* This is my article in BusinessWorld last November 15, 2018.
“Something terribly wrong with a program that grows ever larger even when prosperity for everyone else is increasing. We should measure welfare’s success by how many people leave welfare, not by how many are added.”
— Ronald Reagan, 40th US President
Among the economic phenomena that I am skeptical about is the continued high poverty incidence of the Philippines. I often go to provinces especially in rice farming villages and among the things I notice is that the poor hardly ride animals or bicycles anymore, they ride motorcycles, electric bikes, or buses and vans. Farmers hardly use cows and carabaos to till the farms, they use hand tractors or big tractors. The poor now communicate via e-mails and social media, not slow mails or smoke signal.
I suspect that there is some corruption in the design and measurement of poverty because there is big public money involved in high poverty: multi-billion pesos of continuing loans with WB-ADB; big budget yearly for welfare agencies like DSWD, DepEd, CHEd, DoH; big pork barrel (explicit and implicit) for legislators, national and local governments; big projects for consultants and academics; even big indirect funding for NGOs.
From ADB’s Key Indicators for Asia and the Pacific (KI) 2018, here are some data on poverty (see Table 1).
See that the Philippines has higher poverty incidence than Cambodia, Indonesia and Vietnam, and nearly similar as India and Laos?
There are several possible proxies for poverty, like low access to formal credit markets like bank accounts, low access to modern telecoms and the web. From four selected factors, they belie the high poverty incidence data of the Philippines: Cambodia, Laos, Myanmar and Vietnam (CLMV) people have lower access to formal credit markets, LTE mobile and Internet access. India and Indonesia have lower access to LTE network, mobile phones, Internet access, etc. (see Table 2).
Reagan was right. Any serious, honest and successful welfare, anti-poverty programs by government should result in a decline in the number of the poor and state-dependent, subsidy-seeking people.
What we often have are either dishonest, unsuccessful welfare and anti-poverty programs so that the current poverty incidence is similar to those three decades ago and will remain so two decades from now. Or the programs somehow were successful but implementers, lenders and consultants have invented new schemes so that revised definitions and measurements of poverty always lead to high poverty incidence.
So government invents new taxes and fees, or raise existing taxes and fees, to finance new programs and bureaucracies to “fight poverty” endlessly.
If there is more honesty in reducing poverty, the budget for welfarism, the number of bureaucracies and politicians, the rates of taxes and fees, should flatline and even decline through time. This is hardly happening.
Here is an old anecdote about poverty:
Politician: Thank God for poverty, it provides my political platform.
Consultant: Thank God for poverty, my occupation is to study it.
ODA lender: Thank God for poverty, we endlessly lend money for it.Poor: I feel so appreciated, thank God.
BWorld 264, Energy by legislation promotes corruption, November 14, 2018
BWorld 265, Integrated PPP vs Hybrid PPP: The case of Kaliwa Dam, November 15, 2018
BWorld 266, Inflation, GDP and Duterte, November 16, 2018