I read a fascinating article by John Derbyshire about an obscurely named program, “Conditional Cash Transfer,” and what its failure in New York says about the underclass and opportunity in America. Conditional Cash Transfer (CCT) programs are based on the principle that providing incentives for certain behaviors can help improve the lives and opportunities of the poor. CCT programs pay recipients cash for specific actions, as opposed to giving them cash with no strings attached. Some of these ideas were incorporated in the welfare reform bill that passed in 1996 which requires welfare recipients to work after 2 years. Apparently, CCT programs work well in the Third World where they can significantly influence people’s behavior. In New York city, not so much. A trial CCT program was recently canceled by Mayor Bloomberg.
Why? In Mexico, CCT payments were contingent on children attending school instead of working to support the family. With education, these children are upwardly mobile and can break the cycle of poverty. In New York, recipients were paid for going to the dentist, holding a full time job, attending school regularly, or passing the Regents exam. Apparently, that didn’t have a significant positive effect.
Derbyshire draws the following conclusions from these differing outcomes that can be considered callous or realistic, depending on your perspective:
- The obstacles to life improvement that exist in the Third World simply are not present in the U.S. 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. 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.
- Most poverty in the U.S. 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.
- If you offer [a New Yorker] $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.
There is a lot to think about here. Is it really true that most poverty in the US is due to factors that cannot be changed by throwing (more) money at the problem ? Are there hard limits to what social engineering can acomplish? If most Americans with talent and drive can rise to the middle class, is that the standard of fairness we want? And does it maximize everyone’s potential? My son would disagree. He thinks our starting point in life has a big impact on what we can achieve.
I am not so sure. I think of Michelle Obama who grew up 10 minutes away from where I did on the South Side of Chicago. For her family, that neighborhood may have been a step up. For mine, it was a stepping stone to a wealthy North Shore suburb. Yet we attended the same Ivy League schools, Princeton and Harvard, and both attained advanced degrees. I know that she and I are just individual examples. But isn’t that the point? In the end, at least in the US, a lot depends on the individual.