GIVE CASH
As welfare: This year, the World Bank made a remarkable announcement about the first of the U.N. Millennium Development Goals, which aims to cut extreme poverty in half. Despite the global economic crisis of the last few years, it was achieved -- five years ahead of schedule. One big reason is China's economic growth. But the second most important reason is probably a welfare program called conditional cash transfers, or CCTs.
CCTs started nearly simultaneously in Mexico and Brazil, which are still duking it out for credit. (Mexico, through former Deputy Finance Minister Santiago Levy, had the first nationwide program, but Brazil, thanks to the efforts of former Brasilia Gov. Cristovam Buarque, implemented the idea first.) The idea is to give the poorest people cash to relieve poverty now -- but condition that cash on actions that will help the next generation. In Mexico's Oportunidades program, which covers a fifth of the country, families get cash if they keep their children in school and attend regular medical checkups and health workshops on topics like nutrition and preventing dengue fever. In Brazil, the program has contributed to a stunning drop in inequality.
What's new about CCTs is their application just about everywhere. Pushed by the World Bank and the Inter-American Development Bank, they are now used in at least 35 countries and cover half a billion people. In many countries, the CCT program is the first social welfare system ever -- or the first one that works. CCTs are usually successful because handing out cash is relatively easy for even bad governments to do right. The hard part is that when recipients increase their use of health clinics and schools, countries have to build more of them, and in places that didn't have them before.
Instead of food aid: When famine occurs, wealthy countries tend to give food, especially the United States, by far the world's largest donor of emergency food. Shipping grain abroad was designed as a way to help American farmers. But it has always been a lousy system for helping starving people. It is inefficient: Shipping and storage cost as much as the food, and transport costs are now rising with oil prices. It's also slow: Hungry people need food now, not four to six months from now.
What works better? Cash, or its equivalent in vouchers. The idea is old -- it was discussed, among other places, in Amartya Sen and Jean Drèze's 1989 book, Hunger and Public Action. What's new is the bear hug it's finally getting from food donors. The World Food Program is moving away from shipping grain toward using cash -- this year a third of its donations will be in cash or vouchers -- as are other major donors such as Britain. The holdout is the United States.
In some places where people go hungry, grain is needed because no food can be found. In others, however, the market works -- or would work, if people could afford to buy anything.
Cash has other advantages. It allows people to buy the foods they normally eat and helps local farmers and shopkeepers -- who are often put out of business when grain comes in from outside. Giving money also eliminates the horrifying scrum to grab a sack of grain thrown off the truck, which robs the weakest of the chance for food, and robs everyone of dignity.
Instead of refugee camps: The more than 100,000 Syrian refugees in Lebanon, like refugees everywhere, get support from U.N. agencies such as the World Food Program and the Office of the U.N. High Commissioner for Refugees (UNHCR). But Lebanon hasn't set up a camp for them; they get vouchers for buying food in local shops. Refugees from the Iraq war in Lebanon, Syria, and Jordan got bank cards. They took out money from cash machines, bought food, and paid rent. They lived as close to a normal life as they could.
Refugee camps save lives -- millions of lives. The problem is that once an emergency is over, the refugee camp persists. The world's largest refugee complex, in Dadaab, northern Kenya, is 20 years old, and there are people who have never stepped outside it. In many camps, refugees are essentially prisoners -- people victimized twice.
The U.S. Committee for Refugees and Immigrants has spent years fighting for alternatives to what it calls the "warehousing" of refugees. Those alternatives are starting to take hold: UNHCR now looks for ways to support refugees outside camps, giving them money and services instead. This method runs best when the money that would otherwise be spent on camps is given not only to refugees, but also to their hosts to pay for the services the refugees use.
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