Guyana and the wider world
Within the international economic community there is a growing consensus that the worst is over. It is expected that the global economy will turn the corner and come out of the financial and economic crisis during 2010. Already it is projected that the vast majority of G20 countries (17 at the last count) might see their recessions end in the final quarter of this year. It is against this background of growing optimism and hope that I have been exploring the crucial lessons, which should be learnt from recent global experiences in coping with this exceedingly complex and painful crisis that burst on us a year ago.
Dr Clive Thomas
Last week I discussed conditional cash transfers as an innovative way of providing social protection to the poor, and in particular, the poorest of the poor at times of grave developmental setbacks. This, I suggested, is the second main lesson, which should be learnt from the present crisis that would be immensely useful in dealing with future crises. This week I shall discuss more fully some of the pros and cons of this new developmental mechanism.
Pros and cons
The truth is for a large number of persons (perhaps a majority) giving cash to poor people as a means of fighting poverty makes them pause. The reason for this is partly due to the fact that they have negative images of ‘dependency’ developing from cash handouts to poor people. Additionally, some persons actually believe that they know better than poor persons how to spend money on their behalf and so would prefer to spend it for them. While there may be other reasons for hesitation, I suspect these two are primary.
The cash payments in these schemes, however, recognise that poor people have a better sense of what they need and would choose to spend money on. The issue is, therefore, to tie their receipt of cash payments to a definite set of poverty reducing actions. This is the basis for making these payments conditional.
Some examples from actual practice should help to clarify the principles at work. Requiring households/individuals who take cash payments to attend medical clinics for vaccinations, pre- and post-natal care, HIV/AIDS testing, dental and opthamalogical testing for infants and children improve the health status of these persons. By building up their human capital, they are better endowed to fight poverty on their own behalf and that of the community/country in which they live. Other types of requirements often include fulfilling targets connected to education, the environment, community networking and so forth.
Because of these features conditional cash transfers focus on fighting poverty both in the short term (through immediate cash payments to relieve growing distress) and the long term (building up human, social, and cultural capital). Recognition of these features is responsible for much of the success and acclaim attributed to this mechanism as a new tool for fighting economic difficulties. It has become a key part of expenditure in several developing countries’ stimulus packages.
There are many other features of this mechanism, which are of particular merit at times of economic recession. One of these is that lacking assets and access to readily available credit, cash transfers to poor people are quickly translated into expenditure on consumption and/or investment items. This is precisely what is needed at times of economic recession, a quick increase in spending.
Irony
The irony is that for decades traditional social safety nets in rich countries have operated on the same principle when persons made jobless are given cash (unemployment) benefits to help tide them over difficult times. As I pointed out last week, these payments are approvingly described as ‘automatic stabilizers’ in the economy. They rise, when the economy fails to grow and sustain job expansion. In similar fashion these conditional cash transfers, depending on their magnitude and coverage, have the potential to become pro-poor stabilizers in developing countries. They should rise when economic downturns put pressures on the poor, and in particular the poorest of the poor.
Experience has shown that to be successful conditional cash transfers require very careful targeting. By this is meant clear determination of the communities where they apply, their duration, those who qualify, the criteria for establishing qualification for the schemes, requirements for exiting the schemes, and their financing. Such careful targeting places a heavy premium on the regular compilation of social and economic data and the extensive use of surveys backed up with up-to-the-minute socio-economic databases.
Evaluations
What do evaluations of conditional cash transfer schemes show? A recent World Bank Evaluation Panel found a strong correlation between these schemes and reduced poverty rates. At the same time they found that the two most widely used conditional requirements, health and education, did not reveal marked improvements in the health status or educational achievement of beneficiaries. However, this mixed result has been contradicted in other evaluations, which found considerable success.
Thus the United Nations review of the World Social Situation (2005) found success in reducing inter-generational transmission of poverty and a growing popularity for these schemes. Specific impact evaluations of these schemes in Latin America and Africa also show very good results. Several schemes were found to have a positive impact on education, health, and nutrition outcomes for the poor; the last moreso, when the schemes are linked to the availability of cheap food supplements.
These evaluations have also found that these schemes do not encourage dependency. That is, they have no negative impact on labour supply from poor communities. Indeed, large scale conditional cash transfer programmes have helped to reduce income and wealth inequality. In particular, they have narrowed poverty gaps and reduced the severity of poverty by being disproportionately helpful to the poorest of the poor. In this sense these schemes have overall helped poor households to manage risk and cope with the distress heaped on them by the global crisis.
Next week I shall conclude this discussion, before turning to the third and final lesson to be learnt from this crisis, which is, how to address global trade as part of national solutions.
I have nothing more than utter respect and deep admiration for Dr. Clive Thomas not only as a brilliant scholar but also as a man of quiet dignity who has withstood the test of time.My following comment is not a challenge to the scholarly opinions of Dr. Thomas but simply my own opinions.
I have stated many times before that the world is awash in money and oil. It is the control and distribution of these two commoditites, that has devastating consequences, more distructive than standing armies or the atom bomb.
Let us take a “rich” country like America in the mids of this financial crisis. Millions of people are now unemployed and they are receiving unemployment. On the surface it looks like free money, it lends the impression that the American government cares for its people; that was before people began to realize how the money was created.
As the crisis drags on more and more people will run out of unemployment and become no more better off than their third world counterparts.These are statistics they do not reveal.
Every dollar a person receives in unemployment becomes a big IOU of the government owed to the private corporation called the Federal Reserve. It is added to the defecit and is transferred to the backs of future generations of American children born and yet to be born.
A little known scam that few Americans are aware of is the Debit card scam. Americans are making every effort to pay down their debt, so most are now using the debit card. What the banks are not telling them is that if there is an overdraft they will redflag the customer and then charge a penalty fee on every other transaction until they decide to remove that red flag.
The banks have made 27 billion dollars in profit from this scam for this year alone.This same vulture mechanism is applied to third world countries when they take on a foreign loan and hence the saying those who borrow a lot will sorrow a lot.
So these are just two examples where we see that no matter what, the banks are forever there, with an invisible vulture like presence, picking away at the bones of the people. For the majority of people, you cannot escape this carefully constructed trap of poverty, no matter how hard you try.
Bill Gates and Warren Buffet are giving away their entire fortunes to help the poor of this world, it has not made much of a difference.
China has instructed their business communities not to honor any repayment on their toxic derivitave investments. They likened it to economic war. Come Sept 30th 2009 all banks will be forced to show all assets on their books. It will be a financial bloodbath.
Investors were picking away at undervalued stocks caused by the meltdown of wall street, and that is part of what caused the spike in the financial indicators, but now there is indication that insiders are now dumping all their stocks enmass. These are all freigntening developments that the ordinary people are not concerning themselves about.
Let us address the future of development in Guyana. I said in an earlier blog that all it would take is an innovative mind, a farmer and his donkey. Now that statement seems outrageous, silly and laughable and that is exactly why I said it, in the way I did.
Now allow me to explain. The Amish has created a breadbasket in the heartland of America that rivals anything found in all of the Caribbean put together. They accomplished all of this with horses and no electricity. The same result can be accomplished in Guyana with donkeys and the half ass electricity supply we have.
I said that I can accomplish this, but I did not literally mean that I alone have some extradonary ability, what I meant is that any ordinary person with an innovative creative mind and approach can get the job done.
The academics cannot accomplish any of this because of the veneer of prestige inherent in their academic qualifications. They cannot go out and introduce a donkey as the key to future agriculture development in Guyana, they would be laughed right out of town.
Ordinary people like myself that has no egotistical drapes of vanity hanging over ourselves are allowed to do it and that is again why I made the bold statement,in another blog that I can accomplish what no politican or academic has ever accomplished or will ever accomplish in Guyana. We the people have that ability, not our colonial minded government or academics.
In another blog I will reveal the solutions to proper nourishment of the people and children in Guyana and the source of good health and vitality and complete recovery from illnesses like diabetes, cancer and aids.
These solutions and medicines already exist right there in Guyana, we only need to take off the blindfold of western induced knowledge and education and we will find it.
Joe.
I did not want to make my blog excessively long so I decided to break it up. A tractor plow will cause what? 20 or 30 thousand US dollars. A similar animal drawn plow will cost between 900 to 4,000 US dollars. Donkeys are wandering all over the market place.
Let US look back at those kids who kidnapped the farmer. What part of those boys look lazy, they are all young, wirey strong men honed by the hardship of country life. Catch those donkeys, give these boys a piece of land and a plow and there you have it, farmers in the making.
The agriculture theme for Guyana is not “Go Invest” or “Grow more Food” those are all old meaningless themes. I will now introduce a new theme to the lexicon of agriculture development in Guyana.
**** “An innovative mind, a Farmer and his Donkey” *******
That’s it. Below is the site for the animal drawn farm equipment.
http://www.farmingwithhorses.com/
Joe.
I agree, Conditional Cash Transfer Programs (CCTP) are a great innovative and intelligent tool in social protection in Latin America and the wider world. This is clearly substantiated by evidence of the success stories in these countries where it has been implemented. This financial mechanism has been very successful in reducing the intergenerational transmission of poverty and decreasing the inequality of the “haves” and the “have nots”.Talk about an effective tool to addressing absolute and extreme poverty especially when government expenditure don’t get trickle down to the poorest people admist corruption and untargeted spending in social programs. I mean it’s good to boast about good fiscal policies and try to reduce your external and current account deficits but in reality the developmental outcome of GDP Growth for the beneficiaries which it is meant for, the tangible benefits at times are never felt. Governments should really to try to implementing it in agriculture where it could be a subsidy to compensate for high input prices and low market prices for products, although the argument would be whether it promotes consumption or investment. These programs are not the magic solution to poverty but surely it diminishes the cycle of poverty. It also reduces the inequality of opportunity of youths in rural relative to urban areas. With the right poverty maps and effective institutions, it could provide inputs in education e.g reduce dropout rates, inputs to health e.g subsidies to pregnant mothers and overall address the demand side of poverty.
CCTP can be a win-win solution to poverty at Guyana’s stage of economic development.
Kadir, as I said in my opening statement in my earlier blog on this article, I did not want to lend the appearance of rebutting the wisdom of Dr. Clive Thomas.
But you being a blogger, maybe you can help me understand how this CCTP system will really work. The questions I present is where does this money come from, who provides it? How is it different from the American welfare system?
I made mention of the Bill and Malenda Gates foundation which was joined by Warren Buffet to gave away their fortune to the poor of this world. The money that Bill Gates is giving away came from his sale of a real product being Microsoft Windown, that assisted worldwide production by adding computer efficiencies to many of the worlds electronic processes.
Warren Buffet on the other hand made his fortune on Wall Street by investments. His money was created by his speculative wizardry but based on nothing tangible and produced nothing but his enormous wealth.
Nothing wrong with that or so we thought, until now we come to find out, that is wealth sucked out from the system, but no production created it.
This investment process multiplied millions of times and morphed into the dozens of exotic derivitive schemes created by the top Wall Street money magicians is what got the world into this total financial mess.
Money given to American welfare recipients have to be repaid to the private Federal Reserve by the American tax payer. It is not free money by a long shot.So if you give monetary handouts to anyone in the world some group of suckers somewhere, will be made to pay for it and all of this money is being created out of thin air by the only country that gave themselves the exclusive right to supply and control the worlds money supply.
Now you can give this money to any poor family in the world and they will spend it and it would appear to have solved the problem of poverty, but it cannot be sustained because it produces nothing and if someone is made to pay for it, then a time will come when they can no longer pay for it.
I have long argued that they should wipe out all third world debt but that was because the debt was created by lending legal counterfeit printed funny money.
Any third world country can do that, all the money changers have to do is say we will accept it on the same face value as our so called worlds reserve currency.
Then why would they not do that? because according to Hemschel Rothschild, whose financial empire controls all of the worlds money supply and distribution, “give me control of a countries money and I care not who make its laws”
The American taxpayer has reached that point and they are not going to take it anymore. They have started their protest. On 9/12 of this year they showed up by the millions in Washington, but the media shut this whole event out of existence.
The natives are becoming restless, my friends, the world over and it all boils down to the single question. Who provides and control the world’s money supply.
This is one time that I will bypass providing the evidence of the 9/12 protest gathering in Washington, but you can find it on the internet. The reason being is because there are those who are trying to paint a racist color onto what is going to happen here in the USA and those who are willing to believe that is what it is all about.
Joe.