Fintan O’Toole: Pandemic has shown the real wonder drug is money

When did the biggest reduction in poverty in the history of the United States take place? During the New Deal era of the 1930s, when Franklin Roosevelt created huge government programmes to deal with the Great Depression? As a result of Lyndon Johnson's "war on poverty" in the mid-1960s?

No. By far the fastest and most dramatic cuts in poverty ever seen in the US have been in the past two years. The pandemic, for all its personal costs and economic disruptions, has been good for social justice.

The figures are stunning. The number of poor Americans is expected to fall this year by nearly 20 million as compared with 2018, a decline of almost 45 per cent. Nothing like this has ever happened before.

Conservatives have put an enormous amount of effort into obscuring the bloody obvious: that poverty is primarily a matter of not having enough money to lead a dignified life

What is the secret to this spectacular achievement? There is no secret, just the delivery of modest amounts of money to the people who need it most.

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It should not take a horrible plague to make this plain. But, over the last three centuries, conservatives have put an enormous amount of effort into obscuring the bloody obvious: that poverty is primarily a matter of not having enough money to lead a dignified life. They have managed instead to explain poverty as a moral failing, not of society, but of the poor themselves.

The great convenience of this ideology is that it makes a good thing – giving poor people money – into a bad thing. Delivering cash merely rewards their failures and reinforces their bad habits.

It is as if we were to say that if people are naked, we must not give them clothes. We must make them feel ashamed of their nakedness so that they will be motivated to dress themselves.

People, in this mindset, are not poor because they have no money, but because there is something wrong with them, individually or collectively, some lack of gumption or failure of will, or bad genes or wrong beliefs.

Covid-19 created an urgency, even in the US, about giving people cash to keep the economy going

The theory, for example, that Irish Catholics were destitute both because their religion made them ignorant and slavish, and because they were racially inferior to hardworking Anglo-Saxons and Teutons.

This attitude persists in the reluctance to give poor people money. At worst, they’ll spend it on drink or drugs. At best, they will develop a “culture of dependency”.

Well over a century ago, the most influential Irish thinker of the 20th century, Bernard Shaw, wrote: "The crying need of the nation is not for better morals, cheaper bread, temperance, liberty, culture, redemption of fallen sisters and erring brothers, nor the grace, love and fellowship of the Trinity, but simply for enough money."

It has taken a pandemic to bring back this obvious truth. Covid-19 created an urgency, even in the US, about giving people cash to keep the economy going. The Biden administration has pumped about $1 trillion into households through stimulus cheques, increased unemployment benefits and child tax credits.

The result is that poverty has fallen most among children but also in every age group, among white, black, Latinx and Asian Americans, in every state of the US and in both rural and urban communities.

Right-wingers argue that this is all very well in the short term, but it will serve only to make these people more dependent, more demoralised, and less willing to go to work and take care of themselves.

The empirical evidence shows the complete opposite. Consider one of the most fascinating social experiments of recent times: the so-called Stockton Economic Empowerment Demonstration (SEED).

Stockton, in California, was named by Time magazine in 2014 as “America’s most miserable city”. It has very high rates of poverty.

If the cloud of daily despair is lifted, people can see possibilities – including the possibility of looking for a half-decent job

In 2019, the then mayor Michael Tubbs began the SEED experiment. It was very simple: 125 randomly chosen people were each given $500 a month for two years.

That was it. No “deserving poor”, no moral tests, no work requirements, no instructions on how they should spend the money. They were simply monitored and compared to a control group that did not get this extra cash.

Conservatives would have predicted that the free money would make these people lazier, less motivated and, in the end, even more economically marginal. They would have no incentive to work.

In fact, what happened is that many more of the people who got the money ended up in full-time work. At the start of the experiment, just 28 per cent of the recipients were in full-time employment. After just a year, 40 per cent were.

Another result of the experiment helps us to understand why this should be so. The money really improved people’s mental health.

The recipients suffered far less depression, anxiety, hopelessness, fatigue and lack of concentration. They felt much more in control of their lives. For people living in poverty, cash may be a much more effective mental health treatment than anything pharmacology has invented.

There’s no great mystery about this. Struggling every day to make ends meet is immensely stressful. Stress is terrible for both the body and the mind.

If you give people enough money to alleviate that stress, you increase their capacity to improve their own lives and those of their children. If the cloud of daily despair is lifted, people can see possibilities – including the possibility of looking for a half-decent job.

The case for a universal basic income, argued for so long by radicals, has been made even more powerfully by Covid

The pandemic has been, in many developed societies, a gigantic version of the Stockton experiment. A lot of people living in poverty got a lot of extra cash. There is little reason to doubt that for most of them life has become more dignified, less frantically anxious, more self-controlled.

The big problem, of course, is that so much of this has been framed as a temporary, emergency response to a one-off crisis. The pressure is on to take the money away again – and, in effect, to dump families back into poverty.

Yet, if there is any reality behind all the talk about “building back better” and not merely returning to the old bad habits, this cannot be accepted as an inevitability. The case for a universal basic income, argued for so long by radicals, has been made even more powerfully by Covid.

In responding to the pandemic, most governments recognised that access to enough money is as much a public health issue as is access to medical care. It was in nobody’s interest to let families become destitute and for their lives to become more chaotic.

What was obviously true as we faced into this crisis cannot be untrue as we slowly emerge from it. And there will, in any case, be other crises – climate change and automation alone will powerfully disrupt the economic lives of billions of people.

Money is not the solution to all social problems. But it is, for those who suffer most acutely from a shortage of it, something of a wonder drug. If it were an actual drug, we would spend fortunes to develop and deploy it and roll it out like a social vaccine.