Joseph Hanlon, Armando Barrientos, David Hulme, 2010: Just Give Money to the Poor: The Development Revolution from the Global South. Sterling: Kumarian Press.

If it sounds novel to suggest that if you want the poor to have more money, you could just give them money, these are strange times. What could be more straightforward than giving money to people in need? But cost recovery, self-help, and “financial deepening” are essential tenets of the current development ethos, so someone must go out and make the argument – as Joseph Hanlon, Armando Barrientos and David Hulme do in Just Give Money to the Poor – that simply handing out cash may be easier, and better, than anything else.

Cash transfers are a rising idea in development policy. Even The Economist likes them. Still, they are far from a hype, and little is known to most people about the successful programmes implemented by Brazil, Mexico or Indonesia, for example. This book aims to change that. Perhaps its greatest strength and weakness is its simplicity. But hard science can be discussed elsewhere. Just Give Money to the Poor introduces a broader audience, and gives impetus, to the simple but still-controversial idea: that redistribution works.

The authors recap evidence from two decades of experimental and pragmatic progress on social transfer programmes in the developing world. They argue that no-strings-attached, widespread systems of cash distribution are far more effective and cheaper than other models, such as vouchers, food subsidies (where monitoring creates costs) or microcredit. The key is that the money must be a dependable, substantial and easy source of income for the poor. Assured regular cash transfers – not charity or philanthropy – are the key, even at a relatively small scale, for achieving impressive outcomes:

“In the short term they reduce poverty levels and ameliorate suffering. In the medium term, they enable many poor people to exercise their agency and pursue micro-level plans to increase their productivity and incomes.  In the longer term, they create a generation of healthier and better educated people who can seize economic opportunities and contribute to broad-based economic growth.”

The target groups could be particularly vulnerable demographics – children, the elderly – or simply everyone. Programmes can be gradually expanded as experience grows, since garnering political support by demonstrating impact, fairness and adequacy, is key.

It does appear that cash transfers can start small, but successful ones are not narrowly targeted at groups with whom most voters cannot identify.

I would definitely have appreciated more of an explanation from co-author David Hulme, a long-standing microfinance researcher and early enthusiast, as to why microfinance isn’t an alternative. This section is painfully short, and his explanation that microfinance may benefit some people, but not everyone, is too shallow. But at least the book thoroughly dispenses of the idea that the poor are poor because of their laziness or foolishness:

Poor people, who have struggled to survive on tiny amounts of cash, are good economists who use additional money wisely.

That is the same premise on which microcredit, too, is based. Microcredit however retains the basic suspicion that, unless the poor are forced to repay, they may go out and squander the money. That’s why the patronising caricature of the hard-working, caring, sensible woman who deserves a microloan instead of her happy-go-lucky, boozed-up husband, is so popular.

But the essential difference between the cash transfers advocated in this book, and microcredit on the other hand, is the fact that cash transfers bring security – while microcredit brings risk. Microcredit requires those who are already in a precarious position to take on entrepreneurial risk. The events preceding the Indian microfinance crisis of 2010/11 remind us of what can happen to the poor when things do go wrong.

With the security granted by even a small transfer, those households who are willing and able to take on entrepreneurial risk, could do so without risking complete destitution – something we should be worried about. Others may simply be able to get a decent job and send their children to school.

(phil)