Rutger Bregman: Poverty Isn’t a Lack of Character; It’s a Lack of Cash (Transcript)

Here is the full transcript of journalist Rutger Bregman’s TEDx Talk: Poverty Isn’t a Lack of Character; It’s a Lack of Cash at TED conference. 

Listen to the MP3 Audio: Poverty isn’t a lack of character; it’s a lack of cash by Rutger Bregman at TED conference

TRANSCRIPT: 

I’d like to start with a simple question: Why do the poor make so many poor decisions? I know it’s a harsh question, but take a look at the data. The poor borrow more, save less, smoke more, exercise less, drink more and eat less healthfully.

Why? Well, the standard explanation was once summed up by the British Prime Minister, Margaret Thatcher. And she called poverty “a personality defect”. A lack of character, basically.

Now, I’m sure not many of you would be so blunt. But the idea that there’s something wrong with the poor themselves is not restricted to Mrs Thatcher. Some of you may believe that the poor should be held responsible for their own mistakes. And others may argue that we should help them to make better decisions.

But the underlying assumption is the same: there’s something wrong with them. If we could just change them, if we could just teach them how to live their lives, if they would only listen.

And to be honest, this was what I thought for a long time. It was only a few years ago that I discovered that everything I thought I knew about poverty was wrong. It all started when I accidentally stumbled upon a paper by a few American psychologists. They had traveled 8,000 miles, all the way to India, for a fascinating study. And it was an experiment with sugarcane farmers.

You should know that these farmers collect about 60% of their annual income all at once, right after the harvest. This means that they’re relatively poor one part of the year and rich the other. The researchers asked them to do an IQ test before and after the harvest. What they subsequently discovered completely blew my mind. The farmers scored much worse on the test before the harvest.

The effects of living in poverty, it turns out, correspond to losing 14 points of IQ. Now, to give you an idea, that’s comparable to losing a night’s sleep or the effects of alcoholism.

A few months later, I heard that Eldar Shafir, a professor at Princeton University and one of the authors of this study, was coming over to Holland, where I live. So we met up in Amsterdam to talk about his revolutionary new theory of poverty. And I can sum it up in just two words: scarcity mentality.

It turns out that people behave differently when they perceive a thing to be scarce. And what that thing is doesn’t much matter — whether it’s not enough time, money or food. You all know this feeling, when you’ve got too much to do, or when you’ve put off breaking for lunch and your blood sugar takes a dive. This narrows your focus to your immediate lack — to the sandwich you’ve got to have now, the meeting that’s starting in five minutes or the bills that have to be paid tomorrow. So the long-term perspective goes out the window.

You could compare it to a new computer that’s running 10 heavy programs at once. It gets slower and slower, making errors. Eventually, it freezes — not because it’s a bad computer, but because it has too much to do at once. The poor have the same problem. They’re not making dumb decisions because they are dumb, but because they’re living in a context in which anyone would make dumb decisions.

So suddenly I understood why so many of our anti-poverty programs don’t work. Investments in education, for example, are often completely ineffective. Poverty is not a lack of knowledge. A recent analysis of 201 studies on the effectiveness of money-management training came to the conclusion that it has almost no effect at all. Now, don’t get me wrong — this is not to say the poor don’t learn anything — they can come out wiser for sure.

But it’s not enough. Or as Professor Shafir told me, “It’s like teaching someone to swim and then throwing them in a stormy sea.” I still remember sitting there, perplexed. And it struck me that we could have figured this all out decades ago. I mean, these psychologists didn’t need any complicated brain scans; they only had to measure the farmer’s IQ, and IQ tests were invented more than 100 years ago.

Actually, I realized I had read about the psychology of poverty before George Orwell, one of the greatest writers who ever lived, experienced poverty firsthand in the 1920s. “The essence of poverty,” he wrote back then, is that it “annihilates the future”. And he marveled at, quote, “How people take it for granted they have the right to preach at you and pray over you as soon as your income falls below a certain level.” Now, those words are every bit as resonant today.

The big question is, of course: What can be done? Modern economists have a few solutions up their sleeves. We could help the poor with their paperwork or send them a text message to remind them to pay their bills. This type of solution is hugely popular with modern politicians, mostly because, well, they cost next to nothing. These solutions are, I think, a symbol of this era in which we so often treat the symptoms, but ignore the underlying cause.

So I wonder: Why don’t we just change the context in which the poor live? Or, going back to our computer analogy: Why keep tinkering around with the software when we can easily solve the problem by installing some extra memory instead? At that point, Professor Shafir responded with a blank look.

And after a few seconds, he said, “Oh, I get it. You mean you want to just hand out more money to the poor to eradicate poverty. Uh, sure, that’d be great. But I’m afraid that brand of left-wing politics you’ve got in Amsterdam — it doesn’t exist in the States.” But is this really an old-fashioned, leftist idea? I remembered reading about an old plan — something that has been proposed by some of history’s leading thinkers.

The philosopher Thomas More first hinted at it in his book, “Utopia,” more than 500 years ago. And its proponents have spanned the spectrum from the left to the right, from the civil rights campaigner, Martin Luther King, to the economist Milton Friedman. And it’s an incredibly simple idea: basic income guarantee. What it is? Well, that’s easy. It’s a monthly grant, enough to pay for your basic needs: food, shelter, education.

It’s completely unconditional, so no one’s going to tell you what you have to do for it, and no one’s going to tell you what you have to do with it. The basic income is not a favor, but a right. There’s absolutely no stigma attached. So as I learned about the true nature of poverty, I couldn’t stop wondering: Is this the idea we’ve all been waiting for? Could it really be that simple?

And in the three years that followed, I read everything I could find about basic income. I researched the dozens of experiments that have been conducted all over the globe, and it didn’t take long before I stumbled upon a story of a town that had done it — had actually eradicated poverty.

But then nearly everyone forgot about it. This story starts in Dauphin, Canada. In 1974, everybody in this small town was guaranteed a basic income, ensuring that no one fell below the poverty line. At the start of the experiment, an army of researchers descended on the town. For four years, all went well.