Cash Handouts Are Changing Inequality In Brazil
Credit: Flickr
December 29, 2013

This is the same guaranteed minimum income idea that's being kicked around now, but it has a couple of things going against it. First, it works. Second, the right-wingers are aghast at giving money to people for doing nothing -- unless they're transferring untaxed wealth via trusts or estates to their ne'er-do-well children:

Ten years ago, Brazil set out to do something that few countries have ever overtly attempted: become more equal. The undertaking was unusual, but even more remarkable was the outcome: measurable success. Brazil has in the past decade moved people out of poverty on an unprecedented scale – the standard of living improved so much for 22 million that they are no longer considered “poor.” Millions more living on the knife-edge of starvation in drought-ridden expanses of the interior are still poor but vastly better off. Between 2003 and 2009, incomes of the poorest Brazilians grew seven times those of rich citizens.

And how did Brazil help? It gave its poorest citizens money.

It’s an idea that was once anathema to development experts and economists, and which is still deeply unpopular in many quarters – witness the hostility to “welfare moms” in the developed world. But the effectiveness of giving money to poor people to make them less poor is supported by mounting evidence as a smart way to address poverty. Sixty-three countries have sent experts here to learn about the Bolsa Familia – the family grant.

Brazil’s is not the biggest anti-poverty program in the world – it is dwarfed by several in South Asia, such as India’s $70-billion guaranteed-income-for-work scheme, for example.

And it is not the only one to use cash transfers, which are done on a moderate scale in India, on a larger one in South Africa, and which exist in some form in dozens of developing countries today, run either by the state or by private aid organizations.

What makes Brazil’s program stand out is the rock-solid evidence of the many ways this program has served to remake, dramatically, the lives of millions of people over the past decade.

Teresa Campello, who heads the Ministry of Social Development and the Fight Against Hunger – and who projects an electric enthusiasm for her job difficult to imagine in a Canadian cabinet minister – rattles off the statistics: Infant mortality has fallen by 40 per cent in 10 years – one of the most dramatic declines ever seen anywhere – and the fall is sharpest in poorest areas; school enrollment sits at nearly 100 per cent, and kids who get the grant now graduate at nearly twice the rate of kids who don’t; research shows that women given the grant have greater decision-making power and more equitable relations with their partners, if they have one.

And at a time when Brazil’s economy was booming – traditionally a guarantee that the gulf between rich and poor would get even wider – inequality, for the first time ever, declined. Brazil went from being the world’s third most unequal country to the 15th between 2001 and 2012.

Ms. Campello, whose ministry was created to oversee anti-poverty programs, says a key to the Bolsa Familia success was the fact someone had a personal stake in it: Brazil’s former president.

Shortly after Luiz Inacio da Silva – known universally by the nickname Lula – was elected president on an overtly socialist platform in 2002, he united a number of anti-poverty initiatives undertaken by the previous, right-wing, government, including a payment to parents for keeping kids in school, into a national system. He called it the Bolsa Familia and he told Brazilians, “You do not owe anyone anything for this: this is your right as a citizen of this country.”

“We were lucky we had a president who was poor,” Ms. Campellos says. “Not poor – very poor. He went hungry. And he had a mother who ... decided that her children weren’t going to be poor, that they would study. And she raised wonderful children, who lived in poverty and left poverty. All of them.”

The president thought about his mother, she says (and, no doubt, the father who abandoned his eight children for a new wife, had as many children with her, abandoned them, too, and drank himself to death). Mr. Da Silva worked full-time at age 8 and taught himself to read a few years later). He told his staff, ‘A poor man has only his name as collateral,’” says Ms. Campello, and will use money wisely.

“This thing about being suspicious – ‘Oh, you have to supervise poor people because they will spend it wrong,’” she says. “That is just not true.”

As his staff debated what their big anti-poverty program should look like, the president weighed in: It would be a cash grant and it would go to the woman in each family, to increase the chances of it being spent on children. Those two factors, Ms. Campello said, lie at the core of its success.

The grant is what economists call a “conditional cash transfer.” To get it, families have to enroll, bring their children to public health centres for regular checkups and vaccinations, and keep those kids in school until they finish high school. If a student drops out – once a huge problem in Brazil – then the per-person grant for that child is cancelled.

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