Welfare Is on a Roll in Mexico

Nicolasa Sarabia doesn’t look as if she’s on the front lines of a social revolution. Stocky, with the no-nonsense hips of a mother of seven, the 34-year-old farmhand ekes out a living growing corn and picking beans for 50 cents an hour. But the dark-haired peasant in the red polka-dot dress is symbolic of a dramatic shift in this country.

Sarabia is a welfare mom.

With little fanfare, Mexico has launched a sweeping initiative that provides cash for the first time to the country’s poorest, like Sarabia. Dropping its longtime subsidies for basic foods, the government is promoting an argument that might ring odd to American ears: Welfare is more efficient.

The scope of the new program is extraordinary. In the past year, it has begun to cover 11 million people--one in nine Mexicans--at an annual cost of nearly $800 million.

By next year, officials estimate, half the country’s rural children will be on public assistance.

“In the United States, [welfare] has become a dirty word. But people in Mexico need help,” said Deputy Finance Minister Santiago Levy, regarded as the program’s father. “It’s just [a question of] whether you can give help in smart ways.”

Experts say Mexico’s experiment is among the boldest examples of a trend: Third World welfare. Even as such programs are being pared back by Washington, they are catching on in places like Latin America.

Still, the idea is controversial. In Mexico, few object to helping the poor. But critics charge that the government will pay for welfare by yanking the small safety net away from the moderately poor and working class.

“You are taking away from the poor to give to the very poor. This isn’t valid,” said Enrique del Val, Mexico’s ex-deputy minister for social development, who resigned last spring to protest the new policies.

Poverty is Mexico’s gravest problem, and indirectly affects the United States in the form of immigration and drug trafficking. So any program that can alleviate poverty is important on both sides of the border.

But Mexico’s is not just another anti-poverty initiative.

It is a sea change in a country that for decades subsidized basic items such as the tortilla. Now, the government plans to steer the aid directly to the most needy.

“You are changing the whole concept of welfare to something like the U.S. [system],” said Miguel Szekely, an economist at the Inter-American Development Bank.

The Mexican program, known as Progresa, uses sophisticated door-to-door polls to identify the poorest families. Then, it pays them welfare--with strings attached. To qualify, families must send their children to school and to the doctor for checkups and vaccines. Authorities keep special records of class attendance and medical visits, paying only those families who comply.

Recipient, Her Family Live in Cement Hovel

Sarabia, the peasant, is an example of how it’s working. She lives only an hour from San Miguel de Allende, the upscale tourist enclave in central Mexico. But her dim, cement-block hovel might as well be on another planet.

Sarabia, her husband and seven children share three beds--and no bathroom. Her stove is a cut-up oil drum, set in the sunbaked yard, amid scratching chickens and a cactus that serves as a clothesline.

Her middle girls, 8-year-old Ana Laura and 10-year-old Ana Cecilia, had never been to school.

“It’s because of our economy,” said their mother, referring to the family’s meager earnings. “They helped me in the house and with the harvest.”

But this year, the shy, dark-haired girls started first grade. Sarabia knows that, if they stick to their studies, the family will eventually get a big boost in its welfare payment, now about $10 a month.

Welfare has proved a powerful enticement to other families in San Martin. J. Celestino Rodriguez, who teaches in the hamlet’s two-room schoolhouse, says 13 of his 44 first- to third-grade students used to drop out during the planting and harvest seasons. Now, they go to class or face loss of the payments.

“The kids pay a lot more attention to their studies,” he said.

Mexico’s program stands many U.S. ideas about public assistance on their heads. For example, the biggest promoters of welfare here aren’t traditional liberals. They are people like Levy, a 42-year-old former Boston University professor who has quietly become one of the most powerful men in the Mexican government.

He is a keen free-marketeer. But he acknowledges that the benefits of Mexico’s sweeping economic reforms haven’t trickled down to the neediest. That’s because, he says, only some of the Mexican poor can take advantage of schools, job opportunities, the market.

The others are the “extreme poor”--like Sarabia. Hunger-stricken, they’re too weak to work or study well. With meager incomes, they must use their children to earn a few more pesos. Even if the government builds a school, it’s too much of a luxury for such parents to send their offspring.

“They’re caught in a poverty trap,” Levy said. “These people are in different circumstances than somebody with a low income but who can take advantage of some government programs.”

Mexico has actually made huge strides against poverty in the past several decades. In 1950, 73.2% of the population was poor; nearly one-third of Mexicans were in extreme poverty, according to figures compiled by Szekely, the economist, in a recent book.

By 1984, the percentage of poor had fallen to 28.5%, with fewer than one-seventh of Mexicans in extreme poverty, according to Szekely’s figures. The percentages have since risen due to economic crises that have beset the country, with 36% living in poverty in 1996. Szekely did not have data for 1998; the government estimates extreme poverty last year at 27%, but does not have comparative figures for earlier years.

Like other Latin American countries, Mexico had fought poverty by building up vast systems of price controls and subsidies over the years, artificially lowering the price of tortillas, milk and electricity.

The problem: Those subsidies helped country clubbers and campesinos alike. When Latin America was buffeted by the debt crisis of the 1980s, many strapped governments began to reexamine such aid.

Thus was born the idea of targeting the poor. That concept has won favor with powerful institutions like the World Bank as well as free-market Latin governments.

Forget U.S. stereotypes. To these officials, welfare equals efficiency.

“We often find that commodity subsidies . . . [are] supported in the name of fighting poverty. But they’re extremely inefficient,” said Michael Walton, director for poverty reduction at the World Bank. “The richer people tend to consume more of those commodities.”

Most Needy Were Often Overlooked

Advocates also link welfare to justice. Academics have come to realize that anti-poverty measures in places like Mexico often didn’t reach the extreme poor, who frequently live in isolated villages.

Instead, benefits tended to help city dwellers. They may not be the poorest, but are the loudest, able to grab the attention of politicians.

“One of the features of extreme poverty is that these people aren’t only poor in terms of income but in their capacity to organize,” said Alberto Diaz Cayeros, a poverty expert at the Center of Research for Development, a Mexican think tank.

Several countries have adopted programs to specifically identify the poorest and funnel aid directly to them. The schemes vary widely, from a food-stamp system in Jamaica to a program in Bangladesh that uses food to lure poor children to school, said the World Bank’s Walton.

There is no one-size-fits-all solution, he said. But welfare-style programs have proven successful in countries like Chile and Colombia, he said.

In Mexico, however, the shift to welfare has provoked a howl of protest.

Politicians, including some from the governing party, have fiercely opposed the government’s elimination of price supports for items like the tortilla, and its plans to gut Conasupo, its vast network of discount food stores.

“It’s seen as a dismantling of the social safety-net structure that had been in place since the post-revolutionary era,” said Denise Dresser, a political scientist, referring to the 1910-17 Mexican Revolution.

“All Mexican schoolchildren are taught that’s what the revolution was fought for.”

Critics say the cutbacks will leave millions of the moderate poor out in the cold. They argue that it’s naive for the government to try to target the extreme poor when the difference between them and the moderate poor may be only a few dollars a week.

They point to such dramatic steps as the elimination of the tortilla subsidy. The corn crepes that form the basis of the Mexican diet have nearly doubled in price as the subsidy has been lifted over the past year, and now cost about 35 cents for a standard two-pound pack. Such an increase is substantial even for Mexico’s moderate poor, who may earn the minimum wage of 44 cents an hour, or less.

Many also wonder if the program is sufficient. The welfare payments, a maximum $63 a month, are tiny by U.S. standards. And the massive effort to identify the poor, then provide them cash and access to schools and clinics, has been marked by disorganization in some communities.

Teacher Criticizes Program as Too Little

In the hamlet of San Martin, in the state of Guanajuato, welfare has produced visible results. But Rodriguez, the teacher, criticizes the program as insufficient to lift people out of poverty.

“It’s little money. If they gave more, you’d have enough for other things, not just tortillas and beans,” he said.

Rodriguez gestured at the blackboard, where he had chalked the names of fruits for a reading lesson. Many children barely knew what they were.

“They’ve seen strawberries, but they’ve never eaten them. They’re expensive,” he said. “It’s the same with watermelons and apples.”

A knot of tiny children gathered around his desk, one scratching her tousled head. “Parasites,” noted the teacher.

Still, to families barely scraping by, the payments aren’t trivial.

Sarabia, for example, gets the minimum welfare check--about $20 every two months. But she and her husband often take home only $30 a month from their work on a nearby farm.

“For me, it’s important. Every two months, I can buy my kids, maybe, a pair of underwear. Or some socks,” Sarabia said.

If her children continue to study, her payments could rise significantly. Families can receive the $63 a month maximum if they have several children in school; the average payment is $33. The assistance is phased out as children grow up.

Mexico’s welfare program embodies many new ideas from top international poverty scholars. For example, it requires welfare recipients to attend talks on nutrition and child care--a recognition that the poor often lack information.

It gives more money to families with girls than to those with boys--an effort to reverse the lower status accorded to daughters in many indigent families. Payments are in checks made out to mothers.

But critics contend that ideas from poverty scholars can’t substitute for seasoned programs. They worry that slashing a long-established subsidy system like Conasupo could provoke chaos. The idea may look good to an economist, they say, but it’s easier to white-out subsidies than to build a complex new organization to compensate the poor.

“Levy’s aides have doctorates, but they don’t know this country,” said Del Val, the former development official.

Levy bristles at the suggestion. He has been passionate about poverty since his high school days, when he and other middle-class Mexico City youth idolized revolutionaries Fidel Castro and Che Guevara.

Levy abandoned Marxism for capitalism at Boston University, where he earned his doctorate. But he plunged into the issue of poverty, becoming one of Mexico’s foremost experts.

“We’re trying to change from a strategy in which all you were doing is subsidizing food, to a strategy in which you try to invest in the human capital of the poor,” he said. “There’s a big difference.”

Officials like Levy are pinning their hopes on Progresa to reverse the rise in poverty since Mexico’s 1995 economic crisis. The percentage of Mexicans in poverty rose from 31.8% in 1994 to 36% in 1996, according to Szekely’s figures.

Early results are encouraging, officials say. Attendance is up one-third in schools in communities with Progresa, said Jose Gomez de Leon, the program’s administrator.

Experts at institutions like the Inter-American Development Bank say Progresa appears well planned, although they caution that it is still early to judge the results.

“You’re not only fighting current poverty but trying to make sure you give people the possibility of earning better in the future--particularly the next generation,” said Nora Lustig, a poverty specialist at the bank.

It is unclear, however, how long welfare will survive. The press-shy government of President Ernesto Zedillo has introduced Progresa quietly. Officials say they want to avoid the impression that they are using the program to buy votes, a tradition of the ruling party. But the effect is that critics often steal their thunder.

* TORTILLA TO-DO

Mexican officials moved to force tortilla prices back down after a national outcry. C1

(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)

Poverty in Mexico

The percentage of poor families in Mexico has been mostly declining for decades but rose sharply after the country’s 1995 economic crisis.

1950

Percentage of population considered poor: 73.2%

Percentage of population in extreme poverty: 31.3%

*

1984

Percentage of population considered poor: 28.5%

Percentage of population in extreme poverty: 13.9%

*

1996

Percentage of population considered poor: 36%

Percentage of population in extreme poverty: 20%

Source: “Economics of Poverty, Inequality and Wealth Accumulation in Mexico” by Miguel Szekely.