»  National Review Online

April 21, 2010

  "Conditional Cash Transfer" Flops in NYC

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Michael Bloomberg, New York City's Mayor-for-Life, has announced that the city will not go ahead with a publicly-funded CCT program.

A what?

"CCT" stands for "Conditional Cash Transfer," the current fad among anti-poverty campaigners. The name, unusually for social-policy onomastics, clearly describes the program. Cash ($$$$) is transferred (from some funding source, most likely an anagram of PAXTAYERS, to poor people) with conditions ("If you make sure your child attends school regularly, we'll give you $50 a month").

CCT is not particularly a New York thing; there have been CCTs all over the world since the late 1990s. Nor did the CCT idea appear ex nihilo in a puff of smoke: it evolved from the widespread failure of un-conditional welfare programs in the post-WW2 developed world. The U.S.A.'s own welfare reform legislation of 1996 was a product of that same evolution. The notion that you can eliminate poverty by just giving poor people money, no strings attached, was pretty thoroughly discredited by the 1980s. It just took a while to sink in with policy-makers.

Bloomberg caught the CCT bug three years ago. The source of the infection was Mexico, which has been running a CCT program to alleviate rural poverty since 1997. Urged on by private donors, principally the Rockefeller Foundation, Bloomberg and his social-policy advisers met with administrators of the Mexican program and were impressed with what they heard.

In March 2007 the mayor threw his support behind a privately-funded CCT program for New York City, the first of its kind in America. The intention was to monitor the program for three years, then decide whether to provide public funding — to make the program, called Opportunity NYC, an official component of the city's welfare efforts.

Decision time came at the end of March this year, Opportunity NYC's third birthday. Results from the first two years of the program had been analyzed. It was plain that those results were meager, though Bloomberg and the donor foundations put as much lipstick on the pig as they could.

In those first two years, $14 million had been paid out to 2,400 city families, eighty percent of them single-parent. With a further $20 million added for program operating costs and evaluations, that's north of $14,000 per family on average — $7,000 a year. For all that money there were some scattered, modest upticks in school attendance and test scores, and "more families went to the dentist for regular checkups." To the mayor of a cash-strapped city with colossal looming fiscal problems, CCT did not compute.

The curious thing is that CCT seems to work well in Third World countries. Mexico, Brazil, Argentina, Bangladesh, Jamaica, Honduras, and Turkey all report good results from their programs.

The Mexicans had an external agency, the International Food Policy Research Institute, evaluate their program. IFPRI found that Mexican children in poor rural areas under the program had strongly improved health and rates of school enrolment. Even their stature increased by "16 percent in mean growth rate per year (corresponding to 1 cm) for children [in the program] between 12 and 36 months of age."

So why didn't CCT work in New York? The clue is in the World Bank report I took that last quote from. Speaking of the rationale for Mexico's program, the report says:

Poor families are aware of the benefits of investing in their children but cannot afford the monetary costs of attending school or the opportunity costs of sending children to school (the income or value of income that children would earn if they were working, rather than attending school). Since families need this income for current consumption, they take their children out of school at early ages and send them to work.

The assumption here is that poor Mexicans, especially poor rural Mexicans, would practice bourgeois habits if they could — investing in their families' human capital — but are prevented from doing so by institutional and social barriers they are too poor to surmount. They'd love to send their kids to school, but need them to help in the fields, or help scavenge the garbage dumps.

New York City has no such barriers. Public schools in New York are free. Kids can't work, so there is no opportunity cost to sending your children to school. Health-care is free, through Medicaid and emergency-room services. No job? The city is awash with job training and placement programs, privately or publicly funded.

The obstacles to life-improvement that exist in the Third World simply are not present in the U.S.A. In rural Mexico it is possible to be smart, prudent, ambitious, and energetic, and yet still be stuck in hopeless poverty. This is not possible in the U.S.A. An American who is smart, prudent, ambitious, and energetic will be in the middle class in no time. Mexico's CCT program has a lot of low-hanging fruit to pick; New York's had very little.

I wouldn't go so far as to say that our country has no such thing as "the deserving poor." I'm sure there are many who fall into that category: sufferers from chronic health problems, elderly victims of Madoff-type scams, people who have just endured really, sensationally bad luck in some way. We have, though, I think, reduced the number of such unfortunates to something near its existential minimum. Most poverty in the U.S.A. today is not the result of social or institutional barriers. It is the result of personal psychological factors: imprudence, low intelligence, lack of drive — or, if you prefer the terminology of a franker age: folly, stupidity, and sloth.

As a nation, through government social programs, we have done all we can, all it is possible to do, to establish a frictionless meritocracy. So far as barriers to personal advancement are concerned, America is wellnigh perfect. Anyone who wishes to rise to a modestly comfortable life free from want, can easily do so. Anyone who does not so wish, can subsist on state benefits, or leech off someone who does.

Many seem content with the latter option. If you offer one of them $100 to take her child to the dentist, she won't turn you down; but you haven't changed her outlook in any way, or her life, or her prospects, or her child's prospects. In Tepotzlan, perhaps, but not in New York.

When every social-engineering project a free society can tolerate has been tried, when ten thousand programs have been implemented and ten trillion dollars spent, then at last you are left looking at knotty old human nature. When the soil has all been scraped away, you are faced with the bedrock. It's not flat.