This is a really interesting episode of Econtalk, and worth a listen.
Highlight 1: Accurate description of poor communities
A couple of things here really resonated with my experience of living and working in low-income communities in Jakarta:
- Miller’s descriptions of the resourcefulness of people in poor communities – that many people in poor communities are hard working and resourceful and demonstrating impressive amounts of willpower and – in his word – ‘talent’ just to get by on low incomes.
- The dynamism of poor communities, particularly in terms of people moving in and out of poverty – apparently backed up by statistics. According to Miller, although 15% of the U.S. population are ‘poor’ at any given time, the majority of those will move above the poverty line, to be replaced by other (temporarily) poor people – i.e. people who lost their job a month before the census and have no income, but will soon return to work. Miller says that only about 3% of the population are ‘long-term, generationally poor.’
Highlight 2: What happens when users pay for services
This section also really reflected my experience at the charity I work for, where a switch to a ‘user pays’ model of service (rather than a purely donation-based, ‘charitable’ model) made us more responsive to the needs of our users, and drove up the quality of what we do. Here’s Miller:
Mauricio Miller: …I wouldn’t bring my own family through [my own social services]; now I had money–
Russ Roberts: Why not?
Mauricio Miller: Because they were paternalistic. My mother hated that. She said, ‘The social workers are really nice, but they take away my pride.’ And certainly the racists would take away her pride, too. You know. And sexual harassers would take away her pride. But even the people who were trying to be really nice would take her pride away. And so, that was one of the issues. The other issue is that the programs that I had were sold–and the structures were to sell to get funding. Funders don’t really understand circumstances on the ground. But, they get certain interests. And so you have to shape your program based on what they kind of want in order to get the money. And that, then you are held accountable to those kind of standards. Where, I actually had started two businesses within my own non-profit, that, when you are running a business, you have to meet the customer demand. Not the investor demand. You have to really meet the customer demand. And so, somehow or other, when I wanted to adjust my programs, they were not responsive to my customers. And so, for me, my social service programs were too structured, too paternalistic. They did not recognize or meet that market demand. And now that I was middle income and had money, I would instead, when I had to help my nephew and nieces who struggled with drugs and all kinds of things, I would go to private sector services, because they would say, ‘Do you want us to send the advisor on the weekend, or the evenings?’ Or, ‘What’s convenient for you?’ and ‘Would you like this program?’ I was given choices. Because I had money. But people who were poor didn’t have those kind of choices. And so, why would I want to take my own family, that had struggled with everything that everybody else was struggling with what was out there in some of these neighborhoods: Why would I take them into a system that was so structured and was not responsive when I had money? So, money made a difference. And I realized that: No, I wouldn’t bring my own family.Russ Roberts and Mauricio Miller – Econtalk
In the end, I wasn’t completely convinced with Miller’s model – or didn’t feel completely clear about what he was offering – but these bits were excellent – and true.