The Myth of Welfare’s Corrupting Influence on the Poor

The Myth of Welfare’s Corrupting Influence on the Poor

by Eduardo Porter at the NY Times

http://www.nytimes.com/2015/10/21/business/the-myth-of-welfares-corrupting-influence-on-the-poor.html?ref=business&_r=0

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Today, almost 20 years after Mr. Clinton signed a law that stopped the federal entitlement to cash assistance for low-income families with children, the argument has solidified into a core tenet influencing social policy not only in the United States but also around the world.

And yet, to a significant degree, it is wrong. Actual experience, from the richest country in the world to some of the poorest places on the planet, suggests that cash assistance can be of enormous help for the poor. And freeing them from what President Ronald Reagan memorably termed the “spider’s web of dependency” — also known as forcing the poor to swim or sink — is not the cure-all for social ills its supporters claim.

One billion people in developing countries participate in a social safety net. At least one type of unconditional cash assistance is used in 119 countries. In 52 other countries, cash transfers are conditioned on relatively benign requirements like parents’ enrolling their children in school.

Abhijit Banerjee, a director of the Poverty Action Lab at the Massachusetts Institute of Technology, released a paper with three colleagues last week that carefully assessed the effects of seven cash-transfer programs in Mexico, Morocco, Honduras, Nicaragua, the Philippines and Indonesia. It found “no systematic evidence that cash transfer programs discourage work.”




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