The poverty debate

The article ‘Poverty and social protection” by Amir Hussain in these pages (June 27, 2019) touches upon some fundamental aspects of the development debate, with respect to the relationship between social protection and poverty reduction.

There is, indeed, an urgent need for all development stakeholders in the country to engage in this debate. Alarmingly, however, the writer commences his article with the admission that the reflections follow a discussion with “senior officials of an international financial institution at the Cabinet Division”. It is, thus, clear where the intellectual oxygen for this particular debate comes from.

The writer correctly paraphrases my views thus: “… social protection initiatives of the Benazir Income Support Programme (BISP) are not essentially linked to poverty alleviation because they do not offer a pathway to prosperity. Social protection programmes focus on the poorest of the poor by doling out some subsistence income support so that they survive.” But he is incorrect when he quotes me to say that “… the poor cannot be helped to move out of poverty” and when he dubs social protection as “an instrument of charity and subsidiary which in turn creates dependency and the poor is politically seen as a parasite.”

Herewith, clarification of some concepts may be helpful. Social security or protection is not the same as social safety nets. The latter is a charity-centred notion, propounded by neo-liberal protagonists in IFIs as a palliative for the poor whose numbers swell by the harshness of their innocuously-termed “structural adjustment” programmes. IFIs’ compulsion for lip-service to social healing arises from what the writer correctly highlights as the “need to sublimate public anger (that) becomes inevitable in the face of increasing disparities.”

On the other hand, the former is a rights-based concept; whereby, it is the right of citizens to be supported by the state when in need. And it is here that the definition of the state and its role emerges. In the neo-liberal conceptualization, the state’s role is to provide the framework and the enabling environment for the market to generate profits. The people, as workers, are merely production inputs and, as consumers, merely targets for sales. Thus, the concept of ‘subsistence wage’.

In the alternative conceptualization, the state sees people as human beings and its role as a provider of welfare to enable people to lead economically, socially and culturally fulfilling lives. The state acknowledges the fact that, no matter how much prosperity abounds, there will always be families and individuals who are unable to earn a living for a variety of very legitimate reasons. And it is this segment of the population that the state accepts as its duty to support.

All developed countries have social protection programmes in the form of unemployment payouts, food stamps, etc, and/or free or subsidized public housing, education and health facilities, etc. No one and nowhere have these programmes been dubbed as creating dependency or labelled recipients as parasites. In fact, there is now incontrovertible empirical evidence that social security payouts contribute to strengthening aggregate demand and supports economic growth.

Admittedly, the context in developing countries is different from that of developed countries, with the former beset with mass unemployment and mass poverty. And if the state cannot provide the framework and enabling environment for the people to obtain employment and a liveable income, then it is the duty of the state to extend support. This is the conceptual basis of BISP.

The quantum of social security support anywhere is never sufficient to become a substitute for a regular income. Thus, any suggestion of creating dependency is absurd. It is with this view in mind that the ‘IS’ in BISP stands for ‘Income Support’. BISP was not designed to address poverty. And it is again absurd to expect that payouts of one or two thousand rupees a month will help any family “graduate out of poverty”. This is a donor fetish that has been around in Pakistan for nearly a decade.

Now to the history and results anti-poverty initiatives. The last 40 years, since General Ziaul Haq’s martial law days, have seen fancy acronyms and sophisticated verbiage aplenty. Memories of ‘Social Action Programme’ (SAP) and ‘Poverty Reduction Strategy Paper’ (PRSP) and the like are still fresh in memory, particularly for those who lived through it and opposed their conceptual validity and utility from the very outset. Today, they lie in the dustbin of history.

Millions of dollars were poured into the country and it is not clear how much of that and the accumulated interest accounts for today’s debt burden. However, governments of the day received loads of cash to splurge and development consultants of the day prospered substantially. The new mantra now emerging is the ‘BISP Graduation Model (BGM)’ and the language spouts new, but familiarly complex, terminologies like ‘institutional collaboration and programmatic integration’, ‘strategic alignment of the leading poverty alleviation and rural support programmes’ and ‘institutional transitioning of BISP’.

The ‘collaboration and integration’ refers to IFI-propped organizations such as the Pakistan Poverty Alleviation Fund and ‘Rural Support Programs’, with their Livelihood Enhancement and Protection (LEP), National Poverty Graduation Programme (NPGP), Community Investment Funds (CIF), Income Generation Grants (IGG) and other initiatives. They have been around for more than three decades. While their executives have permanently overcome their own poverty and that of their progenies with the help of six and seven digit pay packages, poverty continues to stalk the land. These ‘initiatives’ too will find a place in the dustbin of history when their development outcomes record is analyzed at any future time.

In this context, the Ehsaas initiative is a non-starter, not unlike its misguided predecessors. The real drivers of poverty are political, which the neo-liberal ideologues in IFIs and right-wing opportunists in the Potohar do not want to acknowledge; thus, the skirting around the peripheries. Poverty is a macroeconomic phenomenon and cannot be addressed with micro tools. Poverty is an outcome of inter-generational mal-distribution of assets and economic power. It is an ongoing outcome of regressive taxation and public expenditure policies. It is a direct outcome of the state’s failure to invest in housing, water supply, sanitation, public transport, education and health – investments that help raise the incomes and income-earning abilities of the poor and save avoidable expenditure, like medical care for diarrhoea and the like – that compound poverty.

Poverty can never be reduced via social protection or social safety nets or any other handouts. Social protection is just what it says – protection. Social safety nets are just what it says – rescuing those who fall below the poverty line as a result of market-based growth. Any genuine effort to address poverty needs to re-direct current efforts towards politico-macroeconomic structural factors to arrive at an equitable inter-personal and inter-regional distribution of assets and incomes. This is where the national debate needs to focus on.

The writer is a leading economist and was the first head of BISP. Twitter: @kaiserbengali