US welfare reform — beyond sticks and sermons

In his 1984 book Losing Ground, Charles Murray argued that welfare hurt poor families by creating incentives for self-defeating behaviour. Last month, New York Mayor Michael Bloomberg proposed that poor families ought to be rewarded for making the right decisions:

"This policy is called "conditional cash transfers," and it is designed to address the simple fact that the stress of poverty often causes people to make decisions-to skip a doctor’s appointment, or to neglect other basic tasks-that often only worsen their long-term prospects. Conditional cash transfers give them an incentive to make sound decisions instead.

"In our case, we intend to provide conditional cash transfers-using privately raised money-to families of at-risk youngsters to encourage parents and young people to engage in healthy behavior, and to stay in school, stay at work, and stay on track to rise out of poverty.

Conditional cash transfers have been successful in developing countries like Mexico and Brazil. Research shows that they can significantly improve health, nutrition and education outcomes. "Historically, the rest of the world has often looked to America for leadership in social policy" said Mayor Bloomberg, "but there is no reason that we cannot also learn from the experience of others."

The Manhattan Institute’s Heather Mac Donald disagrees. Whatever the research might say, Mac Donald thinks that Bloomberg has overstepped the boundaries of good government:

What government cannot do is create personal responsibility and drive in individuals. Yet that is what Mayor Bloomberg is attempting to do by paying people to send their children to school or to keep medical appointments. This payment system creates a very odd situation for the long term, as well as the short term. Will the recipients ever be weaned off their payments? The entitlement mentality will inevitably suck in a larger and larger range of paid-for activities.

Bloomberg’s proposal is to use private rather than public money for the cash transfers. Mac Donald will probably have some advice for any philanthropists who might be thinking of getting involved in a scheme like this. At a 2005 symposium, Mac Donald urged donors to ignore social policy experts since anyone who has made a fortune already knows how to motivate people to succeed (pdf p 23).

At the New York Times Magazine, James Traub has an good piece on the Bloomberg plan.

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15 years ago

Incentives are created by govts (eg through the tax system) all the time. It’s true enough that

“What government cannot do is create personal responsibility and drive in individuals.”

but that doesn’t mean that incentive payments couldn’t be tried to see if they work. Why not give it a go?

15 years ago

I think it might be worth a shot – I agree entirely with the quote attributed to MacDonald, but at the same time democratic politics requires (fortunately I think) political bodies to consider those who aren’t willing or able to help themselves.

This seems quite sensible since eg a healthy half-educated 22 yo can much more easily get his life in order than a HIV positive tooth-decayed illiterate 22 yo, and will probably end up costing his fellow taxpayers a lot less, too.