Simplicity is a Virtue
By on January 5, 2011 at 9:00 am

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piggy bank

Mexico and Brazil have instituted a novel approach to fighting poverty—giving poor people money:

The generic term for the program is conditional cash transfers.  The idea is to give regular payments to poor families, in the form of cash or electronic transfers into their bank accounts, if they meet certain requirements.  The requirements vary, but many countries employ those used by Mexico: families must keep their children in school and go for regular medical checkups, and mom must attend workshops on subjects like nutrition or disease prevention.  The payments almost always go to women, as they are the most likely to spend the money on their families.  The elegant idea behind conditional cash transfers is to combat poverty today while breaking the cycle of poverty for tomorrow.

By all accounts these programs have been remarkably successful.  Income inequality has fallen dramatically in Brazil, and in both countries the programs it seems that people do in fact stay healthier and stay in school.  So this seems like a pretty good idea.

I think one of the greatest virtues of these programs is their simplicity.  The basic idea is very straightforward: if you do X, we’ll give you Y dollars.  And that’s all there is to it.  I have to imagine this makes it easier for people to participate in the programs, and simpler rules mean that’s it’s a lot harder to find loopholes in the programs and exploit them.

And simplicity seems like a feature that we should extend to as many laws and programs as possible.  Of course, that may not always be a good idea – simplifying FDA regulations would probably be counterproductive.  But consider the tax code.  It’s been said a million times, but a simpler tax code would make it easier for people to pay their taxes and would eliminate loopholes that make tax evasion possible.

And who knows; given America’s own problems with economic inequality, maybe we could use something like conditional cash transfers ourselves.  Ideas like this have been tossed around – things like a universal basic income or a lump-sum stake, a bunch of money awarded to every citizen at the age of, say, 21.  Ideas like this are probably a long time coming (if ever), but one can always hope!

(Photo by sxc.hu)

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