↳ Poverty

February 18th, 2020

↳ Poverty

The Importance of Being Evergreen

ADMINISTRATION PRIMARY

A comparative overview of national healthcare systems

In an employer-sponsored healthcare system like that of the United States, deteriorating labor market protections have immediate consequences for access to healthcare. Democratic primary candidates have presented a number of proposals to address declining rates of insurance, ranging in degrees of accessibility, coverage, and number of providers.

In her 1992 book, Healthcare Politics, ELLEN M. IMMERGUT seeks to explain America's healthcare system through a comparison of its history to Switzerland's, France's, and Sweden's. From the author's preface:

"I compare the politics of three countries where national health insurance had been proposed, but where, as a result of political struggles, the final policy results are diverse. Medical associations in all three countries had opposed national health insurance on the grounds that doctors preferred to work as private practitioners and not as government employees. How then could one explain the fact that Switzerland rejected national health insurance, France accepted it, and Sweden not only enacted national health insurance, but later converted its health system to a de facto national health service? The history of each case pointed insistently to the role played by standard political institutions. The Swiss referendum, the French parliament, and the Swedish executive bureaucracy emerged as key elements in an explanation of national health insurance politics in those countries.

The resulting book argues for the primacy of these institutions in explaining policy outcomes precisely because they facilitate or impede the entry of different groups into the policy-making process. In Switzerland, the public interest on any specific policy issue is viewed as the sum of the demands of individual citizens as expressed in national referenda. In Sweden, on the other hand, proper representation for policy issues is a matter of consensual agreements between interest groups, whose large memberships and democratic procedures ensure their responsiveness to the public. In France, the rules of representation stress the importance of an impartial executive standing above the particularistic claims of interest groups. But there is no linear relationship between a specific set of political institutions and the interest groups that will succeed or the health system that results. These histories are filled with unexpected events, sudden about faces, and new strategies. This book is a call to look at these histories, not just at the broad sweep of major events, but also at the seemingly minor struggles that make up daily political life. These are the battles that establish the constraints on politics, but they are also the junctures that extend the limits of the possible."

Link to a downloadable copy of the book.

  • "The postwar growth of public expenditures in the health sector and the growth of universalism in coverage of benefits is tied to the strength of the labor movement in each country." Vincent Navarro's influential 1989 paper situates healthcare policies within a broader distributional framework. Link.
  • "The idea of a British hospital system funded by its users is one which emerged only late in the 19th century. Before this, care was provided through thousands of voluntary hospitals." Martin Gorsky, John Mohan, and Tim Willis on "Mutualism and Healthcare" in the UK. And in a similar vein, David T. Beito's 2000 book on the fraternal societies which provided healthcare to millions of Americans throughout the 19th and early 20th centuries. Link and link.
  • A recent paper by Stefan Bauernschuster, Anastasia Driva, and Erik Hornung uses "the introduction of compulsory health insurance in the German Empire in 1884 as a natural experiment to study the impact of social health insurance on mortality," finding that "Bismarck’s health insurance generated a significant mortality reduction." Link.
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November 14th, 2019

Phenomenal Works: Beth Popp Berman

On knowledge, institutions, and social policy

Editor's Note: This is the second post in a new series, Phenomenal Works, in which we invite our favorite researchers to share notable readings with us. We'll be publishing new editions every two weeks, around our regular output of interviews and analysis. Sign up for our newsletter to stay up to date with every post.

Beth Popp Berman is sociologist whose research focuses on the history of knowledge, organizations and public policy making. Her first book, Creating the Market University: How Academic Science Became an Economic Engine, examines the transformation of American academia from partially noncommercial institution to innovation-oriented entrepreneurial university. Popp Berman's forthcoming book, Thinking Like an Economist: How Economics Became the Language of U.S. Public Policy, charts how a style of economic reasoning pioneered among a small group of DoD technocrats became institutionalized at the core of the policy process—and its fundamental consequences for political decision-making.

Popp Berman's selections reflect the import of her own work, illuminating how and why certain forms of knowledge came to be produced, and how they are put to use in the construction of policy and institutions.

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September 3rd, 2019

Eye Machine

IMPLICIT FAVOR

The failures of research on fin-tech and poverty alleviation

Last week, we considered how social and political standards can pressure climate scientists to under-report their findings, introducing an underestimation bias into published climate research. In a recent thread, Nicholas Loubere examines the development buzz around mobile money, showing how similar factors can serve to exaggerate the findings of academic studies.

In a new article quoted in the thread, MILFORD BATEMAN, MAREN DUVENDACK, and NICHOLAS LOUBERE contest a much cited study on the poverty alleviating effects of mobile money platforms like M-Pesa. The criticism rests largely on grounds of omission: the study, they argue, ignores the closure of nearly half of microenterprises opened with M-Pesa, the jobs and incomes lost with the introduction of new businesses into fragile markets, the burgeoning debt accrued through digital loans, the overwhelmingly foreign ownership of M-Pesa and its profits, and the wealthy networks composing its primary users. Methodologically, it had no control group, used a small sample size, and overlooked the potential for reverse causality.

Why was a potentially flawed study so well regarded? According to Bateman, Duvendack, and Loubre, it's in part because its results told researchers and policymakers what they wanted to hear. From the article:

"The rapid popularization of fin-tech as a developmental solution is premised on the continued prominence of microcredit and the broader concept of financial inclusion. The microcredit movement was established and validated in the 1980s on overblown and ultimately false claims that providing small loans to groups of poor women was a panacea for global poverty reduction—claims that were especially associated with Dr Muhammad Yunus. Empirical justification came from an impact evaluation undertaken in Bangladesh by then World Bank economists Mark Pitt and Shahidur Khandker, which claimed that microcredit programs had significant beneficial results for impoverished female clients. For many years, Muhammad Yunus used Pitt and Khandker’s findings to successfully ‘sell’ the microcredit model to the international development community, generating a consensus that the microcredit model was the most effective way to efficiently provide enormous benefits to the global poor."

Link to the article, and link to a blogpost in which the authors outline their key findings.

  • "Kenya’s new experience of debt reveals a novel, digitized form of slow violence that operates not so much through negotiated social relations, nor the threat of state enforcement, as through the accumulation of data, the commodification of reputation, and the instrumentalization of social ties." Kevin P. Donovan and Emma Park report on the consequences of mobile debt for poor borrowers. Link.
  • In an article from 2017, Loubere "examines examples of exploitation, fraud, instability, and extraction related to expanded digital financial coverage in contemporary China." Link. At Bloomberg, David Malingha compares credit markets in Asia with those of sub-Saharan Africa. Link.
  • "This article claims that to bring finance back to serve the real economy, it is fundamental to (a) de-financialize companies in the real economy, and (b) think clearly about how to structure finance so that it can provide the long-term committed patient capital required by innovation." Mariana Mazzucato on governments' role in ensuring that finance serves public ends. Link.
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May 28th, 2019

Interior Spring

CONTINGENT REFORM

The history and theory behind the Earned Income Tax Credit

The Earned Income Tax Credit (EITC) is the country's largest anti-poverty program. In 2018, over 20 million filers received $63 billion in EITC refunds. Because of its bipartisan popularity and its secure position in the tax code, with no distinct administrative unit managing its payouts, it is also at the center of several substantial anti-poverty programs recently floated in the House and Senate. These proposals variously expand and modify the EITC, often in concert with the Child Tax Credit, in order to offer a more robust benefit.

A look into the history of the EITC reveals that, at its formation, the credit was an unlikely candidate for a major anti-poverty vehicle. In a CONGRESSIONAL RESEARCH SERVICE paper, MARGOT KRANDLE HOLLICK lays out its legislative history, showing that its 1972 introduction by Senator Russell Long was an intervention against proposed guaranteed income programs, and that "the bill had originally included a provision that would have required states to reduce cash welfare by an amount equal to the aggregate EITC benefits received by their residents." From the paper:

"The origins of the EITC can be found in the debate in the late 1960s and 1970s over how to reform welfare—known at the time as Aid to Families with Dependent Children (AFDC). Some policymakers were interested in alternatives to cash welfare for the poor. Some welfare reform proposals relied on the 'negative income tax' (NIT) concept. The NIT proposals would have provided a guaranteed income to families who had no earnings (the 'income guarantee' that was part of these proposals). For families with earnings, the NIT would have been gradually reduced as earnings increased. Influenced by the idea of a NIT, President Nixon proposed in 1971 the 'family assistance plan' (FAP) that 'would have helped working-poor families with children by means of a federal minimum cash guarantee.'

Senator Russell Long, then chairman of the Senate Finance Committee, did not support FAP because it provided 'its largest benefits to those without earnings' and would, in his opinion, discourage people from working. Instead, Senator Long proposed a 'work bonus' plan that would supplement the wages of poor workers. Senator Long stated that his proposed 'work bonus plan' was 'a dignified way' to help poor Americans 'whereby the more he [or she] works the more he [or she] gets.'"

Link to that paper.

  • A 1999 Brookings paper by historian Dennis Ventry also examines the unique political history of the EITC, writing that its emergence appealed to legislators as "both an anti-poverty and an anti-welfare program." Link.
  • Brian Steensland's excellent book The Failed Welfare Revolution: America's Struggle Over Guaranteed Income Policy surveys this history in depth. Link. And link to a 2006 paper that preceded its publication, on cultures of "worth" and anti-poverty programs.
  • A 2015 Duke Law Review Note titled "Earned Income Tax Credit: Path Dependence and the Blessing of Undertheorization," examines "the credit’s path-dependent past, which has resulted in a present-day EITC that manifests a diverse, uncoordinated assortment of policy purposes." Link.
  • The above-linked recent proposals have focused on expanding the program's breadth, but retain in some form the "phase-in" structure originally proposed by Long, which excludes non-waged workers from claiming the return. Link to a (previously shared) critique of this structure—and work-tied benefits more broadly—by Matt Bruenig. Link to an also previously shared paper by JFI Fellow Max Kasy, which proposes expanding the EITC into a universal benefit.
  • Our colleagues at the Economic Security Project have developed a proposed "Cost of Living Refund," which tackles several important issues with the EITC. It includes proposals for monthly disbursements and expanding eligibility to un-waged care work. Link to the project's website, which hosts research and model legislation.
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January 12th, 2019

Worldviews

SOFT CYBER

Another kind of cybersecurity risk: the destruction of common knowledge

In a report for the Berkman Klein center, Henry Farrell and Bruce Schneier identify a gap in current approaches to cybersecurity. National cybersecurity officials still base their thinking on Cold War-type threats, where technologists focus on hackers. Combining both approaches, Farrell and Schneier make a wider argument about collective knowledge in democratic systems—and the dangers of its diminishment.

From the abstract:

"We demonstrate systematic differences between how autocracies and democracies work as information systems, because they rely on different mixes of common and contested political knowledge. Stable autocracies will have common knowledge over who is in charge and their associated ideological or policy goals, but will generate contested knowledge over who the various political actors in society are, and how they might form coalitions and gain public support, so as to make it more difficult for coalitions to displace the regime. Stable democracies will have contested knowledge over who is in charge, but common knowledge over who the political actors are, and how they may form coalitions and gain public support... democracies are vulnerable to measures that 'flood' public debate and disrupt shared decentralized understandings of actors and coalitions, in ways that autocracies are not."

One compelling metaresearch point from the paper is that autocratic governments receive analysis of information trade-offs, while democratic governments do not:

"There is existing research literature on the informational trade-offs or 'dictators' dilemmas' that autocrats face, in seeking to balance between their own need for useful information and economic growth, and the risk that others can use available information to undermine their rule. There is no corresponding literature on the informational trade-offs that democracies face between desiderata like availability and stability."

Full paper available on SSRN here.

  • Farrell summarizes the work on Crooked Timber: "In other words, the same fake news techniques that benefit autocracies by making everyone unsure about political alternatives undermine democracies by making people question the common political systems that bind their society." Many substantive comments follow. Link.
  • Jeremy Wallace, an expert on authoritarianism, weighs in on Twitter: "Insiders, inevitably, have even more information about the contours of these debates. On the other hand, there's a lot that dictators don't know--about their own regimes, the threats that they are facing, etc." Link to Wallace's work on the topic.
  • Related reading recommended by Wallace, from Daniel Little, a 2016 paper on propaganda: "Surprisingly, the government tends to pick a high level of propaganda precisely when it is ineffective." Link.
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