Poverty interventions in market economies
March 28, 2007
It is very easy for any government to outline its vision for the country. What is far more difficult is to ensure that that vision is visionary.
It is in short, easy to say what one hopes to achieve, but if for example achieving these goals involves the same old ways of doing things and following failed prescriptions, then any government's vision statement would be lacking in foresight.
Our new ministers have settled in to their new jobs but apart from one or two there have not been many visionary statements coming from these ministers. One is therefore apt to ask whether the next five years will witness the same old sluggishness in economic growth and the dearth of policies to bring about a reduction in poverty which one assumes is the ultimate goal of the administration.
The government is so encased in an adjustment programme that it has failed to recognise what has long been the record of such programmes: that by themselves these schemes do not reduce poverty and that a strong argument can be made for the contrary, i.e., that these adjustment programmes aggravate income equalities and make the rich richer at the expense of the poor.
Guyana fortunately does not have an acute poverty problem. In fact, looked at from a positive perspective, seven out of every ten Guyanese cannot be considered poor. However, the real goal of economic development is to lift all ships, both the steamships and the canoes, and therefore the argument is that growth is a necessary but not an absolute condition for improving the lot of the poor in our society.
The IMF/World Bank record however ably demonstrates that their preferred neo-liberal prescriptions have exacerbated the plight of the poor in many countries, and no one has made this a study better than the PPP's late President, Dr. Cheddi Jagan who had prior to 1992, consistently lashed out at the IMF and the World Bank.
Had President Jagdeo been able to attend the last Non Aligned Summit in Cuba , it may have allowed him a different perspective, something that he can do with, in appreciating that he should not be an uncritical adherent to the neo-liberal school of economics.
For example, he could have used the opportunity to explore the way in which President Lula of Brazil has been able to follow the same market-oriented policies of his predecessor while making interventions to directly help the poor.
Lula actually pays parents to send their children to school and be vaccinated. I have a problem with the dependency that Lula may be fostering amongst the poor of Brazil , but I applaud his awareness of the limitations of market policies to reduce poverty.
Similarly, our President could have been enlightened by the Venezuelan President about the more aggressive social interventions in social spending in that country, policies that are driven by more than just the windfall from oil revenues.
I believe it is important that our President try to take some time to study some of the ways other leaders have tried to stick with market policies while tailoring interventions to make an impact on poverty.
It is not that our President has not tried to intervene; it is just that these interventions like so much of what he does has been spur-of-the-moment decisions that are not well thought out and that end up doing more harm than good.
Take for example the issue of waiver of water rates for old age pensioners. In principle this sounds good, but in practice, the system will benefit both rich and poor pensioners and will force those paying water rates to subsidise some rich homeowners, some of whom are not living in Guyana , some of whom are renting their premises.
These categories will enjoy water rate pensions because the policy is that so long as you are a pensioner you should not pay water rates. So, whether you live in Guyana or not, so long as you have a transport which says you are the owner of a property and you are sixty-five years old you enjoy a waiver. The rich in the end will benefit more than the poor.
Then there is the issue of school uniforms. This system I believe is difficult to fairly administer and would lead to dependency and controversy. A long time ago, I had suggested to the government that they scrap the entire programme except for hinterland communities where the most acute levels of poverty exist.
The savings from this and the water rates waivers could have been better directed to increasing old age pensions which, while free of a means test, has a residency requirement.
Some time last year the Ministry of Education announced that it was purchasing some $200 million dollars worth of text books for our school children. Based on my own estimates, I calculate that these books will benefit no more than 15,000 of our students at any one time, an extremely small fraction of the school population. And I am sure that both rich and poor will benefit when one would have expected that such an intervention would have targeted the poor directly.
This is one area where I feel the government needs to devote a great deal of resources. A better policy initiative would have been to establish in each school, book lending units whereby every child would be entitled to rent all his or her text books and at the end of the school year would have to surrender these back to school before he or she is promoted to the next level.
In this way, we will ensure that both rich and poor children have access to text books and this is the surest way of lifting all ships, but especially the poor, through a selective intervention.