Money, Politics, and Poverty: Ready for a Paradigm Shift

Give Directly has garnered a lot of attention lately for advocating and implementing a radical new approach to fighting poverty in Kenya and Uganda: unconditional cash transfers.

The NGO simply targets places where there is extreme poverty and provides individuals with direct transfers of cash. In order to do this they are utilizing digital technology - providing people with cell phones and then making mobile account payments to them.

Joy Sun, the Chief Operating Officer of Give Directly and a veteran aid worker, said that aid workers in the past acted on two assumptions that proved to be wrong: 1) that the poor were poor because they were uneducated and made bad choices; and 2) that they required educated aid workers to tell them what they needed in order to get out of poverty, and how to do it.

This approach demanded a large and expensive workforce of aid workers, along with huge transfers of materials - food, agricultural equipment, housing, and infrastructure supplies.

According to Sun, a 2011 report from Shapiro & Raj - an independent investment research and consulting firm - for every $100 in allocated resources, it costs another $99.00 to provide and service them. The report also said that more than 30% of the recipients of aid materials sold them for cash.

In July, in her TED Talk in New York City , Sun confided that many aid workers were skeptical of Give Directly's new approach. They feared that the cash recipients would use the money to pay for non-essential personal items - and to not work. But according to Give Directly the data so far refutes that notion; that in fact the people who received unconditional cash transfers invested better, worked harder and made more substantial gains towards moving out of poverty than those who received more traditional forms of material aid alone.

"Dozens of studies show across the board that people use cash transfers to improve their own lives," said Sun.

There are critics of this program, including the Stanford Social Innovation Review. They don't question the merits or effectiveness of unconditional cash transfers; they just caution that it's too early to tell what the long-term effects of this approach will be.

Fair enough.

But as I wrote in a previous article for Talk Poverty, we clearly need a paradigm shift in how we perceive the poor and treat poverty. I quoted Thomas Kuhn who describes paradigm shifts as points of "intellectually violent revolutions" through which "one conceptual world view is replaced by another."

I believe that unconditional cash transfers via mobile payments represent the kind of policy change that can indeed contribute to a paradigm shift in our approach to poverty. If the empirical evidence contradicts long-held beliefs about why people are poor, and how to help them work their way out of poverty--how should that inform how we deal with poverty in America? In real terms, there are more than 46 million Americans living today with daily chronic food and housing insecurity, many of them children. Certainly, no one can claim we are using a winning formula for eliminating poverty in America.

What is the biggest obstacle to changing non-working approaches and adapting more evidence-based ones for eliminating poverty in America? It's the same problem plaguing American public policy in general: willful, well-funded ignorance cynically masquerading as political ideology.

If many of our politicians can deny that there is a relation between carbon emissions and climate change; or that an obscene proliferation of guns in this society is not related to the increasing number of senseless killings taking place regularly in our country; they can, and no doubt will, ignore any empirical evidence that proves transferring money directly to people who are poor will help end poverty.

We need that violent intellectual revolution--one that allows us to respond to issues that are so fundamental to the wellbeing of our democracy, including poverty.