Rory Stewart makes the case for direct cash transfers

The keynote and final address in the annual Green Templeton Lectures was given by Rt Hon Rory Stewart on Monday 5 June 2023. In this eloquently presented talk, Stewart drew on his experiences to argue for the importance of direct cash transfers.

Rory Stewart is President, GiveDirectly; host, The Rest Is Politics; and former UK Secretary of State for International Development. He spoke to packed out lecture theatre in the Mathematical Institute next to college in an event that was also live streamed online.

Watch online

Read report of the lecture

Pallavi Menon (MSc Evidence-Based Social Intervention and Policy Evaluation, 2022) writes

The Rt Hon Rory Stewart began his talk by framing an important problem: ending extreme poverty in the world. Ending poverty is the first goal of the UN Sustainable Development Goals, which seemed achievable when the SDGs were drafted. However, one of the most telling failures is reflected in the high number of people, almost 719 million, who still live in absolute poverty today. Additionally, The Brookings Institution reports that the global poverty gap, the theoretical amount of money to lift everybody in the world above $2.15, is $100 billion, which is about 0.1% of global GDP. Reflecting on this scale of the discrepancy between global wealth and need, Rory urged his listeners to consider the historical drivers of wealth inequalities.

Historical Evolution of the Poverty Gap

To frame the context of the current poverty crisis, Rory examined four phases of predominant sociopolitical events from the late 1980s till today. He suggested that the underlying problem of matching philanthropy with extreme poverty is a problem of political change and the collapse of global liberal order.

1989 to the early 2000s: The age of liberal optimism

This is the period when the fall of the Berlin Wall brought the United States into unparalleled global dominance. It was also a period when the world became more prosperous every year and the number of democracies doubled. Every year during this period, the number of refugees and internally displaced people diminished. Western models of democracies, human rights, and free markets also seemed transferrable to places like Liberia and Bosnia. It was also a period when poverty was dropping dramatically, driven largely by a transformation in China lifting many out of poverty. However, this only lasted till 2004, when it all began to change.

2004 to 2014: The age of uncertainty and transition

During this period, the curve of increasing democracies around the world began to flatten out. There is an increasing constriction around the world of civil society and a sense that the human rights agenda is moving backward. This was the period of the explosion of the power of China. In 2001 China joined the World Trade Organization and China became progressively larger than the French, British, German, and Japanese economies. However, this period is also defined by three other factors.

First was the rise of social media through the emergence of Twitter and Facebook, allowing the spread of a revolution from Tunisia to Syria, Bahrain, and Yemen. Technology began to deepen polarisation and hyperactive nationalism. The second factor was the humiliation of the United States and its allies in Iraq and Afghanistan. This was important because it attacked the legitimacy of the US, but also because of its scale of nation-building. At this time, Afghanistan drew from American think tanks, charities, and powerful research to transform its state. 3.5 trillion dollars were spent in Iraq and Afghanistan during this period. This was also the cracking of the dominant liberal global order. The final event in this period was the 2008 financial crisis. This fundamentally broke the confidence in the capitalist market system.

Since 2014: The age of populism

This period began with Narendra Modi being elected in India, when ISIS took Mosul, and when the Law and Justice party was elected in Poland. It is also the era of the Brexit vote and the election of leaders like Jair Bolsonaro in Brazil and Donald Trump in the United States. Rory highlighted that this was also the period when he became a development minister and began wrestling with the notion of tackling extreme poverty. It was clear to him when he entered the then UK Department for International Development (DFID) that the world was in a difficult state. Political forces in the West were becoming more isolationist and less committed to the idea of a global international order. Rory hypothesized that the reasons for that included the conditions created by the global financial crisis and the Western anxiety surrounding the state of Afghanistan and Iraq. DFID, therefore, responded with a narrow and austere vision of international development, which involved a commitment to spend 0.7% of GDP on international aid and a reluctance to engage with the public.

Rory argued that now is an unpropitious time for government giving, a story seen not just in Britain. Most countries have diverted money from sub-Saharan Africa to Ukrainian refugee support. Therefore, 90% of the support for the drought crisis in the Horn of Africa was from the United States alone. This shift was also seen in the fall in support of Oxfam through membership. In this United States, however, this seemed to be a time of prosperity, largely driven by the tech boom. This progress was furthered by the generosity of the likes of Bill Gates, Jeff Bezos, and his former wife. However, this source of funds was blocked with the collapse of crypto and the retrenchment of tech stocks, leading to challenging circumstances for non-governmental organizations in Africa.

Rory the offered a solution: direct cash transfers.

The power of direct cash transfers

He suggested that the preceding story of the loss of hope can be overturned with the following three solutions:

1. Development of mobile money in Africa like M-PESA
2. Randomised Controlled Trials which offer evidence for direct cash transfers
3. Understanding contextual capacities for development

Overall, Rory emphasised the transformative power of delivering cash straight to phones in ending extreme poverty. However, there are some persistent barriers as outlined below.

Psychological barriers

Philanthropic donors do not want to offer just money. Rather, they endeavour to offer advice.

Historical proverb problem

Rory recalled the well-known proverb, ‘If you give a man a fish, you feed him for a day. If you teach a man to fish, you feed him for a lifetime.’ Cash essentially feels like a ‘giant fish-giving project’. However, the problem with ‘teaching a man to fish’ is that capacity building does not always work. The needs of individuals are often unique and capacity building has the problem of being one size fits all. Additionally, to utilise capacity, individuals need capital, which is often used up while providing capacity. Rory shared an example of a study in which cash transformed nutritional outcomes because the fundamental problem was not a lack of knowledge surrounding nutrition, but a lack of money to obtain food. Poverty underlies a plethora of other issues and cash is often the best solution.

Institutional problem

Most individuals in development roles are hired as specialists, involving capacity building through workshops and programs. In this instance, simply transferring cash seems to be an underutilisation of skills.

Despite these barriers, Rory continued to emphasise that direct cash transfers to the extremely poor address many of the problems from the previously outlined 40-year history. This 40-year story is in fact one of overweening ambition, hubris, arrogance, and failure to impose models on other people. However, giving cash is radically respectful. Providing cash unconditionally empowers individuals with dignity, giving them the freedom to decide how to spend their cash.

In conclusion, Rory stressed that giving cash is an action of immense ethical significance, rather than one of self-interest or logic. He even suggested the power of cash transfers could almost certainly end poverty in current lifetimes. Cash giving is an act of empathy, respect, and acknowledgment of dignity and fundamental equality. Finally, in the process of donor action, it is an act of solidarity and can enhance the sense of community and compassion.

About the series

The Green Templeton Lectures 2023 explored whether philanthropy has a problem with evidence under the umbrella ‘Seeing is believing’. They were convened by Principal Sir Michael Dixon and Associate Fellow Caroline Greenhalgh. Josh Yates gave the first lecture on unlocking the benefits of venture philanthropy and Anne-Birgitte Albrectsen gave the second lecture on co-impact philanthropy.

Contact

Contact the Academic Projects team for further information about this event and Associate Fellow Caroline Greenhalgh for information about the lecture series and work in this area.