Intro. [Recording date: April 4, 2019.]
Russ Roberts: My guest is author and social entrepreneur Mauricio Miller. His book, which is the subject of today's conversation, is The Alternative: Most of What You Believe about Poverty Is Wrong.... What's wrong with what we believe about poverty? What are some of the mistakes we make when we think about it?
Mauricio Miller: I think one of the biggest things is just how we as people relate to each other. Which is, too often, when it is a people or a population we don't know, we will defer, default, to a stereotype. And some people's stereotypes of other people are good, bad, or whatever. But that, what's interesting about humanity is that none of us actually fit the stereotype. And it's difficult to be treated like the stereotype. So, um, one of the big stereotypes around people that are poor is that they are probably there because it is their fault. And that, you know, the most helpful will try to then come in and provide advice; and the ones that are not wanting to be helpful will basically try to ignore that population or get rid of it. So, the stereotypes, I think, tend to really play a big role in terms of and how we then come up with solutions. Which isn't very helpful.
Russ Roberts: One of the things we'll come back to, I'm sure, that you write about in your book--but one of the things I think about a great deal, especially recently, is I think about how to help the poor. Is the role of agency--the role of personal ability--and I think--as you say, one of the stereotypes is 'It's their fault. The poor are'--I think a lot of people think the poor are lazy. As somebody said to me recently, 'There's so many jobs in America. There's so much opportunity.' And they don't think about the complications of trying to find a job, given your life circumstances--the way you were raised, the education you didn't get--and so on. And at the other end are people who say, 'Well, they really can't help themselves, because they have no chance. They are oppressed. They are victims. The system gives them no scope for agency. So, we have to lift them out ourselves from this situation that they are in because they have no way of helping themselves.' And, you are very--you attack both of those views.
Mauricio Miller: Yes. I think, for me--because, you know, I was raised by a single mom--Mexican, immigrated to the United States when I was about 8 years old. And just watching what things were like in Mexico, and then, when we came up here; and realizing that the people that I lived with in these neighborhoods--and we lived in some fairly tough neighborhoods: I think I had like 18 addresses by the time I was 21--that, everybody, almost everybody worked really, really hard and they were really resourceful, and really talented. That, there were circumstances, certainly, that kept them from maybe becoming as independent as they all wanted to; and that, somehow or other they were not really looked at in terms of how resourceful they were. What I remember is that it takes a huge amount of resourcefulness--of reliance, determination, hard work, and talent--to really be able to survive in this country or any country when you don't have very much money. And that is just not something that's accepted. It's: The amount of talent required to make it through the month, and watching my mother try to pay the bills at the end of the month and figuring out how and what we could eat for the next month: That is something that a lot of people in privileged situations don't realize how difficult that is.
Russ Roberts: And, you also make the point that another stereotype we have is that people are either permanently poor or permanently rich. And in fact there's quite a bit of mobility in and out of poverty. Not to understate the challenges. But, it's not a permanent class for a large group of people who might be poor in any one year.
Mauricio Miller: I think that's one of the most fascinating things. Because, when I ran social service programs--and I ran programs for about 20 years--that in order to get funding, I would promote the issue that we had these people that were in these neighborhoods that we had to go save because they were stuck there. And, what was really curious to me was that, since I grew up in a lot of the neighborhoods; and I realized that people weren't, like, stuck--that, actually, people had done a lot--it was very strange to me to on the one hand be making arguments to get funding that people were stuck in the realization that, 'Well, we'll call the neighborhood violent,' and people weren't that stuck. They would hit ceilings once they actually were working poor. But they obviously were not just stuck generationally, which was how I sold my programs. What happened later as I was running a lot of the Family Independence Initiative, which was the initiative I started later, to find out what was going on in these neighborhoods, is that, I ran into Census Studies going all the way back to 2004. And in the Census Studies it consistently showed that we don't have generational poverty that is stuck under the poverty level. That, only about 3% of the population is stuck under poverty level for even 3 or 4 years. And that the average stay under poverty is 2-4 months, or something like that--I'm losing track of. But it was a very small amount of time. And that what happens is exactly what the studies showed. Exactly what I experienced. Which is: People actually go out immediately after they lost a job and go try to find another job. It may take them a couple of months. And then they again climb out of poverty. But, what is not noted is how unstable it is to be working poor in America, in the United States. That, you are paid a wage that will not allow you to take care of your car when it breaks down, or your child when they get sick. And so, when that happens--like, my mother, her bosses would come on to her and so she'd have to quit. She just couldn't take the harassment that would happen. And so, in those periods, then, you go back under poverty. So, the curious piece, and I was presenting to some trustees of foundation, and [?] said, 'Well, the Census says it's always 3%, not 15%, how comes it's always 15% or something like that that are in poverty?' and I said, 'Well, it is anybody who has lost their job in the period when the Census does its studies, and some of those are middle class people that basically lost a job because a plant closed in their town or that actually are in transition to another job. And some of them are working poor, and some are poor that have disabilities.' And so that 15% is an ever-changing group of families. It is not one block of families that then doesn't know what to do. Obviously, if it's only 3%, people are doing something. And what our society has not learned, either on the Left or the Right, is to recognize what it is people actually do for themselves and with each other.
Russ Roberts: Now, your book is a rather--it's an extraordinary personal story alongside some of the policy lessons you expound on. The personal story you raised a little earlier: you were raised by a single mom who immigrates from Mexico. You end up at UC Berkeley [University of California] with an engineering degree and then go out and change the world in a different way. Do you ever worry that your personal success in overcoming those barriers--and they are quite high, and you describe them in really poignant and powerful ways in the book--but, that that's made you overconfident about the ability of others to rise and to put themselves on their own feet?
Mauricio Miller: You know, I don't know that that's a worry that I have. For me, the reason I probably don't even go there is knowing my mother and my sister and some of the close friends that we had that were really poor, that, I'd say the majority of them were smarter than me, worked harder than me, worked more determinedly than me. But that circumstance and certainly a lot of love and care from my family, that circumstance, however, put me in this situation where "then I'm considered successful." So, for me, it's almost the opposite. Given the fact that I'm not as smart as a lot of--my nephew or whatever--and that I'm not as determined as they were in trying to even get one kid like me to go to college--that somehow or other, if there are so many people that are smarter and harder working than me, then obviously there is something, you know, if it's wrong then it's not the people themselves. And it's certainly not that I'm the exception. I'm the exception because of circumstance, not because I work harder or anything else. So, yeah, I actually come to the different conclusion than I'm exceptionally privileged and therefore I worked harder and am smarter than anybody. That just has not been my experience.
Russ Roberts: But do you think others can rise and be successful and overcome their handicaps of circumstance?
Mauricio Miller: Oh, yeah. I mean, when I came to the United States it was a period where everybody was saying you could really make it if you worked really hard. And what I was really conscious of was that there had been a Jewish community that came in under heavy stress, heavy discrimination. There had been the Irish, the Polish that had come in--the Irish after the potato famine; they were discriminated against. The African-Americans after slavery produced entire townships: 50 towns were built in Oklahoma during Reconstruction, and it was just when they were totally isolated from the major economy. So, these were the examples that I had in terms of coming into this country and saying, 'Well, then we might be able to do some of what was done, if we work really hard.' So, to me, that capacity, that capability, really existed. So then you start to wonder, 'Well, how come we're not getting as much of that success that had happened in all these various communities?'
Russ Roberts: One of the phrases you use, one of the memorable phrases you use, is that in America we 'make poverty tolerable.' What do you mean by that, and what's wrong with that?
Mauricio Miller: There isn't anything wrong with it; but it is not going to lead, it's not going to be a springboard toward upward mobility. One of the things is that all of us hate to see a child starve, a child struggle, a family that is in crisis. And, for me, we came up to the United States and my sister got in--even though we were put in good high schools, my mother did all she could--my sister got in with the wrong group. And she ended up getting pregnant by this guy who would beat her up. And, my mother was devastated that this should happen. But, my mother's working two jobs and it's very difficult, then, to be able to supervise my sister. So, she ends up pregnant by this guy, and he would beat her up. And that, with her, she would try to run away from him. He wouldn't let her get a job that paid more than him; he wouldn't let her finish high school; he wanted to keep control over her. So, then she would run away. And at that point in time, she actually needed services. She needed welfare. She needed to stabilize. She needed to know her kids were going to be fed for the next week or so. But as soon as she started getting her wherewithal, she was like my mother: that, she wanted to work, she still had this vision of, 'If I could really get out there and show what I'm really good at,' that she could do it. But, again, she couldn't get a decent job that would pay enough to raise 3 kids. And so she was left on welfare or 'Do I go back to this guy?' Who again would promise not to beat her up again. So, there was a role for the services that I think I ran[?] a lot of, which actually made her situation, her crisis, tolerable. We also accepted like, Hurricane Sandy, I think it was--it went through a middle class neighborhood and destroyed all the homes. So, you know, the Red Cross goes in. And during a crisis, you need outside help. You need counseling. You may even need welfare, you know, if your home has been destroyed and jobs have been destroyed, even if you are middle income. So, there is a role for making, you know, people that fall into poverty for whatever reason, to make it tolerable. We don't want everybody dying. But the fact is that after 50 years of the War on Poverty, that that primarily [?] what we've done has been able to make poverty tolerable for those that are eligible for all these different programs that we have created, and that, I don't think, was what my family and other families come to the United States for. We really come here to be able to get a chance to really exceed and be able to have the upward mobility that the history of the United States really has talked about. So, there is the difference, and it is necessary to make poverty tolerable--certainly, you know, whether it is in Africa or South America or whatever. But, really what we have not focused on is how to make poverty escapable. And, even though people work really hard and they become working poor, something happens when they are working poor and we can talk more about that. But, you know, in the United States, they get above poverty level; they are working one or two jobs. But they are really on edge and they are not able to then move further ahead. And it is that upward mobility past being working poor and earning $10 or $15 dollars an hour that we're missing in this country. And, that upward mobility: How are you going to tackle it? You can't tackle it by looking at the weaknesses in people. You actually have to start looking at the talents and initiative that they take.
Russ Roberts: And helping them realize that. Which is what your book's about.
Russ Roberts: And I want to get to the part of your story of how you get to a very different vision of how that might be possible. In 1999, Jerry Brown, who at the time was Mayor of Oakland [California], asked you for suggestions on how to fight poverty. And, you had a very strange idea--ultimately. So, tell us why he called you. And what were you doing that made you a person that he would call you in? And, talk about what you ended up suggesting, and what happened as a result.
Mauricio Miller: Well, it's a very strange story. And this goes back to one of the original questions I think you asked, in terms of, 'Well, is there something about me that's really special?' Um--there is a serendipity that has happened in my life. And, the issue of Jerry calling me was very strange to me, because I sat on a Board of the [?] Council that handled a lot of the workforce training money for the City of Oakland. And I was one of about 17 or 18 Board members. Jerry had known my services. And so, I know he was conscious of what I'd done. But there were like 17 other people that were very accomplished. And, somehow or other, he decides to call me. And I could never understand--and actually, I just talked to him just a few days ago--I could never understand: Why me? But the same thing had happened: I got invited to the State of the Union Address by President Clinton. I got into UC Berkeley. These were circumstances that, somehow or other happened in my life. And, if you read some of the stories and outliers in the book by Malcolm Gladwell, there are stories of people like Steve Jobs and others where circumstances led to their success. And those are the kinds of things that happened to me. So, why exactly Jerry Brown would call me--not that I was dumb or anything, also I had accomplished something; but why me? I'm not totally clear.
Russ Roberts: But at that point--at that point you are running--you are taking government money from Federal, state, local--I don't know where--and trying to help train gang members and people in really desperate straits to help them become more productive. Is that accurate?
Mauricio Miller: Yes. Yeah. I ran social service programs for about 20 years. Which actually was a long time. Although 10 years into it I knew I wouldn't bring my own family through my own services. Somehow or other, [?] the programs were still considered really successful; and then the President invites me to the State of the Union Address. And I'm [?] 'Well, this is dumb. If my programs are some of the best in the country, then our standards are way too low,' because I wouldn't bring my own family through; now I had money--
Russ Roberts: Why not?
Mauricio Miller: Because they were paternalistic. My mother hated that. She said, 'The social workers are really nice, but they take away my pride.' And certainly the racists would take away her pride, too. You know. And sexual harassers would take away her pride. But even the people who were trying to be really nice would take her pride away. And so, that was one of the issues. The other issue is that the programs that I had were sold--and the structures were to sell to get funding. Funders don't really understand circumstances on the ground. But, they get certain interests. And so you have to shape your program based on what they kind of want in order to get the money. And that, then you are held accountable to those kind of standards. Where, I actually had started two businesses within my own non-profit, that, when you are running a business, you have to meet the customer demand. Not the investor demand. You have to really meet the customer demand. And so, somehow or other, when I wanted to adjust my programs, they were not responsive to my customers. And so, for me, my social service programs were too structured, too paternalistic. They did not recognize or meet that market demand. And now that I was middle income and had money, I would instead, when I had to help my nephew and nieces who struggled with drugs and all kinds of things, I would go to private sector services, because they would say, 'Do you want us to send the advisor on the weekend, or the evenings?' Or, 'What's convenient for you?' and 'Would you like this program?' I was given choices. Because I had money. But people who were poor didn't have those kind of choices. And so, why would I want to take my own family, that had struggled with everything that everybody else was struggling with what was out there in some of these neighborhoods: Why would I take them into a system that was so structured and was not responsive when I had money? So, money made a difference. And I realized that: No, I wouldn't bring my own family.
Russ Roberts: So, when Jerry Brown came to you, he offered you--he gave you a hypothetical where he basically said, 'If you had a lot of money, what would do?' I guess, by the way: Your other complaint about your programs was, as you write in the book, you were aware that the staff was quite expensive. And the cost of helping these people was quite large. And that you were helping them in these paternalistic ways was disturbing to you. So, Jerry Brown says, 'Take a clean piece of paper. What do you think you should do?' And, as you say in the book, you didn't have anything to say at first. You were kind of slack-jawed. But eventually you came back a few weeks later, and what was your idea? Crazy idea.
Mauricio Miller: Well, it was--you know, what Jerry said is, 'Look, if you could do anything you wanted to do, and money and regulations were not a problem,' because that's what I'd complained about, 'but you wanted to really bring about some fundamental change, what would you do?' And, 'You come to my office next month and tell me about it.' And so, for two weeks, I struggled with this idea of, 'Wow. What if I could do anything I wanted to do?' And I really care about these issues and the people I grew up with. And finally came to a conclusion: if I really wanted fundamental change, I really didn't know how to bring it about. The other thing was--and it alludes back to a little bit of the conversation we had earlier--is, growing up in these neighborhoods, I saw that: Yes, there was, you know, that 3% in the neighborhood that were stuck in poverty or some of their kids got in trouble. But almost everybody really, really worked. And they worked really hard. And yet, in my Social Service programs, I would look at the population and say, 'Well, these people who are showing in my program, they are really needy,' but they were living in the same kind of neighborhood. I couldn't reconcile the two realities. And so, what ended up happening was that I wasn't quite sure about whether my experience was just my personal experience--maybe I just happened to be in neighborhoods where there was initiative and where there was resourcefulness and all these other people lived in some other neighborhood. So, I had developed a journaling system to learn about other people's lives: the ones who were coming into my programs. Remember, I was running programs for 20 years. So, I started actually asking them to tell me what their life was like--to see if it was like what I had experienced. And as the journaling was coming in, I was seeing that, 'Yeah: They actually work really hard, too; and they have talents, whatever. But when they come to my program, they will only get into my program if they show me how needy they are.' You know, my program will never ask them if they are talented. And, you know, I don't get funding if I bring in people that are talented. So, obviously, there was a problem on that side. So, then, when I go in with Jerry and he asked me, 'What would you do?' I said, 'Well, I don't know what to do; but what I do have is, I have a journaling system that I developed in the 1990s, and what I would do is, I would ask these families what to do, because I think they would know better how to improve their own lives. Certainly my mother figured out what to do with me. Other people I've seen. So, I think the experts are really in the neighborhoods' [?]. We can collect that information.' And again, 'If you help me put this journaling system online, I'll give all the families I enroll a computer and ask them to journal and tell us what they are doing, and see if we can help them in that way.' But there was one other aspect that actually was really important; and that was in Mexico, if you ever had a crisis or trouble, or, like my sister started getting in with the wrong people, all our neighbors would tell us. And the neighbors would scold my sister; and there was a whole sense of community. And there's good and bad parts to, you know, neighbors knowing everything that you do. But there was a sense of support. And, that, I knew that my mother missed that support--that of her uncle and her friends in Mexico. And that up in the United States this issue of friends and community helping one another was not very strong here. So, I told Jerry, 'So, lookit. What I'm going to do is: People do need other people. Certainly, when you're poor especially, you hit crises. But,' I promised him, 'Okay, I want to get clean data.' Remember, I was an engineer. 'I want clean data. I don't want to learn what families will do if my adviser tells them to do something. I want to know what they would do on their own. What's their capacity? But, I will enroll them only if they come in with 6 or 7 of their other friends, and say: You can not turn to my staff. You have to turn to each other.' And that's what I had experienced, is: In a neighborhood you start watching your neighbors or talking to them. 'So, I'm going to enroll them as a group, and I'm going to ask them to journal monthly online. Everybody will get a computer. And from that data we are bound to learn something.' And that's how this project got started. It really was a research and learning project more than anything else.
Russ Roberts: And the crazy part that--it's going to be such a good miniseries on Netflix--but the part that I love is that you told your staff--and this is the Family Independence Initiative, FII--you told your staff that if they helped people, they'd be fired. And so this was a very different mindset for a social worker or a staff member working with people who are "poor, underprivileged, handicapped, disadvantaged." And there's a natural impulse to reach out and say, 'I can do this for you. Let me help you.' And you tell a couple of stories in the book over people--they would lie to you. They would hide from you what they were doing for people. Talk about some of those examples of what a staff member would do and why that was such bad thing that you needed to stop.
Mauricio Miller: Well, the overall, obviously, was that I was an engineer. I wanted clean data about the capacity of the families, of themselves. And how much they would help each other. And so, obviously, to me, it was very logical, as an engineer, that I had to keep outsiders out of the way. Otherwise I wouldn't know what the capacity truly was. Okay, so that's the overall. The dilemma is more what you described: that there is a tendency to want to help. And certainly people that would want to take a job with a nonprofit like mine, the Family Independence Initiative, would join that job in order to be helpful. And so I had to threaten them. And, one of the--actually, there's a couple of stories in the book. I had several stories in the book about this whole thing. The most significant, though, was that the staff realized that I would fire, and I fired a couple of people before for being helpful. The one of them--I forget what name I used in the book--but he was trying to hide the fact that he was helping people. And, so, we came to realize that, because, his hours--the number of hours he was charging me in the program kept rising but the number of families he was actually supposed to be the liaison for--in order for us to make sure the reports were done and audited and whatever--that's what his job was supposed to be--it's really jobs auditing and being able to capture the stories. But his hours were going up. And it was costing me more money. And so then we started investigating and we found out that he was helping people do their journals monthly. And they were Latino families. Many of them had no education. They were not putting email addresses together. Which is how we were supposed to communicate. And, I--I feel like--you know, if I was smart enough to barely make it through Berkeley, all these other people were just as smart as me. I'm pretty average. So, they could figure out how to do an email address, but he felt sorry for them so he was helping them. And so I told him, 'I'm going to have to fire you.' And he went back to all these families that he had been helping and he said, 'Well, I'm going to be fired. And will you guys protest my firing?' And so they put together a big protest; and they wanted to meet with me. And they were probably a good 25, 30 families at this meeting where actually they had put together protest signs: 'Don't Fire Him'. And, so, you know, for me, then I showed a video clip to all these families saying, 'When people talk about you as these families and that are poor, here's what people say about you.' And there was, you know, a clipping from Newt Gingrich saying how, you know, families are really bad, and Liberals, they were saying the same thing: They don't know how to make good decisions. So, it was like a cross of political spectrum saying like, 'This is how people think of you, as parents that are very low income.' The other piece is that, 'My liaison there is actually costing me a lot of money. And that, if, instead, I would give my money to you guys, that you could help each other to put together an email address or whatever.' And, they're, over there, 'Well, you mean, we could get that money that you're paying him?' And, I said, 'Well, yes. That was the original intent with Jerry Brown, is that we're going to pay you for doing the work that normally social workers do whatever they do.' And so, once they got a sense that actually they could earn it, then you could see the protest kind of shifting. Then this woman in the back stands up and she says, 'But, I've never done an email. How am I supposed to do it?' And that's when a 17-year-old or something like that stood up in the front. She turned around to that woman and says, 'I'll help you. I'll help all of you.' And at that point, the entire protest died. There is one other story that actually was really significant. And, the names I used in the book is, Javier and Maria. This is actually the story that impacted me, or the experience that impacted me, that led me to be able to actually fire staff later on that tried to be helpful. When the project first started, about 7 months into the project, there were a group of refugees from the war in El Salvador. And, it was a group that had all of their savings they had were being sent in remittances back to El Salvador, to their village. And, that, their goals as a group and individually were really to have their kids do well in school and keep their health together because they wanted to go back to El Salvador. So, I'm over there: 'Well, I don't know what we're going to learn from this group. But we'll see.' And then, one day, my staff comes in from the monthly meeting--the families are required to have a monthly meeting for us to hear the stories behind the data. Because data can be really misleading. And they said, 'Well, Javier and Maria got approached by the Spanish-speaking real-estate agents who promised them he could help them buy this house. And we think he's a predatory lender. Can we talk to the families, or give them any advice, or at least send them to financial training?' And I'm over there looking at this and believing them, and saying, 'Well, no, because we promised Jerry Brown that we would not help. That we would just see what people do. And my mother made mistakes. And we need to understand those mistakes, too.' And, admittedly, I wanted to help. So, my staff backed off. And, sure enough, because the real estate agent makes his money upon closing, he was able to get them to closing by putting in mortgage insurance. But it ended up that their mortgage payments were 65% of their income. And my staff goes back to me: '65% of their income? There's no way they can keep that house and still clothe and feed their kids. They're going to lose the house.' And I felt terrible. Because I'm looking in, you know, our data system. We see all their income. We see all their statements of families. We pay them; and they're very trusting. We verify all the data they give us. And I'm over there looking at their income and expense, and saying, 'Yeah, they're going to lose the house.' And I felt really bad. And then the lessons started. So, what ended up happening is, somewhere along the line, Javier and Maria are smart: They figured out this was a scammer. It's not--made offer or something like that--but he was a scammer. And, so, they had a--what do you call it--a refinance clause put into the contract. And, after closing they had borrowed money from all kinds of friends, in the neighborhood. And those friends descended on the house: repainted, re[?] it, re-landscaped it. They got the valuation of the house up. And then they were able to refinance it with me sitting in--I knew some Spanish--me sitting in on the refinance. They got their payments down to 40% of their income, but with their whole group of friends surrounding them, it was clear they were not going to lose that house. And they still own that house here in Oakland. So that was a first lesson, is that: the solution of, you know, getting a refinance clause and then having all your friends come in and get the value up and refinance, was not something my staff probably could have figured out even if we wanted to help them. Certainly what we would have done is talk them out of getting the house. And here they have a house that has equity now. The second set of lessons came about two months later. Because, again, we have an online data-tracking system, and I could see the savings for every family. And so, all the other 5 families, I believe, that were part of that group, their savings, the red line for savings, started going up. Before, remember, they were sending all their savings back to El Salvador. So, I went to a meeting and said, 'How come you guys are all saving?' They said, 'Well,' and they looked at Javier and Maria and said, 'if they can buy a house, we can buy a house.' It was clear that Javier and Maria were positive deviants--what are called 'positive deviants--which we have to talk at some point, because that's really important. They deviated from the norm, and they were successful. And so they became a role model that then was tested by the other families. Within 18 months of the red lines going up, every other Salvadorian refugee family owned a house in the United States. So, that was the second lesson. Then the third, they started saying, 'You know, all our other friends in the refugee community are hearing about us, and so they are starting to buy homes.' It changed the trajectory of expectations of what could be accomplished in the United States, because of that role model. If we had saved that family from buying a house, none of this would have happened. None of this would have changed. Then, about a year and a half or two years ago, I was doing a presentation at Stanford. And so it was 15 years after this Javier and Maria story. And, I told the Javier and Maria story to the audience, and afterwards this young man walked up to me and he says, 'So, you know, I and my family are from El Salvador, and my mother heard about your families' buying houses; and so our family decided to buy a house. And it's the equity from that house that got me through Stanford. So, thank you very much.' Because this was motivational[?]--
Russ Roberts: A high point in your life. That's a pretty beautiful moment.
Mauricio Miller: It was an amazing moment. And so, that was 15 years ago. Before; and so, after that, it was much easier to fire people.
Russ Roberts: Let me understand better, though, what you actually did with the families in this non-profit. First, give me a feel for how many families they were. Is it 15 or 20, or is it more? Secondly, you said you paid them. How much money did you pay them? And in return, they journaled; they got a computer and they journaled. What were they journaling about? What was the goal of what you would learn from them, and how was that useful to other families and not just you as a researcher?
Mauricio Miller: So, and you probably have to restate some of the questions because I'll get lost in these stories. But, essentially, when I ran Social Services, I would have to pay consultants, evaluators, to come in; and they would go an interview families to get their income and expenses and whatever to do my evaluations for my funders. In this particular case, we were getting the families to actually provide us that data; I would verify it every, about, 3 months. And, the thing is that we also require them not only to journal, but to meet monthly; and then to go through an auditor verification. That took their time; and where I used to pay evaluating consultants $75-$150 an hour, essentially what I did is I calculated about how many hours it was going to take the families to go through the process I wanted. Which is: You have to journal, and you have to meet, and you have to do all this. And I came up with a figure that was about, at that point in time, about $30 an hour. So, I basically put it in to: 'If you are willing to go through this process, I will compensate you. I won't do it hourly, but it was the equivalent of about $30 an hour, [?] the amount of time it's going to take you. And that's the compensation you're going to get.' So, this was both cheaper for me than hiring a bunch of outside evaluators to go try to interview families--
Russ Roberts: But all you did--all you did as the non-profit--was: give them a computer; require them, and then pay them for their time to keep track of their lives in that journaling process. How did they get better? What's the process by which--how did you encourage them? What was the--what did they learn from each other that helped them?
Mauricio Miller: Well, obviously, like, Javier and Maria, it was clear we didn't encourage them. If anything, if I'd have let my staff talk to them, we would have discouraged them. So, the biggest thing was sort of what I mentioned, were positive deviants. That, behavioral studies will show you that what happens in any grouping of people is that people are always trying to think of ideas. And, there are barriers. Or, there are opportunities that they want to take advantage of. And somebody will come up with some idea, or some method, or some action that will get you through that barrier or that will take advantage of an opportunity. Those people, in a group--certainly it's not the entire group--but, those people that do that deviation, those are called, what are called 'positive deviance.' So, that was Javier and Maria. Okay? Then, this is all under Diffusion of Innovation, which is Behavioral Study theory. That, what happens is, if there is a positive deviation--and I think The Tipping Point also talks about it. And somebody starts wearing Hush Puppies, which is what Malcolm Gladwell talked about in his book. That, then there are the friends that decide they are going to be early adopters. So, 'We are also going to wear Hush Puppies, because we are going to then be the cool group.' Or, in the case of the Javier and Maria, it's like, 'Well, we're also going to buy a house.' So, all of a sudden--it wasn't just that there was an idea, but there were early adopters that tested that idea and that they started buying homes. The positive deviants [?positive deviance?] are probably the most important because people have ideas and there's individuals that because of circumstance, like, for me, my circumstance is not a circumstance everybody gets. What actually is important is the early adopters. When other people, kind of of-the-same circumstance start following and actually are succeeding on an idea, that's what starts to then be catchy for other folks. 'Oh, so they are kind of cool; so therefore that can be done.' So, Javier and Maria's story is that it was the other families' being able to buy homes that then led to a big tipping point, where then in that particular refugee community where word-of-mouth really spread, the expectations would truly change. So, this is all called 'Diffusion of Innovation.' And it starts with positive deviance. And so in many ways, that, what the data was looking for is for positive deviations. So, we'd see the data--and most people don't know what to do. That's when they go to Social Service programs, and everybody says, 'Well, nobody knows what to do, so we have to help them.' Well, what we don't discover is the positive deviants. Because they are the ones that figure out their own solution. That's what we should be looking for. And then, once you see a positive deviation, what our data system does, is we basically say, 'Javier and Maria bought a house. If you want to buy a house, go talk to them. Don't talk to my staff. My staff wasn't the one that bought the house. Go talk to Javier and Maria.' And we tell Javier and Maria, so, 'You are now being the expert. So, now, can people go to you and ask you for advice?' And I can tell you: Almost anybody who is low-income, to be told that they are an expert in something and be the adviser and the counselor, they'd love it. So, of course they want to help each other. And so, all of a sudden, again, you don't need a whole bunch of staff being trained. One of the best documented experiences around positive deviance, early doctors, and how it can scale through Tipping Point is a project run by Save the Children, Vietnam, around nutrition in the villages. Quite a while back. But it was really well-documented. Where they were able to find, basically, families that were positive deviants, that, their children were doing well nutritionally within the village; whereas as a whole the children were not doing well. So, it is really well-documented that, again, if you take a grouping of people--which, it helped because I enrolled families when they came in with groups. And somebody in the group then did something different that was positive. Obviously, you can have negative deviants, too: Growing up, you join a gang or something--
Russ Roberts: Yeah. Drugs--
Mauricio Miller: But if you actually validate the positive deviants--so, Javier and Maria, go talk to them--then all of a sudden other people will say, 'You know, I think I can do that, too.' And they start then following. This is how the black townships were built during Reconstruction. Once a town started getting put together, and people pooled their money--they had lending circles or whatever--and they put together a barbershop, and then people in another area said, 'Okay, we can start a town,' and, 'We can put a barber shop together.' And business, how all these communities have kind of done it is they've had to pool their money and help each other and share expertise. Again, the positive deviant actually can make a huge, huge difference, and there are tons of examples. Some are in the book.
Russ Roberts: But you talk, in the book, that the families you were working with had fairly large increases in income while they were in the program. Which, I've come to believe is one of our failings as economists: We focus on things we can measure; but, income, when you are poor, is not unimportant. I would argue that dignity and pride and a sense of responsibility are also important. But when you are poor, income counts a lot. How did their self-reliance and sharing of information help them become more productive? I can understand that, if I see other people buying a house, I can stop sending money to El Salvador and keeping it here in the United States for a down-payment. Or I can try to spend a little bit less and increase the amount I have available. So, there can be a behavioral change. But, you actually found that among your families, people did better over time. And I assume--I don't know if you tracked this--but I assume their children also did fairly well. So, I assume some of what they were sharing with each other was how they were treating their children and education and so on. Talk about what have been the--what are some of the mechanisms by which that was happening?
Mauricio Miller: I think--you know, these are the kind of mechanisms I think you and I probably take for granted at this point in time. If somebody is like you--I was an ordinary kid, and some other ordinary kid, not the exception; you know, I always felt like most of these kids were smarter than me and got straight A's and whatever; they were going to succeed and I could never do that--but when somebody like you starts succeeding, then it inspires you. And what's fascinating is that you may actually follow the exact same path. So, for a while, you know, back in the mid-1800s the Irish start penetrating the police department in Boston, and then all of a sudden you find a bunch of Irishmen going into jobs as policemen; and you saw the Polish go into meat factories, etc. For the Chinese in the 1960s it was like, you send your kid, 'If you are going to go to college, you're going to be a pharmacist.' That type of following. And, you know, the parents obviously would play a role in it. But, I think that the biggest thing that I saw--because incomes start jumping 20, 30%, is that, in many ways, our country has been discouraging initiative. And that, what happened is, once you saw some positive deviation of, 'Oh, somebody like me now has a better job. Maybe I could strive at least in that same direction.' Sometimes it was in the same network, so they would refer to each other. So, for people doing my landscaping, they ended up knowing somebody who could do the foundation and do my driveway. And, you know, so, a lot of them were going into construction. Maybe not exactly the same thing because some were better electricians, and some were better whatever. But, I think what ended up happening is that, because the project itself just enrolled people that were really around the poverty level, after a while they started saying, 'Well, if they can do it, I can do it.' And it was that inspiration. And I think that's how my mother came to this country: feeling inspired. That, you know, 'We're going to go there; we are going to work hard; and we are going to be able to do it.' And, what she found is that both, you know, being called a potential criminal would have, you know--it was really so discouraging. And the names that we call people, and that her kids are struggling in school; and, you know, that it was just really, really difficult. But that pride, that inspiration is really [?]. And we saw income really jumping up. And, probably the most fascinating thing, to me: in that first grouping--we had about 25 families. There was a group that's primarily African-American, not totally--because remember, they bring in their own friends--with a group that were the refugees from the war in El Salvador and a group that were refugees from the war in Vietnam--the Mien[?Iu Mien?] people. And that the income jumps for the African-American group was 37% within two years. The next piece was that the refugees from the war in El Salvador, it was only 23% but they start buying homes. Where, the African-Americans were starting buying businesses. Not everybody, but they seemed to inspire each other to start businesses. And that, the income increase for the Asian group was only 18%. But, what they actually were able to do was, they were able to stop gang wars. So, their kids had been joining gangs. That community had the highest[?] incarceration rate of any ethnic group in Oakland. The Mien[?Iu Mien?] people. They were able to re-track their kids from joining gangs to, instead, starting to go to college. And now, these kids go to 4-year colleges. So, these are self-chosen success measures. So, it's not just income. But the African-Americans did the best in terms of income. And in terms of home ownership, that particular Salvadorian group, because of Javier and Maria. And, for the Asian group, it was really dealing with the gang problems. And, we need to give people the chance and the choice to really deal with what they think is the most important. Because, ultimately it just leads to better lives for everybody and for all our communities.
Russ Roberts: So you write, this is a quote:
As a society, we need to learn that top down solutions have never been the true instruments of change.You also write:
Many of us have control over--but do not fully understand--the social and economic experiences that make up the world of those we try to help. Thus, we are constantly in danger of doing more harm than good.Those two quotes could have been written by the great economist F. A. Hayek. Or the lesser economist--me--about the dangers of unintended consequences. And how top-down solutions are often blunt and not very effective. So, I'm very sympathetic to your approach. The skeptic in me says: What you are really claiming is that what was holding these people back was a self-image of themselves as failures. As wards of the state. As people who couldn't possibly succeed on their own. And, once we--once you changed that self-image, they were able to thrive. That sounds--um, I don't know, a little bit rose-colored. Even for me. So, tell me that's wrong. Tell me that really is a powerful thing and that it's more than 25 families. Which is, you know, fantastic; but it's only 25 families.
Mauricio Miller: Well, now it's over 10,000 families. But, you are only half right. I think that for a lot of the families that I grew up with--remember, humanity is a mixture of everything, right? And so, again, the stereotype will never fit. So, the self-image piece: I think that it is, in terms of building self-image, let's say that's only half the population. The other half of the population already has--like, my mother was very confident. She was just pissed that outsiders had that image of her--you know, Mexican, single mom, 3rd grade education. So, it was--for most people it's both a combination of how the outside world views you and how it treats you and the opportunities it makes available to you. And, sometimes, say, especially during your depressed periods, you feel yourself, in which your self-confidence goes down; and in other periods it goes up. So, again: We can't--we just have to understand humanity as kind of a mix of all of these emotions; and they all interplay. I think what's interesting is that if you are in a community that somehow has a very strong sense of pride, or strength in their religion, or whatever, that that image then, not only can open up some opportunities, because there will positive deviants there that break through, but it also helps the kids' self-image. So, even though that kind of self-image, as we at FII could say, 'Look at, I think you as families, you could come up with better solutions. Maybe you are not going to become rich or whatever. But you have better solutions than my staff, because I'm going to fire staff in order to show you that.' So, I think, FII and the projects I'm working on, I'm going to Liberia now, whatever, that what we do is we set up an ecosystem, says 'Lookit: No outsider is going to be able to understand your life. You are the only expert. And I'm willing to trust you with the money I raise.' Which is a big marker for them. So, that, I think is really helpful. The problem we still have is the outside image. And that is what FII has not been able to change. So, now, FII is getting funded by Google and, some, you know--Stand Together. So it is getting attention. But it is getting attention because it's a program. The image of low-income families still hasn't changed. So, I'm trying to prove that the capacity is in these communities themselves. You don't have to have an FII. You just need to have an environment that's really trusting. So, we're going to go to Liberia, where 90% of the population is in poverty. They are having to create their own jobs. We're basically going to go there and say, 'Lookit: There are outsiders that are interested in your economy. You are the only ones building the economy right now, because corporations have left. The government is still pretty screwed up. And, right now, you are finding malaria. But, you have created your own jobs. And, as you do that, we're going to look for investors into what you do. And, anything that's built--and it's going to be built by you.' That trust in the fact that these people, any people that are low income, do have talent and resourcefulness, that's what we are trying to trying to prove, is that actually 75% of the world lives around poverty; and we are missing mathematicians, talents, dress designers, like my mother. We are missing all these amazing talents. These are people that will then start buying computers. And they will start buying more diapers. I mean, this is good for business. So, some way or other, again, there's positive deviance and things that can happen; and that we need to do is actually recognize and putting some of our energy and our research, and certainly the validation is really, really big.
Russ Roberts: I want to get a little better picture, though, of your program on the ground for these families. So, let's say I'm one of these families. I'm teetering on the edge of the poverty line: I might be below it, sometimes slightly above it. But I'm not doing so great. Maybe I've just come in from El Salvador, as one of your groups did. And I have a choice. I can either go on government Welfare, which gives me thousands of dollars of food and health care and housing aid and other programs--maybe a training program like the one you used to run. Why would I come to you in return for a computer and the opportunity to be paid for my time to do some journaling? What did they get out of the program that was transformative, either from each other or from the program itself, that I'm missing? I'm missing something.
Mauricio Miller: Hehh, hehh, hehh. You are missing what, I think, most of our society feels is like, a mechanism. And, I do think that, when I go to some of the meetings that the families have, and that I've never met--there's just some city, and I go there and they start thanking me, and then I said, 'But I didn't do anything.' And, what--I have two written notes, basically saying, 'But you trusted us.' So, I'm not sure how to convince people that being thought of as smart and capable--that's like so key when we raise teenagers. And so, that is a huge change; as parents, we know that is really, really key. So, that self-confidence and that validation from the outside; and, you know, these rich parents trying to get their kids into UCLA [University of California, Los Angeles] or the different colleges--they know that it's that environment that actually sets them up for success. So--
Russ Roberts: But, how did your program create that environment for them? In other words, if I just--one model would be that you just contacted this family on their own and said, 'Here. Here's a computer. Keep a journal. It will help you.' But, you are doing something else that I'm missing: That they interact with each other? What is it?
Mauricio Miller: Okay. So, the two things that I think make--and everything is kind of in duality--on the one hand it is, 'We trust you.' You know, and therefore, 'Go help each other. Go learn from each other.' The second piece is, 'How do you learn from each other?' So, one of the biggest changes that's happened, you know, in this century, is technology. And that, what you've seen is people come together--through cell phones or whatever--the Arab Spring of people then protesting what they wanted, you know, and the change in Egypt, or other places--that, technology really changes things. And that, the piece that we also brought in--and I think that's the biggest role of FII that we haven't actually talked about--is the use of technology. That, what we were able to do is, on the one hand, going to a neighborhood and said, 'I'll bring in some of your other neighbors,' and there was some positive deviance that happened out of that. But we also knew that some of the families in Boston were starting cafŽ[?] that was really similar to the cafŽ[?] being done by the New Orleans families. And so they wanted to be able to talk to each other. What's fascinating today is that technology allows people to communicate and see each other's successes across all of these technology platforms. And so, one of the things that FII has done is not only do we have a journal where people see their own data--and it's kind of like FitBit and Mint.com. Basically, 'Oh, this month I've done really well.' They are able to also see how the rest of the families in their cohort or their city are doing. 'Oh, and I'm doing better than the other families,' or, 'I'm not doing as well. I'd better go find out what they're doing.' That kind of thing. And that, it really is--the reason FitBit and Mint.com work is it is inspiring to you. It kind of helps you plan your life. Okay? So that's one thing. Second piece of when somebody says, 'Well, but, some of those families are doing better than me. Let me find out what they're doing.' There is also technology platform, kind of like Facebook or LinkedIn, that people go into. And they can see what people in New Orleans are doing. 'Oh. These are people that are putting cafŽs together. These are the people that are getting jobs like this. And there's a section that says, 'Be an expert.' Which means: 'I'm the one that bought a house. And you can come to me.' Or, 'Find an expert. I'm looking for--you know--whoever built the house.' So, essentially, now, this can be across the country. Now it's being taken to Liberia. So, and we're going to be international. So there's another platform being put together called Elevate that is actually going to let people see: What are the initiatives that people are taking in Liberia? And then we are going to tie the diaspora from Liberia and other people who are concerned about Liberia to be able to see what those folks are doing. And, now, those people can put their pool--they pool their money together and be able to invest in the sewing machine for a woman that we met in Liberia that sells charcoal but is really a great dress designer, like my mother. So these--this is the way that technology can now go across boundaries that we have not normally seen before. For all the bad part of technology, the fact is, my mother could have shown her dress designs online today, through Etsy or whatever, where in her day, she couldn't do that. She was stuck with only the people that she could meet physically. So, technology, I think, is our biggest contributor to the family. But it's not the driving force. The driving force is seeing somebody like you succeed and wanting the same thing. And going after and researching it--
Russ Roberts: So, did they--
Mauricio Miller: The technology lets you--
Russ Roberts: Do they see that only through the online platform, or do they also meet together as a group?
Mauricio Miller: In our project, they meet together as a group. The one in Liberia, they are almost all the families are, you go through a church, and they meet every Sunday after Mass. And, the reason we are going to Liberia is that we have families in our Boston Project, Boston FII Project, that are from Liberia and basically said, 'Lookit: Africa does not need any more programs from you guys. But, this FII approach, which is not bringing programs, is just getting us connections with each other; and you need to bring FII, at least the approach. Not FII, but the approach, to Liberia.' My Board did not want to do that--at least the National Board--
Russ Roberts: Sure--
Mauricio Miller: And so, the Reverend--yeah. The Reverend then came up to me; he says, 'Well, I'm going to do it. He went back to Liberia and he was in a Mass--after the Mass, talking with families, and said, 'All you've been doing is talking about Jesus and all the problems you have. Have you ever told each other what you are doing? For instance, if you are out there trying to sell some baked goods and whatever, and you are doing that,' because he knew some of the families. And they said, 'Oh,' and they start talking with each other; and they said, 'Oh, you are doing that. And you are doing that.' And all of a sudden then they start sharing a very different set of information. And, so, that whole thing, he then termed the 'community independence initiative.' He started it with no money. Those positive deviant examples then started going on the radio, and now it has spread into two counties. So, now, we're going to bring in outsiders to say, 'Lookit. You show us what you are doing; We may be willing to invest in it.' And again, technology is going to allow that investment to come even across the country borders.
<strong>Russ Roberts: I should have asked you this earlier--forgive me--but: When your family is participating in your program, journal, what's the rough outline of what that requires? What's that requirement? It's not--well, tell me.
Mauricio Miller: Well, the FII, which was with Jerry Brown, was set up as a research project. So, it collects what can be over 200 data points on a monthly basis. But we only collect changes. And everything in your life does not change every month. So, now it only takes about 17 minutes on average to fill out your monthly journal. But that's, it could be up to 200 data points, because we want to see their entire life, including who they helped, who helped them, etc. The--we started a project in Singapore. That is probably down to about 50 or 60 data points. So, again, it's much less in terms of Singapore. But they also have a journaling platform that's been developed out there. The one in Liberia is only going to be, probably, about 10 data points. That, this is information--the data points do help people to understand their own lives; but, you know, broadband in Liberia is just not the same thing as broadband here in Singapore. And so, over there it's much more limited. It's going to be much more the social connection. So, radio, obviously, is going to play a role; and people talking with one another after church is going to be a role. So, the data points are not as heavy. It is still going to be around what's your income, where are you earning it from, who have you helped; are you sending money to somebody, your family in a northern village that's much poorer? What initiative are they taking? Are you starting any businesses? Are--you know, what are you doing? And then, if you are working with anybody, you have this Elevate platform that you can advertise. Basically. It's kind of like Kiva. So, you can say, look at, there's a bunch of us in one area that, if we have a sewing machine then we could actually start selling dresses instead of selling charcoal. So, that's the kind of stuff that I think we can facilitate. We're almost--in many ways, kind of like Amazon. We're more a fulfilment agent. In other words, the families are the ones that are going to produce everything. And the investors are the ones that are looking for something. And, we're kind of that intermediary that allows them to connect. So, for Amazon, it's that they look for patterns; and then they sell their products to you. But, they are not the ones that produce all of the different products. So, we are using technology in the way that business uses technology. So that we don't have to do a longitudinal study and say, 'This is the trend that is going to happen for the next three years.' Which never happens. Basically, data right now is real time. And so, people can see projects and initiatives, whatever, in real time. And would be able to invest in them, in real time. And that's what's different about the world today.
Russ Roberts: But when you say, 'invest,' you don't mean--you have a really sad story; I'm going to send you a check every month.
Mauricio Miller: Mmhmm. You know, I think there's plenty of platforms where, we feel sorry for you. Our whole thing is, 'No. You can admire these folks.' So there's a woman that has three kids and is supporting them by selling charcoal. Which is, like, 'I can't collect charcoal when it rains.' Right? And, but she's like this talented dress designing like my mother. So, you know, basically, it's like, 'Show us your talents.' And that's really what we focus on. And that's what FII has always focused on. And that's why we were invited to Africa.
Russ Roberts: So, then, how would somebody invest in that dressmaker?
Mauricio Miller: I think, for us, what we are trying to do is make visible a lot of the initiative that people are taking. So, if you are a dressmaker and you need a sewing machine, that, obviously, you can put it up online the way Kiva does, or whatever. And people can look at it and say, 'Okay, well, I'm going to invest in you.' And platforms right now allow you to actually transfer money. Actually, in Africa, to cellphones. And so, you know, if you have a cellphone you can actually get the investment directly. And then, more like angel investors, you can track the progress of what is going on. It's like, has it created a job? Or, has the wage gone up? Etc., etc. In the United States, actually, the investments that we're making now is that we have a pot of money that people say, well, we want to help people in Detroit, or we want to help people in whatever. And that, the technology in FII in the United States has gotten to the point that we can actually track not just the increases in income or changes of people are being, but we can track who's helping who, and what are the actual social interactions that are happening. And, the staff there has developed a set of algorithms that they've been testing to come up with what's an alternative credit score. A lot of our families have bad credit score because their car broke down or their kid got sick. It isn't that they're not reliable. It's just that some incident destroyed their credit rating. So, instead, what we have, is like, we capture the initiative data. And it's been translated to an algorithm, to an initiative score. And once you are scored at a certain level--because you are taking whatever initiative you are--then, you are eligible to the new trod-down[?] of money that's been set aside for you, for your groups, for that city, or for that FII. So, in, FII, in the United States is becoming very, very sophisticated. What's happening in countries like Singapore--again, it's been a, try to move into something like that, but in Liberia, where again, the product isn't to the point where we could actually collect that much data, then it is going to be more stories and churches going to be coming together, and more where the self-groupings are. And then being able to demonstrate that, either to be in other county in Liberia, like, there's two counties already involved, or even across to the diaspora from Liberia that's in the United States.
Russ Roberts: Going back to the beginning, in the early days: How frustrated were you, or not, by the school system in Oakland, that the children of these families were attending? You talk a lot about resourcefulness and initiative and talent. But, of course, formal education is not unimportant in America. And, I've always felt that poor people who, in urban areas are handicapped by the quality of the school systems they are in--I don't know if that's true or not. But it's my starting point. Did you observe that in Oakland, in those times?
Mauricio Miller: Yes. My kids started in public school. And then the public school system in Oakland collapsed and was taken over by the State. So, I had enough money, to then, at least Middle School and High school, to go to a private school, like Catholic School for High School. A lot of other families that I knew, when we started in public school, don't have the resources to do that. And so, it did negatively impact them. I think what was fascinating to me, though, is that, in, like, Oakland High School, here in Oakland, that, we saw that there were groups of children or teenagers that actually were still doing pretty well. And when we looked into it, we found that it was because they went home to a community that was pretty solid. In other words, the kids had both family and community--a sense of village that was a support system that would offset the educational. It did not necessarily help them get into good colleges, and Yale, and whatever. But, it merely meant that they were able to graduate from high school. And they could do pretty well. But, for both populations--those that have a strong sense of community and those where community is breaking down, or the family structure is breaking down--that, one way or another, the education system is really important. But, what happens, again, in the United States is that we tend to disaggregate these problems. And we basically say, 'Well, then these are not good schools. It is a barrier to families, so let's go fix the school.' What we don't do is actually be able to give the family the wherewithal to then create the environment that's supportive of their kids. My mother worked two jobs. She wasn't home in the evening. It created some problems because my sister got in with the wrong kids, and we just didn't know. The neighbors weren't telling us what was going on. So, somehow or other, if you are going to invest money into the schools, you need to invest money into the parents. They actually can develop a stable life, and be there for their kids. Instead of blaming them that it's their fault. So, again, this duality of approach is really, really important. We can't just keep doing these silos of let's move money to education, let's move money to employment, or let's move money to housing, whatever. In my work, in my family and my growing up, all of those are interactive. And actually, by giving families just the money and having them make a choice in terms of how they spend it, allows them to deal with their car, their housing, whatever they need at the different point in time. So, it's--I think the data now showing, getting money to families probably works the best. But I would not do it like Universal Basic Income, or whatever. I would do it based on the initiative that people take.
Russ Roberts: So, there's a tension there, obviously. Which is that--you started out by making the point--and it's a really beautiful idea that we want poverty to be escapable rather than tolerable. Money is what makes it tolerable. Initiative and progress is what makes it escapable. The more money you give people, sometimes you destroy their initiative. Either literally by the way that the program is structured, or by the very fact that you are telling them that they can't make it on their own and 'Here's a bunch of money.' So, going forward, and we'll close on this--what do you see? And instead of Jerry Brown, if Donald Trump called you in and said, 'We're spending billons of dollars on trying to help poor people and we could start from scratch,' what would you do differently?
Mauricio Miller: I think one of the biggest contributions is, obviously, money. You know, money--the reason people are called 'poor' is because they don't have as much money as somebody else. The other piece, I think, is social connections. It's like, those are where the opportunities lie. And, that, in many ways, I would look at mechanisms that would both open up opportunities and then be able to invest in the initiative. So, if, again, I had my 'druthers, I would take--okay, so if we had just been able to been able to been able to come up with a whole set of tax cuts for corporations in order for them to be able to create more jobs and that was kind of the basic piece, then, since what I've seen is a lot of these low-income communities creating their own jobs, rather than be, like the maid at the hotel that got set up because we invested in that, that instead, it's like Javier who now had been doing my driveway and now is becoming an electrician and starting to set up his own, basically, business, and is able to train people from the neighborhood because that's where he lives. You know, that, these are people that are part of our community and are also creating jobs. And if we can portray them for what they really are, which are both customers, were[?] the cafŽ's, and that they do job creation--again, remember the validation is really important. That, you know, if I had my 'druthers what I would do is both validate the contributions that folks make. It would make them less scary because they are immigrants or a different color or whatever, because they actually are contributing and they are creating jobs for other folks. And then, I would set up mechanisms to invest in that, either through, uh, tax credits, or whatever mechanisms we've done. Certainly we can cut tax rates for a while. And, provide health care so that they don't have these small business--they are not able to afford the health care. So, those are the kinds of mechanisms I think actually can be done. And we do it for people in privileged positions. And I would just take and mirror what we do for people in privileged positions because we feel it helps the economy or helps us all, and then just do the same thing and recognize that these families that I grew up with are actually contributors into society. And just treat them as such.
Russ Roberts: And how would that work? Or, a better way to say it is: The lessons you've learned on the ground through the Family Independence Initiative, which, you're so powerful about social connection and honoring people's, the pride they take in what they do, treating them as knowledgeable. Most government welfare programs struggle to do that. In fact, you wrote, "Just offering money, as with passing policies or providing services, does not change the sense of control. People need over their lives." And it seems to me, that the fundamental tension we have is that, as you point out, if you want to fight poverty, you need to give people money. If you give people money, you are taking away some of the control they have over their life. And: How do you maintain some of the lessons you've learned in these small settings, at the national level? How can we possibly change policy in a way that would actually make a difference?
Mauricio Miller: I think that it's in the words that you were kind of using. If you give people money, certainly a population that feels kind of patronized already, that does not help. My mother never wanted free money. If you invest in people's talents, investing is very different. We do that, and we use that terminology for people that are privileged and we feel create jobs. That, these are investments. Even tax cuts are investments. It is how you treat people and what the message is that you are saying. So, I would certainly stay away from giving people money. That's why I don't--I'm not a big proponent of Universal Basic Income, or whatever. But the fact is that these families are productive. And, what we need to do is recognize the productivity. And so, therefore, like in Liberia, basically there are very few corporations. And we try to bring in them. But it is really people creating their own jobs--and these are very low income people creating their own jobs. We can invest in them. And they, then, will be able to grow the economies, and help us all in that kind of mechanism--
Russ Roberts: But when you say--
Mauricio Miller: So, that's a distinction I would make.
Russ Roberts: But when you say, 'invest in them,' what's the difference between that and just giving them money?
Mauricio Miller: Invest, you only invest when you see an idea or a venture, and that people have already invested themselves. So, an angel investor will go to Stanford and say, 'Okay, what are your ideas?' And then, 'How far have you developed it? How much time and/or money have you put in?' And they find, feel confident in the idea--I will quote "invest in your venture." Right? And it's not that Stanford students get up there and say, you know, 'I have this great idea, and you know, I'm from this family, and we just need your charity.' It just would not work that way. And so, giving is again a very patronizing type of approach. Investing based on what people already produce and contribute, especially when you get lots of deviance and you get early adopters, you invest in that type of thing, then what's going to happen is you can reach tipping points. And that's how people have self-invested. That's helped, like, townships came about. It's how the Jewish community took control of the garment district in New York. It was really self-investment, but also investment from outsiders recognizing that initiative.
May 6 2019 at 2:08pm
Um. Holy cow. Wow.
This episode is profound. Just the discussion alone on the difference between “giving” and “investing” and “angel investing” right at the end makes it a worthy listen. The humility both the guest and Russ repeatedly show when discussing these complex questions is real, refreshing, and inspiring. Mauricio Miller and Russ Roberts only began unpacking the–apparently huge–importance of networked information chains supported by targeted information gathering, internet access, information sharing, money investing, and auditing. And that little bit where Mauricio likened helping the poor to helping your children… fascinating.
I once heard a story–purportedly the summary of a study–that when a child complains to a father, if that child is a girl the father is more likely to solve the problem for her, but if the child is a boy the father is more likely to instruct the boy on how to solve the problem himself. I have, ever since, approached all my children in the instructional form. “You say you can’t reach it? That you need help reaching it? Do you know where we keep the stepstool? Good. Perhaps if you went and got the stepstool you’d be able to reach it without my help.”
It takes longer in the short run, but it is better for them and myself in the long run.
Much of what Mauricio said about his Independence Initiative strikes me as systematizing that “instruct-the-child” strategy and applying it to the poor while also trying to avoid “paternalism” or incentivizing poor behaviors. <cough> the entire U.S. “disability” system <cough>
Another thing that came up only briefly, but that I don’t think Miller stressed enough, is that his Initiative gave families a computer and wired it to the internet! At that point the recipients’ past education is irrelevant. Google is their teacher! That’s no small intervention! But he went further. He paid them to use the computer! Which meant they had an incentive to learn how to use it–the most powerful information gathering and distributing tool in all of human history! Hello! That’s a big deal.
In any case. I’m already sharing this podcast with my friends in the Rotary club and the United Way. We are all trying to help the poor. And, so far as I can tell after 10 years of trying, I’m right where Mauricio was at the end of years of doing it full time. “If I really wanted fundamental change, I didn’t know how to bring it about.”
The one downside to this podcast was the attempt to discuss formal education. I don’t think either the interviewer or the guest knew the answers to those questions about the school system. And neither do I. And, honestly, I’m not sure that it matters with regards to these questions of poverty. But I’d love to know for sure. Because we spend sooooo much time and money on it. But that will make for many a great future discussions, I am sure.
Beautiful podcast, Russ. Thank you.
May 7 2019 at 2:22am
Truthfully, up until the end of the episode I still didn’t really understand what made the “alternative approach” different, or at least what the role of Mauricio’s organization is in this endeavour. I agree with Mauricio that the depiction and treatment of impoverished individuals is wrong and lacks dignity, but I don’t think he was very clear about how this program works or how we can implement it broadly. From how I understand it, the key is to essentially look for “positive deviants” in an impoverished area, and invest in these individuals, rather than have an outsider provide suggestions. But, then what? Are these individuals meant to start a business and improve the economic well-being of the whole community? What do you do if there are no “positive deviants” in the community to begin with? What if everyone in the community can’t design dresses as well as Mauricio’s mother? How do you scale a solution like this, and apply it broadly? I suppose I’ll have to purchase the book and find out, but from the conversation this seems to be yet another case-study focused development book that offers small lessons but no general conclusions.
May 7 2019 at 9:12am
I think I will need to read the book to get the full picture; it’s only a few dollars on Kindle. I wasn’t sure if the folks enrolled in FII were also separately enrolling in SNAP, TANF, Adult Education, WIOA Title I training services, etc. I guess it might not matter because suddenly all of these programs would be in the context of an overall framework for self-reliance and dignity. This is exciting stuff.
May 7 2019 at 2:39pm
Like others, this was an incredibly thought provoking episode. I don’t normally write long posts(or maybe i do?) but I will try to touch on a few things that struck me. Most of it will sound like a critique, but I do want to say I was touched by the good work Mr. Miller.
1) I think Mr Miller did a good job using his own personal experiences to try and solve the problem and it worked for him and the communities he was familiar with. One worry I have is, the word poor has many meanings. I was initially confused if he meant the homeless in San Francisco, the chronically unemployed in Appalachia or the urban poor? No doubt humans are humans and poor people share similar challenges, but I worry what worked for him may not work for others. This is especially true for Liberia.
2) That brings me to my next worry. He spoke about investing in the poor in a kind of targeted way that affects all aspects of their life. It reminded me of Sach’s herculean MVP project which assessed the poverty trap as a confluence of factors all feeding off one another and you needed to burn the heads of each hydra or two would grow back. I don’t want to call Sach’s MVP project a failure, but its not exactly been a rollicking success either. This goes back to the critique by Easterly and Angus Deaton – that oppressive regimes twist the incentives in every direction. Hell, even Romer had to throw up his hands on charter cities in poor countries precisely because the corrupt government would never allow the kind of flourishing he hoped. He may view Liberia as an extension of his local approach, but I’m pretty skeptical. There have been a generation of economists studying poverty traps and I don’t think Mr. Miller has stumbled upon something they were previously unaware of. His local approach may have worked in his case because he had clearly intimate knowledge of that community and had worked from a social workers perspective. But again, what works in one context doesn’t necessarily generalize in another. In fact, the evidence suggests it does not.
Finally – I found Mr. Miller constantly repeated words like initiative, investment, empowering – etc etc. I worked as a data scientist at a non-profit started by a person with a somewhat similar background to Mr. Miller. He also believed deeply that using investor money to empower the students rather than straight charity would make the difference in helping them with their education. He wasn’t an economist by training, but he had somehow stumbled upon the notion that you had to incentivize motivation. His mistake? The investors themselves never held the company accountable because at worst, they regarded the wasted funds as charity. As a result, the company was horribly mismanaged and much of my efforts were spent trying to spin numbers for prospective future investors about all the potentially great work the company could be doing rather than trying to correctly assess the effects on the ground. I have no doubt the founder deeply cared about the kids, but his incentives were about raising money and the investors incentives were only slightly about the welfare of the kids and more about feeling good about giving money to needy people. In fact, one of the company’s chief investors is one of the largest investment banks in the world. I spent hours and hours with their data science team pouring over models and assumptions – none of which ever made it into the code. In fact, there was an overall resistance to tech and data science. Why? Because those efforts did not raise investor funding. It’s why i recoiled at the angel investor analogy. The angel investor does a ton of due diligence and relies on a Stanford degree to help mitigate risk(Stanford is a pretty sweet signal after all). An investor will never put for the same effort if the context carries the charity undertone. And I don’t think Mr. Miller can ever wash that away.
May 9 2019 at 9:51am
What a great episode. My thanks to the guest for the work he does and taking the time to speak about it.
Interesting he worked with Hmong, African Americans, and El Salvadorans teaching them to network and help each other. I guess tribes are useful sometimes.
I thought it was wonderful how much of the groups success was on building social capital and information networks – basically rebuilding a community in the modern world much like a church might historically or any tight knit community. The benefits even had some generational effects. I think being able to facilitate those networks is an amazing achievement that points to a possible long term approach to poverty that would have better outcomes that the failed approach we have been using.
In the United States in order to not be poor it is fairly straightforward based on the data: Don’t have children out of wedlock, get married, and work. It seems pretty obvious but remains an elusive mystery for many. In the episode it was mentioned several times that there were single moms and though there are successes the data overwhelming support single moms are probably the biggest destroyers of civilization ever. I think you could probably solve a lot of poverty by taxing single motherhood and those who father children outside marriage. We do the opposite – we subsidize it heavily. We now have African American communities where 80% of children are born out of wedlock. I would be very interested if the guest had insight into how to stop this (although thankfully the trend is now downward).
May 9 2019 at 12:14pm
So not only are the “haves” not to give the “have-nots” the proverbial “fish,” they are also not to teach them how to “fish?” “Have-nots” are to learn how to “fish” on their own by the “haves” facilitating networks with similar “have-nots?”
May 11 2019 at 9:07am
Perhaps a healthier way to think about it—in light of this podcast—is the “haves” are very intentionally getting out of the way of the “have-nots” who are working hard. One of the most important, and least appreciated, insights of economics is that threats and punishments are not the only kinds of barriers to entry. Honey and sweet things—even when given with good intentions—can mislead people more effectively than any obstacle. Think obesity epidemic and diabetes explosion, just as an off the cuff example.
May 11 2019 at 11:26am
So, when those of us who learned how to swim by falling in deep water, were threatened with “negative” motives such as death and were enticed with “sweet” thoughts of living, struggled to an inch of our lives but succeeded on our own, see someone trying to swim who is obviously “working hard” but flailing, we are to “get out of their way” because it worked for us and many of the other swimmers we know? And those who can’t save themselves, meh, life’s a b—-?
May 11 2019 at 2:01pm
“we are to ‘get out of their way’ because it worked for us…”
“And those who can’t save themselves, meh, life’s a b—-?”
Yes and no. The freedom to succeed requires the freedom to fail. Not just because incentives matter, both positive and negative, in determining behavior, but because human beings learn best from our mistakes. Policies—which is what we are talking about here… I think—that seek to prevent people from ever failing or ever suffering actually prevent those same people from learning the most important lessons.
I knew a man once. He was my boy scout troupe leader. He was a very caring and thoughtful person and a father of two lovely girls. He told me a story once where his oldest little daughter was about to put her hand on the hot stovetop at their home. The man’s wife wanted desperately to remove the child from the kitchen entirely so avoid the inevitable injury and tears. But the father said, “No. If she wants to touch it. Let her. Let her touch it while I am here and can help her. Then she will know. And she will not do it again. If you prevent her from learning, she will do it again later, maybe when I am not around to help her.”
As I recall, the little girl chose not to touch it. She had learned from past experience that when her father told her what she was going to do was going to hurt. He was right.
It was a hard story to hear. But there is great truth in it if you take the time to ponder. Importantly, it is the same story you are telling about learning to swim and the hazards of learning to swim. And it the same story I think Mauricio Miller is trying to tell about leaving people free to learn about the things they think important in their own time and in their own way.
And to the extent that all this correct, it has logical implications for your desire to help others: You know how to swim. You think others would benefit from your knowledge. What can you do to help others that won’t mess up their incentives or their learning? 1) Offer to teach others. If they take you up on your offer, great. You have a successful business and they are learning to swim from you. 2) PAY them to behave in the way you think will help them avoid the pitfalls of swimming. Just be sure you’re paying them out of your own funds and not mine. That will limit the damage if you are wrong. 3) Become a lifeguard. Then the people you care about can pay you to save them when they are drowning, but it leaves them free to flounder while they are learning.
May 9 2019 at 5:26pm
Mr. Miller makes a big deal about how they went out of their way to not help the treatment group, then has a theory about how journaling and whatever helped the treatment group. The most obvious answer is that the program had no effect, which was likely a good thing.
For instance, he mentions that the wages increased ~20% over some time, and that a lot of participants worked in construction. If you work construction, over time you become more skilled, and get promoted to foreman (or other skilled position). He didn’t seem to follow up on why their earnings increased
The participants weren’t randomly selected; their social networks would have existed without this program, and the outcomes would likely have been the same.
Furthermore, this “positive deviant” theory needs a bit more heft. Javier and Maria may have just had a bit more money in the bank, and other families weren’t thinking about improving their housing.
tl;dr this was an observational study.
May 11 2019 at 12:36am
Since my interest in economics grew out of my desire to understand the origins of poverty and possible mechanisms for its elimination, I appreciate Econtalk episodes that focus on these topics. I do believe our society is not structured in such a way as to bring out the best in all of its members. However, the model described in this episode seems to me to rest upon an impoverished vision of what a society is and could become. Why don’t we envision and build a society that gives people access to easily identifiable opportunities for developing their own capacities, instead of cheering people on when they find ways to succeed in spite of their lack of access to jobs that provide financial security? Why should someone have to devise a clever work around in order to thrive in our communities? What if one is not a member of a particular network? It seems that much effort is expended that could be avoided if we had an economy that is designed to funnel enough money to people to give them financial security. Even entrepreneurship which is so revered seems to me who admittedly has never started a business to involve lots of risk just for the promise of financial security (or the promise of wealth – do we really want to be glorifying greed?) which to my mind we should find a way to provide without so much wasted effort. In the future, algorithms should be able to determine the most efficient way of manufacturing a good or providing a service, so won’t the idea of competition spurring innovation become obsolete anyway? In addition to providing all with financial security, our goal should be to set up a system that encourages and gives everyone the opportunity to use their minds to compete in a marketplace of ideas. Can’t we find a way to revere and incentivize knowledge and the pursuit of excellence which confer benefits not just for individuals but for society as a whole?
Rather leading to job loss, the discovery that some employees were threatening the integrity of the program by offering assistance to participants could have lead Mr. Miller to reflect that he had 1) not communicated the goals of the program to the staff in an effective manner and 2) not taken into account the legitimate fears staff members may have had about losing their own jobs or hours. After recognizing these oversights, he could have corrected them by addressing these issues with the staff directly. I don’t feel good about applauding a story in which a major turning point involves shaming (even if only by recounting their actions) and firing people who had genuine concerns that had not been addressed.
May 12 2019 at 10:22am
I m sorry, I didn’t get out of this podcast the same perspective of what previous commenters did. I am proud of Mauricio of his accomplishments and appreciate his dedication towards improving people in poverty, but I differ on the economic incentives for individual advancement. I also was taken back that people are getting paid with taxpayers money not to help people. I hope I understood that part. I believe governmental intervention through regulation, licensing, taxes, and local politics hinders people in poverty from advancing. Mauricio identifies some key components that can increase people in poverty the opportunity to succeed. Stay in school, don’t do drugs, don’t get pregnant at 16 years old, and help your neighbors.
When Russ said ” What you are really claiming is that what was holding these people back was a self-image of themselves as failures. As wards of the state. As people who couldn’t possibly succeed on their own. And, once we–once you changed that self-image, they were able to thrive. That sounds–um, I don’t know, a little bit rose-colored. Even for me. So, tell me that’s wrong. Tell me that really is a powerful thing and that it’s more than 25 families. Which is, you know, fantastic; but it’s only 25 families.” I agreed. I believe the key to future success is to educate young students the basic economic concepts that the current education system is lacking.
May 12 2019 at 11:55am
At the 48:25 segment;
you know, fantastic; but it’s only 25 families.
Mauricio Miller: Well, now it’s over 10,000 families. But, you are only half
May 12 2019 at 9:11pm
Very deep and touching on the first listen, but problems pop up when you think a bit about it. Others have already commented on the biased sample and the important role of community and computers.
The issue that I can’t resolve is that Mr. Miller, despite claiming otherwise, seems to have a limited sense of agency:
If you’re poor and make poor choices: No agency. The way he talks about his sister encapsulates this. While she chose to associate with bad people, chose to have unprotected sex with a violent man, chose to carry the child to term, and chose to have another child with this man, she is stripped of her agency by using words that make it seem that these events just happened to her (“got in with the wrong group,” “ended up getting pregnant”). Similarly, his cousins who chose to do drugs “struggle” with drugs.
If you’re poor and you make the right choices and succeed into the middle or upper classes: No agency. Time after time, Mr. Miller mentions that he got where he did by luck and circumstance. Sure he worked hard, but he’s where he is because of luck he says. Maybe it’s false humility, but attributing Steve Jobs’ success to luck makes it seem like he has a different idea of agency.
If you’re poor and make the right choices and succeed, but not enough to get really rich: Agency (finally!). Javier and Maria made the right choices and had enough money to be comfortably poor and maybe lower middle class. Had they made enough money to be a solidly middle/upper class person like Mr. Miller, their agency would presumably get stripped and their success attributed to luck.
There is a rich literature on the culture of poverty and Bryan Caplan has written extensively on this. I wish Mr. Miller had addressed these issues.
May 14 2019 at 11:22am
Do you mind sharing what you think is some relevant B.Caplan writing on this? Thanks.
May 17 2019 at 10:08am
Sure thing. I don’t necessarily agree with everything he says, but his positions are, as usual, pretty well thought out.
This should get you started:
May 25 2019 at 11:20am
Thank for the podcast. I think that the other econtalk podcast links should include a link to your talk with David Rose on the moral foundations of economic behavior. Also curious if David would recognize what Mauricio is doing as building of bilateral trust? If only he would comment. Perhaps it is time for another talk with David who has a new book out.
[Here is the link: David Rose on the Moral Foundations of Economic Behavior —Econlib Ed.]
Comments are closed.