Technology may offer a third way
I hate milk. I always have. It turns my stomach. Yet as a child in the 1970s, I was forced to drink a glassful each and every school day. It was some sort of state hand-out — a remnant of post-war policy.
Then, all of a sudden, the lactic New Jerusalem came crashing down. No more free school milk. Finally, I could stop retching.
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Not everyone was happy. As education secretary, Maggie Thatcher — the ‘milk snatcher’ — was blamed. That didn’t stop her becoming Prime Minister, of course. And when she did, the watchword was ‘choice’. Ideally, that meant the choice afforded by the rewards of hard work, but where state support was required, the preference was to provide it in cash, not kind.
More recently, the idea of ‘free stuff’ — as championed by populist Left-wingers like Jeremy Corbyn and Alexandria Ocasio-Cortez — has come back into vogue. Marcus Rashford was pushing at an open door with his free school meals campaign. However, the poor quality of some of the meals provided has prompted people to ask: why we don’t we just give parents the money instead?
That’s a question that Aveek Bhattacharya thinks we should be asking a lot more often. In a thought-provoking paper for the Social Market Foundation, he calls for ‘cash benchmarking’:
In many cases, it’s perfectly obvious why governments would want to provide a service directly instead of giving people money to buy what they need from the market. For instance, it’s hugely more efficient for the state to build and maintain a road network than to have competing highways provided by the private sector.
But in another cases, like those substitutes for free school meals, there’s a useful debate to be had. As Bhattacharya argues, we must at least consider whether a simple cash transfer would be more efficient and more dignified.
But what about the risk that the cash will be misused by those given it? Whether or not this is a valid concern, it does present a political hurdle to cash-based welfare — and indeed to ideas like Universal Basic Income.
There is, however, a third way: giving people conditional purchasing power. This is the logic behind America’s Supplemental Nutrition Assistance Program — a.k.a. Food Stamps. Voucher welfare is resisted in other countries because it’s seen as ‘othering’ the poor. Having to pay for your food with tokens not cash marks you out.
But what if it didn’t? If, or rather when, we switch to electronic cash — the potential will exist for cash credits that can be digitally — and discreetly — earmarked for specific categories of purchase. US Food Stamps are already in the process of going fully digital and thus one can foresee technology enabling a wider revolution in welfare policy.
What is unclear, however, is whether this will be used to give welfare recipients more options — or to impose conditions on the ordinary cash payments currently made to them.