Empirical evidence shows that just giving people what they need is the simplest, most effective way of fighting poverty.
When it comes to American politics and public discourse there are few dirtier words than the “s”-word: socialism. In the minds of provincial Americans who have never been outside of America’s borders in the modern era, the word conjures disquieting images of soldiers on parade in Red Square, empty shop shelves in Eastern Europe, and benighted states in the developing world where starvation and mass privation create refugees and hordes of glassy-eyed children with distended bellies.
It’s a cliché, of course, since the growth of both American capitalism and the great American middle class were intimately linked to state intervention, control and redistribution, but it is nonetheless true that most Americans are uneasy with the term and its connotations. In particular, the idea that top-down, collectivist solutions to social ills can be beneficial is galling to those claiming to have worked hard — as if others have not — to make something of the opportunities given to them. Success, they claim, requires hard work, and the worst thing one can do is to remove the incentives to work hard, something on which socialist redistribution of wealth is actively premised.
Indeed, it is often better to teach a man to fish rather than to keep providing him with one day after day, but research suggests that the dreaded loss of incentive that comes with providing a handout is neither so bad to the individual, nor, in fact, ultimately so costly to society. To see why, just take a look at what is going on in the area of public policy toward chronic homelessness, where a radical new socialist philosophy is now taking root and effectively ending the scourge of homelessness for the indigent as we know it.
Commonly referred to as “Housing First,” the policy is premised on the notion that to actually solve the problem of chronic homelessness we should first, you know, actually give people a place to live. Solve that problem, say its proponents, and individuals and families can start rebuilding their lives by taking the steps necessary for reintegrating into a community’s economic and social life from a safe, secure location. So relieved of the psychological burden of having to find a play to stay every night and provided with a home base from which to operate, people who fall into homelessness can — with additional support — once again become productive members of society.
What’s more, by providing housing to those who most need it — which tends to be the chronically mentally ill — we keep people off the streets who might otherwise impose other, greater costs on society than the price of a small efficiency apartment somewhere. In theory, Housing First policies cut down on crime, police calls, jailing, emergency room visits and a whole host of other burdens placed on our communities by those who have no place to go and nowhere to stay, but who must be cared for anyway at public expense.
It sounds good, of course, but what is even better is that it actually works. For about a decade now, several states have been experimenting with the philosophy through programmatic changes to their homeless policies that emphasize finding homes for the homeless first, handling other problems second, and empirical research so far has documented amazing results. In the state of Utah, for instance, the institution of a statewide policy to give the homeless homes has seen an unprecedented 74 percent decline in homelessness since the state put a Housing First program into effect statewide in 2005.
What’s more, Utah’s results have come with significant savings attached, as each homeless person provided a home saves the state $5,670 per person. Yes, you read that right: not only is this program working to reduce the number of people sleeping on Utah’s streets, but it is actually reducing overall welfare costs. The state determined that it was cheaper to provide people with a social worker and a place to stay — calculated to cost the state some $11,000 per year — than the alternative which, once the total costs of homelessness on society were estimated, ended up being a much higher $16,670 per year.
If that weren’t remarkable enough, it seems the results in Utah have been replicated elsewhere, too. In North Carolina, for instance, the city of Charlotte built an 85-unit facility called Moore Place in 2013 especially for the indigent homeless. This resulted in a marked reduction in the use of social services by the population using the new housing units. In the space of just one year, the city saw 447 fewer visits to emergency rooms, 372 fewer days spent in hospitals, and a truly remarkable 78 percent reduction in arrests and 84 percent fewer days spent in jail. In total, the benefits associated with the housing program outweighed the costs to the tune of $1.8 million in just one year.
Likewise in Boston, where the institution of a Housing First philosophy in the midst of the Great Recession for the local indigent population has been so successful that placement of the truly needy into long-term housing where they can be looked after by social welfare agencies has led to the slow shuttering of the network of emergency shelters that used to temporarily warehouse them for years on end. As in Utah and the city of Charlotte, Boston and the state of Massachusetts found that the new approach to housing the needy led to significant cost savings of about $2 million a year due to fewer calls on other, more expensive public services.
Then, in an example that perfectly demonstrates the utter folly of what our society has been doing for so long, a prison in Colorado was converted into a Housing First-philosophy homeless shelter for $3.9 million. When the facility ramps up to serving its full population of 200 individuals sometime later this year, total savings to the state from a reduced demand for social services will exceed the state’s appropriation by nearly $1.4 million. Given that there are an estimated 17,000 homeless individuals in the state, if Colorado were to supply housing arrangements for the rest of its homeless population at similar cost per person, the savings to the state would be immense.
These numbers also jibe with other research findings in other contexts that show that the best, simplest and most efficient way to eliminate poverty or the harms associated with it is to simply give people what they need. In Africa, for instance, decades of research on the best way to combat malaria in poor areas that suffer from the disease concluded a few years ago that the best way get antimalarial, insecticide-treated nets to the people who needed them most was to simply give them away for free.
The previous scheme — which was backed by various Western donor agencies and development organizations and saw the use of complicated and corrupt subsidized mosquito net markets — simply did an inadequate job of providing disease protection to those who needed it most. Given the huge costs associated with malaria, the costs of literally carpet-bombing tropical Africa and Asia with free anti-malarial nets pales in comparison to the huge amount of positive economic good the free nets cause. Market fundamentalists may have griped about free lunches for malaria-prone Africans, but the adoption of free distribution of mosquito nets for the poor of the developing world is a literal no-brainer. The free nets pay for themselves millions, if not billions, of times over by reducing sickness and increasing productivity for those at the bottom of the economic heap.
This, finally, leads us back to the most hated direct-benefit program in our own federal government: food stamps. This program, derided by conservatives as a handout to deadbeats unable to pay for their own children’s nourishment, is a phenomenally successful program that not only keeps hungry children and families fed and pumps money directly into low-income communities, but also exhibits such a low frequency of fraud and abuse that citing these as reasons to cut it is either laughably ignorant, inexcusably cruel, or both. Indeed, the documented economic benefits of the Supplemental Nutrition Assistance Program, or SNAP, so outweigh the costs that it is a crime against rational economic policymaking to cut or abolish the program outright, as some on the right constantly urge us to do.
So, the research on the effects of welfare policy in several areas is rather clear and exactly the opposite of what many on the conservative or libertarian right would have us believe. Time and again we find that the best, most efficient and most economically-productive way to alleviate poverty and suffering associated with it is not to punish people through an ill-conceived and Manichean system of Rube-Goldberg-like incentives that are meant to herd them to some desired end goal, but to simply give them, at no cost to them and with little in the way of fuss, what they need to survive and pull themselves up out of the hole they’re in.
Not only does this approach work, as empirically documented, but it works in just the way economic theory and human psychology predict it should. As every Econ 101 student should know, the basic theory that is taught in introductory economics states that the best way to alleviate inequality is not through some cockamamie system of subsidies and market restrictions that distort prices and market outcomes one way or the other, but through a direct transfer from those who have to those who don’t.
Likewise, given our evolved psychological hierarchy of needs, once the truly basic needs of the average person — like shelter and avoiding starvation — are taken care of, that person will, as a matter of course, pursue other needs — like finding work — so he can achieve a sense of belonging and self-worth as a productive member of society. Some may not, of course, but given that the vast majority will, it makes no sense to not do what is most effective and efficient simply because a few might bilk the system. Indeed, as the data above show so clearly, it is the equivalent of cutting off one’s nose in order to spite one’s face — the very definition of insanity.
In the end, what we see when we open our eyes to the way in which the world really works is that the conservative, market-fundamentalist approach to welfare policy is just as much a failure as industrial socialism was in places like Russia and China. Only, instead of regulating what people can and cannot produce, as under communism, here in America we regulate and restrict what the needy poor can and cannot receive via a byzantine system of bureaucracy and rules aimed more at punishing and humiliating them for their poverty than assisting them in a way that we ourselves would wish to be assisted.
Here in America we treat our poor more as dumb cattle to be herded with carrot-and-stick policies by well-meaning bureaucrats and market moralists than as human beings, like ourselves, in real need of desperate help. In addition to being inhumane and unjust, we can now document that it is also grossly inefficient, costly and ineffective.
Instead of coming up with ever more complicated ways to make our poor jump through hoops, why don’t we do what moral philosophy, basic economic theory and now empirical research demonstrates would be best for all involved: simply give the poor — no matter who they are or what their circumstances might be — what they need.