Respond to prefers-color-scheme dark in app web views

Follow section front redirects in Spectrum

Enable NLP source in PCS for load testing

Switch off the News Alerts Survey Widget when we have enough responses

Poll to determine if new LUF updates are available

Allows the winning A/B test variant to be turned on without Spectrum deployment

Show infinite scrolling sections in Assembler MultiView

Show option for NLP article summaries in Action Bar

Show NLP summaries collection recirc on article pages

A general feature flag for Recipe Features that aren't yet released

Feature flag for media team features that aren't yet released

Use new Orca video player for preroll plugin in Spectrum

Show the snow tracker (instead of the heat tracker) on Spectrum

Can you spot bad financial advice on TikTok? Take our quiz.

5 myths about Social Security as the program faces a funding crisis

Social Security has to be fixed. But you still need your own savings.

Ted Leonsis remains interested in buying the Nationals

Senator will block RFK site bill unless team honors family of logo creator

Nationals-White Sox rained out; Josiah Gray edges closer to return

How the authoritarian Middle East became the capital of Silicon Valley

These four searches show how Google is changing

OpenAI wants users to act natural around ChatGPT

Haiti’s plight is a case study in the ‘responsibility to protect’

No, Apple, people do not want tech to crush everything in its path 

The urgent air defense lessons of April 16 

Ask Amy: What if the mysterious mourner at my dad’s memorial is my brother? 

Miss Manners: My relative’s memoir was poorly written and boring

Carolyn Hax: Is it ‘charming’ to stage a surprise wedding at a family reunion?

Tired of overcrowded national parks? Here’s how to go backcountry camping.

Pete Buttigieg’s view from the middle seat

Airlines are trying to stop Biden from enforcing ‘junk fees’ rule

Biden once nearly died of an aneurysm. Risky surgery changed his life.

Election 2024 latest news: Primary elections today in Maryland, Nebraska, West Virginia

Michael Cohen outlined a crime. Did he prove that Trump committed one?

Woman who punched crocodile to save twin awarded medal by King Charles

Trade pact would be a bonanza for Africa — if it can be made to work

14 dead after massive billboard in Mumbai collapses on gas station

Man, 91, shocks tiny firehouse with $500K gift: ‘Nobody knew how much I’d saved’

Retired cop meets abandoned baby he helped 23 years ago: ‘What are the odds?’

I used to dismiss my mom’s advice. Then I found a note she wrote before she died.  

The wacky, grueling bike race that captivates a Midwest college town

Biodegradable fabric might be the next best thing in clothing

Are home prices still rising? See how prices have changed in your area.

Angela Alsobrooks Wins Maryland Senate Seat 

Did Mexico figure out how to improve the lives of the poor?

Earlier this month the government’s policy evaluation unit, Coneval, revealed that 56.1 million Mexicans lived under the poverty line last year (4,158.35 pesos a month, or US $244.18, in cities and 2,970.76 pesos in rural areas), 5.7 million fewer than in 2018, the year before President Andrés Manuel López Obrador’s administration first took root.

The number of Mexicans living under roughly half the poverty line – not enough to buy even the basic food basket – fell to 15.5 million, from 17.3 million four years before.

This progress happened despite Covid, which ravaged Mexico as it did few other countries. The president, naturally, celebrated it as a sign of his commitment toward the poor, unequivocal proof of the success of his expansion of Mexico’s welfare apparatus. “I can die at peace,” he said.

This progress is indeed largely the government’s doing. Mexico’s social spending budget rose 115% after inflation over López Obrador’s first four years in office, to nearly 67 billion pesos, according to an analysis of the statistical agency’s biennial survey of household income by Mexico’s Institute for Inequality Studies. In 2022, 34% of Mexicans were covered by one social program or another, up from 28% four years earlier.

These data will shape not only the debate over Mexican social policy. They will likely influence the discussion over strategies to combat poverty across the developing world, where dozens of countries from Latin America to Asia have successfully replicated Mexican innovations over the last two decades.

The new numbers, unfortunately, are not entirely good news. Closer scrutiny reveals a darker landscape. It highlights the cost of a president’s gut-level distaste for the policies of previous governments, regardless of the evidence of their effectiveness, and it underscores the primacy of ideological conflicts over the objectives of social policy. Critically, it also exposes the conflict pitting the interests of the poor against those of a powerful political constituency: the old.

“There was an increase in resources but a loss of progressivity,” noted John Scott from Mexico’s Center for Research and Education in Economics, CIDE. “The first decile lost ground.”

According to the Institute for Inequality Studies’ analysis, last year the poorest 10% of the Mexican population received 9% of the government’s social spending budget, a sharp decline from their 23% share in 2018, the last year of the previous administration. The richest 10% of Mexicans, by contrast, saw their share increase from 3% to 8% of the total.

The weird redistribution came about, in part, from the dismantling of Mexico’s long-standing antipoverty strategy, which has swapped names from Progresa to Oportunidades to Prospera over the course of the previous four administrations.

From 1998 onward, the program offered cash transfers to poor mothers on the condition that they put their kids in school and took them to a health clinic, where the children and the mothers could get checked up and receive nutritional supplements.

The results were fairly remarkable, measured across educational and health indicators. It has been evaluated as so effective that some 80 countries have adopted this approach over the past 25 years.

The López Obrador administration, however, criticized Progresa and its successors as badly targeted, corrupt, prone to abuse for political gain and paternalistic because it conditioned help on mothers’ behavior. What the government put in its place, however, didn’t do much targeting. Instead, it channeled most of the money to the old, regardless of their income.

Santiago Levy, a former head of Mexico’s Social Security Institute, who led the design and the early evaluations of the Progresa program, characterized the policy shift as, “I’ll help people who are poor in old age but not those who are poor in childhood.”

Social spending today largely consists of a universal pension for the elderly of roughly 2,100 pesos a month per beneficiary household, on average (from 1,821 pesos for the poorest 10% of households to 2,234 pesos to those in the middle of the distribution). Combined with a smaller scholarship program for children in K-to-12th grade, and some other smaller efforts, the changes ironed the progressivity out of the policy.

Average social spending per beneficiary household did jump up, from 922 pesos a month in 2018 to 1,511 in 2022, in inflation adjusted pesos, according to the Institute for Inequality Studies’ analysis. But households in the bottom decile got 14% less. Not only did the share receiving government help decline, but the average benefit also barely budged over the period, stuck at about 1,000 pesos a month.

By contrast, the share of rich households receiving government aid rose to a record high. And transfers to households in the richest decile doubled over four years, to 1,836 pesos in 2022.

López Obrador understandably doesn’t dwell on these data. If poverty declined, who cares how government aid was spent? Other policies, like the repeated increases of the minimum wage, also improved incomes in the bottom half of the distribution. Booming remittances from migrants in the United States bolstered household budgets.

What’s more, conditioning assistance truly does impose behaviors on the poor. Targeted transfers to the poor are also both stigmatizing and more politically vulnerable than universal programs.

As the economist Amartya Sen once wrote, “any system of subsidy that requires people to be identified as poor and that is seen as a special benefaction for those who cannot fend for themselves would tend to have some effects on their self-respect as well as on the respect accorded them by others.” In the words of Wilbur Cohen, considered one of the fathers of American Social Security, “a program that deals only with the poor will end up being a poor program.”

But Mexico’s recent policy gyrations underscore how ending conditional transfers to the poor also carries undeniable costs. These must be acknowledged.

There are many studies of gains from Mexico’s conditional cash transfers. Recently, Karen Macours of the Paris School of Economics and Maria Caridad Araujo of the Inter-American Development Bank published a paper about long-term impacts: How did families’ exposure to the program affect the lives of their children 20 years down the line?

For the youngest of children – born from 1997 to 1999 – an additional 18 months of benefits under Progresa significantly extended their educational attainment. Their odds of finishing high school were 16% higher and they were 67% more likely to have university studies.

For kids who were in 6th grade at the program’s inception, being in a family that received benefits 18 months earlier resulted in a 16% increase in labor income by the time they were in their early 30s. They were also more likely to migrate to the US and to delay parenthood by about half a year.

There had been doubts, said Macours, that the programs would deliver on their multiple objectives to improve the lives of children in beneficiary families, opening better choices for the next generation to transcend poverty. “We quite convincingly put those aside,” she said.

Such gains, presumably, will now have been lost. Indeed, research by Susan Wendy Parker at the University of the Maryland School of Public Policy, Tom Vogl, now at the University of California San Diego, and Fernanda Marquez-Padilla from El Colegio de México found that turning off the program imposed an immediate cost.

Looking at data from the end of the cash transfer program in the spring of 2019 to before the onset of Covid in early 2020, they found that losing the money trimmed kids’ primary school enrollment by roughly 3%, an effect that was concentrated in rural households. What’s more, losing the aid apparently led to an increase in children under 5-years-old admitted to public hospitals.

And, as Coneval’s recent data suggest, this is hardly the end of it. The dismantling of the Progresa-Oportunidades-Prospera system might have important long-term consequences. But Mexicans have a more urgent problem: the undoing of government-provided healthcare.

In 2003, the government of Vicente Fox launched the Seguro Popular to offer healthcare to millions of Mexicans who work outside the formal labor market covered by social insurance. Run by the states, it was indeed a target of opportunity for corrupt state governments. So in 2019 Lopez Obrador put it to rest, launching a new federal institute that, he claimed, would provide uninsured Mexicans with Danish levels of healthcare for a lower price tag.

Denmark, alas, remains a faraway dream. The new system was underfunded from the outset. Health spending on the uninsured fell to 0.88% of GDP last year, from 1.03% in 2018, according to Mexico’s Center for Economic and Budgetary Research, CIEP. Moreover, the federal government couldn’t figure out how to manage such a large and heterogeneous healthcare apparatus. Its attempt at centralization led to shortages of medicines.

One result: In 2022, 50 million Mexicans reported having no access to healthcare services, 30 million more than in 2018, according to the Coneval evaluation. Last year, two-thirds of the poorest Mexicans, in the bottom decile of the income distribution, reported lacking access. In 2018 the figure was 17%. 

A key insight from the Mexican experience for governments across the developing world hoping to build a social safety net: Insulation from the tantrums of those in power is essential. The pet peeves of each incoming government are a poor guide for policy.

Beyond the damage wrought by López Obrador’s resentments, however, the more important lesson is probably about the political forces shaping the government’s provision of aid. First, for all the benefits associated with conditionality to encourage healthier behaviors, “giving money without conditions is always more popular,” as Macours put it.

Then there’s the political cost/benefit analysis: the poor might be a core constituency of President López Obrador. But so are the old. And the old vote at higher rates. It’s not crazy that he wants to make them happy.

This hard political fact holds sway in policy design around the world. Just ask former US President George W. Bush, who toyed with privatizing Social Security. Or take a look at the political consequences of the increase in the retirement age implemented by President Emmanuel Macron in France.

The last and most important lesson is that governments need more money: It is hard to argue against setting up a pension for elderly Mexicans. It becomes a problem when it comes largely at the expense of a successful program for the poor. There lies the ultimate weakness of López Obrador’s social policy: Unwilling to raise the taxes to pay for a more generous safety net, he cornered himself into an unnecessary choice.

• UPS Drivers Deliver a Message to Jay Powell: Conor Sen

• 2024   Won’t Be the End of South Africa’s ANC Party: Melanie Verwoerd

• A US Soft Landing? Even the Fed Doesn’t Believe It: Bill Dudley

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Eduardo Porter is a Bloomberg Opinion columnist covering Latin America, US economic policy and immigration. He is the author of “American Poison: How Racial Hostility Destroyed Our Promise” and “The Price of Everything: Finding Method in the Madness of What Things Cost.”

More stories like this are available on <a href="https://www.bloomberg.com/opinion">bloomberg.com/opinion</a>

Eduardo Porter | Bloomberg

Bloomberg

name

prism://prism.query/site-articles-only,/business&limit=20

Get a curated selection of 10 of our best stories in your inbox every weekend.

Business

The source for business news and analysis. Covering economic policy, business policy, financial news, economic issues, stock market data, local business, technology and more.