In a recent article in the New York Times called ‘To Beat Back Poverty, Pay the Poor’, Tina Rosenberg describes what sounds like a resounding success story:
‘Parts of Brazil look like southern California. Parts of it look like Haiti. Many countries display great wealth side by side with great poverty. But until recently, Brazil was the most unequal country in the world. Today, however, Brazil’s level of economic inequality is dropping at a faster rate than that of almost any other country. Between 2003 and 2009, the income of poor Brazilians has grown seven times as much as the income of rich Brazilians. Poverty has fallen during that time from 22 per cent of the population to 7 per cent.’
She then contrasts this progress with the position in the US:
‘Contrast this with the United States, where from 1980 to 2005, more than four-fifths of the increase in Americans’ income went to the top 1 per cent of earners … If current trends continue, the United States may soon be more unequal than Brazil.’
She could have gone on to mention Europe. In the UK, there has been what one author calls a ‘a long-term trend of rising inequality’ sharpened by cuts in public services. A recent report from the UK’s Institute of Fiscal Studies predicts that by 2013-14, relative poverty will have risen ‘by about 200,000 children, 100,000 working-age parents and 200,000 working-age adults without children, and absolute poverty to rise by about 100,000 children, 100,000 working-age parents and 100,000 working-age adults without children.’
According to Rosenberg, a major part of Brazil’s achievement is due to a social programme called Bolsa Familia (Family Grant). The programme basically involves conditional cash transfers: regular payments to poor families, in the form of cash or electronic transfers into their bank accounts, if they meet certain requirements.
Brazil’s conditional cash transfer programme covers about 50 million Brazilians, about a quarter of the country. It pays a monthly stipend of about $13 to poor families for each child of 15 or younger who is attending school and additional payments of $19 a month for each child of 16 or 17 still in school. Families in extreme poverty get a basic benefit of about $40, with no conditions.
Conditional cash transfer programmes are now found in 14 countries in Latin America and some 26 other countries, according to the World Bank; it started in Mexico with the highly successful Oportunidades programme. Rosenberg calls this ‘likely the most important government anti-poverty program the world has ever seen’.
The elegant idea behind conditional cash transfers, says Rosenberg, ‘is to combat poverty today while breaking the cycle of poverty for tomorrow’. They give money to the poor, thus reducing poverty, especially extreme poverty, and beginning to close the inequality gap. In addition, by giving, they begin to break the cycle of poverty. Ample research indicates that conditional cash transfer programmes in Mexico and Brazil do keep people healthier and keep kids in school.
Current policies of the UK government seem set to squeeze the poorest and most disadvantaged ever harder, increasing both poverty and inequality. We clearly need to take other directions, but fresh ideas seem few and far between among all political parties. Rather than attempting to devise an idea of what a good society should look like and creating a consensus to achieve it, political parties of all stripes remain committed to the idea of economic growth. At different points last year, Gordon Brown and the Conservative/Liberal Democrat coalition both used similar language in promising deficit reduction and ensuring economic recovery. In a forthcoming book, Barry Knight suggests that such an approach condemns us to repeat the mistakes of the past, so that a priority for foundations is to come up with a narrative that enables us to organize things differently.
Foundations are under a lot of pressure to step in and plug some of the gaps that will inevitably be left by impending government cutbacks. An even more crucial role may be to support the development of alternative thinking, looking at examples such as the Bolsa Familia and Oportunidades programmes and drawing on the findings of Richard Wilkinson and Kate Pickett whose 2009 book The Spirit Level makes a compelling case that unequal societies are dysfunctional. The Joseph Rowntree Charitable Trust’s support for the writing and publication of Treasure Islands is a notable example. Published last month, the book is an indictment of tax havens and the offshore banking system, showing how tax havens have been instrumental in nearly every major economic event and every big financial scandal.
1 Mike Brewer and Robert Joyce (2010) Children and Working-age Poverty from 2010 to 2013 IFS Briefing Note 115; http://www.ifs.org.uk/bns/bn115
2 Barry Knight (2011) ‘What is to be done?’ in Knight (ed) A Minority View: What Beatrice Webb would say now Alliance Publishing Trust.
3 Nicholas Shaxson (2011) Treasure Islands UK, Bodley Head.
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