Developing a system of social protection is a fundamental part of building a nation, but I’m not banging on about Scotland again. I’ve been looking at a short report from the Center for Economic Research in Uzbekistan, which is not a place I know anything about. Their figures can be difficult to interpret, and they’re not helped by claims that “Taxes in Uzbekistan are considerably lower than in Scandinavia” or that “As in the Scandinavian model, Uzbekistan has large social expenditures” (hardly). Uzbekistan is a very poor country, with income per capita less than a sixth of neighbouring Kazakhstan (though, intriguingly, with a better record on infant mortality). The plan envisages steady growth of 7-8% over the next twenty years (without being very clear how this is going to happen) and assumes that the relative costs of social protection will fall as income increases (which is questionable). The issues they identify are that the problems of industrialisation – people are moving out of agriculture at speed – and they point to the need to develop better education, health services and labour market policies. I’ve argued before that growth, and greater consumption, are basic to the aspirations of people in poorer countries. This is what many of the world’s emerging countries have been created to do, and social welfare provision is a major part of it.
Here’s some good news, for once, which I was pointed to by a report about China in the Economist. International organisations have identified ten countries which have made exceptional progress in keeping children alive. The basic figures are here; a report explaining what those countries have done to achieve it is here. A substantial part of it is the improvement in the health of the mothers.
|Under 5 mortality rate per 1000 live births|
This item, which I have from the Economist, is one of the strangest reports I’ve seen in years. Assessments of GDP are supposed to be regularly revised, and Nigeria has not done it in an age. In its latest revision, the assessment of GDP has grown by 89%, making Nigeria the largest economy in Africa. GDP per capita has risen from $1500 a year to $2688.
At the same time, Nigeria also has one of the worst rates for infant mortality in the world. UNICEF puts the death rate for under-5s at 124 per 1000. This is much better than it used to be – there have been improvements across most of Africa – but Nigeria’s rating is still the 9th worst in the world. There are more important things than GDP.
The Economist argues that the main thing holding back nations in sub-Saharan Africa is the high birth rate, and that the primary reason for this is the lack of contraception. I think they are mistaken. I have linked to two dynamic graphs. The relationship between fertility rates and contraception is uneven. Far, far stronger is the relationship between fertility rates and infant mortality. The main single factor determining how many children a woman has is how likely it seems that those children will survive.
The position is of course more complex. Fertility rates fall wherever women have economic opportunities, education and better health; the reason is partly because they then have alternatives, and partly because they are more likely to delay childbearing. Contraception contributes to this process, but it is not decisive. Economic development is far more important.
This, by the way, is the 400th entry I have made on this blog.
I was drawn to a paper from the World Bank by its title: “A comprehensive analysis of poverty in India“. In recent years the World Bank has published some remarkably rich, subtle, multidimensional, participative studies of poverty. This isn’t one of those.
The authors define poverty in terms of a minimum basket of goods; although there are nominally two poverty lines, they are both subsistence measures, largely based on a minimaum calorific intake. They write:
the poverty line should be set at a level that allows us to track the progress made in helping the truly destitute or those living in abject poverty, often referred to as extreme poverty.
Back to Bowley, it seems; it’s as if the last eighty years of poverty research never happened. The authors explain:
To appreciate further the folly of setting too high a poverty line for purposes of identifying the poor, recall that the national average poverty line was 22.2 rupees per person per day in rural areas and 28.26 rupees in urban areas in 2009-10. … raising these lines to just 33.3 and 45.4 rupees, respectively, would place 70% of the rural and 50% of the urban population in poverty in 2009-10. … Will the fate of the destitute not be compromised if the meager tax revenues available for redistribution were thinly spread on this much larger population?
Peter Townsend used to complain, long and loud, that subsistence measures were liable to be used to justify limiting support. (It’s a caution that the Joseph Rowntree Foundation, currently investigating destitution, might do well to note. ) The idea that extending and generalising support undermines the position of the poor is plainly wrong. Many of the gains that have been made in antipoverty programmes in recent years have been through austere universal measures, such as Essential Health Packages, and the extension of social protection and assistance in a range of transitional economies. We might ask, on the contrary, whether there is any prospect of people receiving the help they need if the only benefits are focused on a limited, marginal population.
An article in the Economist led me to a paper in the Journal of Economic Perspectives, arguing that that slums can trap people in poverty. This is not exactly fresh – the description of slums as “poverty traps” (p.190) can be found in Charles Booth’s studies of London in the 1880s.
Who thought differently? The crucial arguments were made by Turner and Perlman in the 60s and 70s: they argued that squatting was in many places a normal form of tenure, which allowed people first to form a ‘bridgehead’ and then to consolidate over time. This article has data from five cities in Kenya, Bangladesh and India. They all had a system of landholding imposed by the British Empire, and squatting has a limited role in all of them. The article confirms that when people living in slums have to pay rent, they may not be able to afford to do more. That’s not new, but it doesn’t get to grips with the main point of the argument.
An article in the Independent suggests that Jeffrey Sachs has lost the argument: international aid can’t save places that are mired in poverty. This is based largely in criticism of Sach’s favoured Millennium Villages Project, which have sought to show that intensive aid can make a difference in a locality. The projects aren’t what they’re cracked up to be; there are no experimental controls; other places with no such projects have done better.
There are three problems with those criticisms. The first is that many of the criticisms are untrue, or at least disputed. The second is that even if the MVPs had been completely misconceived and crackpot (they’re not – they’re just small scale), it wouldn’t be possible to generalise from their success or failure to the whole concept of overseas aid. The third is that all of this has been happening during a period when international aid has been visibly more successful than ever before (which of course upsets any potential finding from a control). The combination of aid with Poverty Reduction Strategies and partnership working has paid handsome dividends, with many of the poorest places in the world showing a spectacular drop in infant mortality, typically of a quarter. Even if we don’t buy the economics, we can still believe in that.
It’s more than thirty years that Amartya Sen made the fundamental argument in Poverty and Famines (1981) that the problem of hunger is not about shortage of food, but people’s right to get to the food that was there. The Right to Food campaign in India seems to have won the argument. A bill currently under consideration accepts the principle of a right to food, and aims to deliver it by subsidies of basic grains.
There are doubts, of course, about India’s capacity to deliver the right effectively. And, as reported last month, a third of the world’s poorest people are in India.
Many people working on poverty issues are sceptical of the measures used by the World Bank, based on poverty lines of $1.25 or $2 a day. While the figures can’t be taken at face value, it’s doubtful that income at that level can be ‘measured’, very low incomes do tell us two things: that lots of people are poor, and that as there is almost no money they are probably not part of a formal economy either.
A short statistical report from the World Bank, The state of the poor, flags up some interesting issues. The first is that extreme poverty by their measure is falling in most parts of the world, with the clear exception of Sub Saharan Africa, Second, while a third of the poorest people are in Sub Saharan Africa, and a third more are in one country – not China, which has 13% of the poorest people, but India. (I missed the World Bank report when it came out, but the Times of India didn’t.) The Millennium Development Goals aimed to cut extreme poverty by half, and that has been done; the next goal is to go for half again by 2030, and these places are where the main focus will fall.
A paper for the World Bank questions whether green growth policies are good for the poor. Stefan Dercon argues: “High labor intensity, declining shares of agriculture in gross domestic product and employment, migration, and urbanization are essential features of poverty-reducing growth. … trade offs are bound to exist. … the poor should not be asked to pay the price for sustaining growth while greening the planet.”
The argument is not new; it is perhaps more remarkable for its source. In The Future of Socialism, Tony Crosland argued that higher personal consumption – consumption, not just formal economic growth – is fundamental to the living standards of the poor. The policy he advocated was not to achieve maximum growth, or even high growth relative to other countries, but to improve people’s position over time, because that was necessary to achieve greater equality. Later, in Socialism Now, he added a crucial rider: that without growth, redistribution would be impossible. “I do not of course mean that rapid growth will automatically produce a transfer of resources of the kind we want … but I do dogmatically assert that in a democracy low or zero growth excludes the possibility.” Those arguments seem to me to apply with equal force to the developing world; and they raise the question whether it is possible to be pro-green and pro-poor at the same time.