
Startup says it wants to fight poverty, but a food stamp giant is blocking it - dredmorbius
https://www.nytimes.com/2018/04/23/technology/start-up-fight-poverty-food-stamp-giant-blocking-it.html
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hamandcheese
I’ve had the pleasure of doing some contract work that involved dealings with
Conduent, and my oh my are they absolutely horrible to work with, and
generally incompetent.

Their m.o. is to put you on the phone with some folks from Bangalore, where if
you ask anything off script they stonewall you with “that’s against internal
security policy.”

Then, because the project is 6 months delayed and the main stakeholders are
upset (the ones paying $$$ of taxpayer money), some account manager there CC’s
every living soul who has ever been involved and tries to get them all on the
phone together, which goes about as well as you would expect. Promises get
made, timelines agreed upon, and then they never deliver.

~~~
SlowRobotAhead
Sounds exactly the like the type of company states choose to be sole suppliers
of software and services. Not even joking, this sounds perfectly typical in my
experience.

~~~
hamandcheese
I suppose there is comfort in choosing an organization that operates similarly
to your own.

~~~
gt_
This proposition is missing an _actual_ motive. In other words, what’s
comfortable about that?

We might also ask “what is ‘their own’?”

If you are proposing that the government is the organization of the elected
officials, you’re wrong. A democratic government belongs to the members of the
society. Many Americans don’t realize that so I’ll assume you’re one of them.

In reality, most American elected officials don’t make decisions on behalf of
their electorate because they get paid more by private companies to
specifically not do so, which is clearly the issue at hand.

But furthermore, if you are an American, it is _your_ society who hired this
company by proxy, and who is paying for it.

When you give these strange narratives which insult your own government, you
are only insulting yourself. You are the people who let this happen.

~~~
hamandcheese
No, I’m talking about an organization of civil servants, with layers of
beuracracy and process, similar to any large organization.

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utopkara
Many will only read the image captions and will miss this buried "info" bit:

"Conduent, in another twist, has begun competing with the start-up. The
business services outsourcer, which has $6 billion in yearly revenue,
introduced its own smartphone app last year. Conduent’s entry, ConnectEBT, has
significantly fewer reviews and lower ratings on the Google and Apple app
stores than Propel’s FreshEBT."

~~~
fortythirteen
In most cases, I would agree that Conduent is within their rights to build
their own data stream for their product, and cut off a competitor. But, when
your product is the redistribution of taxpayer dollars, doing so turns into a
government sponsored monopoly.

~~~
noobermin
I'm happy you agree, but how is being a monopoly better than being a
government sponsored monopoly? They result in the same outcome.

~~~
wand3r
I think the difference is that they are using public funds and public data
which they are withholding. Google is/was a natural monopoly due to sheer
technological advantage however someone can (and sort of has) built a
competing product. There is no way to build a competing product in this case
because it relys on data that is being withheld, it is doubly annoying because
that data is (or should be) public and is funded by taxpayer dollars.

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dalbasal
This is something we're going to have to get way better at.. ...government
created markets.

Modern governments run many monopsonies, sectors where they are the only
buyers. Spacex is selling to such a monopsony, for example. It seems that
there, a simple change from cost-plus to fixed-quote pricing system made a
huge difference.

A bigger example is roads, comm cables and a lot of "infrastructure"
generally. These are sectors with a centralize core, and less centralized
layers above it. Generally, the centralized layer is publicly run, contracted
or highly regulated. Lending/money markets are a big example. Central banks at
the core, large banks in the next layer, consumer financial services above
that.

This sounds like an example of a centralized-core market.

There are just tons of example of things I would class as designed markets.
Private companies can design/control markets too, the app stores are an
example. The difference between a well designed/managed market and a badly
designed one is huge.

In this example, how does it work? You need (or at least, they opted for) a
centralised core: the part that keeps track of users, balances and allows
transactions to happen. If there is to be a layer built onto this core, it
needs to be well designed and designed for openness. We also can't expect
competition or market forces to fix problems with the central core, at least
unless that competition can be designed in.

We're really bad at this. Governments today do a lot of this, it's a core
instrument. The difference between being good or bad at this is tremendous.
One way or another, it'll need to improve.

~~~
lr4444lr
Private prisons and munitions manufacturers, too.

Your general point speaks to a major source of corruption in the United
States, which is often glossed over when well-meaning people push for
increased government spending that will go to service providers rather than
recipients directly, and is IMHO a vastly underappreciated argument in support
of UBI.

~~~
jadedhacker
One big answer to the unbridled graft in public-private partnerships is to
nationalize such services and run them as public enterprises.

~~~
djrogers
True, but that results in other problems - lack of accountabbility and
control. Perfect example is the VA.

I think the ultimate solution is to simplify access to, and limit govnerment
control of, all entitlement programs. The ultimate expression of that would be
UBI - I'd even be in favor of a means-tested phase-out of the UBI.

After that's done, all we gotta do is fix the tax code...

~~~
AnthonyMouse
> I'd even be in favor of a means-tested phase-out of the UBI.

This is a bad idea. A phase-out is indistinguishable from a tax in the same
amount, but it harder to reason about and consequently tends to be implemented
incoherently.

Suppose you have $10,000 basic income with a 20% phase-out rate and a
progressive income tax with a 15% tax rate up to $50,000 and 25% thereafter.
Then what you really have is a $10,000 UBI and an income tax of 35% up to
$50,000 and 25% thereafter. Probably not what you wanted, right?

Much better to have a $10,000 UBI with no phase out and a flat 30% tax rate.
Which has the added benefit of vastly simplifying the tax system -- no need
for multiple rates and all the complexity and opportunities for tax avoidance
that go with them.

~~~
djrogers
Your phase-out and progressive taxation numbers don't work out for any logical
application of the concept. A means-tested pahse-out of a UBI in a progressive
tax scheme would reduce the UBI for earners only in the highest tax bracket,
thus further increasing their tax rate.

I would prefer a flat tax, with the UBI acting as the progressive mechanism
while also being phased-out for high earners. Your assumptions in your
response are really bizzarre...

------
afpx
I don’t see where Propel is fighting poverty. Instead, it’s a for-profit
company that requires an audience of low-income people for it to make money.
And, if considered like that, Propel actually has a perverse incentive to keep
people in poverty.

It saddens me to see NYT publish these types of PR pieces, disguised as
journalism.

~~~
williamscales
Are you arguing that no-one should be allowed to make a profit when providing
services to low-income people? What incentive would there then be to offer
these services?

~~~
noir-york
> What incentive would there then be to offer these services?

Justice.

The state should be providing these services to low-income people itself. Low-
income people are not 'customers' \- they are citizens and any money that is
diverted to profit is money that is not going to the people who need it.

~~~
cududa
Good luck with that approach.

~~~
noir-york
Why? The countries I am familiar with (in Europe) manage to provide most
social services through the government agencies just fine. When there is a
scew up, its usually when the provision has been out-sourced (at great cost).

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wirrbel
Can we stop these hyperinflated mission claims already. Fighting poverty is a
good ambition, not quite sure an app will solve that problem.

~~~
OliverJones
"Fight poverty" is certainly a grandiose mission statement.

But this core function--checking benefits balances--is very helpful to EBT
users.

Why? In my neighborhood there are quite a few EBT users. I've seen several of
them run over their limits at the supermarket checkout. It's humiliating. (I
volunteer at the drop-in center for kiddos in the local public housing
project, so I know a few of these families.)

Plus, the nudges in this app to good nutrition are undoubtedly helpful.
Generally super cheap food isn't the healthiest food, and an app like this can
help.

I pay lots of taxes so poor people can have a fair shot at getting themselves
and their families out of poverty. EBT helps fulfill that mission.

I know some people take the default position that recipients of public
assistance ought to endure some hassles. I don't agree: being poor is hassle
enough. The states where this big contractor does business should require them
to cooperate with innovating stuff like Propel.

~~~
heywire
In most cases you can do an EBT Balance Inquiry right at the checkout (or
customer service, etc).

~~~
Jemmeh
Yeah but it's easier to look it up before you even go to the store. Why waste
gas if you've only got $10, wait til next bit comes in a few days, that sort
of thing.

~~~
heywire
Most EBT cards I’ve seen also have a toll-free number on the back to call and
check your balance through an automated system (similar to gift cards).

~~~
alasdair_
>Most EBT cards I’ve seen also have a toll-free number on the back to call and
check your balance through an automated system (similar to gift cards).

Yeah, and my bank does online phone banking. Which I've literally never used
because it takes a couple of seconds with online banking to check my balance
and roughly 10,000% more time to perform the same action with phone banking
and that's IF I can remember all the details needed to get to that point.,

------
joveian
Folks here might not be aware that when you get food stamps the balance
appears on your receipt after each purchase. Calling a balance checking app
"fighting poverty" is very much a misrepresentation.

~~~
bausshf
It's more than just checking your balance.

------
foreigner
"A digital skin" sounds like they were scraping the big company's website, and
they shut them down. That's hardly surprising.

~~~
fastball
It's an issue because the data in question should be open, as it's for a
purely public service and is entirely funded by taxpayer dollars.

~~~
yellowapple
Sure, but to what extent should it be open? I'd imagine EBT balances count as
"sensitive information" which should not be directly available to every single
member of the general public; the general public should not need the ability
to determine that I'm dependent on food stamps at all, let alone my exact EBT
balance.

That would mean that some degree of access control is required, which in turn
means that - short of implementing food stamps as a cryptocurrency - there
would need to be a central authority delegating that access. That central
authority, in this case, was (allegedly) experiencing a surge of traffic from
some random startup; restricting that traffic is not an unreasonable response.

The article tries to convince the reader that "but think of the poor people!"
is a legitimate excuse for unauthorized overloading of service. I ain't buying
it, not for one bit.

~~~
fastball
The service was being used for exactly what the government was presumably
paying Confluent to deliver -- the ability for EBT beneficiaries to see their
balance. If Confluent can't deliver on serving customer data to customers,
they have no business holding that contract.

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throw7
Frankly, gov't programs should be fully open and transparent. If Conduent is
"blocking" access then the gov't needs to step up and make them "play nice".

~~~
yellow_postit
There should be some access provisions but if you aren't in the API business
then Propel relying entirely on screen scraping (or equivalent) could be a
problem. The article doesn't detail what technical discussions the two have
had. I've seen enough poor capacity planning that I can easily imagine a new
app causing issues depending how it is designed.

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dajohnson89
>In those states, where 60 percent of Propel’s users live, Conduent maintains
the database that Propel’s app uses to let people check their accounts.

there's the problem. decentralize the database, i.e., take it out of the hands
of a private entity. why do they control it anyways?

~~~
Spooky23
Because most governments abandoned their systems for administering these
programs and outsource it to companies like Conduent nee Xerox. It doesn't
save money, but it shifts risk to the vendor.

Once a vendor gets one of these contracts, they can repackage it for other
states, or get acquired by a bigger company. They don't "own" the databases,
but they end up controlling it and acquiring competitors. It is a many-billion
dollar market.

~~~
GCU-Empiricist
The hurdle of bringing "government data" back inside the government lifelines
is one of the things large contractors can use to minimize the risk of the
contractor being changed.

It's a non-trivial challenge as the government agencies seldom staffs up to
the level of tech personnel required, and can't really afford to attract
sufficient talent to automate without outsourcing the support contract.

Source: I've been adjacent to these efforts in the DOD/Mil sector with a
military region BOSS (Base operations Support services) contractor in
question.

~~~
logfromblammo
Even small contractors do this.

I once worked on a range safety reporting application, with a budget of _4
hours per month_ for the developer maintenance. It was not by any means a big-
money contract. But the site still had a database behind it, and I was given
explicit instructions by management to _not_ give too much of _our_ data to
the government customer at once.

It's almost like the company was trying to punish the government for not
paying them more money. I really had a personal ethical struggle with that
one, as I'm a citizen more than I am an employee, but the latter definitely
pays better. In the end, I chose to _not_ slip a complete copy of the database
onto a delivery CD, and the company shuttered the branch office and fired
everyone working in it shortly thereafter. But then I did get to do some
consulting work for the successor company as I was looking for a new
"permanent" position, which allowed me to pay some bills while otherwise
unemployed. Slight win for me, individually, but that government customer got
screwed, mainly because a different government customer (that was paying a lot
more per month) pulled their big contract and awarded the work to someone
else.

As I walked out of the customer's office for the last time, the Army officer
in charge of the program encouraged me to apply for open government technology
positions, and I couldn't help thinking about what a bad deal that would be
for me financially. It all boils down to limits on individual direct employee
salaries, but no limits on what a contractor company may be paid for hiring
exactly the same person to do exactly the same work. So the government can pay
me $35/hour directly, or they can pay a company $200/hour, so they can
indirectly pay me $50/hour. Oh, and they can then fire me at the drop of a
hat. (This was before 18F, by the way.)

I have no idea how anyone justifies the argument that outsourcing essential
government functions to private companies saves money. It's pants-on-head
stupid. It exposes enough flesh for the parasitic military-industrial
contractors to dig in their mouth-parts, and then never stop sucking out the
blood.

It's the same for non-military privatized functions. The agency problem always
gets in the way. People insert themselves into the system to become unmovable
middlemen, and extract maximum value by standing between work and workers.

------
jdtang13
Wow, this is actually pretty strange. It feels as if the ability to query your
own food stamp information should be free and publicly accessible. But the
food stamp information is hosted on Conduent private servers that are getting
a huge increase in requests due to Propel users.

Very strange, feels like the correct distinction between private and public is
very messed up here.

------
jordan801
It's a slippery slope when you start profiting from misfortune. This company
seems to be doing it right, for now. But it makes me wonder, if they're
successful, will they be so symbiotic if something better tries to dislodge
them in the future?

Seems to me, that a lot of these things start with good intentions and quickly
become parasitic.

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kgwgk
I don’t like when the title changes without apparent reason but, at least you
could use a gramatically correct title.

------
noir-york
Propel is a feature, a digital skin over Conduent's data. If Propel really
wanted to help poor people, it would help them go out to vote for candidates
who want to fund social welfare and a higher minimum wage.

You would be forgiven for thinking that Propel, seeing the huge (in absolute
terms) fed govt spend on programs, wanted a piece of that pie while draping
itself in moral virtue. But that would be cynical...

~~~
PeterStuer
Yep. They might want to detail their business model before making any moral
claims.

------
martin_bech
I dont understand this? Why do you guys have foodstamps? Are you not one of
the richest nations in the world?

~~~
jadedhacker
You got downvoted, but here's what the UN Special Rapporteur on Extreme
Poverty and Human Rights said about the US:
[http://www.ohchr.org/EN/NewsEvents/Pages/DisplayNews.aspx?Ne...](http://www.ohchr.org/EN/NewsEvents/Pages/DisplayNews.aspx?NewsID=22533)

"3\. The United States is one of the world’s richest, most powerful and
technologically innovative countries; but neither its wealth nor its power nor
its technology is being harnessed to address the situation in which 40 million
people continue to live in poverty."

"6\. American exceptionalism was a constant theme in my conversations. But
instead of realizing its founders’ admirable commitments, today’s United
States has proved itself to be exceptional in far more problematic ways that
are shockingly at odds with its immense wealth and its founding commitment to
human rights. As a result, contrasts between private wealth and public squalor
abound."

As an American I can't agree more.

~~~
martin_bech
I agree completely. Why discus some apps access to cardbalances, when the
issue is actually, why do people, making the minimum wage (or similar), need
foodstamps?

Here in Europe we had foodstamps during WW2.. but not since.

------
dredmorbius
NB: Title edited for length & declickbaiting.

------
ibdf
The article makes it sound that Conduent has been in this business for years,
but they started in Jan 2017? So how old is Propel?

It seems to me Propel saw an opportunity to make improvements using someone
else's data. Both seem eager to help people in poverty but not so eager that
they are willing to work out their issues or better, work together to meet
their goals.

Neither company seems to be "wrong" or "right". Looks like more of a matter of
pride and poor business.

------
amingilani
I mean... if you scrape someone's website and they block you, it's totally
legit. This article is fairly biased in the way it portrays the situation.

Conduent isn't blocking Propel from "fighting poverty", they're just keeping
them from scraping their sites and launching a competing product.

~~~
lucio
Hmmm... but unless I'm misunderstanding something here, Conduent "clients" are
not voluntary "clients", and Conduent "product" is literally taxpayers' money,
so there's a case for the data to be public and access regulated and open.

~~~
amingilani
Ofcourse, and that's definitely a good case for them to fight over. However,
as it stands, it's a lot like Amazon blocking scrapers from giving price
recommendations.

------
ThomPete
One of the most difficult things for any organization based on a political
mandate or a cause is to plan for its dissolution.

One of the best examples I have seen of this is in Denmark where libraries are
now renting out a lot of other things and setting up plays and culture nights
to keep staying relevant.

------
qrbLPHiKpiux
On iOS App Store, it’s a free app. How does propel make money?

~~~
PeterStuer
I would guess by selling out their customer's privacy, which seems to be the
standard operating model.

~~~
joshdick
"It does not store or sell users’ personal information, the company said."

------
classics2
Sounds like they are web scraping and got caught.

------
peterburkimsher
The government gives food stamps to poor people (good). The stamps are
replaced by an electronic debit card system (good). The government outsources
the food stamp/debit card management to a private contractor, Conduent (not
inherently bad in a capitalist society). Conduent make an app (good).

The startup, Propel, makes their own app, and uses the Conduent database
through an API (good). Many users like Propel's app (good), and it becomes
more popular than Conduent's app.

Conduent controls the database, and tries to block Propel from database access
(rude, possibly anti-competitive). Their reasoning is that Propel are making
too many API requests ("a capacity ambush"). Propel turns to mass media to
defend themselves (rude, possibly libellous).

If I trusted the government, I'd recommend that they take back control of
their database, and offer it as Open Data. In the meantime, I think Propel
should scrape the data from Conduent and run their own servers so they're not
vulnerable to API blocks. The Internet is great, but we can't always expect
servers to keep working (for political reasons like this, or technical ones),
and that's one reason I dislike the shift from the Digital Hub to Cloud
Subscription business models.

~~~
tyingq
Was it an public API, or scraping Conduent's website?

I'm not sure Conduent is really the "bad guy" here. The states should supply
the API.

~~~
HenryBemis
Looks like when they started out the drain was drawing some MB per day:

> "On average, users check their balances seven times a month")

Now that they have scaled, and added more content, making the app more
attractive and visited more often, this may go up. And perhaps Conduent is the
first who reacts on the jump on the requests ("capacity ambush").

Giving away one glass of water per day, for free, is acceptable.

Giving away 50 buckets of water per day is just to much to be free.

~~~
themoat
Isn't the better response to start charging for API access at that point? Not
revoke access and go silent?

------
baldfat
Rich ONLY get richer at the expense of others.

------
franzwong
Is it common that food stamp recipient can afford cell phone?

~~~
logfromblammo
A cell phone is one of the highest utility-per-unit-cost items in existence.

They are so useful that a person could conceivably choose to keep a cell phone
and phone service in preference to a permanent housing arrangement. You can
sleep in a lot of different places, if you can respond to your e-mail, or pick
up the call extending the job offer, wherever you happen to be.

~~~
yellowapple
As the saying goes: "You can sleep in your car, but you can't drive your house
to work"

