Latin American economies have long been associated with huge gaps between the “haves” and “have nots.” But in countries like Mexico and Brazil, innovative government programs are showing impressive results in ending extreme poverty. These incentive-based models pay poor families for meeting certain education and nutrition requirements. We examine whether they can be adapted to combat poverty in the United States.

Guests

  • Santiago Levy Vice President for Sector and Knowledge, Inter-American Development Bank; Deputy Minister, Ministry of Finance and Public Credit, Government of Mexico (1994- 2000)
  • Laura Rawlings Lead Social Protection Specialist, World Bank
  • James A. Riccio Director, Low-Wage Workers and Communities Policy Area, MDRC

Transcript

  • 13:06:32

    MR. KOJO NNAMDIFrom WAMU 88.5 at American University in Washington, welcome to "The Kojo Nnamdi Show," connecting your neighborhood with the world. It's a success story in the fight against extreme poverty. In 1997, the government of Mexico was in the mist of economic upheaval. The so-called tequila crisis of 1994 had left its economy battered and millions of families were struggling to meet the most basic needs of food and shelter so they tried a simple untested idea.

  • 13:07:20

    MR. KOJO NNAMDIWhat if they abandoned old outdated ways of helping the poor and simply cut them a check? They had identified families in the most need and transferred money directly to them all on the condition that they meet basic requirements, keeping kids in school, mothers taking courses on child nutrition. It sounds too simple and straight forward to register much success, but 14 years later, it's become a template for breaking the cycle of poverty across Latin America.

  • 13:07:51

    MR. KOJO NNAMDIMexico and Brazil are beginning to do something once thought impossible, they're closing huge wealth gaps between the haves and have-nots and they're establishing real social safety nets. Now, some people are wondering whether American cities and states should borrow a page from our Latin American neighbors. Joining us in studio to discuss this is Santiago Levy, vice president with the Inter-American Development Bank.

  • 13:08:18

    MR. KOJO NNAMDIHe was the Deputy Finance Minister in Mexico from 1994 to 2000. Santiago Levy, thank you very much for joining us.

  • 13:08:26

    MR. SANTIAGO LEVYThank you for invitation, Kojo. Pleasure to be here.

  • 13:08:29

    NNAMDISantiago Levy was one of the creators of Mexico's Progressive Program now known as Oportunidades, the first example of so-called conditional cash transfer programs and widely considered the most successful anti-poverty program in Latin American history. Also joining us in studio is Laura Rawlings, a lead specialist with the World Bank. Her work tracks the effectiveness of social sector projects worldwide. Laura Rawlings, thank you for joining us.

  • 13:08:57

    MS. LAURA RAWLINGSThank you, Kojo. Pleasure to be here.

  • 13:08:59

    NNAMDIAnd joining us from NPR studio's in New York City is Jim -- James or Jim Riccio, Director of the Low-Wage Workers and Communities Policy Area of MDRC. Jim Riccio, thank you also for joining us.

  • 13:09:14

    MR. JAMES RICCIOMy pleasure.

  • 13:09:15

    NNAMDIWhen it comes to poverty and economic development, Washington is used to playing the role of teacher, imparting policy advice and wisdom to developing countries. But the success of these programs we're discussing might be shifting that dynamic. Santiago, you helped design that program we talked about that's widely considered one of the more successful or the most successful anti-poverty measures in Latin American history. It was called Progresa. Today, it's known as Oportunidades. How did it get started and how does it work?

  • 13:09:47

    LEVYIt's a little bit in the context that you mentioned, Kojo. In '95, '96, the situation in Mexico was difficult as a result of economic crisis of '94. Mexico had, had more than 30 years of various poverty programs, subsidizing foods, subsidizing tortillas, delivering meals to kids. But what we had learned that is over all those years, the effectiveness of these programs was actually very low. So President Zedillo, at that time, asked me to come up with some suggestions as to a new approach for fighting poverty.

  • 13:10:22

    LEVYAnd the fundamental idea was to help people in such a way that eventually they would not need help. So the idea here is to invest in poor people. Allow them to get more education, allow them to get better nutrition, allow them to have a better health status so that eventually they can get on their feet, find a better job and then the next generation will not have the need to have programs like this. The basic idea is to trust families and to invest in families.

  • 13:10:54

    LEVYAnd you trust them by establishing, so to speak, a contract between the government and the family. The government provides resources to the family in cash so they can buy alcohol if they want, they can buy cigarettes if they want. Ninety-nine percent don’t. But you trust in them. You give them resources and in exchange for commitment from the family to invest in itself, particularly to ensure that kids go to school, 85 percent of the time that they should go to school, and that mothers and the members of the household attend health clinics where they can get information about better health, better nutrition.

  • 13:11:32

    LEVYAnd also they can get vaccinations and some primary care to avoid preventable diseases and to avoid transmittable diseases. So the fundamental idea is that people will have more years of education, they will have better health, they will not suffer from very serious issues associated with under-nutrition that impedes people from learning and developing well in the labor market later in life. And eventually these investments should pay off by having the next generation of poor people having four or five more years of school than their parents and being able to get a better job in the labor market, higher wages and eventually coming out of poverty. So that's the core idea.

  • 13:12:13

    NNAMDII'd like to paint a slightly grander picture for one second, Laura Rawlings, because when, over the course of the past 20 years, I've been invited to speak in different places I've said, we learn in the 20th century how to create millionaires and billionaires. We learned how to create wealth for individuals. It seems to me that the challenge that faces the world after that is whether or not we can take fundamental steps towards eliminating poverty. And it would just appear that because that poverty has gone from generation to generation, it's a defining trait of poverty being handed down from parent to child.

  • 13:12:47

    NNAMDIIt seems that we have found programs here that can help us do this. To what extent has this program been successful?

  • 13:12:56

    RAWLINGSI think these programs have been successful to a great degree. And there are a lot of robust studies that have been done -- that have accompanied many of these programs that have produced results. So we know more about these types of development programs than almost any other anti-poverty program in the world. And as Santiago was mentioning, these program's great ambition is to actually break this cycle of intergenerational poverty by supporting families today, giving them cash and also investing in their children for tomorrow so that their lives can be better than their parents or grandparents.

  • 13:13:34

    RAWLINGSAnd what we've found is that across the world, although most of the evidence remains from Latin America where these programs were first established, these programs have had a proven impact on alleviating poverty, on raising school enrollment, on fostering greater use of preventive healthcare and in some cases, reducing malnutrition.

  • 13:13:55

    RAWLINGSAnd projecting beyond that, in some of the more established programs such as in Mexico, this program that Santiago helped start, it's been shown that families have been investing portions of this cash transfer with returns on that investment that have raised their incomes by close to 30 percent.

  • 13:14:17

    NNAMDIJim, the original Oportunidades program was relatively simple. It had only a handful of conditions and only a handful of incentives. But when you began designing a program modeled on the Mexican example, it was much more complex. First, tell us how you were inspired by that model and then talk about how your slightly more complex version came into being.

  • 13:14:40

    RICCIOOkay. The New York City program was inspired by the idea of trying to provide resources to very low income families in the short-term that could help reduce immediate hardship in current poverty, but to do so in a way that would build capacity for future poverty reduction and second generation poverty reduction. So it borrowed those very same principles that Santiago and Laura had referred to. But New York is obviously a very different context. The United States is a very different context.

  • 13:15:14

    RICCIOHere we already had a very well developed and have a very well developed social safety net. Whereas in Mexico and many Latin American countries, the programs like Oportunidades have become a core part of their social safety net. So in New York, we needed to build a program that would be adapted to this very different local context. We created a program that, as you said, is more complicated in the sense that's more comprehensive and has many more ways in which families can earn rewards.

  • 13:15:51

    RICCIOIt's still, as the Mexican program, focusing on rewards tied to progress in children's education and family preventive healthcare. But we also added a component that offers rewards to encourage full-time work and combining work and training among the parents. And we also attach some rewards tied to actual achievement in school outcomes for children, not just attendance. So we took the basic concept and tried to adapt it and provide families with a wide variety of ways to earn additional income, but all of those ways we hoped would be ways in which they would position themselves for a better future.

  • 13:16:39

    NNAMDIAnd how did that work out for you?

  • 13:16:42

    RICCIOWell, we are subjecting this to a very rigorous trial, a randomized control trial which is like a clinical trial in medicine. So we have a program group and a control group. We're testing it on about 4,800 families, half are in the program group and they get an offer of this series of rewards for three years. The program -- people can be in the program for three years. At the moment, we only have very early findings covering the first one to two years after people enter the program.

  • 13:17:15

    RICCIOWe will eventually have findings covering five years after people enter the program, including two years after they exited the program. So far we've seen a range of effects. The most immediate goals were to reduce poverty and material hardship and we have seen some successes on those fronts, some substantial declines in poverty and some improvements in people's material conditions, for example, more people reporting that they have enough food to eat at the end of the month.

  • 13:17:46

    RICCIOFewer people forgoing medical care because of costs and fewer problems relating to housing so those early findings are encouraging. We've also seen a variety of effects across the domains of children's education, preventive healthcare in parents work. Not all of them positive, we haven't seen improvements yet in children's performance on standardized tests in elementary and middle school. But at the high school level, we have seen some very encouraging effects for high schoolers, 9th graders who began the program somewhat better prepared for high school, meaning they'd perform better on their 8th grade standardized tests.

  • 13:18:27

    RICCIOAnd for that group, we're seeing an increase in attendance, a reduction in the likelihood of repeating 9th grade. We're seeing an increase in passing other standardized tests. So we are seeing some positive effects for certain students, but not across the board at this point.

  • 13:18:51

    NNAMDIWe're discussing "Helping the Poor, With Conditions attached: Lessons from Latin America," and inviting you to participate in the conversation by calling us at 800-433-8850. Are there lessons we can learn about safety nets from countries like Brazil or Mexico or do we need to rethink the way we help the poor in this country? 800-433-8850. You can also go to our , kojoshow.org, ask a question or make a comment there or simply send us a tweet at kojoshow.

  • 13:19:22

    NNAMDILaura Rawlings, our previous school's chancellor in the District of Columbia, the internationally known Michelle Rhee, tried, during her tenure, a program of -- in which students themselves earned cash rewards for getting better grades. Any indication of whether that has been tried any place as opposed to giving it to the family and whether or not it's a good idea?

  • 13:19:46

    RAWLINGSWell, as Jim was just mentioning, they've also tried this in New York and this is a program that Roland Fryer, a professor at Harvard, has been supporting. In fact, in a number of school districts, also Chicago and some others in the United States. So this is an area that's experimental, but that has produced some interesting results as Jim was mentioning and was part of Michelle Rhee's effort to really try to improve a school system that needed some improvement here in Washington.

  • 13:20:26

    RAWLINGSAs a mother who has a child in the D.C. Public School system, I think it's commendable that she's made these efforts and engaged in some very interesting and innovative ways to boost achievement.

  • 13:20:41

    NNAMDISantiago, from 10,000 feet, it seems like the economies of Latin America and the U.S. economy are, in general, heading in different directions. When it comes to wealth inequality, the gap closing in Latin America, growing in the U.S. for decades, is there something that we can learn from a country like Mexico or Brazil?

  • 13:21:01

    LEVYWell, quite modestly, I think the answer is yes. I think that the experience that has now been accumulated over almost 15 years starting in Mexico and then spreading to Brazil, Columbia, other countries in Central America, countries in the Caribbean and by now also countries in Asia, indicates that there's kind of a fundamental lesson here.

  • 13:21:22

    LEVYThat if you read the sign, the contract between the state and the household, the household will respond responsibly if you treat the household responsibly. This is not welfare. These are not handouts. These are investments in households in which you are giving them the choice to do something to improvement their conditions and you're facilitating them to do so and the bulk of the evidence shows that when that occurs, households respond very positively.

  • 13:21:53

    LEVYAnd that, therefore, it is feasible to lower current poverty. As Jim was saying, in New York, people having more food in their refrigerators at the end of the month and being able to go to the doctor because they have a little money to spend on that. It is feasible to lower poverty, but much more importantly, it is feasible for people to have faith in the future because they now have a high school, as opposed to the parents who didn't even finish primary school. And that's the fundamental change.

  • 13:22:22

    NNAMDIWe've got to take a short break, but we're inviting your calls. Can you compare poverty in the U.S. to poverty in developing countries? What do you think? 800-433-8850. It's a question we'll have our panelists address when we come back. You can also go to our website, kojoshow.org, join the conversation there or shoot us an e-mail to kojo@wamu.org. I'm Kojo Nnamdi.

  • 13:24:42

    NNAMDIWelcome back to our conversation about whether lessons about helping the poor with conditions can be learned from Latin America. We're talking with Laura Rawlings, a lead specialist with the World Bank. Her work tracks the effectiveness of social sector projects worldwide. She joins us in our Washington studio along with Santiago Levy, vice president of the Inter-American Development Bank.

  • 13:25:03

    NNAMDIHe was deputy finance minister with the governor of Mexico in the middle 1990s and one of the creators of Mexico's progressive program now known as Oportunidades, the first example of so-called conditional cash transfer programs and widely considered the most successful anti-poverty program in Latin American history.

  • 13:25:22

    NNAMDIAnd Jim Riccio is director of the Low-Wage Workers and Community Policy Area with MDRC. He joins us from studios in New York. Laura Rawlings, we've talked a little bit about Mexico, but tell us about the story of Brazil and its experience with this kind of program?

  • 13:25:38

    RAWLINGSWell, Brazil, along with Mexico, is one of the forerunners in introducing this type of program and their program today has grown -- it's a consolidated program called Bolsa Familia that reaches about 25 percent of their population and provides them with very generous grants, over 20 percent of their income and at a very reasonable cost. It's about .4 so less than one percent of their gross domestic product.

  • 13:26:08

    RAWLINGSAnd I think what's very interesting about the Brazil story is that Brazil has long been known as one of the most unequal countries in the world, both in terms of inequalities in income and inequalities in opportunity. And this program in Brazil, as in many other places, had started to chip away very effectively at those inequalities. And as reported recently in The New York Times, Brazil's level of economic inequality is dropping at a faster rate than almost any other country in the world.

  • 13:26:39

    RAWLINGSSo between 2003 and 2009, the income of poor Brazilians grew seven times more than the income of rich Brazilians and poverty has fallen during that time from 22 percent of the population to seven. So this program has achieved very impressive gains and was also critical to making President Lula, former President Lula, one of the most popular presidents in Brazil and allowed him to deliver on his promise to give the poor a helping hand and in launching an effective fight against poverty. And this legacy is now being picked up by the new president, by President Rousseff, who'd been President Lula's chief of staff and who's very much continuing in the fight against poverty and that mission.

  • 13:27:34

    NNAMDIBetween 2003 and 2009, the income of poor Brazilians has grown seven times as much as the income of rich Brazilians, that's according to a piece in The New York Times, an opinion piece by Tina Rosenberg. Poverty has fallen during that time from 22 percent of the population to 7 percent, contrasted with the United States where, from 1982 to 2005, more than four-fifths of the increase in American's income went to the top 1 percent of earners.

  • 13:28:01

    NNAMDISo that's why we said earlier that the two countries seem to be moving in different directions. I do -- I would like to get to the phone. But Jim Riccio, is it fair? Can we compare poverty in the U.S. to poverty in Mexico or Brazil?

  • 13:28:14

    RICCIOWell, I think it's very different. In Latin American countries, a lot of the poverty is rural poverty and here a lot of the poverty is urban, suburban poverty. But we're starting at very different bases. As I mentioned earlier, the U.S. already has a pretty-well established safety net in place. We have a welfare system, a Food Stamp system and an earned income tax credit system.

  • 13:28:39

    RICCIOSo we have mechanisms in place to transfer to poor people, many of which also include some conditions by the way. To get the earned income tax credit, you need to be working. And so the condition-cash-transfer program in New York is more of a supplement, something that -- another strategy that maybe can strengthen the safety net and provide some more comprehensive assistance and do it in a way that can build the capacity of lower income families in the ways that the current safety net may not be doing as well as it could.

  • 13:29:17

    NNAMDISantiago Levy, your take on comparing poverty in U.S. to poverty in Mexico?

  • 13:29:23

    LEVYI think Jim is fundamentally right. I mean, in most Latin American countries, Mexico, Brazil, Columbia, poverty is, by and large -- not uniquely, but by and large a rural phenomenon. Whereas in the United States, it's urban so the conditions are different in that context. That said, the experience of Latin American countries with the equivalent mechanisms like Food Stamps or trying to transfer income through the fiscal system, you know, the earned income tax credit, was not very promising.

  • 13:29:52

    LEVYIn fact, in Mexico, we, by and large, dismantled all the food subsidies and replaced that by (word?) . The fundamental point here is that if you give people food stamps, it's another way of giving them money, but nothing else happens. And then, tomorrow you have to do the same and the day after tomorrow you have to do the same.

  • 13:30:14

    LEVYWhereas, if you give them money, but you say, look, you have to invest in yourself. You have to think about the future and we don’t want your kids to be in the same situation that you are today, you raise your consumption today, but at the same time, you do something to change conditions in the future. And that has to do with what economists like to call the human capital of people.

  • 13:30:33

    LEVYYou know, their education, their health, their ability to participate in the labor market, to have skills, which is what really at the end of the day is going to be what changes matters. The real test of these programs is whether eventually you will not need them. If you have a program like this that lasts 30 years, you're failing because you're not really changing the underlying conditions.

  • 13:31:01

    NNAMDIOn to the telephones where several people would like to comment on this. We will start with Jenny in Rockville, Md. Hi, Jenny.

  • 13:31:08

    JENNYHello, Kojo, thanks for taking my call. I just wanted to say that a hungry child in Mexico or Africa is not very different than a hungry child in America. A hungry child is a hungry child. And, however, what we have here that they don't have in many countries is a public school system. I mean, children can go to school and they can get breakfast and they can get lunch and they can learn. Now, I know our schools are not equal and there's a lot of work that needs to be done there, but that's a huge thing.

  • 13:31:39

    JENNYAnd then, finally, my other comment. I just read the book "Say You're One Of Them" and, you know, you add to the poverty, the corruption and that you can't ever get out of it. I'm thinking of a boy who was trying to get out of Sierra Leone and the bribes at every checkpoint and there are some people who are turned away back into the lure because they don't have the money to pay the bribes. It's your money or your life, you know?

  • 13:32:06

    NNAMDIWell, Santiago and Laura both have some experience with how you avoid corruption tainting these programs. First you, Santiago.

  • 13:32:15

    LEVYThe corruption point is very important because many countries in Latin America and many developing countries in general have a weak institutional structures and weak states and corruption is an issue. That said, when Progresso was designed, precisely we thought about mechanisms that would try to bypass all the intermediaries that could take advantage of households and require a payment to them like the example that Jenny was giving from Sierra Leone.

  • 13:32:44

    LEVYBy establishing a direct mechanism in which if the household complied with the conditions, it was absolutely guaranteed that they would get the income transfers without anybody in the middle trying to take a cut or take a pay. And those mechanisms were quite revolutionary back then because you were running against the grain of the way the state and many of the government offices functioned.

  • 13:33:08

    LEVYThere were some frictions as a result of that, but by now, it's well established that the money goes to the families if the families comply with what the state is expecting of them. And the corruption issue, thankfully, has not been a big issue in this program. I don't want to argue that the corruption issue is not an issue in Latin America, by any means.

  • 13:33:27

    NNAMDIIt just seems to me, though, Laura Rawlings, that for these programs to work, you need pretty much a strong culture of transparency, don't you?

  • 13:33:34

    RAWLINGSAbsolutely. But I think what's interesting here is that these programs have actually been instrumental in establishing that strong culture of transparency and many would argue that these programs have helped launch a quiet revolution in promoting good government.

  • 13:33:51

    RAWLINGSTheir success is really a success that's attributed both to many of the technocrats, such as Santiago and his colleagues who have advanced good government through effective public policy and putting into place a lot of the nuts and bolts of what it takes to run effective programs and so these programs are known for certain elements, such as transparent ways of selecting beneficiaries, strong monitoring systems to track payments and program performance and also very good impact evaluations, such as the one that Jim was mentioning, which is not unique to New York City's program.

  • 13:34:27

    RAWLINGSIt's, in fact, been a hallmark of many of these programs around the world and that has allowed both policymakers in charge of these programs, but most importantly, citizens to know whether or not these programs are working and whether the goals are being achieved. And I think one that's quite interesting here is that dynamic that's at play because what seems to have worked well technically has also seemed to have worked politically.

  • 13:34:54

    RAWLINGSSo there's been a virtuous cycle in place in a lot of countries where the results from evaluation reports, from the critical attention to performance, that's been picked up in the media and by citizens has actually prompted technical improvements in the programs and then also led to some political rewards. So these programs have not only put the poor first, but they've also used effective public sector management to stick to their mission and to produce impressive results.

  • 13:35:25

    NNAMDI800-433-8850, do you think there are lessons we can learn about safety nets from countries like Brazil or Mexico? Here is Karen in Herndon, Va. Karen, your turn.

  • 13:35:36

    KARENHi, I just think this is the most sincere anti-poverty program I've ever heard of and very intelligent. And when people need money and jobs, they need money and jobs. They don't need a paternalistic social work system and this seems like the perfect combination of accountability and yet, you know, it's not a total control of people's lives and I really think it should be tried in Washington D.C.

  • 13:36:05

    NNAMDIFascinating that you should mention that because, Jim Riccio, we all know that in Big Washington, that is the Washington that hosts the Congress there in the mid 1990s, the overhaul, the way welfare payments were made to the poor, new programs that made it more temporary and much more difficult to get, some people saw that as a major blow to the safety net in this country. How different are the safety nets we are discussing today, Jim?

  • 13:36:35

    RICCIOWell, the welfare overhaul, as you said, established a time limit, but also re-enforced a policy that had been evolving and that was to attach the cash payments to efforts to look for work. So we already have a welfare system that has moved in that direction, that individuals, in order to receive their full welfare benefit, have to make some effort to look for work unless it is really not feasible for them to do so because of health or other problems.

  • 13:37:12

    RICCIOAnd what the conditional-cash transfer programs do is take that a step further and try to link payments, extra payments, to investments in children's education, investments in family preventative healthcare and in further investments in parental workforce efforts.

  • 13:37:31

    NNAMDIWell, there are some who would say, isn't this is a nanny state approach to things? I mean, we shouldn't need a government agency to tell mothers to care of their kids, should we, Laura?

  • 13:37:45

    RAWLINGSWell, this is a source of some controversy and people do ask why should we pay people for what they should be doing anyway. And the fact of the matter is that in most of the places where these programs have been introduced, these things actually weren't happening. And so to take a bold step and to look at ways of getting kids in school, of addressing malnutrition problems, of getting effective income transfers to families is an important goal and it's an important goal because of the fundamental problems of poverty, of income inequality and inequality in opportunities and we're actually seeing that these programs are working in a lot of these areas. So I think the old adage of the proof being in the pudding is a pretty adept one for what we're looking at.

  • 13:38:37

    NNAMDISantiago, I also suspect that an economist, someone working with the World Bank or the Inter-American Development Bank would also tell me there's the problem of imperfect information.

  • 13:38:48

    LEVYThat is sensitive issue, Kojo, and it goes to the root of why these conditions are attached as opposed to the notion of this nanny state. Two points here. One, poor households in Latin American countries, Mexico included, Brazil included, are mostly in the rural areas are also poor in information. Many of these households, many of these mothers, do not know that it is not right to give coca-cola for breakfast to a kid.

  • 13:39:16

    LEVYThey do not know that they have to bring the kids to a vaccination center and that vaccinations are important. They don't have this information. They don’t know about nutrition and you have to wash your hands before you eat. And sometimes the payments that have to do with schooling really allow these parents to send the kids to school because in the absence of the payments, the parents cannot afford the kids to school.

  • 13:39:39

    LEVYA very, very important point about poverty in Latin America is that kids are an asset to the family because they bring money, either by begging in the street for money and they bring money to the household or either in the rural areas they're helping with the crop, they're picking coffee or they're doing whatnot and looking after the cattle.

  • 13:39:56

    LEVYSo the kids -- even if the school is there, and that was the experience in Mexico, the parents didn't send them to school. Not because the parents didn't know that kids should get schooling or they weren't doing the right thing, quote/unquote, or needed a nanny to come and do them, for a more simpler reason. They couldn't afford to send them to school. What these payments do is they allow the household to have the income that the kid would otherwise produce by working, but have the income at the same time that the kid is going to school. So it's this investment notion that is critical here.

  • 13:40:27

    NNAMDIHere in Marlin in Annapolis, Md. Marlin, you're on the air. Go ahead, please.

  • 13:40:32

    MARLINHi, Kojo. Thank you so much for what you do. I so appreciate hearing you. I -- I drive a lot in my job and I have you on my radio and I really -- you're so thoughtful and concise and fair. I really appreciate that.

  • 13:40:49

    NNAMDIThank you very much.

  • 13:40:51

    MARLINWhat I'm calling about today is, you know, I heard part of your show. Santiago certainly -- this is speaking to the choir. Um, my understanding, though, is I have the ability to help some people and yet I don't know how to help people and who to help. And it's a very frustrating feeling. My husband and I don't travel extensively, but one weekend we went to Jamaica, to Kingston, with food for the poor and I can only say that my impression there was it was -- it was really...

  • 13:41:26

    NNAMDIIt was really touching for you, I can tell.

  • 13:41:30

    MARLINYes. But what I found -- and I'm not a sexist person, but what I found was that I found strong women and I found men in -- Majesty Gardens was a place I will not forget, a little housing area of huts and things. And I saw strong women and I saw men mulling around playing cards drinking in the middle of the day. And I just felt so badly for these women, you know, the mothers of which, you know, I am part. And I just wanted so to try to help them and I -- education is what we need to get these people out of that quandary.

  • 13:42:10

    MARLINAnd also, you know, what Santiago said about responsibility, I feel the dissolution of the family. What is a family? Is a family a mother and a father and a child or is it a mother and children and the system?

  • 13:42:23

    NNAMDIYou know, Marlin, we've got to take a short break, but when we come back, I promise you we will talk about the gender component of these problems because it is important to the point of being crucial. So thank you very much for sharing your story with us. If you have already called, stay on the line. We will get to your call. If not, you can still have a few lines open. It's 800-433-8850, or you can go to our website, kojoshow.org. Ask a question or make a comment there.

  • 13:42:49

    NNAMDIAre there lessons you think we can learn about safety nets from countries like Brazil or Mexico? 800-433-8850 is the number to call. I'm Kojo Nnamdi.

  • 13:44:50

    NNAMDIWelcome back to our conversation about helping the poor with conditions, the lessons we can learn from Latin America. We're talking with Jim Riccio, director for the Low-Wage Workers and Communities Policy Area with MDRC. Santiago Levy is vice president with the Inter-American Development Bank, and was deputy finance minister in Mexico from 1994 to 2000. And Laura Rawlings is a lead specialist with the World Bank. Her work tracks the effectiveness of social sector projects worldwide.

  • 13:45:19

    NNAMDIOur last caller, Laura, talked about the emphasis on women in these societies where she saw men seeming to do nothing and women seeming to do all the work. The gender aspect of these programs is one of the important because in most of the developing world, the raising of children is left to women.

  • 13:45:39

    RAWLINGSIndeed these programs do have strong gender component and the majority of them give these cash transfers to poor families with children and give the cash transfers to the mothers. So there -- this is based on a lot of evidence about the types of choices that mothers make in terms of how to distribute that income versus fathers. And it's also led to some important, perhaps less directly quantifiable impacts, but important impacts in terms of women's empowerment in a lot of these communities.

  • 13:46:16

    RAWLINGSAnd in countries such as in Mexico, the program have representatives, local representatives that are elected women amongst their peers that serve as a platform for the program as a channel for managing complaints, even have congresses where they go and represent their communities under the auspices of the program. There have been some other gender dimensions as well that have been interesting in this program that I'll be happy to turn to, if you would...

  • 13:46:49

    NNAMDIWe'll try to get there in time, but we got this e-mail from Barbara in Rockville, Santiago. "Would Sub-Saharan Africa benefit from this approach? I think of countries like Sierra Leone. It's such a tragedy that millions of dollars pour into that region for the purpose of quote/unquote "development" fire NGOs and other indirect resource intensive groups. This development in many ways never materializes, at least not in the manner intended. Would this be transferable to countries like Sierra Leone?"

  • 13:47:21

    LEVYWhat I would tell Barbara is, I think we've got to make a distinction between the concept and the actual details of the programs. I think the general idea of trusting the poor, of fostering responsibility and accountability, giving them freedom of choice and at the same time helping them with income transfers to invest in their future, I think is an idea that, broadly speaking, could probably be applied in most countries that have poverty.

  • 13:47:48

    LEVYThe details matter because I don't know enough about Sierra Leone to see whether they have sufficient schools and health clinics for the program to actually operate. Um, before you can send the kids to school with a scholarship through these programs, there must be a school out there and there must be teachers teaching and I don't know whether the -- that has occurred there. If not, what these countries need to do is, they need to develop the infrastructure in education and health.

  • 13:48:14

    LEVYLet me just take 30 seconds to make a point on the gender issue, which was interesting. There's a side little -- very important side program -- side effect of the program that matters a lot. When we structured the scholarships for going to school, we decided to give more money for girls going to school than for boys going to school because for cultural reasons, parents would pull out the girls from school sooner and at younger ages than -- than boys.

  • 13:48:42

    LEVYAnd through the scholarships we changed that and now the evidence shows that the completion rate for high school, this is amazing, but the completion rate for high school are almost the same between women and men as a result of the scholarships that we did.

  • 13:48:56

    NNAMDILaura, you wanted to add?

  • 13:48:58

    RAWLINGSYeah. I wanted to add something with respect to Barbara's question about how transferable these programs are. First of all, I just wanted to say that a lot of these types of programs are already being tried in Africa under different -- with a wide variety of different focus groups and...

  • 13:49:18

    NNAMDIYeah. It's my understanding that in Malawi this model is being used to combat sexually transmitted infections among teenage girls.

  • 13:49:26

    RAWLINGSThat is one of the ways it's being applied. And in Malawi, cash transfers are being given to adolescent girls and they have proven to be successful in terms of both raising school enrollment and in terms of reduce -- of increasing the age at which girls have their first sexual encounter. And also in terms of in terms of influencing their choice of partners who tend to be younger and healthier men.

  • 13:49:53

    RAWLINGSSo there has been some success with this quite small program in Malawi. But if you'll allow me, Kojo, I think another reflection is that a lot of the evidence that we have on these programs comes from Latin America, which has -- and middle income countries in Latin America which do have some particular characteristics. And in those areas where we have a lot of the results, as Santiago was saying, there are plenty of schools and health clinics that can be accessed.

  • 13:50:23

    RAWLINGSAlso, poverty has been a roadblock to sending kids to school and for their medical checkups, but those resources were available. There are also areas characterized by high income and equality and concentrated poverty so that there were clear choices that could be made in terms of reaching the poor. And very importantly, governments had the capacity to implement these fairly administratively complex programs.

  • 13:50:49

    RAWLINGSSo when you see the variety of programs that are now taking place outside of this particular context in Latin America, which was also mainly in rural areas, you see a lot of variety in what these programs look like. And New York is certainly one excellent example, maybe in a very different direction than what you might see in some countries in Africa, but these programs have really blossomed worldwide and have gone from just a handful of programs in Mexico and Brazil and in Bangladesh in the late 1990s to probably well over 50 or 60 programs worldwide today.

  • 13:51:30

    NNAMDIAnd Jim Riccio, I want to bring it back home a second and talk about our political and philosophical divides. Our nation's political and economic leaders are profoundly divided right now when it comes to basic philosophical questions about our economy. President Obama has made the argument that government is needed to help steer the economy and protect people from the excesses of the market.

  • 13:51:51

    NNAMDIRepublican leaders say the problem is government, too much regulation and too much distortion of market forces. Where would this kind of -- or these kinds of programs fall along that philosophical or ideological spectrum? Allow me to read to you an e-mail we got from Keith in Silver Spring, who says, "What you fail to see is that no American politician will borrow an idea from another nation no matter how well it works. That would be un-American." Jim Riccio.

  • 13:52:20

    RICCIOWell, I think there's quite a bit of support for the idea of -- on both sides of the political aisle, for helping poor people, but particularly if you do it in a way that encourages them to -- and supports them in their efforts to help themselves. So I think that there is some possibility for programs like this to be framed in a way that can be seen as an investment tied to outcomes that can be helpful to the country as a whole, for example, a more educated population, that can make it appealing.

  • 13:52:58

    RICCIOBut it's a quite costly program and I think ultimately there are strong opinions, as Laura mentioned, about the -- a lot of sensitivity about paying people to do things they ought to be doing anyway. And I think ultimately it's gonna come down to whether we see good evidence that it really is making a difference. And I think if we find that it has substantial effects, helps poor people, is a good investment for government, then you'll see perhaps people from different political persuasions reassessing their original ideological perspectives on this kind of initiative.

  • 13:53:36

    NNAMDISpeaking of ideological perspectives, we got this e-mail from Ed who says, "It seems that there is a growing recognition that free markets and democratic institutions do more to eliminate poverty than anything else." Care to comment on that, Santiago?

  • 13:53:51

    LEVYI think there's a lot to be said for clearly democracy because democratic governments allow an open discussion of the country's problems, and an open discussion of public policies. Free markets, in general, are good for growth and are good for development, but there's a middle there. It's not an absolute, you know, everything the market will sell. By and large markets work well, but here and there they don't.

  • 13:54:17

    LEVYAnd what happened in the United States a couple years ago with the financial crisis is a very definite example that markets can all sometimes go way off and create major crisis. So democracy certainly is a solid foundation in which public policy can be built, and with that, you can tune free markets to suit whatever conditions are, these conditions vary from country to country.

  • 13:54:41

    NNAMDIHere is David in Vienna, Va., with a related question. David, you're on the air. Go ahead, please.

  • 13:54:46

    DAVIDYes. Thanks for the interesting show. I was wondering, speaking of market affects, whether there are any safeguards in place for preventing what apparently has happened in the microlending -- microfinance realm where a predatory lending industry is strengthened and emboldened to prey upon basically the recipients of microgrants or microfinancing. And whether in this government's grant program in the two countries that are being discussed, Brazil and Mexico, whether there's concern for the predatory lending affect and whether some of these pretty impressive statistics that are coming through at this point are being viewed as sort an early cycle phenomenon and whether anybody's watching out to see that this isn't sort of being artificially propped up by a microlending -- I'm sorry, by a predatory lending situation where the grant recipients go out and get these loans.

  • 13:55:45

    NNAMDISantiago?

  • 13:55:47

    LEVYSo what I would tell David is that in the case of these conditional cash transfers programs, there are no loans involved. They're all delivery of resources physically in bills, in cash, which is paid after it's verified that the behavior by the household has been in accordance to the rules that were established. So there are no loans involved. In parallel, in many developing countries, there are other programs, different from these conditional cash transfer programs that have tried to promote the idea of microcredits.

  • 13:56:21

    LEVYAnd there, David, you're completely correct that these can work well if the appropriate regulation is there and we go back to markets being regulated appropriately because in the absence of that regulation there is a case in which these microcredits can actually turn into predatory situations in these households.

  • 13:56:38

    NNAMDIAnd we're running out of time, Jim Riccio, but it's my understanding that in New York you also monitor whether or not you're -- the people who are participating in this program spend a lot of time, oh, around payday lenders or check cashing institutions.

  • 13:56:55

    RICCIOYes. In fact, one of the outcomes we measured was a series of -- actually a series of outcomes related to financial behaviors. The program did help families establish bank accounts, and all the payments to them were made into those bank accounts. And 18 months later, families in the program group where much more likely to have bank accounts than those in the control group. And even more interesting is the fact that people in the program group were considerably less likely to use check cashers, either to cash checks or to pay bills, than those in the -- the control group. And they were beginning to build savings.

  • 13:57:37

    RICCIOSo we have some early indications that the program was helping to move people more into the mainstream banking system.

  • 13:57:44

    NNAMDIJim Riccio is director of the Low-Wage Workers and Communities Policy Area with MDRC. Jim Riccio, thank you for joining us.

  • 13:57:51

    RICCIOMy pleasure.

  • 13:57:53

    NNAMDILaura Rawlings is a lead specialist with the World Bank. Her work tracks the effectiveness of social sector projects worldwide. Laura, thank you so much for joining us.

  • 13:58:01

    RAWLINGSThank you, Kojo.

  • 13:58:02

    NNAMDIAnd Santiago Levy is vice president with the Inter-American Development Bank. He was deputy finance minister with the government of Mexico from 1994 to 2000. Santiago, thank you for joining us.

  • 13:58:13

    LEVYIt was my pleasure, Kojo. Thank you.

  • 13:58:15

    NNAMDIAnd thank you all for listening. I'm Kojo Nnamdi.

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