The Agenda

A Better Life for a While or Higher Earned Incomes?

Christopher Blattman, a political scientist at Columbia University and a student of poverty in the development world, argues that the success of cash transfer programs in the developing world might offer lessons for fighting poverty in more affluent societies, including the United States. Specifically, he observes that in a recent experiment, he and his colleagues identified homeless men and criminals in Libya’s urban slums and provided them with cash transfers. They found that almost none of the beneficiaries wasted the money. Rather, they dressed, ate and lived better, yet they were “back where they started” after the transfers came to a close. Blattman writes that the program brought its beneficiaries “a better life for a while, which is the fundamental goal of any welfare program.” He then asks ”if homeless people and drug users in Liberia don’t misuse cash, why would we expect the homeless in New York to waste it?”

Leaving aside exactly how the homeless in New York city, where all individuals are entitled to a suite of labor-intensive services, yet where the coercion of those who refuse assistance and counseling is frowned upon, are different from the homeless in Libya’s urban slums, who are living in desperate conditions in a failed state with limited social service provision, Blattman is too quick to assume that the fundamental goal of any welfare program is to temporarily improve the quality of life of beneficiaries. Or perhaps we ought to differentiate between the fundamental goal of welfare programs and the fundamental goal of development, a distinction captured by the Campaign for Boring Development in its Boring Development Manifesto.

The CBD takes the stance that while many development interventions, like those devised and tested by Blattman, aim to make poverty easier to bear, the goal of development is, or ought to be, to actually make the poor less poor.  CBD maintains that the only way to fight poverty is to boost poor people’s incomes, or rather to boost their earned incomes. This is a goal that involves meaningful increases in labor productivity and in savings over time, and in short run it may well involve working harder and actually consuming less. This is what happens when poor people living in rural villages migrate to cities, a traumatic transition that generally involves making life harder and more unpleasant in many important respects (social isolation, cramped quarters), yet which also leads to a sharp immediate increase in productivity, thanks to economies of agglomeration (denser places are more productive than less-dense places), and a faster rate of productivity growth, due to knowledge spillovers (if you’re around large numbers of other people in the same line of work, you can acquire skills faster than you would if you were isolated). 

The contrast between Blattman’s approach and that of the CBD is clear: Blattman will offer cash transfers to the rural poor, some of whom might then use them to settle in productive cities; the CBD, in contrast, might emphasize devoting resources to improving connectivity, so that it is easier for people to increase their long-run productivity. The former strategy might do a better job of making poverty easier to bear, particularly for those reluctant to leave family connections behind, while the latter might ultimately do a better job of actually fighting poverty. I should stress that this isn’t necessarily true. But CBD’s emphasis is clearly quite different than Blattman’s.

Is CBD’s approach to development relevant to fighting poverty in affluent market democracies? I’d suggest that it is far more development than the strategy Blattman employed in Libya’s urban slums. I’ll elaborate on this theme tomorrow.


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