Category: Poverty

Easterly argues that the Washington Consensus worked: post hoc, propter hoc?

Development economist Bill Easterly  has posted a new paper arguing that the “Washington Consensus” and structural adjustment might have worked after all.  These were the basis for the liberal market policies forced on developing countries by the IMF and the World Bank in the 80s and 90s.   The argument is that although most of the measures failed to show any consistent benefits at the time, subsequent improvements in development might not have happened without it.

There are three core problems with that position.  The first problem is evidential: showing that something happens over a long period of time does not show that a policy near the beginning is what started it.  If structural adjustment really did work, there should be evidence of it starting to work at the time, and evidence that countries which did it more faithfully had better results.  There really isn’t.  Second, the ‘policy outcomes’ Easterley uses as a test – currency value, inflation rates, trade shares and so on – are not necessarily the outcomes of policy at all; they are indicators that economies have avoided some of the problems that impede growth.  Third, over that length of time, there have been lots of other influences.  The massive improvements in recent years might just be attributable to poverty reduction strategies, the growth of democracy, improved governance, basic health care, the internet and the cellphone, the advancement of education, cash transfers, women’s rights and many other things.  The more influence we attribute to any of those – and I’d argue that they all matter – the less we attribute to structural adjustment.

In defence of Oxfam

I have made a donation to Oxfam.  While I have some reservations about Oxfam’s stance on a range of issues, I have none about its integrity.    I’d like to endorse Richard Murphy’s defence of the organisation,  and his follow-up.  Oxfam took swift and serious action in relation to its staff in Haiti in 2011.  It reported that there were problems at the time; the offenders were fired; and since then it has publicly reported on its actions relating to child protection (most of which concerned its charity shops).  Oxfam’s main failing was that its disclosure was not full; I am not sure that it could have been.

Oxfam also claimed in its annual report to have helped help more than half a million people in Haiti in 2011/12.  This is from their web page on their work in Haiti:

Oxfam’s 100 strong team, including 15 emergency specialists, was on hand to respond with provision of clean water, shelter and basic sanitation, as well as by helping community canteens provide daily hot meals.

By providing paid employment to the people in the camps; to keep the camps clean, build latrines and clear up their destroyed neighborhoods, we put money in the pockets of those who needed it most and helped them improve their living conditions.  We reached 300,000 people with aid in the first three months.

The level of destruction and logistical challenges were among the worst Oxfam had ever faced. The Oxfam office and a key warehouse full of vital water and sanitation equipment were destroyed when the quake struck. Like thousands of others in Haiti Oxfam staff were not left untouched by the disaster.

Despite personal losses, including two Oxfam employees, a day after the quake most Oxfam staff were back in the office and they managed to salvage some of the stock from the destroyed warehouse. Oxfam Country Director, Yolette Etienne told her staff there was “no other option but to work and to work harder since we have the privilege of still being here and we can help people to overcome their desperation.”

Before we join the chorus of criticism about Oxfam, let’s remember what really matters.

My role as a straw man: no, I don’t think that poverty is the fault of the poor

There are times when I wonder what is the point of writing academic arguments – it doesn’t seem to matter what you say, because people will just make it up anyway.  In the course of the last year,   I’ve commented on a couple of references which have set me up with positions I don’t hold.  Today I’ve come across a paper written for a conference in Indonesia which says this:

Paul Spicker argues that poverty is an individual issue caused by the weakness and choice of the individual concerned. Poverty will disappear if market power is expanded to the maximum and  economic growth is driven to the highest possible level.

For the avoidance of doubt, I do not hold this position, and I have never held it.  I cannot imagine why anyone who has read what I do write should suppose that I might think this way.

 

Not austerity, but a purposeful aggravation of inequalities

A report for the EHRC identifies the impact of ‘austerity’ policies since 2010.  The cumulative effect of policy changes has been disproportionately to affect people on low incomes, women, people with disabilities and minority ethnic groups.  This is not about austerity, which has always been a misnomer.  Austerity means spending less; this is something quite different.

My doubts about ‘food sovereignty’

I was asked to act as a discussant for a paper on ‘food sovereignty’.  Food sovereignty is an idea being promoted by Via Campesina.  Via Campesina “defends small-scale sustainable peasant agriculture as a way to promote social justice and dignity based on food sovereignty.” They describe food sovereignty in these terms:

Food sovereignty is the right of peoples to healthy and culturally appropriate food produced through ecologically sound and sustainable methods, and their right to define their own food and agriculture systems. It puts the aspirations and needs of those who produce, distribute and consume food at the heart of food systems and policies rather than the demands of markets and corporations. … Food sovereignty implies new social relations free of oppression and inequality between men and women, peoples, racial groups, social and economic classes and generations.

It sounds very warm and human, but it’s a muddled, ill-considered set of claims.  The core problem with it is that food sovereignty doesn’t protect food security – people’s right to have food to eat.  It protects the interests of producers, not populations.  The second problem is that it can’t offer a response to significant vulnerabilities, such as civil war, drought or climate change; if (or when) such things happen, the localities where they happen will be not be protected by a system that is relatively localised.  Third, providing healthy diets locally and on the small scale must mean less food.  That’s true partly because it’s only possible to provide varied diets locally by growing things that grow less well locally as well as those that grow better, and partly because comparative advantage is lost – less specialisation and less trade means less food.  Fourth, for what it’s worth, there’s absolutely no reason to assume, as this declaration assumes, that local production will be ecologically sound.  Why should it be?  Finally, food sovereignty can’t deal with the distributive issues within societies.  There’s reason in some aspects, such as gender relations,  to believe it won’t.

More troubling still is the ranting, anti-capitalist wrapping this comes in. This is from the Via Campesina website:

For too many years, we have witnessed with deep pain the systematic plunder and destruction of our precious natural resources and the oppression of our people. We know that our African elites in the public and private sectors have been for many years colluding in corruption with the evil transnational corporations which today represent the new face of imperialist neo-colonialism. We are appalled by this and demand an immediate end to immoral and irresponsible behaviour of many of our leaders.

This is the authentic voice of populist demagoguery.  Populism has been defined as

an ideology that considers society to be ultimately separated into two homogeneous and antagonistic groups, ‘the pure people’ versus ‘the corrupt elite’, and which argues that politics should be an expression of the volonté générale (general will) of the people.  (C Mudde, 2004, The populist zeitgeist Government and Opposition 39 (4), 541–63.)

an ideology which pits a virtuous and homogeneous people against a set of elites and dangerous ‘others’ who are together depicted as depriving (or attempting to deprive) the sovereign people of their rights, values, prosperity, identity and voice.  (D Albertazzi, D McDonnell (eds) 2008, Twenty first century populism, Palgrave Macmillan, p 34)

The examples I heard about today manipulate people’s concerns to push forward an authoritarian, collectivised, exclusive model.   This doctrine is not just foolish, but sinister.

The relational elements of poverty

Later this week I’ll be giving a paper at a conference in Paris on The Politics of  Inclusion, organised by CROP (the Comparative Research Programme on Poverty)  and Unesco.  This is the abstract.

Poverty is at root a relational concept, which can only be understood by locating the experience of poor people in the social and economic situation where they are found. This is not just saying that poverty is ‘relative’. Developments in policy and practice are increasingly focused on dynamic, relational and multi-dimensional understandings of poverty; our conceptual frameworks have failed to keep pace.

Much of the consideration of poverty in the course of the last hundred years, relative or absolute, has found it convenient to rely on three fallacies. The first is that poverty is a condition or state of being, which can be considered exclusively from the perspective of the individual who experiences it. The second is that can be understood solely in terms of resources, when resources themselves have to be understood in terms of social and economic relationships. The third is that there is a clear and decisive threshold below which people can be said to be poor, and above which they are not poor.

All of these positions are tenable – they are supported by many of the most eminent writers in the field – but they are not adequate, either as a way of describing the positions that people hold, or as a conceptual tool to analyse the issues.  Discussions of exclusion, a concept which is self-evidently relational, come closer to the idea of poverty than much of the academic literature on poverty in itself, offering a way to escape from the limitations of conventional models of poverty.

Some comments on Basic Income schemes; it’s not the answer to automation

A couple of days ago I spoke to Anas Hassan, a journalist for Common Weal, about Basic Income.  His article is on Common Space.  He recorded the conversation, and what’s presented, while it looks a bit like I’ve written a contribution, is actually a selection of the things I said over the phone.   Part of my comment, which is about the distributive problems of Basic Income, is stuff I’ve already covered in this blog, so I won’t repeat it now.  The other part is something I think I haven’t tackled elsewhere, which is about the idea that Basic Income can make up for the loss of jobs in an automated age.    What I told Anas, more or less, is this:

There are ways of absorbing the loss of jobs. As it happens, I think that there are lots of jobs that we ought to be providing and we ought to be doing. Many of those jobs are public in one sense or another – either they are paid for publicly or they are directly employed in the public sector.  Examples might be police, nurses, people involved in fire and rescue, gardeners. We need a massive number of carers both for older people and for younger people. We need more road menders [My correction: Anas has written ‘members’]. We need more people protecting the civic environment.  … We also have countries that simply employ more people doing things that are socially useful. My model for that would be some of the Nordic countries, but particularly Norway. And what we find is that the number of people who are involved in public service is directly associated and related to the amount of residual poverty that then remains in that economy, because what you are giving people is respected, worthwhile jobs. We could do that. Government has created many jobs. They are worthwhile jobs. They’re important jobs. And it could create an awful lot more if we had the will to do so.  That’s the answer to this question of what happens to people not having jobs.

Oxfam is critical of extreme inequality but it’s not clear about what the problems are.

Oxfam’s briefing paper on inequality, An economy for the 99%, has attracted some plaudits, but I was disappointed.  Its main theme is the startling disparity between the super-rich and the rest of the world.   While it’s well researched, it suffers from two key vices.  The first is that it doesn’t do enough to explain why this inequality is a bad thing.  The second that it gets distracted by other issues – climate change and violence against women.  That’s not to say that they’re not important, but so are lots of other things – war, corruption, sanitation, communications –  and they’re all irrelevant to this case, too.

What, then, is wrong with extreme inequality?  The problem with  inequality is not that very rich people don’t pay their taxes, though it would help if they did.  It’s that their wealth limits the rights and security of the poor, most obviously in access to land and resources.  At the same time,  that the maldistribution of resources going to lower paid workers holds back the world economy, ultimately costing everyone.  We need to be wary, too, of the assumption that the Rich are exclusively made up of people richer than us.  From the point of view of much of the world, those of us living comfortably in Europe are the Rich, and we’re just as much of a problem as Bill Gates and Warren Buffet.

Martin Ravallion on The Economics of Poverty

I’ve just finished working my way through Martin Ravallion’s magnum opus, The economics of poverty (Oxford University Press, 2016).  Ravallion was the leading economist in this field for the World Bank, and is now a Professor of Economics at Georgetown.  For Ravallion, there have been two ‘poverty enlightenments’: the early nineteenth century, when economists started to address the problems, and the 1960s and 70s, when poverty was ‘rediscovered’ and many contemporary techniques were devised or refined.   There has been a third wave since then, as people have come to understand the multidimensional and relational character of poverty, the political and legal dimensions of the concept and the importance of voice and empowerment; but Ravallion doesn’t have much time for all that.   Multidimensional indicators are ‘mashups’, poverty is at best ‘weakly relative’ with an absolute core and the experience of poverty is individual.

There’s lots to disagree with, then.  Most of the book is a review of economic techniques for the analysis of anti-poverty programmes; occasionally it’s heavy going.  Ravallion is at his best in the section on impact evaluation, even if I disagree with much about the basic approach.  Ravallion is a true believer in the value of multivariate analysis; missing values can be filled in by the computer (p 158), and the influences on poverty can be identified by letting variables “‘fight it out’ statistically to determine how much each variable matters” (p 249).

There are a couple of sideways mentions of my book, The idea of poverty, and the joy of blogging is that I can reply.  Ravallion is critical of the contention that structural adjustment made things worse for poor people. I’ve written more about structural adjustment, but in the book in question I had written only this brief comment:

In the 1980s, the International Monetary Fund and the World Bank promoted ‘structural adjustment’, a particular model of economic reform for developing countries – creating opportunities for international business, imposing strict financial discipline, increasing inequality and cutting the public sector.  Even when this worked, it generally increased the vulnerability of the poor.  When it did not, it could have very detrimental effects, because it weakened investment in human capital and cut away the main social protections that poorer people might have had.

Ravallion comments:

The critics of adjustment efforts argued that they were externally imposed and ill-conceived agendas for reform. In the 1980s it was often claimed that these programs increased poverty and inequality and one still hears such claims. [Note 174:   For example, Spicker (2007, 127) asserts that these programs generally increased inequality and poverty.]  The claims were rarely based on good evidence and, by and large, they did not stand up well to more careful empirical scrutiny.

Well, I did write that “Even when this worked, it generally increased the vulnerability of the poor.”  And another poverty expert wrote this:

This success against extreme poverty has come with continuing vulnerability to aggregate economic contraction, with one-in-six people in the developing world now living between $2 and $3 per day.

I wrote that the programmes increased inequality, and the same expert wrote, with a reservation I’d accept, that

Better (in the sense of “pro-market”) institutions … offer some hope for poor people, but it must be judged a rather limited hope based on experience.  The favored institutions tend in practice  to perform less well for poorer people. … [S]uppose that reforming developing countries fall into two categories: those for which pre-reform controls on the economy benefited the rich, keeping inequality artificially high (arguably the case in much of Latin America up to the 1980s), and those in which the controls had the opposite effect, keeping inequality low (as in Eastern Europe and Central Asia prior to the 1990s). Then economic policy reforms can entail sizable redistribution between the poor and the rich, but in opposite directions.

The expert in question is, of course, Martin Ravallion, on pages 448, 409-10 and 439 of this book.

Redesigning funeral benefits

I was at a conference today on funeral poverty, part of the Scottish Government’s agenda for #fairerscotland.   The current system of support is very limited, and horrendously complicated.  There are five elements in a claim: the circumstances and resources of a claimant, the circumstances and resources of the deceased, the arrangements made for a funeral, the relationship between the claimant and the deceased and the situation of other relatives who might potentially pay instead.  I argued that the system could be simplified most effectively if we treated the liabilities and any claim as a matter for the estate of the dead person.  That position didn’t attract much support at first, but as the discussion went on more people saw the point of it.  This is virtually the only circumstance in the UK system where we directly oblige family members other than spouses to take on the financial liabilities of their adult relatives.

It’s always a pleasure to learn from people who know much more than I do, and the representatives from the organisations for funeral directors were particularly impressive, not just for their detailed knowledge but also for their sensitivity and awareness of the issues. Unfortunately, the profession isn’t well regulated, and I was shocked to hear of bodies in England being kept in the freezer for months until fees could be met – in one case, for 25 years.  Some problems can’t be solved by the market.  There’s a strong argument for decommodification, and while there will always be some elements of the process that depend on personal choice, there’s also a case for reducing the role of payments and charges, for example by direct provision of burial lairs or cremation.