June 02, 2008
Whose Incentives , Whose Rights?: 'Incentivizing' the Poor
America can’t be all one thing. Or rather it is a contradictory thing, swerving almost every two generations – and sometimes within generations – between expanding equal opportunity and equal protections under the law to punishing people who are failing a course in the American Dream. The rights of those who are failing become fungible: they are transmuted into cudgels with which we punish them for precisely their inability to exercise their rights to self-determination, personhood and the pathways to their own destinies.
We still live in the punishment age. Since how the poor, a social description that connotes failure from the start, live is the cause of their downfall, they must be re-directed. So, for instance, the Temporary Assistance for Needy Families Act, the new welfare system that took effect in 1997, eliminated subsistence support for the poor by virtue of their poverty and replaced it with a law that limited benefits by time and effort. No adults are eligible for welfare payments for more than 5 years during the course of their lifetime, nor will they receive further benefits if they did not seek a job and/or were not job ready within two years of assistance. After the two years, they must be employed for at least 30 hours a week or lose benefits.
Some would say that since rights imply duties It is also true that the failure to fulfill duties annuls or diminishes people’s rights. If the poor don’t live up to their duties as American citizens, then they forfeit some measure of their rights. Or at least those rights can be held in abeyance until they successfully exercise their duties.
There is an apparent paradox here. If people lack resources, then they can neither fulfill their duties nor exercise their rights. Thus, the first problem we have discovered is that both rights and duties depend upon resources. You need them to achieve both rights and duties. Though I will not prove it here today, the resources provided to the poor, for instance, seldom reach the level that average Americans use to procure a modest living, and to fulfill the contract of rights for duties fulfilled. This is intentional, as promoters of orthodox economics tell us that the rest of society’s workers will not work, or their efforts will slack off because they have no monetary incentive to work harder.
I am going to set aside what I think is another telling criticism of our welfare policy that absent full funding of what persons in America normally need to succeed, poor people will never fulfill their duties, and thus their rights will likely remained highly conditional, and in significant ways diminished.
Another approach is on the rise. Providing the poor with incentives to change, it is proposed, could work better than punishment. Financial incentives are being proposed as the carrots whereby we can get the poor to fulfill their duties and help them earn back their rights. It works like this, for example: if we provide a poor mother with money for keeping her child in school, then the child is likely to stay in school. This way we can achieve two things: first, more schooling should improve a child’s life chances; and two, the mother receives additional monies to improve the life circumstances of her family.
Christopher Grimes in a recent Financial Times article (May 24-25, 2008) reports on an experimental program begun in New York City by the Michael Bloomberg administration to try out this approach with 2500 poor families in six poor neighborhoods of the city. The city will provide money incentives for 60 behaviors that it believes might bring positive changes in behavioral patterns of the poor families. The behaviors to be rewarded, according to the website of agency administering the project Opportunity NYC include:
· $25 when parents attend teacher conferences
· $600 for students who perform well on important exams, and smaller amounts for improving grades
· $200 for getting a medical check-up
· A financial reward for enrolling in health insurance
· $100 for preventive medicinal and dental check-ups
· A financial reward for improving credit scores
· $150 a month for full-time employment
The short-term goals are to alleviate poverty, improve the health and education status of children, as well as improve “workforce outcomes” for adults. The long-term goal is to reduce intergenerational poverty.
These are indisputably noble goals. Through incentives, social planners hope to achieve what compulsion apparently is not. According to Christopher Grimes’ report, Mayor Bloomberg uses the analogy that Wall Street bankers work harder because they get a year-end bonus for success, rather than simply an their ample salaries. “That’s capitalism, and it shouldn’t be a foreign concept to government.” Grimes also notes that American policy planners learned from the social welfare policies of countries such as Mexico, which I have noted in other columns include micro-lending to support business development by the poor.
This approach is an important step toward eliminating in part through incentives the compulsory punishments now installed in our national welfare system. The rewards may be varied and complex but the principle is simple. It is behaviorist: behavioral patterns are achieved and maintained by the consequences that befall actors performing the desired behaviors.
But the incentive approach raises an important moral question. Whose rights to liberty and the pursuit of happiness are being rewarded? Are they those of the poor, the actors in this social experiment? It may not be theirs. What moral choices can they exercise? They are those of America’s apparent majority, assuming that the political apparatus fairly represents majority opinion.
Another moral choice returns us again to the dilemma between rights and punishments for economic and social failure. In exchange for some social attention to their needs – in no way satisfied by programs of this sort as people do not achieve with inadequate incomes that support the standard of living of the average American that seem to go some way to satisfying their needs – have incentives become another means to compulsion?
If so, we are still failing to help people exercise their rights and punishing them when the lack of resources prevents them from their enjoyment. Policies imply moral decisions no less than pragmatic policy concerns. Above all, this American failing is what continues to stand in the way of our pursuit of happiness.
Posted by Michael Blim at 12:34 PM | Permalink