Category: Poverty

Universal Credit leaves more people destitute

As Universal Credit extends its icy grip, the tone of press coverage has been changing; it is more focused on personal experiences, and it is ever more serious.   These are from the last few days; the headlines speak for themselves.

 

Thoughts for 2019

Richard Murphy has posted a rather gloomy blog entry, outlining many of the things going wrong in Europe and America.  He points, among other things, to Brexit, populism, growing inequality and economic and political instability. 2019, he thinks, ‘is going to be horrid’.  While I can’t gainsay any of the grim predictions he offers, I think there are other grounds for optimism, mainly from the developing world.

  • There have been marked improvements in the incomes of poor populations in many of the world’s poorest countries – among them China, Bangladesh, South East Asia, Latin America and the Middle East.  See the World Bank’s Atlas of Sustainable Development Goals.
  • Around the world, infant mortality is falling.  So is family size – one follows from the other.
  • Maternal mortality is falling.
  • Girls are much more likely to be engaged in primary education.
  • Social protection is being extended.  See The state of social protection 2018.  There is a still a long way to go, with less than 30% of the world’s population experiencing comprehensive social security provision, but safety nets have been spreading across the global South.

2019 might well be horrid, but it may not be quite as horrid for everyone as it threatens to be in the UK.  Happy New Year.

 

 

Some remarkable graphics from the World Bank

The World Bank has published a series of graphics outlining progress on the Sustainable Development Goals. I’m hopeful that this example will display properly on your systems and that you’ll be able to see what I’m seeing.  Click on the arrow in the centre to see the animation.

Among the many other insights, the graphs show that in many places boys are more likely to suffer malnutrition than girls, and that cash transfers – including unconditional cash transfers and pensions – are the most likely form of social protection to benefit the poorest.

Poverty and social security

I went today to a seminar for early career researchers, most of whom are working on issues related to social security.  That is, of course, a terrible idea; I spent most of my career trying to interest people in social security issues, and look what happened to me.

Adrian Sinfield, who reflected about the changing situation in Scotland, gave one of the presentations,  He was very kind about a book I wrote more than 25 years ago, Poverty and Social Security: concepts and principles.  However, as I’ve explained to Adrian, I’ve had some reason to think again about that book, and I wonder if I didn’t make a strategic error in writing it.   If we want a social security that treats people with respect and dignity, it’s important that people should see it as a part of everyday life, not as provision for the poor, or even a safety net for exceptional  circumstances.  It’s not necessarily a good idea either to focus a discussion of social security on its effects on poverty, or conversely to identify poverty with the receipt of social security benefits.   The discourse has shifted since, and discussions of social security tend to be hijacked by discussions of employment; that is even less appropriate.

Proxy means tests don’t work

A review of the effectiveness of proxy means tests by Brown, Ravallion and van de Walle finds that they are not an effective way of concentrating resources on the poor. The process is simply not accurate enough.

“Standard PMTs help filter out the non-poor, but exclude many poor people, thus diminishing the impact on poverty. … The prevailing methods are particularly deficient in reaching the poorest.  … The most widely-used form of PMT in practice does only slightly better on average than an untargeted universal basic income scheme, in which everyone gets the same transfer, whatever their characteristics. Even under seemingly ideal conditions, the “high-tech” solutions to the targeting problem with imperfect information do not do much better than age-old methods using state-contingent transfers or even simpler basic income schemes.”

Proxy means tests are being used because poor countries just don’t have the quality of information to make fuller assessments work.  As many critics of means testing have pointed out, richer countries don’t have the capacity to do it either.  People’s incomes fluctuate, boundary problems are intrinsic, people don’t understand what should be included and what should not be, and take-up is consistently poor.

There is however one large reservation to make about this study’s findings.  There have to be doubts as to whether any country, rich or poor, really has the capacity to produce the kind of information that detailed quantitative studies of this kind call for.  This study points to the difficulty that any test has in determining whether or not specific individuals are poor.  The standard they use to verify the connections, household consumption, is not absolute proof of poverty; it’s an indicator.  It’s probably more valid than some other indicators, but it isn’t perfect and it is just as difficult to collect as income.  I happen to agree with the paper’s conclusions about proxy means tests, because they happily coincide with my own judgment, but nothing can be supposed to be proved beyond doubt; the core information that the analysis is built on is not good enough, and it cannot be.

How selective benefits affect people who are not being targeted

A technical study for the World Bank challenges one of the central arguments for ‘targeting’ the poorest – as well as posing a major challenge to conventional economic theory.  The report is snappily titled General equilibrium effects of targeted cash transfers: nutrition impacts on non-beneficiary children.   The first effect of cash benefits to selected poor people was substantially to improve the extent to which their children were able to get protein rich foods.  There were marked improvements in nutrition, particularly on stunting – the effect that malnutrition has over time, in limiting children’s growth.

However, the policy also had a side-effect: the relative price of that kind of food increased. That, in turn, had a further effect: it reduced the access of other children, children in families who were not getting benefits, to protein-rich foods.  The effect was clearest in poorer villages where more people were getting benefits.  “We find that weight-for-age is significantly lower and the likelihood of being underweight significantly higher in program villages that have high rates of saturation. Average height-for-age is also lower and stunting rates higher …”

There are two major implications.  The first is about targeting.  One of the key problems with selectivity has always been that a line has to be drawn somewhere: the effect is that people a little above the line are not necessarily being treated fairly relative to those who are just below it.  The way to avoid this is to make the benefits universal – which is what has been happening with basic health care and universal primary education.

The second implication is about one of the received principles of economic theory, ‘Pareto optimality’.  Most economic analyses about of suppose that welfare is increased if at least one person is made better off, and no-one is worse off.  I’ve argued in previous work (for example, my book Reclaiming individualism) that this cannot happen, because prices are relative to resources.  This  study demonstrates the effect very clearly.

Blaming the people who get left out

In Factfulness, Hans Rosling comments about the way that we underestimate the improvements in poor countries, and complain that their peoples are pathologically incapable of improving their situation, despite the evidence that they are doing just that. Here in Poland, I’ve been told several times, as I’ve gone to local agencies, that the reason why people are poor is that they come from poor, inadequate families.

When Keith Joseph set up the research on transmitted deprivation in the UK, the situation was admittedly complex;  the structures of the UK economy were long-established and it may well have seem that social services had been working with similar problems for a very long time.  But the research showed a very different picture.  In the first place, poverty was not continuous – people’s circumstances had probably changed within their own lifetimes.  Most people had a different experience from the previous generation: the determining factors were the economy, education, and – often forgotten -the impact of partnering.  People who were raised as poor might be disadvantaged, but most of them did not stay poor.  After the first generation, most people were already in different circumstances from their parents; there were continuities only for a minority. By the time we got to the third or fourth generation, any apparent continuities had disappeared.  When the researchers looked for families which had been consistently deprived over four generations, they couldn’t find any.

Poland has changed rather more rapidly than the UK.  Two generations ago, in the Communist era, the main experience of poverty was for people in work; then came liberalisation, and the casualties of reform; and now things are changing again.  In Lodz, where I’m working, the economy has been growing, and unemployment has more than halved in the course of the last six years.  Very few people have a life similar to their grandparents’.

Now, it’s not impossible to argue that, in the scramble for improvement, the race is to the swift – that the people who get left behind, in any generation, are the least engaged, the least competent or least worthy.   To accept that, we’d need to accept both that the system does make such a selection, and that it should.  We need to question the assumption that if people are still poor when things are improving, it must be their fault.

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.