If we can imagine a world where a tiny tax on financial transactions generates hundreds of billions of dollars every year to be used to alleviate poverty, it would be fair to ask, "Who gets this money?", "How do we deliver money and services to the poor?" and, "How can we be sure the aid won't be stolen or wasted?"
Brazil's twenty year war on poverty points to answers.
Standing in the courtyard of a small rural school outside of Brasilia in 2002, I watched as young mothers with toddlers in tow arrived for morning kindergarten. These women were peasant farmers whose small plots of land produced sugar, sisal, coffee, rubber and soybeans, crops typical of 70% of Brazilian agriculture, an export economy in the top five worldwide.
Hunger, malnutrition, poor health care and child labor were regional and national issues in 2002, with over 4 million children working instead of attending school. Over a third of all farmers in Brasilia were extremely poor, with an annual family income of under $700 in today's dollars. These families were typical of the region, struggling to feed and educate their kids.
None of that was apparent the day we came to film. A party was underway, with cake, ice cream, balloons and song. The children had made art and gifts for their mothers, a sort of Mother's Day. All around the classroom, babies with open smiles crawled into their mothers' laps.
We had come to film a cash transfer program, the Bolsa Escola, that allowed these mothers to bring their children to school, by providing a monthly stipend, about $11 per child, for each month of perfect school attendance. Created in 1995 by Cristovam Buarque, then governor of the province, who explained it this way, "We pay professors to go to school and learn, why shouldn't we pay poor children?"
Cash transfers are just what they seem, programs that move money and assistance to the poor to help them out of poverty or prevent their falling into poverty as a result of war or natural calamity.
In just seven years, the Bolsa was transformed into a national model for increasing school attendance, improving child health care, reducing child labor and ending hunger, with over eleven million families enrolled.
The idea then spread throughout Latin America to Africa and Mexico. The Bolsa program was funded in Brazil using less than 2% of the national budget and returned more than half its cost in improved school attendance, a reduction in students repeating grade levels, a higher graduation rate with skill levels that led to better jobs and higher family incomes, a path out of poverty and into society.
The cash transfers were delivered monthly to mothers across Brazil using an early type of debit card, where money could be withdrawn at one of 14,000 savings banks. Any family or individual receiving funds was listed in an online national registry, a form of unprecedented public financial transparency. States and municipalities were called upon to contribute a share of the funds and help with the Bolsa's administration.
In 2002, the Bolsa was by far the most immediate and successful anti-poverty program in the world, an example of what is called a "conditional cash transfer," in which families meet conditions in order to qualify for the funds. In this case, the condition was perfect school attendance. In exchange, the child's mother received money she invariably spent in her local town on food and other necessities, helping to strengthen the local economy. Besides being able to attend school, the children received routine vaccinations, regular health check-ups and school lunch.
In their 2015 report, The State of Social Nets, The World Bank analyzed data and outcomes for cash transfer programs in 136 countries. They report that every country in the world uses cash transfers of various kinds; minimum income programs, voucher programs like our food stamp program or universal benefits like Social Security and Medicare. In all, 1.97 billion people worldwide receive some type of benefit via cash transfers. Last year, the World Bank transferred over 6.5 billion dollars to various cash transfer programs all over the world.
Why has the cash transfer taken on such an important role in the global war on poverty?
Simply put, it is an elegantly simple idea that has proven infinitely doable, economical and effective at attacking chronic global poverty by empowering the world's poorest people to help themselves.
There is virtually no argument on the political left or right against using cash transfers as a central tool to ending poverty. Over a hundred and fifty studies have analyzed a twenty- year practical history, particularly in Latin America. The record shows that targeted programs have reduced hunger and child labor, while demonstrably improving health care delivery to families and reducing local poverty. Some cash transfer programs provide support for orphaned children, others expand access to school or create business opportunities for poor families that lift them out of poverty.
And now a World Bank study of the cash transfer program in Malawi has demonstrated that young girls who attend school are less likely to become infected with HIV, when their studies include a focus on prevention, personal decision-making, reproductive health and their futures. In a world with over 35 million people infected by HIV, the power of educating girls to help stop the spread of the disease is now unmistakable.
Because cash transfers are done conventionally and securely using the global banking system, transparency is improved dramatically and stealing or misusing the funds is more difficult. Countries are streamlining and consolidating their social protection programs and all of this is far more economical than moving goods into war-torn or impoverished areas where they are more likely to be sold than used for the purpose intended. Yet today only 6% of our humanitarian aid is done in cash; we're still shipping blankets, food and supplies that may not reach the people who need help and may actually not be what they need.
Today, over a billion children still live in poverty and of the poorest people worldwide, concentrated in Sub-Saharan Africa and Southeast Asia, only ten to twenty percent of their poorest citizens receive help using cash transfers of any kind. Money appears to be the limiting factor. But if we were to enact a global financial transaction tax, that money would become dependably available every year and could be used to help children and families where it's needed most.
If we returned to that same schoolyard in Brazil today, we would find a country and region transformed by its unified efforts to end poverty, now through their renamed cash transfer program, Bolsa Familia. Extreme poverty in Brazil has been cut in half, 14 million households receive cash transfers touching the lives of fifty million people, which represents a quarter of the population. 90% of the beneficiaries are poor women.
This is what success looks like and it's being replicated all over the world. Only money and political will limit what's possible. Let's take two elegantly simple ideas and join them together. Let a financial transaction tax generate the funds we need, every year, directly out of the global financial system and then let's expand our use of the banking system to deliver the goods via cash transfers and end child poverty in our lifetime.
The Same Heart, a film advocating for the financial transactions tax, will have its Washington, D.C. premiere on March 31st at the Howard Theatre. Awa Sangho, the “Golden Voice of Mali,” will perform along with other musicians from the film’s soundtrack. The event will launch The Same Heart FTT campaign. Tickets available through Ticketmaster or at the Howard box office at 620 T St., N.W.