Challenging poverty the Brazilian way

An amazing revolution has been taking place in Brazil over the last decade – one that could save the world. This revolution was done against the advice of experts from leading institutions such as the World Bank and leading academics.

This revolution, named Bolsa Família has had a huge transformational shift in the fight against inequality and poverty across Brazil. It was based on a simple premise that if you place cash in the hands of the extremely poor and have faith that they will do the right thing, then good things will happen and transform their lives and fortunes.

It was rolled out by a President, Luiz Inacio Lua da Silva (or Lula), who was of the poor and understood what it meant to be poor and therefore had the belief that the Bolsa Família scheme will shape the life of millions.

There is a fantastic article written about it in the Foreign Affairs magazine (by J. Tepperman) for those who want to find out more (this post was inspired by the article). Below are some key highlights about how the Bolsa Família works, how it helped move millions out of poverty, reduce income inequality and radically transform a society.

First – the situation in Brazil before the Bolsa Família

  • In 2000, a third of Brazil’s population of 175 million people lived below the poverty line (under US$2 a day) and 15% were deemed to be indigent (living under US$1.25 a day)
  • By 2010, over 40 million people had moved from below the poverty line to the middle class.
  • Income inequality has also dropped significantly in that time

What led to the birth of the Bolsa Família?

In 2003, a man who was born into an extremely poor family and started his professional life as a shoeshiner became the President of Brazil. This was the time of Luiz Inácio Lua da Silva, or Lula for short.lula-bolsa

When Lula was campaigning for Presidency, he was reviled by the business community and foreign banks. Foreign investors were backing off and international banks were cutting credit.

Goldman Sachs even came up with the ‘Lulameter’ – a meter that predicted an inverse relationship between Lula’s popularity and Brazil’s economic future.

Lula was committed to social policies that benefited all of Brazil rather than just the elite and launched a far-reaching social programme called Fome Zero (“Zero Hunger”) and at the centre of this campaign was the Bolsa Família or Family Grant.

This was a revolutionary and ground-breaking anti-poverty effort that transformed a society and has inspired many similar programmes.

How does the Bolsa Família work?

Rather than provide the poor with perks and benefits which sometimes has the effect of increasing the layers of corruption and bureaucracy, the idea was to simply give the poor money.bolsa_familia_foto_felipe_gesteira_0067

In most developing countries, the poor are given subsidies or physical items such as food or basic tools and equipment which tended to be a largely inefficient process that only engendered a culture of patronage.

The Bolsa Familía was a programme which was easy to qualify for.

If a family proved that it lived in extreme poverty and earned less than 50 Brazilian reais ($42) or 100 reais ($84) per person per month, they will be eligible for the scheme.

An average family gets $65 cash and the benefits tops off at $200. To obtain the cash, families needed to go to a bank and draw the money from their own accounts There were no middleman handing them the cash and they had full control over the receipt and expenditure of the cash.

Whilst getting into the programme itself was easy, staying in required that the beneficiaries signed up to a range of conditions or contrapartidas (counterpart responsibility). Some of these included:

  • Ensuring all the children between six and fifteen years old attended school at least 85% of the time
  • All children got immunisation
  • Both mothers and children got regular medical check-ups
  • Pregnant women needed to get prenatal care and breastfeed their children.

President Lula was determined to break the intergenerational trap – and ensure that parents gave their children a better head start and advantages which they themselves may not have enjoyed.

This social contract between the government and the beneficiaries meant broadly there was a greater adherence to the conditions.

There were also strict penalties for those who did not comply and non-compliance meant being first suspended from the programme before being completely struck-off for continued transgressions.

 

The initial sceptics

When Lula launched the programme, he faced very highly qualified cynics and naysayers, economists and development agency experts who thought the notion of giving cash directly to the poor will be misspent and be ineffective as they felt it created a culture of dependency and that the poor will spend the money on alcohol and other demerit goods.

However, the visionary Lula had the right idea when he mentioned to J. Tepperman:

“The number one teacher in my life was a woman who born and died illiterate: my mother. With all due respect to experts and academics, they knew very little about the poor. They know a lot about statistics, but that’s different, sabe?

To an intellectual, putting $50 into the hands of a poor person is charity, an academic has no idea about what a poor person can do with it. But that’s because at university, they don’t teach you how to care for the poor. And it’s because most experts have never experienced what the poor go through every day. They’ve had to work without breakfast. They’ve never lived in a flooded house, or had to wait three hours at a bus stop. To experts, a social problem like inequality is only numbers.”

 

A policy that favours the poor favours all

Whilst Lula and the policy’s opponents and economists were convinced this hugely controversial policy was going to be a terrible idea, Lula was convinced in his belief that this was the right thing to do. He also had a strong notion that putting cash into the hands of the poor will help them participate in market economics and help the economy grow.

Lula remarked: “When millions can go to the supermarket to buy milk, to buy break, the economy will work better. The miserable will become consumers.”

The premise was simple: If the poor start spending, businesses benefit, social ills go down and society as a whole improves.

 

The fantastic outcomes that transformed a society

  • Bolsa Familía now supports 14 million families (or 55 million Brazilians)
  • It has reached a quarter of Brazil’s population and 85% of the poor.
  • The small payments have helped double the incomes of Brazil’s most destitute.
  • In the first three years of the programme, extreme poverty was cut by 15%.
  • Income inequality has also reduced by a third as a result of the Bolsa Familía. The poorest 20% saw their incomes rise by 6.2% while the richest 20% saw growth of only 2.6%. (In contract, in the US, the richest 10% grew their wealth by 2.6% while the poorest 10% actually saw their wealth decrease by 8.6%).
  • Vaccination rate has increased to 99% of the population.
  • Malnutrition amongst children has reduced by 16%. Infant mortality dropped by 40% over the last decade, with deaths from malnutrition dropping by almost two-thirds – the sharpest decline anywhere in the world.
  • Children of Bolsa Familía recipients have graduation rates that are double that of poor Brazilian children who are not in the programme.
  • The number of children forced to work has reduced by 14%.

When the Bolsa Familía was originally launched, opponents of the programme were of the view that it was going to drain the national coffers and be a huge drain on public finances. However, the entire programme has cost the government less than half a percent of Brazil’s annual GDP. In 2011, a study by the British Government also demonstrated that cash-transfer programmes like the Bolsa Famiía cost 30% less per person than traditional aid programs.

Further evidence has also shown that for every real disbursed by the government towards the Bolsa Familía programme, it has increased Brazil’s GDP by 1.7 reais!

Where next?

Ultimately the recipients of the Bolsa Familía have said that rather than feel stigmatised and shamed, they have felt pride in being enrolled into the programme. The programme has allowed parents to give their children a good life and in the process given them greater autonomy, independence and above all, dignity.

This is an important facet of development which sometimes gets lost when viewed through the lens of economic analysis and statistics – that people need a sense of dignity and a programme that recognises this will ultimately be successful and be a driver of societal benefits.

The Bolsa Familía has become a pioneering programme that is inspiring many more countries and cities around the world – indeed Brazilian government officials responsible for the Bolsa Familía delivery are providing training and seminars for others seeking to emulate them. It is not just the emerging economies of the world learning from Brazil, but even major American cities like New York, which only goes to show that addressing poverty and inequality is THE policy issue that needs to be urgently addressed.

Social mobility and breaking intergenerational poverty and illiteracy traps are fundamental areas that need to be addressed by leaders and policymakers, in countries rich and poor.

bolsa familia 10

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The inequities of India’s proposed Land Acquisition Bill

The Indian government led by Modi has proposed a series of wide-ranging reforms to the Land Acquisition Bill which, in my personal view, will have a deleterious effect on the nation and her people.

The long and the short of this new Bill is that it will allow for the government to take over land from landowners without sufficient due diligence or understanding the social impacts in the name of ‘public interest’ whilst not actually defining what this ‘public interest’ may mean.

The proposed Land Acquisition Bill fails the most material principles of the Indian Constitution – that of democracy, welfare, justice and equality.

The context

Flawed analysis – leading to incorrect conclusions

The problems with the proposed amendments

Conclusion

Paddy Fields in India
Paddy field in India

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The context

For almost one hundred and twenty years, India’s land acquisition was governed by the Land Acquisition Act of 1894 which was a fundamentally exploitative, oppressive and inherently unjust piece of colonial legislation. Since Independence, over 50 million people have been displaced in the name of development. A large segment of the displaced includes entire scheduled tribal communities. The vast majority of the displaced have faced declines in the quality of life, received inadequate compensation and have ended up being marginalised in their own lands.

The Land Acquisition, Rehabilitation and Resettlement (LARR) Act of 2013 was subsequently passed with the official mandate to support the twin objectives of farmer welfare along with the strategic development of the country.

When Modi and his government took over, they decided that they wanted to amend a number of major aspects of the LARR as one of their core priorities. The proposed amendments have drawn widespread condemnation and flak, not just from the opposition, but from within the ruling party itself and more importantly the majority of the populace, particularly those within the rural community.
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Flawed analysis leading to incorrect conclusions

Part of the problem arises from the fact that current Indian administration’s economic analyses predicated on the notion that greater freedom by the State and large commercial interests in acquiring land and property will promote accelerated economic growth. Land acquisition is often cited as an impediment to India’s growth and India’s policymakers and a number of corporate-sponsored industry bodies would have us believe that having a draconian bill to confiscate land is the panacea to India’s economic ailments.

On the contrary, according to a Ministry of Finance-led Economic Survey of 2014/2015, it is less than 1% of projects that have stalled in India as a result of land acquisition issues.

India’s true obstacles to economic progress include corruption (which imposes a cost of between 1% to 3% of total GDP), tax evasion and ultimately a lack of a consistent and coherent economic policy.

Land grabs by the State actually have a huge cost, both economic and societal, for India. An unfair and unjust land acquisition campaign will only serve to further exacerbate the problem of rising income inequality and social disparity that remains a stain on India. The economic, social and environmental cost of displacement and conversion of forests/agricultural land towards industrial assets have never been truly understood or analysed by the government.

The ownership of land is a fundamental basis of livelihood and subsistence for a majority of Indians. Mere monetary compensation, without a resulting benefit in the form of employment will have devastating consequences for farmers, farmhands, artisans and other individuals whose livelihoods depend on agriculture and farming. Forest tribes, adivasis (large segments of tribal and aboriginal groups in India) and dalits (the most marginalised segments of the Indian population) who have been impacted as a result of past land acquisitions will in turn be even more marginalised and suffer even more inequity and exploitation.

The current Indian government is pushing for its “Make in India” slogan. There is no point making in India, if it does not benefit the majority of Indians and only serves to undermine and taint India.

“Make in India” – but not for Indians’ benefit?

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The problems with the proposed amendments

There are a number of serious problems with the amendments being proposed by the government.

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First and foremost is the deletion of the clause to consider the social impact assessment of the land acquisition. Without the ability to assess the possible adverse impact a potential land acquisition has on people in an area, how can we truly understand the externalities (negative or otherwise) and make an informed judgement about the wisdom of acquiring the land. How will we be able to say, to a high degree of comfort, that the benefits of the land acquisition will indeed be substantively higher than the resultant costs and consequences and benefit a broader segment of society?

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Secondly, agricultural land has to be viewed as strategic assets designed to support the development of the nation in order to preserve food security. We have seen countless nations, who in their rush to convert viable agricultural land into vast sweeping industrial or tourist outposts, have lost their ability to feed and serve their people and have had to resort to food import in order to sustain themselves. It can be argued that agricultural efficiencies have improved and that the same output can be delivered with a smaller land area – but in order for this to be truly understood, there has to be a clear understanding and assessment of impacts, which this government does not want to do either. India cannot surrender her independence in her ability to feed, serve and protect her people.

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Thirdly, the previous Act had a provision which required the consent of 80% of affected individuals prior to the land acquisition. The amendments proposed will allow for the government to unilaterally acquire land without the permission of the people who depend on the land. The principles of democratic conventions are being violated here. Unlike a few other countries, India’s rule of law is not enforced by a dictatorship of some nature or under a command economy where all ownership belongs to the State. India is a democracy – a government of the people, by the people, for the people. With the proposed amendment, the state will be a government of a very small group of people, by the faceless/nameless corporates and industries, and certainly not for the people.

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Fourthly, the amendments themselves are vague and, it appears, intentionally ambiguous. ‘Public purpose’ has not been clearly defined and no indicators are being proposed to indicate whether the nation benefits and aids the welfare of all. Five categories of projects are being proposed (national security and defence; rural infrastructure; affordable housing; industrial corridors; and infrastructure (including public-private partnership projects (PPPs)) which are being defined in the broadest possible way which will allow for the government and their industry and corporate partners to acquire/confiscate land without a robust case. It is the absence of a sufficiently strong check and balance that is the biggest cause for concern here.

As the law stands, if no development takes place on acquired land within five years, it has to be returned to the people. This has also now been amended and the land can be held on indefinitely from the time of purchase with no recourse made available to the people who are being impacted. Under the amendments, more land than is required can also be acquired by the government, including the purchase of an additional one kilometre of land on both sides of an industrial corridor – which again will have severe debilitating effects on farmers and small land owners. There is also no consideration of efficiency on the part of the industries and the state looking to acquire the land for their uses and it does not spur or promote more efficient use of the land and instead ends up subsidising the absence of efficiency improvements made by industries.

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Finally and most fundamentally, the proposed amendments to the Land Acquisition Bill violate the principles of individual liberty and human rights. What this Bill does is redistribute land away from the poor and the most vulnerable to the richest and most privileged segments of society. The principles of prior consent and recognition of the societal and economic impacts on the people most directly impacted by any land acquisition is essentially a land grab by those who can from those who cannot do anything about it.


Land Grab

Conclusion

Land is not just a mere economic commodity or factor of production to a large number of people who will be affected by the proposed amendments of the Land Acquisition Bill. Land is a source of life, of sustenance, of faith and of hope. It is a function of the culture of the people who depend on it, be it the farmers, the forest tribes or the dalits. It is a source of livelihood, of dignity through employment and of a symbol of progress and growth.

India can only truly progress, economically and socially, if there is an improvement in the lives of all Indians and not just a select and privileged few.

A nation must be judged not just on what economic progress it has made but on how it has enhanced the welfare of its most vulnerable constituents.

The proposed amendments violate the principles of the Indian Constitution which dictate that India remains a sovereign, socialist, secular and a democratic republic. Socialism and democracy will be the first casualties if this Bill comes to pass – for how can a nation claim to be democratic when it tramples over the rights of its own people to own land without a proper recourse and safeguards.

The amendments to the Land Acquisition Bill must be opposed at all costs. At stake here is not just about India’s principles of fairness and equity for her people but about the future of a prosperous India which benefits all and not just a select few.

 

References:

http://www.dnaindia.com/india/report-land-acquisition-bill-implies-deep-trouble-2072222 (Shivani Chaudhry)

A random musing on society and the elderly…

I am currently sitting at the airport lounge in Terminal 3 in Singapore. I look around the lounge and all I see are elderly people (some of whom do not look in the best of health) working as support staff, clearing plates and glasses in the lounge and slowly doing the rounds around the entire lounge and I am left pondering…
What is the purpose or point of all of this economic progress and development when we are unable (or unwilling?) to provide a social support or safety net to the vulnerable and elderly within our society?
My view is that a society cannot truly call itself advanced if its elderly and vulnerable are not supported and they are in a position where they are made to work to support themselves. The advancement of our society rests on our ability to protect those who need our help the most.

The catastrophe of bees’ colony collapse globally.

Ad campaign to save bees in the UK - in the London underground
Ad campaign to save bees in the UK – in the London underground

I saw this campaign ad in the London Underground and it raised what I consider to be a very important issue.

Einstein is commonly reported to have predicted that ‘if bees were to disappear from the globe, mankind would only have four years left to live’.

Since the statement above, more than 90% of the world’s bees have disappeared. There is no conclusive evidence to explain why and this is a hugely troubling matter.

One in three mouthfuls of food we eat are crops (fruits, etc) that are dependent entirely on bees.

If the bees are wiped out, our food shortage problems (which are already at crisis levels), will reach catastrophic levels.

Bees’ colony collapse is a problem that will have a huge implication with devastating consequences for people around the world. More urgent effort is needed to better understand the reasons for the decline of bee colonies (this decline will further impact agriculture and crop produce – which in turn will exacerbate the current problem of global food security and supply).

I will strong recommend that we learn more about this very critical issue (which to my mind is almost as important as that of climate change) and act on it.

For further information, please read: http://www.nature.com/scitable/blog/green-science/global_crisis_honeybee_population_on

For those with children, get them to watch Bee Movie!!

Let’s start doing our part, inform and educate and above all act. This is not just for us, but for those who will follow us.

Thank you.