10, January, 2014

21st Century Welfare

Latin America as a laboratory for conditional cash transfers, fast becoming the hegemonic social-protection paradigm for the Global South. In a comparative survey, Lena Lavinas reveals the CCT model as a strategy for the financialization—not abolition—of poverty.

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Latin America has long served as a proving ground for economic and political experiments that later acquire a global reach: the shock therapy of neoliberalism was followed by structural adjustment programmes that were visited on debt-stricken states across the continent in the 1980s, before being rolled out in Africa and elsewhere. Since the late 1990s, the region has also served as the laboratory for what the Economist has called 'the world’s favourite new anti-poverty device': conditional cash transfer programmes (CCTs) which, as their name suggests, supply monetary benefits as long as recipients can demonstrate that they have met certain conditions. In 1997, only three Latin American countries had launched such programmes; a decade later, the World Bank reported that 'virtually every country' in the region had one, and others outside it were adopting them 'at a prodigious rate'. By 2008, 30 countries had them, from India, Turkey and Nigeria to Cambodia, the Philippines and Burkina Faso; even New York City had put one in place.
The reasons for this proliferation appear simple. CCTs hold out the prospect of killing several developmental birds with one stone: by tying receipt of benefits to children’s attendance at school or to family visits to health centres, they aim to reduce extreme income poverty while also addressing other disadvantages suffered by the poor—rectifying what development-speak calls 'underinvestment in human capital'. In many cases they also claim to advance an agenda of 'female empowerment', either by requiring women to be the recipients of the cash or by making girls’ education a condition of disbursement. Further, by 'targeting' recipients and imposing conditions, CCTs offer a way to attenuate extreme poverty without imposing the kind of fiscal burdens that universal welfare provision would involve; they are an ad hoc benefit, subject to significant budget constraints. The Economist concluded approvingly in 2010 that 'the programmes have spread because they work. They cut poverty. They improve income distribution. And they do so cheaply.' Little wonder, then, that governments across the developing world, policy experts and multilateral financial institutions—the World Bank foremost among them—have increasingly turned to such programmes as their weapon of choice in the 'war on poverty'.
The rise of CCTs has unfolded in the midst of a broader shift in the nature of social protection, affecting global South and wealthy North alike. In many rich industrialized states, governments of both centre-right and centre-left have proclaimed that they can no longer afford universal welfare systems of the kind created during the twentieth century. Over the last three decades, many have moved to downsize or dismantle them, shifting from comprehensive coverage towards more individualized models—'targeted' or 'means-tested'—and from decommodified provision of goods and services to a greater emphasis on cash benefits. The differences are by no means trivial, underpinned by an ideological sea change with far-reaching effects. Whereas one function of the post-war welfare state had been to remove core provision of health, education, housing and social insurance from the buffetings of the market, the role of the new-model 'enabling state' is to facilitate the play of market forces—providing 'public support for private responsibility'. Rather than recognizing needs, it concedes 'entitlements', and instead of ensuring equal access to public goods, it offers rewards in exchange for the fulfilment of obligations—the quintessential coinage in this sense being 'workfare'.
In the West, one of the key mechanisms for promoting individual responsibility has been financialization: the expansion of credit markets enables citizens better to 'manage risk', with personal and household debt serving in theory both to liberate citizens from dependency on a retreating state and to discipline the feckless. These same doctrines of individual responsibility and risk management have also been advanced across much of the global South, most prominently by international financial institutions, development agencies and NGOs. Here the agenda has been driven not so much by a desire to dismantle universalist mechanisms—countries in the developing world generally lacked the comprehensive social insurance schemes that were a feature of the Cold War in the West—as by a twofold emphasis on economic growth and 'human capital accumulation'. The generally low educational levels and vulnerable health of the poor are seen as an obstacle to prosperity, not least because they prevent them from participating fully in the market. As one IMF functionary emphatically asserted at a seminar co-organized by the Friedrich-Ebert-Stiftung and ILO, 'there is no vibrant economy if there are no consumers.' In this agenda, the battle against poverty and the advance of finance-led capitalism have fused.
In the 1980s and 1990s, the tools of choice for integrating the deserving poor into the market were microcredit schemes, such as Grameen Bank in Bangladesh or BancoSol in Bolivia. Despite many enthusiastic claims made for them, the impact of such schemes on poverty rates was modest, to say the least. Since the turn of the century, thanks to their record of apparent success in Latin America, it is CCTs that have moved to the fore. Such programmes are not merely a technical device for combating poverty. By targeting recipients on condition that they demonstrate 'co-responsibility' for their own welfare, the schemes reinforce the trend away from universal provision and towards a limited, 'residual' model of social protection. At the same time, by providing select groups of the poor with cash or new modalities of bank credit rather than decommodified public goods or services, they are also a powerful instrument for drawing broad strata of the population into the embrace of financial markets. In that sense, the global spread of CCTs is part of a wider reshaping of welfare regimes in the developing world and beyond.
But just how effective have CCTs been in reducing poverty, and what have been their wider consequences for social provision in countries that have adopted them? The experience of Latin America, where the policy was developed and road-tested on populations from Mexico City to Santiago, from the Brazilian sertão to the Peruvian altiplano, offers the broadest range of case studies to date. In what follows, the author traces the emergence and take-up of CCTs across the region, and examine the evidence on their outcomes...

Author:  Lena Lavinas
Orginal publication date: November-December 2013
Publisher: New Left Review

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