educational goals or to financially maintain their “V.A” houses. There are probably numbers in an archive somewhere documenting V.A. loan defaults, for instance. Every social program, as noted above, has its probabilities of success and failure.

What is without a doubt, however, is that these programs significantly “bent the economic curve” for literally millions of Americans, and many politicians who ideologically oppose “socialist” government programs are where they are today precisely because of those programs. I know I am. It was a combination of luck of the draw, hard work, and a not-insignificant amount of (gasp!) “white privilege.” [2]

And again no doubt, both Social Security and Medicare have radically bent the poverty curve for American’s senior citizens. Basically, these are both “near-UBI” programs to a targeted demographic. [3] They are not without problems, but they definitely have been “game changers.”

Aggressive dependence

The big fear/belief in the conservative community is that social programs create a state of dependence in poor communities, where people prefer to “live on the dole” instead of working. Interestingly, if you ask these same people if they would just stop working in exchange for, say, $1,000 per month per person in the household, they say, “Of course not!” Stereotypes about poor people die hard. Able-bodied people, by and large, want to work to make their lives better, even if there is supplemental income underlying it. The marginal benefit from marginal employment income is very strong for the bottom end of the family income scale, and ironically, not so much for the top where we have focused tax cuts. Would Bill Gates work less if he paid $10 million more in taxes this year?

In the spirit of Banerjee and Duflo’s work, it is best to view dependence as (1) a downside cost of all social programs, but also (2) probabilistic, quantifiable, and addressable. I have become pretty darn dependent on my Medicare doctor visits, and I admit to “squandering” my government-provided “UBI” social security income at a nice restaurant now and then. Yet, I doubt that most of you would think less of me because of that dependence and my modest “welfare Cadillac” of a good meal. And so, who is this fear really directed to?

A mentor of mine who spent most of his career in addressing the worst global poverty challenges on the ground familiarized me with what he called aggressive dependence. Aggressive dependence happens when this normally-manageable dependence probability gets out of hand, most often in cultures and countries where years of natural disasters and political strife have destroyed many societal norms.

These places are not just dependent on outside help; they aggressively demand it from the very people and organizations most committed to providing assistance. Right now Haiti is perhaps the best example of this, where even the most dedicated poverty fighters face daily danger just trying to do basic good works, and where the next earthquake or hurricane will undo years’ worth of fragile community building. And yet, most experienced workers in this vineyard know that aggressive dependence is more the exception than the rule, and it is not a sufficient excuse for failing to address global poverty where this is not the case.

Casualties of culture

I wrote last year about the concept I call casualties of culture. This is the idea that culture, the “water in which we swim,” is a dynamic, moving thing, and very fast-moving in much of the U.S. Some people are at the “leading edge” of technology, art, and social success. Most of us are instead lagging behind, struggling to keep up with the “normal middle.” And every day, our culture leaves people behind to “fall off the radar” of the community. In our culture, you “fall off” just by standing still.

Casualties of culture

I once had a discussion with a businessman who complained about the “lazy people” in the community who did not appear to want to work. Knowing this man had basic entry-level job openings, I asked if he would offer them jobs, and he reacted, “I would never hire those people.”

Volunteers who work with community food banks and other on-the-ground community services can usually tell stories of how “normal people” become “those people.” Without dependable cash coming in, a $500 car repair can mean the loss of a low-wage job that you can’t get to, or it might turn into an unmanageable $2,000 payday loan balance in short order, which can lead to a failure to pay child support, which can lead to  jail time. And the jail time, in turn, makes you unemployable by those businessmen who won’t hire “those people.” The next thing you know, you are a “casualty of culture,” all for the lack of $500 at a critical time. Some people are fortunate enough to have a family safety net when times get tough, but many others do not.

And many in our society are never allowed into the larger culture because of disabilities, religion, appearance, or other qualities that makes them “not normal.” As I like to say, in reference to the moving graph above, “Sometimes normal is just a statistic.”

When I watch many politicians on the television or on social media, their cynicism and dislike for people less fortunate than themselves seems to ooze from their pores. Ironically, many of these same folks practice (and apparently they can’t get past the “practice”) a religion that is founded on St. Paul’s preaching of charis, the unmerited favor of “grace.”

I admit to getting discouraged about this world as well, but I will vote for the person who best exhibits, when it comes to social policy, that other divine quality of “Hope.”

And by the way, here is the 4-star Charity Navigator link for Outreach International in Kansas, City, Missouri.


Notes

  1. Banerjee, Abhijit V., and Esther Duflo. Poor Economics: a Radical Rethinking of the Way to Fight Global Poverty. PublicAffairs, 2012.
  2. For my perspective on why these programs are more “bottom-up capitalism” than “socialism,” see this post.
  3. The “trust funds” are primarily accounting fictions designed to keep Congress’s feet to the fire to keep these programs funded. In reality these are both primarily “cash transfer” programs from current taxpayers to current recipients.

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