The deep disregard for the human dignity of the poor is endemic in the social protection system. A particularly heart-wrenching instance is what happened to Chantal, one of the TAE employees we met. When Chantal and her husband, who are both disabled, asked for assistance at home with their four children, two of whom are also disabled, they were offered temporary placement for their children in foster care. This “temporary” solution ended up lasting ten years, during which they were only allowed to see their children for one weekly supervised visit. The suspicion that poor parents are incapable of taking care of their children is widespread. Until the 1980s, tens of thousands of poor Swiss children were removed from their families and placed on farms. In 2012, the government of Switzerland formally apologized for the separations. This discrimination is in effect a form of racism against the poor, a reminder of the policy in Canada where scores of indigenous children were sent to boarding school and forbidden to speak their language, to ease their “assimilation” in mainstream Canadian culture.
A social protection system that treats anyone with this kind of callousness becomes punitive, and people will go to great lengths to avoid having anything to do with it. Make no mistake. This does not just affect some small sliver of the extreme poor that’s very different from the rest of us. When part of the social system conveys punishment and humiliation, it is the entire society that recoils from it. The last thing a worker wants when he has just lost his job is to be treated like “those people.”
STARTING FROM RESPECT
A different model is possible. We once drove to the mission locale office in the city of Sénart near Paris to observe a meeting of “young creators.” The mission locale is a one-stop shop to serve all the needs (medical, social, employment) of disadvantaged youth. This program of young creators is for any young man or woman who is currently unemployed and wants to start a small business. Sitting around the table, the young people explained what they wanted to do. We heard about plans to start a gym, a beauty parlor, and an organic beauty products shop. We then asked them why they wanted to have their own businesses. Strikingly, none of them spoke about money. One after the other, they spoke about dignity, self-respect, and autonomy.
The approach of the young creators program is very different from the typical approach in unemployment agencies. In the traditional approach, the goal of the counselor is to quickly identify something the youths, mostly high school dropouts or vocational school graduates, could do, usually some sort of training program, and direct them there. The presumption is that the counselor knows what is good for each person (the fashion these days is to do it with the help of some machine-learning algorithm). The youths then have to conform or lose their benefits.
Didier Dugast, who conceived the creators program, told us that more often than not, the traditional approach fails entirely. The young people who arrive have been told, all their lives, what to do. They have also been told, in school and perhaps at home, that they are not good enough. They arrive bruised and wounded, with extremely low self-esteem (we verified this in our quantitative survey91), which often translates into an instinctive suspicion of everything offered to them, and a tendency to resist suggestions.
The idea behind the young creators program is to start with the project the young man or woman proposes, and to take it very seriously. The first interview invites them to explain what they want to do, why they want to do it, and where it fits into their personal life and plans. We sat in on three interviews: a young woman who wanted to start a pharmacy for Chinese medicine, a young man who wanted to sell his graphic designs through an online shop, and a young woman who wanted to set up a home care business for elderly people. In all cases, these first interviews were long (about an hour each) and the caseworker took time to understand the project, without ever obviously judging it. More in-depth interviews followed, as well as a few group workshops. In the course of these conversations, the caseworker started to focus on convincing the youths that they were in control of their destinies and had what it took to succeed. At the same time, it was also made clear there was more than one way to succeed; perhaps the aspiring Chinese pharmacist could start training to become a nurse or a paramedic.
We were involved in the RCT of this project. Nine hundred young people who had applied for the program were assigned either to this program or to the regular services. We found that those in the program were more likely to be employed and earned more. The effects were much larger for those who were the most disadvantaged to start with. What was extremely surprising at first glance was that the program actually reduces the probability of being self-employed, even though it begins with the applicant’s idea for starting a business. The main value of the program (and its explicit philosophy) is that the self-employment project is a starting point, but not necessarily the end. The program is essentially a form of therapy aimed at restoring confidence. What matters is finding stable, rewarding occupations within six months to a year. In contrast, a competing program we also evaluated that simply cherry-picked the most promising candidates for a self-employment program and then focused on bringing their initial project idea to fruition had no effect whatsoever, mostly because it selected the type of people likely to succeed regardless of the help they got.92
In our view, the deep respect for the dignity of the young people is what made the Sénart young creators initiative work. Many of these young people had never experienced being taken seriously by anyone in an official position (teachers, bureaucrats, law enforcement officials). As we saw earlier, research in education shows that children quickly internalize their place in the pecking order, and teachers reinforce it. Teachers told that some children are smarter than others (even though they were simply chosen randomly) treat them differently, so that these children in fact do better.93 In France, there was a randomized evaluation of an Énergie Jeunes intervention inspired by Angela Duckworth’s idea of “grit.”94 It showed inspirational videos to students, to encourage them to think of themselves as strong and powerful, and this had positive effects on their regular attendance in school, their attitudes in class, and even their grades. The effect did not seem to be rooted in children’s perceptions of their own grit or seriousness (if anything, children gave themselves low scores on those). It was more that the students became much more optimistic about the chances of success for someone like themselves.95 ATD Fourth World, in collaboration with l’Institut Supérieur Maria Montessori in Paris, is attempting to break this vicious cycle of low expectations as early as possible. In the emergency housing projects it runs, ATD runs high-quality Montessori schools as shiny and well operated as the few private Montessori schools catering to upper classes in the center of Paris.
The same shift in attitude, from patronizing to respectful, was built into the program Becoming a Man, in inner-city Chicago. The program seeks to temper violence among young people. But instead of telling them it is wrong to be violent, it starts with recognizing that for teens in disadvantaged neighborhoods violence may be the norm, so being aggressive or even fighting may be necessary to avoid developing a reputation as a victim. Someone in this sort of neighborhood environment could develop a tendency to reflexively push back with violence whenever challenged. So instead of telling participants it was not the right thing to do, or punishing them when they did so, Becoming a Man asked kids from poor neighborhoods to participate in a series of activities, inspired by cognitive behavioral therapy, to help them identify when fighting was the appropriate reaction and when it might not be. Essentially, they were taught to just take a minute to gauge the environment and assess the proper course of action. Participation in the program reduced the total number of arrests during the intervention period by about a third, reduced violent crime arrests by half, and increased graduation rates by around 15 percent.96
What is common among a drought-affected farmer in India, a youth in Chicago’s South Side, and a fifty-something white man who was just laid off? While they may have problems, they are not the
problem. They are entitled to be seen for who they are and to not be defined by the difficulties besieging them. Time and again, we have seen in our travels in developing countries that hope is the fuel that makes people go. Defining people by their problems is turning circumstance into essence. It denies hope. A natural response is then to wrap oneself into this identity, with treacherous consequences for society at large.
The goal of social policy, in these times of change and anxiety, is to help people absorb the shocks that affect them without allowing those shocks to affect their sense of themselves. Unfortunately, this is not the system we have inherited. Our social protection still has its Victorian overlay, and all too many politicians do not try to hide their contempt for the poor and disadvantaged. Even with a shift in attitude, social protection will require a profound rethinking and an injection of lots of imagination. We have given some clues in this chapter on how to get there, but we clearly don’t have all the solutions, and suspect nobody else does either. We have much more to learn. But as long as we understand what the goal is, we can win.
CONCLUSION
GOOD AND BAD ECONOMICS
… In succession
Houses rise and fall, crumble, are extended,
Are removed, destroyed, restored, or in their place
Is an open field, or a factory, or a by-pass.
Old stone to new building, old timber to new fires,
Old fires to ashes, and ashes to the earth…
—T. S. Eliot, East Coker
ECONOMICS IMAGINES A world of irrepressible dynamism. People get inspired, change jobs, turn from making machines to making music, quit and decide to wander the world. New businesses get born, rise, fail, and die, are replaced by timelier and more brilliant ideas. Productivity grows in staccato leaps, nations grow richer. What was made in Manchester mills moves to Mumbai factories and then to Myanmar and maybe, one day, to Mombasa or Mogadishu. Manchester is reborn as Manchester digital, Mumbai turns its mills into up-market housing and shopping malls, where those who work in finance spend their newly fattened paychecks. Opportunities are everywhere, waiting to be discovered and grabbed by those who need them.
As economists who study poor countries we have long known that things do not quite work that way, at least in the countries we have worked in and spend our time. The Bangladeshi would-be-migrant starves in his village with his family rather than brave the uncertainties of seeking a job in the city. The Ghanaian job seeker sits at home wondering when the opportunity he believed his education promised him will drop into his empty lap. Trade shuts down factories in the Southern Cone of South America, but few new businesses arrive to take their place. Change seems all too often to benefit other people, unseen people, unreachable people. Those who lost their jobs in the Mumbai mills will not get to eat in those glittering eateries. Perhaps their children will get jobs serving—jobs they for the most part do not want.
What we realized over the last few years is that this is also the story of many places in the developed world. All economies are sticky. There are of course important differences. Small businesses in the United States grow much faster than those in India or Mexico, and those that fail to grow are shut down, forcing their owners to move on. Those in India and, to a lesser extent in Mexico, seem stuck in their place in time, neither growing to be the next Walmart nor exiting into something else more promising.1 Yet this US dynamism conceals enormous geographical variations. Businesses shut down in Boise and show up in booming Seattle, but the workers who lost their jobs cannot afford to move to Seattle. Nor do they want to anyway, since so much of what they value—their friends and their families, their memories and their loyalties—will have to stay behind. But as the good jobs vanish and the local economy goes into a tailspin, the choices look more and more dire and anger mounts. This is what is happening in Eastern Germany, much of France outside the big cities, the Brexit heartland, and in the red states of the US, but also in large pockets of Brazil and Mexico. The rich and the talented step nimbly into the glittering pockets of economic success, but all too many of the rest have to hang back. This is the world that produced Donald Trump, Jair Bolsonaro, and Brexit and will produce many more disasters unless we do something about it.
And yet as development economists we are also keenly aware that the most remarkable fact about the last forty years is the pace of change, good and bad. The fall of communism, the rise of China, the halving and then halving again of world poverty, the explosion of inequality, the upsurge and downswing in HIV, the huge drop in infant mortality, the spread of the personal computer and the cell phone, Amazon and Alibaba, Facebook and Twitter, the Arab Spring, the spread of authoritarian nationalism and looming environmental catastrophes—we have seen them all in the last four decades. In the late 1970s, when Abhijit was taking baby steps toward becoming an economist, the Soviet Union still commanded respect, India was figuring out how to be more like it, the extreme left worshipped China, the Chinese worshipped Mao, Reagan and Thatcher were just beginning their assault on the modern welfare state, and 40 percent of the world population was in dire poverty. A lot has changed since then. A lot of it for the better.
Not all the change was willed. Some good ideas just happened to catch fire, some bad ones as well. Some of the change was accidental, some the unanticipated consequences of something else. For example, part of the increase in inequality was the flip side of the sticky economy, which makes it all the more lucrative to be in the right place at the right time. In turn, the increase in inequality funded a construction boom that created jobs for the unskilled in the cities of the developing world, paving the way to the reduction in poverty.
But it would be wrong to underestimate just how much of the change was driven by policy—the opening up of China and India to private enterprise and trade, the slashing of taxes on the rich in the UK, the US, and their imitators, the global cooperation to fight preventable deaths, the prioritization of growth over the environment, the encouragement of internal migration through improvements in connectivity or its discouragement through failure to invest in livable urban spaces, the decline of the welfare state but also the recent reinvention of social transfers in the developing world, and so on. Policy is powerful. Governments have the power to do enormous good but also important damage, and so do large private and bilateral donors.
A lot of that policy stood on the shoulders of good and bad economics (and the social sciences more generally). Social scientists were writing about the mad ambition of Soviet-style dirigisme, the need to liberate the entrepreneurial genie in countries like India and China, the potential for environmental catastrophe, and the extraordinary power of network connections a long time before these became obvious to the wider world. Smart philanthropists were practicing good social science when they pushed for giving away antiretroviral medicines to HIV patients in the developing world to secure much more widespread testing and save millions of lives. Good economics prevailed over ignorance and ideology to ensure insecticide-treated bed nets were given away rather than sold in Africa, thereby cutting childhood malaria deaths by more than half. Bad economics underpinned the grand giveaways to the rich and the squeezing of welfare programs, sold the idea that the state is impotent and corrupt and the poor are lazy, and paved the way to the current stalemate of exploding inequality and angry inertia. Blinkered economics told us trade is good for everyone, and faster growth is everywhere. It is just a matter of trying harder and, moreover, worth all the pain it might take. Blind economics missed the explosion in inequality all over the world, the increasing social fragmentation that came with it, and the impending environmental disaster, delaying action, perhaps irrevocably.
As John Maynard Keynes, who transformed macroeconomic policy with his ideas, wrote: “Practical men who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist. Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years
back.” Ideas are powerful. Ideas drive change. Good economics alone cannot save us. But without it, we are doomed to repeat the mistakes of yesterday. Ignorance, intuitions, ideology, and inertia combine to give us answers that look plausible, promise much, and predictably betray us. As history, alas, demonstrates over and over, the ideas that carry the day in the end can be good or bad. We know the idea that remaining open to migration will inevitably destroy our societies looks like it is winning these days, despite all evidence to the contrary. The only recourse we have against bad ideas is to be vigilant, resist the seduction of the “obvious,” be skeptical of promised miracles, question the evidence, be patient with complexity and honest about what we know and what we can know. Without that vigilance, conversations about multifaceted problems turn into slogans and caricatures and policy analysis gets replaced by quack remedies.
The call to action is not just for academic economists—it is for all of us who want a better, saner, more humane world. Economics is too important to be left to economists.
ACKNOWLEDGMENTS
All books are the product of many minds but this one more so than most. Chiki Sarkar encouraged us to pursue this project before we had any idea of where we were headed. Her enthusiasm, lively intelligence, and faith in our abilities led us and supported us throughout this project. A little bit later in the project Andrew Wylie joined in. The backing of his vast experience gave us the confidence to proceed. Neel Mukherjee read the entire manuscript in its first, raw, version and gave us direction, style advice, and above all reassurance that this was a book worth writing and perhaps even reading. Maddie McKelway did extraordinary work to ensure that every fact in the manuscript was correctly checked and cited, and that every sentence made (at least some) sense. Clive Priddle, as with our previous book, understood exactly where we were trying to go, often before we did so ourselves. His edits made this a book.
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