Economic Arguments in Favor and Against Conditional Cash Transfers (CCTs) Essay Example

Introduction

Conditional Cash Transfers (CCTs) refers to the programs that are initiated and implemented by governments and development organizations aimed at transferring cash to low-income families. CCTs identifies low-income families and set conditions that must be fulfilled by these families to be able to access cash transfers. Generally, the conditions are an investment in the human capital of the family. As such, these families agree to put their children to school, making visits to hospitals for a regular health checkup and receiving vaccinations against different illnesses. These conditions are subjected to these females to improve their social welfare and enhance their abilities to get out of poverty. The CCT programs often identify the mother or the student to CCT the cash transfers to be able to help the family meet their essential needs. The issue of CCTs has been a subject of debate globally concerning its role in fighting poverty. The proponents of this program argue that CCTs enhances the ability of the family to work to fight against poverty. Some say that CCTs does not fight poverty but only contains poverty. These arguments provided factual information thus furthering the debate in support and against CCTs. Numerous countries such as the Philippines, Mexico, Indonesia, Brazil, Turkey, and Cambodia have adopted CCTs programs. These programs have proved to be a success, but in some other cases, they have been blamed for not aiding the fight against poverty. Developing countries have seen such programs eliminating poverty even though structural reforms are required to end poverty. The different arguments in support and against CCTs on the context of its effectiveness in reducing provides a discussion that can provide an in-depth assessment of the program.

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Economic Arguments in Favor of CCTs

The issue of CCTs transfers raises essential questions that must be answered to get to the bottom of the program. An economist must ask oneself if such a program is good for the economic health of any nation. CCTs are short-term and quick means of dealing with poverty, but it might not be sustainable in the long-run. The question on if the CCTs intervention is appropriate for economic growth is rhetorical. The fact that any nation values the fight against poverty as a priority does not make it sensible to use the majority of the resources towards eradicating poverty. The government must balance its expenditure to ensure that other sectors also benefit. Economic growth can only be achieved when the government takes a multivariate approach that involves all the sectors in the economy.

The move to provide cash transfers to the poor has been lauded as it helps them to access public services. In countries such as Nicaragua, the majority of the citizens live without access to essential public services. The major development programs that have been initiated by the government have failed to benefit the poor. In most countries, access to good roads, water, education, electricity, and other social amenities remains a problem. The citizens who despite paying taxes find it hard to access these services are better served when they receive direct cash transfers (Behrman & Skoufias, 2010). The conditions that come with this initiative means that citizens can access social services without necessarily relying on the government. The cash transfer programs serve to bridge the gap in access to social services to the poor. It is through this program that the poor can be able to afford essential services without being sidelined by the government.

CCTs have proved to work for the poor compared to other forms of public expenditure. Public expenditure targets the entire population which includes the poor. Even if there are structural reforms aimed at redirecting the same funding to the poor, the amounts that are allocated might not be adequate to meet the needs of the poor. Besides, the impact of public expenditure on reducing poverty might not be fully felt. CCTs on the hand has proved to be the most reliable avenue of directly reaching out to the poor. The program identifies the poor people in different regions then embarks on the effort to identify development programs that can help the poor (Stampini & Tornarolli, 2012). The direct impact and association with poor communities allow project managers and coordinators to get to the root of the problems of these people. Besides, the move can challenge the government in office to take action to salvage the prevailing situation from reaching unmanageable heights. CCTs provides the appropriate avenue of helping the poor. The initiative of the program aims at empowering the poor socially to developing the confidence of engaging in other economic activities. Besides, it equips them with relevant skills that will allow them to take advantage of economic opportunities fully.

The issue of poverty cannot be handled casually as it requires the involvement of different parties. The cash transfers to the poor on a conditional basis helps empowers the poor socially. Even if the government develops the best policies that can transform the country economically without directly dealing with issues facing the poor, it will be difficult to eradicate poverty (Sugiyama, 2011). There is a need to fast tackle social issues to give the poor the platform to express themselves freely. The role of CCTs is to ensure that these people can afford social needs to the point in which they can think of other need that will spur economic growth. CCTs provides an immediate solution that acts as a catalyst for future economic development. Countries such as Brazil, Philippines, and Turk have proved that CCTs worked to empower communities to engage in meaningful economic activities.

CCTS plays the other role in addressing structural inequalities in society. Poverty in developing countries is attributed to the inequality that is often inherited. The forms of inequality are often worsened by gender issues which alienate women from economic activities. The fact that poverty is inherited does not create an ethical case to address the issue directly. The low-income families have no control over the issues and also rely on well-wishers and false promises by government officials. However, CCTs have come to solve the problem of inequality. How the cash transfer is awarded does not favor any individual and offers equal opportunities for all the people? The outcome of CCTs has seen families improving their social welfare and also engaging in civic activities (Behrman & Skoufias, 2010). It is through CCTs that women empowerment has been achieved. Studies have shown that women who are empowered make a significant impact on their society. The countries that have seen these programs implemented have seen a rise in the number of people voting during general elections. It is through this program that people have been empowered to participate in civic activities fully. The empowerment also gives them the opportunity to shape the destiny of their countries.

The cash transfers on a conditional basis reduce both the current and future poverty levels. The program works by ensuring that there are equity and efficiency in the economy. When poor people receive these funds, they feel better and equal to those who afford essential needs. Besides, the transfer creates efficiency in the economy by ensuring that capital is distributed in the economy. The fluctuations in the market that affect the economy can worsen the situation of low-income families. As such, CCTs addresses the volatile nature of economic markets by improving the welfare of these communities (Stampini & Tornarolli, 2012). The process of fixing the problems in the money market can be costly and timely and urgent interventions can prove to be the game changer. As such, CCTs cushions low-income families from the economic impacts brought about by fluctuations in the economy.

Arguments against CCTs

There are have been different arguments which have been brought forward against CCTs. Economists have argued that poverty in developing countries can best be reduced through efforts that promote economic growth. In these countries, the government has often failed to provide the right infrastructure to support economic besides. Besides the fiscal and economic policies established lack the goodwill of implementation to end poverty. The argument shows that CCTs to the poor have limited payoff compared to when the government investments in capital projects (Sugiyama, 2011). Capital projects tend to have a higher return which can be redistributed back to the economy. CCTs further provides the wrong incentives particularly to the poor. The decision to provide these funds to the poor to gather for their basics means that most of them will relax and wait for government support. In most cases, the poor will stop investing in their human capital to be able to gather for themselves fully. The less productive people worry less about working hard and would welcome the incentive as a way of gathering for their needs.

The other argument presented is that the use of CCTs in funding public infrastructure is better than providing handouts for the poor. Numerous factors have caused the level of poverty in developing countries. However, the citizens of these countries strive to make ends meet. Majority of the poor have mastered the art of how to earn a living. The program of CCTs discourages self-reliance by subjecting people to relying on cash transfers. In developing countries where the rates of unemployment are high, the majority of the people suffer forcing them to engage in crime (Behrman & Skoufias, 2010). The reliance created by these resources not only makes people reluctant to engage in economic activities but also find a way in which they can earn more money from the program. The program has seen a majority of the dependents finding ways of making more money by enrolling relatives or family members to get access to the funding.

The conditioning of cash transfers to only limit individuals on how they should act to benefit from the program raises another ethical issue against the initiative. The conditions that have been set by the program means that specific groups of people can only be signed to benefit from the program. Families that respect autonomy might be locked out from benefiting from the program. Families must agree to comply with the conditions to be able to benefit. The conditions then raise the question on the appropriateness of forcing people in poverty reduction ((Stampini & Tornarolli, 2012). The enrolment of individuals to the program should be free and not set any conditions. The conditions portray the poor as individuals who need to be forced for them to get out of poverty. It further suggests that poverty is a problem that has been created by laziness and lack of ambition to solve problems. The help that is provided based on certain conditions might not achieve its intended goals.

The use of CCTs in the fight against poverty does not provide a substitute for economic models. Structural economic adjustments are needed in the fight against poverty. Researchers have established that CCTs serve to delay the implementation of real solutions to tackle the problem. It only provides short term solutions to relieve people from the consequences of poverty. However, when the program is stopped, there is a likelihood that the same people will get back to poverty. The focus of redistributing income without making changes to other economic issues will not solve the issue once and for all. On the contrary, the program is only used to ease the pressure of poverty and give people the false hope that the government is working to resolve the issue (Sugiyama, 2011). CCTs have failed many economies in t...