Rethinking the Welfare State: The prospects for ... - e-Library

Food stamps 47
in turn could be utilized at their discretion to purchase food. Most Western nations have
embraced this policy and, with the notable exception of the United States, do not
distinguish between cash transfers for food and welfare support payments, which are
intended to subsume the former. The third option is the food stamp or “voucher.” This
option lies somewhere between the in-kind benefit and the untied benefit. Though the
family is provided with stamps to purchase food rather than with actual food, the stamps
can be redeemed only for approved food products and nothing else. What follows is a
critical analysis of these three options that reveals the advantages and disadvantages of
each. It suggests that the untied transfer would be the most effective means of delivering
assistance with the voucher method ranking as the next best alternative.
In-kind provision
Although the CDP was replaced many years ago by a food stamp regime, the benefits of
the direct distribution of food commodities to households should not be discounted. The
most important of these is the alleged assurance that food is indeed consumed by the
family. Unlike cash transfers, it is claimed, in-kind benefits provide recipients with no
alternative uses for the transfer. Barring the evolution of an elaborate underground
economy for food, the recipients must either accept the food they are provided with or go
hungry. Given that the goal of the tax-funded assistance is to reduce food inadequacy, it
is not unreasonable that the state and its taxpayers expect that assistance be spent on food
and not on what they perceive to be less essential forms of consumption. If the claim that
recipients of cash transfers would not allocate the entire value of the transfer on food has
any merit, then in-kind provision is desirable from a paternalistic point of view. 28 This
point is particularly relevant when principal-agent issues arise, that is, when the recipients
of cash transfers are parents who choose to under-invest in food for their children. If this
under-investment translates into the purchase of low-quality food, though such food may
address the immediate concern of hunger, the resultant undernourishment will ultimately
lead to long-term costs. A further advantage of an in-kind benefit scheme is its decreased
susceptibility to fraud and abuse. Were qualifiers for food assistance simply provided
with untied benefits in the form of monthly government cheques, many who do not suffer
from food inadequacy may go to considerable lengths to gain entry into the program.
However, at least intuitively, it seems rational that fewer individuals would make such
false claims if the consequent pay-off were food. Finally, the assurance of consumption
and the reduction of false eligibility claims make in-kind transfers politically appealing.
There are, of course, several disadvantages to the direct provision of food
commodities, disadvantages that ultimately formed the basis for the replacement of the
CDP. First, the implementation of any such distribution program would require a
significant investment in infrastructure by the state. Warehouses would have to be built,
delivery trucks purchased, and employees hired, all of which would contribute to
overhead costs. These costs would be in addition to the administrative costs common to
all three regimes (government offices assessing applications and allocating benefits).
Second, many food commodities are perishable; thus unlike a cash payment, it would not
be feasible to make deliveries only once a month. Instead, the government supplier would
have to make food available to each household on a more frequent basis. This too would