We’ve heard the arguments—the problem is not income inequality (really?); it’s the unbroken cycle of poverty: unemployment and stagnant wages, lack of education, crime, drugs, unwanted pregnancies—the unrelenting hardships of the bottom 20%.
If you grow up poor, you will not only have lower lifetime earnings, but a higher risk of depression, substance abuse, degenerative disease, and accelerated aging.
Let’s talk about fixes. What helps poor children? One answer, it turns out, is—money.
In 1996, the Cherokee Indians of North Carolina opened a casino and split the profits equally among 8,000 members.
Jane Costello, a professor at Duke medical school, had been following the rural children of the area (a quarter of whom were Cherokee) for four years. She had a baseline. Half the Cherokee children lived in poverty, along with one-fifth of the non-Indians.
By 2001, when casino profits were $6,000 per person yearly, the number of Cherokees living in poverty declined by half. Behavioral problems declined by 40 percent, reaching the level of children who had never been poor. Minor crimes decreased. Graduation rates improved.
By 2006, supplements grew to $9,000 yearly and Professor Costello made another observation. The earlier the supplements arrived in a child’s life, the better that child’s mental health in early adulthood.
What did the money do? Interviews with parents and children suggested that it improved parenting. Before the casino, work was seasonal. In winter, families hunkered down to survive. Feast or famine. Animal studies show that early childhood stress has lifelong consequences and maternal nurturing can prevent them. The stress of being poor makes you unwell.
Giving money—cash—to the poorest people goes against our Puritan values. What if they don’t spend it the way we think they should? Won’t they be too ignorant to handle the improvement? In our deepest Puritan hearts, perhaps we think they don’t deserve it.
But all poverty programs are money in another form.
As it turns out, the Cherokee supplements save money. An economist at the University of California looked at Professor Castello’s results. He calculates in 5 to 10 years after age 19, the savings brought about by the casino cash (no prison; decent jobs) surpass the initial costs.
Where do we find this cash? Maybe we could take another look at income inequality.