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Startup says it wants to fight poverty, but a food stamp giant is blocking it (nytimes.com)
230 points by dredmorbius on April 24, 2018 | hide | past | favorite | 157 comments

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.

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.

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

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.

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

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."

I came across Conduent's web portal for checking your balance, only to be greeted with this lovely error message that demonstrates just how accessible and up-to-date this company is:

> You're using Chrome 66. Please use Internet Explorer or Firefox version 4 or above.

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.

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

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.

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.

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.

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

Well, that solves one kind of graft and opens the door to another. The history of Petrobras is a great example of the kind of corruption that can happen in state run enterprises. Chinese SOEs are another example. Transparency, audits, and open procurement processes are probably more useful at fighting graft than nationalization.

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...

> 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.

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...

According to Merriam-Webster, 'entitlement' can mean:

1: a : the state or condition of being entitled : right b : a right to benefits specified especially by law or contract 2 : belief that one is deserving of or entitled to certain privileges 3 : a government program providing benefits to members of a specified group; also : funds supporting or distributed by such a program


How is that a solution for, say, telecom? Or space travel?

(Not touching the other GOP hot topics here...)

If you're ignorant of the cons of the thing you're pushing for are you still well meaning?

Well meaning people support all sorts of dumb things because they seem like the right thing to do at the time.

Dunno if it's underappreciated. I appreciate it for this reason, and similar ones. I assume this is why the idea resonated/s with the likes of friedman and also left-libertarian leaning thinkers.

I don't think all problems can be solved quite this way, and I don't fundamentally have a problem with secondary currencies as an instrument, as long as they work good.

In this case, taking the premise as is (food stamps should exist and apps should exist to make them work better), what you inevitably have is an artificial market. It's not impossible to have a core system onto which independent developers can build apps.

Incidental to your point about apps, I wonder if Propel can't deliver a devastating blow with a digital records FOIA request. Conduent will fight it tooth and nail, and it may be worth Propel's while to put some professional legal help on it, but since the data is being paid for by the taxpayer, as long as it can be redacted so that personal information isn't shared (which Propel could be required to pay for), Conduent may have no recourse to keep their data under lock and key. App users could be shown how to request their primary key or some other permissible identifier under FOIA from Conduent, and then they'd be reduced to a mere primary data warehousing and collection outfit.

> I wonder if Propel can't deliver a devastating blow with a digital records FOIA request

I wouldn't think so. Propel needs current data, and taking a month or two to respond to each FOIA request would make the data untimely even if the FOIA request is deemed to be valid.

> App users could be shown how to request their primary key or some other permissible identifier under FOIA from Conduent, and then they'd be reduced to a mere primary data warehousing and collection outfit.

If I understand the article correctly, Propel already knows the individual's primary key and their app was working fine. Then Conduent stopped responding to API calls from Propel's app. Knowing the ID doesn't help with that problem.

Every market is a designed market. Markets aren't a natural dynamic system.

Federal reserve bank isn’t owned by the government. The federal reserve is owned by commercial banks who receive dividends. It does report to the government and pays the treasury excess earnings.


The Federal Reserve system is quite complex, but the 12 banks are not owned by the banks. They are chartered and organized by the US government, so they can't change their mission without convincing the government to change the laws around them.

Nationally chartered banks are required to be members of one of the Federal Reserve Banks, and have to own "stock" equal to 3% of their capital and surplus. State chartered banks are not required to be members, but may do so under different rules. The banks receive a 6% divided of their stake, with the remaining profits going back to the government. The numbers aren't clear, but it looks like the system made over $92 billion for their 2016 year, and over $91 billion of that went to the government.

> The federal reserve is owned by commercial banks who receive dividends.

This isn't correct by your own link's information (it says no one owns it). However the Federal Reserve is run by a government appointed group who then oversea the various Federal Reserve Banks, each of which are incorporated and have stock which is what the private banks own.

It does seem a bit convoluted though.

Oh I thought stock implied ownership. Maybe it doesn’t mean that in this case.

The shares that the commercial banks own are pretty much entirely symbolic. I believe they have no voting rights, for instance.

The US Government considers the federal bank “independent within the Government”.

The Fed derives all its authority from the Federal Reserve Act, legislated by Congress, and it’s run by a board appointed by the President and confirmed by the Senate.

It’s like owning stock in the Green Bay Packers.

The Packers are the only publicly owned, non-profit team in the league [0]. They are effectively privately held shares: you can't sell them (you can gift them to family members only), you get no dividends, you get no rights except the ability to vote. It's the only reason the Packers are still in Green Bay: to move or sell, you'd have to convince 350,000 die hard Packers fans to vote in favor of a move/sale.

It's one of my favorite stocks: I never have to worry if the value is going up or down.

[0] https://en.wikipedia.org/wiki/Green_Bay_Packers,_Inc.

It was so effective at stopping anyone from buying up and moving the team, that the NFL banned any other teams from structuring their ownership this way. Which says something about who the game's really for I guess.

Fantasic example, exactly the type of alternative structures that could make sense in artificial markets. I didn't know about this.

One bit I'd nitpick is restricting the mission to non profit. Profits could still be good, if shareholders have the right to decide what to do with them. Non profit structures force you into spending "above the line" which muddles things by design. Having a profit is a useful health check, and profits can be spent in a more transparent way.

Imagine such a structure owning street level retail real estate, a busy shopping street. Renting at market value to H&M produces more "profit" than renting at reduced prices (or free) to a community op shop. There's a trade-off that the "owners" might make, if they would like to buy more real estate or whatnot.

Any profits fund charities in the state of Wisconsin - and they have a rotating set of causes they work with each year. Last year I think it was senior citizen care, next year it's alcohol and drug rehabilitation.

Not sure. I mean it might but that would be individual Federal Reserve Banks and not the Federal Reserve itself. I find it a bit confusing, heh.

I wasn't referring to the US system in particular. But regardless of the particulars, there's a centralized core in US banking and in many other industries.

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

The goal should be to eliminate government created markets not get "better" at creating them...

> You need (or at least, they opted for) a centralised core:

That is the problem they opted for the centralized management, one does not need it for EBT, they choose it because they wanted control over how and where the money was spent which means they needed a contractor they controlled.

>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.

In this case it comes down to data ownership. Like so many other things in modern society in the US we have a warped sense of ownership where a company that collects information about you owns that information, you do not own your own information. Until we change that these types of issues will continue to arise

As the article stated commercial banks attempted to shut down services like MINT for people until a law was passed requiring the banks to allow users to access their own data with 3rd party services like Mint.

This type of legal requirement should be expanded to all personal information

re: "The goal should be to eliminate government created markets"

Having been on hn for a while, I was sort of writing to this response when I commented.

So... my friend^, I don't know. I really don't. I am sympathetic to all sorts of minarchist ideas and minarchist ideals. I also have my own ideas off beat ideas about was of improving some of these. In many cases that I alluded to above, trying to minimize government power would be an approach worth trying. However, I just don't see us living in a near future where the quality of artificial^^ markets is not very important. Some of these are a lot worse than others, and we should fix it.

^I mean this. Lets not forget we're friends, disagreements don't negate this.

^^re-reading, I realized that I should have said "artificial" rather than government created. There are many ways to catch mice, and it's worth varying more than just the colour of the cat.

> e-reading, I realized that I should have said "artificial" rather than government created. There are many ways to catch mice, and it's worth varying more than just the colour of the cat.

All markets are artificial. You can't have any kind of market without some enforcement of the rules that make it a market. Otherwise it degenerates into a free market, which, despite its name, is not a market.

All markets are artificial because enforcement of property allocations is an artificial, market creating action. But none of this is relevant to the point of the GP, which is that a realistic policy decision involves making existing artificial markets incremental better in the short term.

> The goal should be to eliminate government created markets not get "better" at creating them...

So we're all going to individually contract with "General Jim's Defense Systems" or "Admiral Bob’s Global Security" ala Snow Crash? The parent is discussing natural monopsonies, where there's no reason for a given territory to have more than one purchaser, such as national security space launches and social security distribution systems.

But we do already have more than one Company for "National Security Space launches" (ULA and SpaceX) with more attempting to become contractors.

We have seen directly in that market what competition will do, massively lower costs. ULA is somewhere on the order for 5x more expensive than SpaceX, and SpaceX had to sue to get the privilege of bidding on the contracts for the Defense Dept which previously did No-Bid contracts to ULA

So your own example debunks your comment

Further I never stated we could eliminate ALL government markets, but that should be the GOAL, national defense is likely one that can not be eliminated however it is also an example of the extreme waste and over reach these markets create where now the government has programs that even the military says they do not want because they are Jobs programs not for actual defense.

I think you might be mixing up monopolies (only one seller) and monopsonies (only one buyer).

Yes, at least that is what I meant by monopsony.

There are multiple competing firms, but they all sell primarily to the state. The legal cases syshum mentions resolved in changing the rules of this artificial, state-run market. ..making them better.

I don't know where "no-bid" plays into the story, but elon musk testified for fixed-bid as an alternative to cost-plus pricing/bidding.

There will always be government created markets. Who else should pay for infrastructure for example? Do you want to privatize all of that?

>>There will always be government created markets.

Maybe, maybe not, but that was not my point. The Goal should be to eliminate as many of those as possible.

>Who else should pay for infrastructure for example?

Depends on what infrastruture you are speaking of, Roads are often an example but you do understand there are private roads, probably more than you think.

"But who will build the roads" is a tired dead horse in libertarian circles, that problem has been solved countless times

>Do you want to privatize all of that?

Again that depends on what you mean by "Privatize", I believe goods and services are best when the consumers that consume them directly pay for them. My goal would be to have the payment for goods and services as close to the consumption of those goods and services as possible.

The more people and organizations you put between a consumer and vendor the more quality suffers, and prices raise.

There's many small private roads, but all the major ones you drive on every day to get to and from your work once you're away from your suburb? Those are public, and unlike the ones that are in your cul-de-sac, they're used by many many people, not just the people who live on the same street.

> There's many small private roads, but all the major ones you drive on every day to get to and from your work once you're away from your suburb? Those are public, and unlike the ones that are in your cul-de-sac, they're used by many many people, not just the people who live on the same street.

Does a 12.5 mile long 6 lane divided highway count as a major road? Because I drive on a privately owned one everyday to and from work.

Cool. I assume that's a toll road. Now let's say every single separate road you travel on was owned by a separate company - how would you pay your tolls? In cash, every 30 seconds? Would you have to install a tracking device on your car that any road owner can tap into? Who'd control access to such a thing? How would you ensure that they don't display monopoly-like behaviour, like the identity verification/credit check/etc companies of today?

Could the road owner outside your work or your home jack up the prices to make it prohibitively expensive to take your car there? How'd you prevent that? How would you ensure that somebody didn't buy up all the major roads into or out of a city and make it prohibitively expensive for poor people to access the city?

How would you ensure that somebody didn't sit on their monopoly on the route to or from wherever you need to go, and refuse to perform repairs?

The whole thing could, potentially, work for the countryside, where land is cheap and plentiful and if you don't mind wasting economic production on duplicating and triplicating and quadrupling routes just to make your fantasy work out, it might work. Except wait... America's got a privatised industry which theoretically competes with road travel already and has many of the same restrictions - the freight rail industry - and when's the last railway that got built? Apparently it's prohibitively expensive to buy the land.

>>and when's the last railway that got built? Apparently it's prohibitively expensive to buy the land.

Umm all the time and continually.

Rail issues are not land prices, Transportation by rail has all kinds of other issue largely related to safety, government, and time not the price of land

So it is your belief there are no major roads that are private? and there is no way to fund major roads in a private user fee way?

So your belief is private = Rich, and Government = Helping poor people? Because in reality the opposite is true, government mainly assists the rich not the poor

Even programs like EBT have been shown to assist companies like Walmart a great deal.

Smash the State, Eat the Rich (https://c4ss.org/content/30085)

Governments tend to create places where there is a large amount of money available in a very non-egalitarian fashion. Look at the DC area--all the tax revenues from around the country is pumped there and supports an immense amount of people on 100k plus salaries. Another example is defense-industrial complex and military bases. Military bases contribute a LOT of money to local economies. That money doesn't ultimately come from the military base but from the population of the country as a whole. That's why senators make very strange, non-strategic decisions about base closures.

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.

You don't see any journalistic value in a story about a government contractor cutting off access to its data, and then trying to compete with the company accessing it?

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?

> What incentive would there then be to offer these services?


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.

Amazingly paternalistic. You think that just because somebody does not have a lot of money they should not be allowed to choose from among a marketplace of providers?

Good luck with that approach.

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).

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

"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.

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

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.

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).

>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.,

Yeah but just glancing at an app is still faster. When you're poor you're constantly tired and low on time.

I certainly still prefer using my bank's website to their automated phone teller as well. More info more quickly.

These things swing, hegelian-like. You have pompous & meaningless, empty slogans: "a culture of excellence." You can find old-timey version of this inscribed in latin on fancy old school walls and banks.

Then meaningful and ambitious slogans start: fighting poverty, changing the world, revolutionizing vegetables. It feels fresh and more meaningful for a bit, then eventually starts to sound pompous and disingenuous too.

Now, I think we'd like to hear a little understatement, soft-voice-big-stick-ish. Maybe "good services for poor people" sounds about right. Rings true, nice contrast to "fighting poverty's" overstatement, without reverting to the old cliches.

Eventually this might sound fake too, or uninspired.

The fun thing about the old-Timey inscription is that they tend to describe not just the solution, but also the problem:

“E pluribus unum”. “One from many” hints at the problem of a society of immigrants. Similarity, “liberté, egalité, franternité” starts with two competing goals (freedom and equality), then offers a bridge between the two: solidarity (fraterinté literally means something like “brotherlieness”)

I'm not an historian, but I think “E pluribus unum” and “liberté, egalité, franternité” should be analyzed in the context of their own time. “liberté, egalité, franternité” was a war cry promoting brotherly union against monarchy. "freedom" and "equality before the law" are not competing goals, but were revolutionary ideas on their time.

If you said to a member of a royal family back then: "I believe all men are created equal", you could be imprisoned and executed, depending on his majesty's will. That's because your ideas jeopardized the foundations of monarchy.

"liberté, egalité, franternité" only appeared after the start of the revolution. And it was not used as the official motto until the third Republic at the end of the 19th century.

Edit: and regarding the last part, I don't think it's true, since the king's power was limited, by the various intistutions and other local powers.

It will most definitely not. But it can make people's lives living in poverty bit better. And having the "job ads", "healthy cooking/eating" content in there may help someone live a better life (while tracking down habits, location, shopping patterns, etc).

This actually looks like a way to tackle poverty, even if in small steps. Pairing SNAP data for recipients with job opportunities is sort of genius. It might not be a large step up for each one but I'm sure it adds up at the scale they reach and in the long run.

>Pairing SNAP data for recipients with job opportunities is sort of genius.

If only that were meaningful. Able bodied single men on SNAP have 3 months of benefits unless they are working, more than 66% of SNAP recipients are working, the problem isn't job ads.

It's that most poor people are already have jobs and are underemployed or jobs are simply not available like for rural people.

Now, if they were pushing seriously catered and easy to understand online classes like money management, program awareness/advocacy, in demand job training, that might be something, but that's all expensive.

Posting low wage job ads is really cheap.

You're equivocating. You went from "fight" to "solve" in the same sentence!

This. As someone who has been in poverty tools to help organize your limited time help take the load off immensely. This tool sounds really great, just being able to glance at it rather than trying to call.

and “Big X wants to block them” is another classic PR spin that usually shows very beneficial to the “victims”.

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.

It's more than just checking your balance.

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

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.

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.

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.

Exactly lol, this is a government issue, not the food stamp giant..

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".

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.

>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?

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.

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.

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.

> decentralize the database

How do you propose?

>decentralize the database


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.

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.

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

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...

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

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

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...

"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.

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.

The US is so unique in so many aspects.

What hits the poor the most in the US is definitely government provoked..bad public education, terrible incarceration rates, high cost of health care. Those 3 together decimate you if you are poor.

Those riches are not distributed optimally.

Additionally, the US is a major agricultural exporter. The food voucher program is likely more about sweeping domestic poverty under the rug, so that no one can complain about shipping food abroad across the globe, even as people are starving at home.

It isn't enough to keep everybody fed all the time, but it is just enough to keep people from blocking the train tracks that go from the grain elevators and meatpackers to the seaports.

This is a somewhat cynical view, I admit.

That could surely explain some of it. And since foodstamps apparently account for 48bln usd yearly, one could also assume, that a lot of companies directly, or indirectly make a lot of money of it, and are determined to keep the status quo.

"Those riches are not distributed optimally."

Define "optimally". What's optimal for the rich is probably not optimal for the poor, and vice versa.

My definition of optimal includes a provision that most people are able to plan their meals at least a week in advance, and no one ever has uncertainty over the place and time where they can eat their next meal.

Like those candy bar ads imply, people tend to make poor decisions when they are hungry, but the results in the real world aren't always amusing, or solvable by a timely application of chocolate and nougat.

The total quantity of food-producing capital in the US is large enough that it boggles my mind that there could be anyone in the country that can't always afford to eat nutritious foods, but such people exist. And they make poor financial decisions, because they have to constantly live in the short run, and are never able to plan far enough ahead to buy their way out of poverty.

Optimal would be when everyone has the ability to carefully consider and negotiate every financial decision, without being forced to act contrary to their own long-term interests by some exigent circumstance or necessity. Oxygen and water are mostly sorted already, but food security and secure shelter are also required before people can start thinking past tomorrow, and considering "do nothing" as a viable alternative to a negotiated deal.

Yes, that's why we can afford food stamps. If the country wasn't rich, it couldn't afford to feed people.

NB: Title edited for length & declickbaiting.

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.

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.

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.

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.

Propel is not scraping, and the Conduent app came after the Propel app.

The Propel app is a digital “skin” that works on top of the websites of food stamp contractors, like Conduent

This sounds a lot like scraping to me. And sure, Conduent's app came _after_ Propel, but that's what I meant. They're trying to compete with Propel using their own app, which uses the data they already have.

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.

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

"Propel typically gets referral fees from its coupon, job-listing and other advertiser partners."

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

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

Sounds like they are web scraping and got caught.

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.

> rude, possibly libellous

What part of their claims is potentially libelous? The standard to prove libel is pretty high in the United States, at least if the target is a "public figure" (which a large corporation like Conduent presumably would be). The statement has to be factual in nature (not an opinion), it has to be false, and the speaker has to know it's false (or have "reckless disregard" for its truth or falsity, which is hard to prove). I don't see anything in the article that's likely to meet that standard.

> If I trusted the government

I trust the government more than a VC backed corporation.

If you want to offer a card balance, you can't use a cache. Any API query from a real user, even if it come via propel should be honored. Of course this fair market for EBT data has to be imposed and regulated by the government.

Got one thing wrong. The Conduent app came after Propel made an app.

I don't know if in the first place they had the idea to make an app for their downstream data flow, or they realized they can drink from their own juice and profit from it.

Looks like Proper beat them to the punch on this one, but hey, the have the cake, they have the knife, looks like they can pick who is getting which slice.

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.

No the states should require it as part of their contract with Conduent that Conduent provide it for free to the End User.

Conduent makes more then enough money of EBT to run an API for the data, this idea that the propel app is some kind of "burden" on their severs is ridiculous

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.

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

Yes, but now Conduent is paying for keeping a database up, which Propel is using to build a competitive business. That's not fair.

The database should be run (or at least paid for) by an independent third party (e.g. government).

But if Conduent is a contractor working for the government, isn't the government then already funding the hosting?

Not necessarily. If someone pays you to do something, it doesn't mean they own what you buy with that money. E.g., your boss doesn't own your home computer.

Conduent entered the business under a certain contract and with certain expectations, and hosting a database for others might not have been part of that.

> If someone pays you to do something, it doesn't mean they own what you buy with that money. E.g., your boss doesn't own your home computer.

In all of my years doing government contracting there has always been money explicitly earmarked for hosting in project estimates and the government had to pay for it. When hosting became more than expected we sent the government the bill anyway and explained it and it would still end up getting paid (though something else may get scaled back).

I mean it's certainly possible it wasn't contracted out this way I would just be surprised.

Propel is not building a competitive business here, they're at best an overlay. There's no indication that Propel wants to muscle in on the state contracting and EBT management business.

The fact that Conduent has created a limited app in response to Propel's app doesn't make Propel a competitor.

Could they not just offer to pay a premium for a larger API quota and additional support?

Its a simple query of 2 values, current EBT Food Benefit and current EBT Cash balance. There isn't terribly much to support, and the "service" itself is a simple database lookup that is near zero cost to perform. API access for this should be free, its a public good.

Unpopular opinion the US Post office should offer minimal banking services and SS, Unemployment, and EBT transfers should be always to those accounts.

In the EU, all banks are required to provide basic banking services, including a debit card, to anybody who does not currently have a bank account. This practically killed cheque-cashing shops in the UK, and provided a significantly higher quality of life for workers, as well as simplifying payroll - direct debit can now be provided to all workers, there's no need to provide a cheque option.

The issue, of course, is that the US Visa/Mastercard system is an often-offline, pull-based system - meaning that a card set up to always require online transactions may be unusable, preventing banks from providing accounts with a debit card without the potential for an overdraft.

It's not a very radical idea either! https://en.wikipedia.org/wiki/Postal_savings_system

It's only really radical in the US.

More recently I've thought considering that we now only have 4-5 large banks it makes more sense than ever since after 40 years of mergers that are 4-5 banks left and they are abusing their monopoly power.

If that were the case, I'm not sure how helpful it would be. Have you tried to get into a post office lately? Frigging places are never open during hours that people who work could get in. But I suppose that wouldn't be as much of a problem for social security and unemployment...

I haven't needed to physically go to my bank in a very long time.

I can go before or after work, lunchtime, or Saturday morning.

I think they prefer this "freemium" model. It works better when it's free data than having to pay a little something for the same data. As for the idea that DB is moved to Open Data, yes, it is a great idea, I can only think of people shouting "socialism!! communism!! don't kill the private sector!!"

Maintaining their own data center (cloning the data once every 24h) would also mean they need to build a compliance capacity. Currently they don't own any data, they just pave the highway and sniffing the traffic (injecting ads).

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

This is a big game changer and would require far greater Security/Compliance efforts.

And if the full company is the 9 people appearing in the first photo, then they will need to double that.

With only 7 lookups per user per month, cloning the database likely doesn't make sense. The data will be stale, and the contractor would likely never permit a daily dump of the database either.

Fair point. It looks like the free-meal is over for Propel (heh, pun!) and they will have to start paying a little something.

If a company provides a service on behalf of the government then really open data should be a basic requirement with default arrangements for high use, like a standard payment across all government open data per 100k accesses.

Government enabled private monopoly is surely anti-capitalist too (ie as well as anti-communist, etc.).

> Government enabled private monopoly is surely anti-capitalist

Capitalism is defined by government maintaining a system of property rights defined to enable private monopoly, though this particular form does clash with the defensive propaganda developed by defenders of the system in response to the criticism of it for doing just that.

OTOH, that propaganda has never really aligned with the reality of capitalism.

Hmm, there are monopolisations of property like copyright, or land ownership, but we're talking monopolisation of a market - AIUI competition is fundamental to Western Capitalism as without it there is no market optimisation. The justification for allowing functions of the state to be performed by private enterprise is that competition in the markets leads to optimised systems that can't be achieved through centralisation; without that justification you're simply stealing from the demos to provide private profits.

Rich ONLY get richer at the expense of others.

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

Yes. In the U.S., in fact, there is a federal program called Lifeline that subsidizes the purchase of mobile phones (including smartphones) and phone service for those with low incomes.


You can get one for $10 and live on public wifis.

Cell phone is a necessity these days, not an expensive luxury item.

Yes, in a variety of ways. Most obvious ones I'm able to imagine off the top of my head:

- It could be a cheap phone on a cheap plan; Wal-Mart sells basic Android phones with prepaid plans for less than $50 [0].

- It could be government-subsidized; the plan itself can be subsidized through the FCC's Lifeline program [1], and I think (though I can't confirm yet) there are similar programs for the phone itself

- It could be a gift from a family member or friend (I personally know a few people for whom this is the case)

[0]: https://www.walmart.com/cp/cell-phones/1105910

[1]: https://www.fcc.gov/general/lifeline-program-low-income-cons...

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.

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

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