India, Brazil and Venezuela: Trying to learn what works in subsidies for the poor

August 9, 2010

Since we are always discussing how to solve many problems in Venezuela, I thought I would note this article in today’s New York Times about the discussion going on in India about the safety net for the poor. India has had a system in place to attempt to provide a safety net for the poor. The system gives people certain items every month. The new proposal is to simply give either food coupons or cash to the people in order to make the system more efficient.

I don’t know much about the current system in India, maybe someone could point us to a good source on it. But one thing that struck me about the article was that the budget for India for this safety net for the poor is US$ 12 billion. Since India has a population of 1.1 billion people, 42 times larger than that of Venezuela, this means that the program is puny on the scale of the population and the numbers used for Mercal/PDVAL/Misiones here in Venezuela is huge on a relative scale.

Note also, the parallel in corruption in both cases, as it is estimated that 70% of the subsidy (which includes kerosene) never reaches the people.

Coincidentally Luis Pedro España, a Professor at the Catholic University in Caracas who has devoted his life to study poverty in Venezuela, gave a talk recently saying that it would only cost US$ 3.5 billion to lift all Venezuelans out of poverty by using direct cash subsidies to the poor, as has been done in Brazil, rather than subsidizing the food, paying people to go to meetings like Mision Ribas and the like.

Think about it, US$ 3.5 billion is quite doable given the country’s macroeconomic numbers. In fact, this would be roughly the same amount spent in 2008 by PDVAL/PUDREVAL in bringing in food to the country, which we have recently learned only 14% of it eventually reached the people.

España notes that despite the close relations between the Chavez and Lula administrations, there has been no effort by the Chavez Government to learn about the Brazilian program, which has been so successful. España suggests that the programs set up by the current Government of Venezuela, not only are full of graft, but also have a clientelistic component in which those receiving subsidies only get them if they participate in political activities.

It would be interesting to know how España came up with his number, it is criminal not to try something like that in Venezuela at that cost. Unfortunately, Chavez has never much had interest on learning what true experts on poverty think on how to solve it.

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64 Responses to “India, Brazil and Venezuela: Trying to learn what works in subsidies for the poor”

  1. torres Says:

    moctavio, generalizing this thought to the world, consider that the world GDP for 2005 was around 45trillion, in 2005 dollars. 2 dollars per day per person in the world would take around 5 trillion per year (i.e., 2 x 365 x 7 billion persons). That’s only 11% of the world GDP.

  2. torres Says:

    firepigette,

    So your point about the data presented to you is that the results being experienced around the world, including in Venezuela, are “flawed and skewed”, leaving us with the only option of taking this on faith, because you don’t tell us anything that helps the rest of us see the flaws nor the skewness.

    And as if to explain that it’s not just faith, you explain that it is because of your more “sensitve and experienced mind” and your dedication to “observe psychological climates”, which gives you an understanding of “individual cultures and collective psyche”, that you are better at predicting this kind of thing than scaled experiments. But, again, we are left with the single option of taking this on faith, because you won’t tell us anything other than unconfirmed anecdotal evidence that demonstrates these particular abilities of yours.

    I would point out, however, that you are wrong about “No data can that”. Clearly your data, from your observations, did do that!

    Two questions:

    1) why don’t your predictions work at the small scale implementations, including Venezuela?

    2) how do you explain your preaching education while practicing such lack of rigor, basis for good science and mathematics, axles of education?

  3. firepigette Says:

    Torres, everybody thinks their opinions trump others, or they would not have the opinions they do.

    In any case I think each country is different.Venezuela is not Alaska or any other country.As I believe that individual cultures and collective psyche trump everything else,I believe you are dead wrong.

    I knew Chavez was going to win the elections one year before he even ran.Why? Because I observe psychological climates.No data can predict that.Only a sensitive and experienced mind can do that.In my opinion most Data is flawed and skewed…that is so easy to do;)

    IMO Venezuelans are way too spoiled in general( not all of course) to be receiving free money of this magnitude….I think there are far better ways to help the poor of spirit and the materially poor.

    It will be another Devil’s Excrement

    But hey you have your rights to fight for what you want, and so do I.

  4. firepigette Says:

    Torres, everybody thinks their opinions trump others, or they would not have the opinions they do.

    In any case I think each country is different.Venezuela is not Alaska or any other country.As I believe that individual cultures and collective psyche trump everything else,I believe you are dead wrong.

    I knew Chavez was going to win the elections one year before he even ran.Why? Because I observe psychological climates.No data can predict that.Only a sensitive and experienced mind can do that.In my opinion most Data is flawed and skewed…that is so easy to do;)

    IMO Venezuelans are way too spoiled in general( not all of course) to be receiving free money of this magnitude….I think there are far better ways to help the poor of spirit and the materially poor.

    It will be another Devil’s Extrement

    But hey you have your rights to fight for what you want, and so do I.

  5. torres Says:

    firepigette, two things:

    1) where is your data?
    2) where is your response to the data in the articles presented to you?

    Until then, your opinion is equal to mine, but my data trumps your lack of data.

  6. firepigette Says:

    “it’s about your undermining.”

    Well dear.I doubt that I have the power to undermine a movement of the magnitude you describe, so relax.I doubt I am that powerful.

    But just as you have the intention to undermine all of my arguments with the pretension of having such ” good form” ,I will add that though I have no proof that you are not above board in anyway, I do consider your cash distribution idea to be quite under par.

    Reason? Because I respect people and their own innate abilities for self reliance.
    Where there is a money making/incentive scheme for votes, there are a million vivos ready to exploit it.

  7. torres Says:

    “You should stop caring SO MUCH if some of us disagree.”

    It’s not about us disagreeing, it’s about your undermining. If you simply disagreed and left it at that, I would not be addressing you, as I don’t address many who disagree with me. But you go out of your way to trash me, my position, and those who support it, mainly with offensive comments, as I pointed out above.

    If you keep doing that, you will keep hearing from me, though, as opposed to you, I will attempt to use rationality and politeness.

    Regardless, I will continue, as I have for decades, trying to find support for the idea that cash distribution is the way to go, and I will continue to do so until it is implemented, perhaps in the coming election.

  8. firepigette Says:

    Torres,

    You need not worry.You can have your beliefs and I can have mine.Everything you say to me is nonsensical in my opinion because I believe the premise is wrong.

    Like I said in another thread.We have to stop attempting to communicate with each other, because it doesn’t work.

    You have sufficient kudos from others, you don’t need mine.

    In the future I will state my opinions and you state yours but perhaps we should refrain from interpersonal debate.

    I have nothing against you as a person.But my thinking and your thinking are light years a part from each other.

    Let’s stop the debate please.I do not have the time to answer so many questions and refute so many things, and it is not worth it because you and I will never agree.

    I think your proposal will only harm Venezuela and you think the opposite.

    You should stop caring SO MUCH if some of us disagree.That is life

  9. torres Says:

    firepigette, I have no issue with your having different opinions.

    Even when you mention me by name first: “Cash distribution in the way I understood it from Torres will have the exact opposite effect in my opinion.” I have no issue with your opion. And, clearly, you undertood cash distribution FROM TORRES differently than I understand it, since your conclusion is the exact opposite than mine.

    Even when you continue to reach conclusions, not only opposite to mine, but opposite to the ones made by the articles being linked and discussed in relation to the main post, I have no issue with your opinion.

    But when your opinion gets on the offensive, stating that proposals in the category of mine need to become “ghosts from the past”, that such wishes are a “sign of narcissism”, that my kind of thinking ” is a kissing cousin of Chavismo.Populism at its absolute worst,” you must not be surprised if I try to defend myself from what is tantamount to insult.

    When I respond with rational arguments, calmly and respectfully, you counter by again mislabeling my proposal, making claims about my understanding of how the mind works, the Venezuelan mind in particular, then making derogatory generalizations regarding those of my nationality.

    You even made it a point of emphasis all but stating that we should feel “embarrassed” by our opinion!

    All that, and I still take my time to extract your arguments from all your offensive discourse, to respond as intelligently as I know how, in the hopes we may enrich each others minds with the exchange of thoughts on this matter of true and tireless importance to me that is poverty alleviation.

    Regarding your bottom line: “life is too easy and the desire for automatic entitlement.” You may be right. That may very well be the root cause. The thing is that when a government is made up of people with that mentality, then all the money handled by government is mishandled by people with that mentality, so it doesn’t get spent on things that would improve the lot of those worse off. Trying to be a realist, I reached the conclusion that, better than having the government misspend the money, is having the public misspend the money.

    After analyzing the economics of it, it began becoming clear that A) the public wouldn’t misspend as much as prejudged, and B) even misspending is good for a free market economy, therefore for everyone. The articles point to data that support this analysis. Instead of arguing the facts, you just shut your ears and yell la-la-la, it seems.

    Thanks for your advice, though I don’t “worry” about you agreeing. I do worry that you claim education is so important, but when you have a chance to be educated, you squelch the new information out. That kind of behavior is worrisome.

    “I don’t care if you disagree with me…” Polite to the end. What can I say.

  10. firepigette Says:

    Torres,

    Perhaps your ego is getting in the way.

    If I disagree with you and you do not understand why….you need to accept that not all people will send you the Kudos you desire for your opinions.

    Just as you think I am illogical, I also think that you are.That’s life.

    As for Kolya, I wish he would give up on me, but unfortunately he can’t stop obsessing with everything I have to say.

    Bottom line on my objection to your propsal is that I think the main problem in Venezuela has always been: life is too easy and the desire for automatic entitlement.Until that is fixed we will continue on the same path of underdevelopment and destruction.All other arguments to me are mute.

    And no, I do not put MO in the same category because I have no clue how he feels, however I see that he is less effected by different view points than you are.

    My advice to you is stop worrying about whether I agree with you or not, and allow me to express myself as I see fit, in the same way you do.

    I don’t care if you disagree with me…it does not touch me in anyway.

  11. torres Says:

    Kolya, thanks. I guess firepigette got to me with her insinuation that Pedro España and moctavio were part of the poverty issue by being one of “those” with the Venezuelan child mentality supporting cash distributions systems. That’s just too much…

  12. Kolya Says:

    Torres, you are a rational and conscientious man who expects your discussion counterpart to be the same. Let me be straightforward: don’t waste your time on firepigette. (I wasted much too much time on her myself.) In real life she might well be quite different from how she comes across online. Her online persona (at least in the blogs I see her around) is rather sad: an irrational, bitter and thin-skinned resentida. She’s opinionated, she emotes, she holds grudges, but she cannot argue in a rational manner. Although laughable, two of her fall back positions are (1) her opponent(s) are immature; (2) she has a more profound knowledge of how the human mind works than those she disagrees with.

    Save your well reasoned arguments to a more worthy counterpart. There are plenty of intelligent people of good will who disagree with you. Arguments with them will be more fruitful and stimulating–to you and to them.

  13. torres Says:

    firepigette,

    After sleeping on it, I’d like to ask how you fit those who have not been supporting cash distribution –heck, some have been outright against it– until just recently into the same bucket as those Venezuelans who are not embarrassed by liking “a free basic sueldo”? I mean, you are using supporters of this proposal as examples for concluding “what else is new in Venezuela?” as if part of the problem you think needs fixing. Yet, they weren’t. They were, like you, against it, but have come around. Do you think they’ve *suddenly* become Venezuelan? Do you think that it’s taken me decades to get a few “kudos” because the Venezuelan problem you describe is so rooted in our culture? The reason poor people support this proposal so quickly is not because they are irresponsible Venezuelans, it is because they are in a desperate situations. It is only people who are not in hard times that have given me a hard time about giving money to those who are in hard times. What seems more of a Venezuelan mold than what you describe is the not wanting to share what’s in the pot.

    The second thought I had thinking about your position is regarding the premise that the poor will misspend their money. Two replies regarding that:

    Assume they will misspend. I don’t think they will, but let’s assume for a moment that they spend 10USD on something useless. And the next day. And the next day. That means that that one person’s life has not changed much, except for the happiness he’s gotten from the useless daily spending. That alone is an improvement. That person is happier than before, for life. But let’s follow the money. Someone has received it. That someone is now receiving 20USD per day, and is someone who provides a useless good or service to the first guy. Hmmm, now this person gets to spend 20USD per day on goods or services that will bring 30USD to someone, then 40USD, and so on. Someone ends up making enough so as to pay taxes. The same original 10USD then, keeps making people happy over and over until it reaches people like you who spend it wisely or until it reaches government for whatever it is they do with it. That, firepigette, sounds like a healthy market economy, even if the misspending is as you suggest, with which, I remind you, I disagree.

    The other angle is more macro. Let’s use the PDVAL’s recent figures. 85% of money spent is wasted, 15% reaches it’s intended user. Too extreme for you? Let’s use the Red Cross figures. Over 60% overhead! Do you honestly think that more than 60% of the poor will derive *no* benefit from their cash if it’s distributed to them? Do you think that the Government will get to a better percentage than the Red Cross in less than a decade? Should we have the 40% continue to suffer poverty just because you don’t want the 60% to misspend it the way it gets misspent by current government or current Red Cross by people who don’t need the money as badly? I rather the poor buy useless things, than those with jobs in the government or the Red Cross buy the same useless things.

  14. torres Says:

    firepigette: “don’t feel embarrassed by it whatsoever”

    I wonder how you can try to diminish our proposals when the data supports our premises and contradicts yours. Are you that resentful at having had such a rough time that you refuse to allow others to have it easier than you did? Shouldn’t you be wanting to help others to have it easier to spare them your difficulties?

    By the way, regarding your family and security, don’t you think that by having 10USD/person/day they may just be able to say “no” to those extra hours of work late one night, or to that part-time job in a dangerous area of town? Maybe not your family, but maybe some other family out there?

    I really think you should go back and read those articles. I keep getting the impression that you haven’t.

    In the meantime, Pide tu Plata.

  15. torres Says:

    firepigette,

    “First people argue that Chavez is fascist, now you say he is a communist??” Just labels. It is what it is, and it has bits of both, and capitalism, too, and many others, as well… The key to my statement, which you sidestepped, is that cash distribution would reverse it towards a competitive consumer market.

    “…a total lack of understanding of how the mind works, particularly the Venezuelan mind.” Except that data mentioned above is from various parts of the world, including some from Venezuela, seems to contradict your stance while supporting mine. What data do you have that giving cash in the way I suggest does not work?

    “Venezuelans have become used to getting something without working for it.” Quite the contrary. You seem to be speaking about the Venezuelans that have been getting something, not the poor. The poor are the ones that have gotten used to getting close to nothing, and then people like you on their high horses, to boot.

    “Just like children.” This says more about you, than about Venezuelans.

    “…insures a basic’ sueldo’ to all, despite earning it…” Firstly, it wouldn’t be a sueldo, but an ingreso. Secondly, we don’t need to earn it because it is already ours. Thirdly, all I’m suggesting is that all Venezuelans benefit equally from it, not according to a small group’s decisions, method which clearly has been failing for decades.

    “…will never learn self sufficiency…” On the contrary, it is by providing them with the liberty to have money that they will learn how to spend it wisely. Are you backpedalling now about the value of learning from experience?

    “…corrupt politicians thrive on dependent voters…” Agreed, which is why I suggest we make the voters independent of the politicians with a double-whammy: on the one hand we take the money of the people away from the politicians with which they control the votes, and on the other hand we give it to the rightful owners, the people, so these won’t need to take money from anyone to vote their hearts.

    “The road to maturity requires self sufficiency.End game.” lol Not true. Ask Stephen Hawkins, for starters. Besides, aren’t you suggesting that people will depend on jobs? Doesn’t sound self sufficient to me. Sounds more like employers will have the chance to abuse employees because they know well the dependence on the jobs of the poor. Furthermore, it sounds like you are saying, “learn to live the way I think you should live, or you get nothing,” which sounds like something chavez would say.

  16. firepigette Says:

    Oh, and it doesn’t escape me that those of you who would like a free basic sueldo don’t feel embarrassed by it whatsoever.So what else is new in Venezuela?

  17. firepigette Says:

    Torres,

    “I would agree that I totally support the calculated use of a cash distribution plank as a political strategy to apeal to the interest of the poorest, and stop chavez’s zigzag path towards an anti-market communism in its tracks.”

    First people argue that Chavez is fascist, now you say he is a communist??Whatever.

    Your proposal is just another populist idea that is based on a total lack of understanding of how the mind works, particularly the Venezuelan mind.Venezuelans have become used to getting something without working for it.Just like children.

    Any system that insures a basic’ sueldo’ to all, despite earning it, is an insurance that those who receive it will never learn self sufficiency corrupt politicians thrive on dependent voters

    The road to maturity requires self sufficiency.End game.

  18. torres Says:

    loroferoz, you hit on several important aspects of economy, but firstly I’d like to argue your first statement. You seem to see cash distribution as a means to an end, a means that must stop once the end is reached. I don’t. I see it as the end, itself. I envision a nation in which forever every citizen is born receiving enough income to at least meet the poverty line, and dying having received it every day of his life and knowing that all his loved ones, fellow citizens, and future generations will have the same lifelong guarantee. You see, I see the eliminating of poverty as a side-effect of this goal. The nation becomes one in which no one falls through the cracks. It’s a nation where providers of goods and services must cater to the population instead of to a handful of fat cats sitting in office. It’s a nation in which communities stop justifying criminal behavior based on need. It’s a nation where no one stays in an abusive marriage out of financial need, or no orphan is left destitute merely because of his financial burden. It’s a nation where government will be doing it’s best to get the market to do well, because that’s the only way they’ll get money from taxes.

    Regarding PDV shares, I see a few issues with that. Firstly, shares only give dividends based on profits, so corruption within PDV would continue to affect recipients. Secondly, you’d have to put so many contraints on the shares (resell, inheritance, trading, collateral use, voting rights, etc.) that they would really not be shares at all. Thirdly, conceptually, it’s the oil of which we are all owners. It’s a share of the oil, not of the derived goods, that Venezuelans should get. The simplest way to achieve that is simply to distribute the share of its worth as it gets extracted. Shares are just more complicated. And if your purpose has anything to do with poverty, read in the articles where they point out that poor people already know how to use cash, but not shares, and simplicity is key to their success.

    Regarding Inflation, it’s just the increase in weighted average of prices of goods and services of a nation. For it to go down, it’s just a matter of having a an efficient and competitive market. What better way than to multiply the number of consumers to the maximum and none of them poor: 100% of the population with spending money?! Seems like a formula for a first world economy.

    Oh, also, ask yourself what’s an easier campaign sell, shares or cash?

  19. loroferoz Says:

    Cash distribution of oil revenue is a good thing as long as it has an objective that involves ending the need for cash distribution (poverty).

    I try to be a realist. And I know that the government, any Venezuelan government will misspend money if allowed. It is in it’s nature. So much that I would rather give PDV shares to Venezuelans (if you like, under the condition that they would not be sold in 5 years).

    But, most of my proposals involve first and foremost, insuring that whatever money can be had by the poor and not so poor will not be stolen from them. Inflation is the primary way in which the government robs everybody blind.

  20. Kolya Says:

    Thanks for the link, Torres.

    I also think that direct cash payments would be best. The less convoluted the process, the better. According to the Boston Globe piece, data from research seems to confirm that.

    What I like about your idea is not only the direct effect on poverty, but that during the process, as Quico wrote, transforms people from supplicants into citizens.

    Once they think about it, your proposal should appeal to a wide spectrum of people. I assume that those who have libertarian inclinations cannot but be supportive. On the other hand, I can see how the government, the state, of a country such as Venezuela or Russia would be terrified of such a thing.

    Okay, have to go….

  21. torres Says:

    Kolya,

    Quico made a third part post to those two you found:

    http://caracaschronicles.blogspot.com/2007/07/how-to-do-it.html

    It was his suggested method, instead of daily debit card deposits, as I suggest. Note that Quico came around to those posts after about three years of my persistently pestering him and fellow readers about this topic. I would support that, too, though I insist debit cards with daily cash distribution is more efficient and more user friendly, by far.

  22. torres Says:

    firepigette: “POLULISM POPULISM POPULISM will get you votes but no development and a very spoiled population.”

    Wow. I keep reading this statement, then letting it sink for a few hours, then reading it again, and then another few hours, etc..

    To me, the meaning of “populism” is: “a political strategy based on a calculated appeal to the interests or prejudices of ordinary people”. If that is what you mean, then I would agree that I totally support the calculated use of a cash distribution plank as a political strategy to apeal to the interest of the poorest, and stop chavez’s zigzag path towards an anti-market communism in its tracks.

    But my guess is that you assume that populism is necessarily a bad thing. I don’t. “Women’s suffrage” may have been considered populist, too, but it certainly is not a bad thing. Eliminating poverty is not a bad thing, and having every Venezuelan with an income of more than 2 USD/day certainly achieves that, as per international measures. I understand that you claim that giving poor people money is worse than keeping them poor until they learn how to be wiser with money, but the evidence keeps mounting against your premise, and you keep ignoring it.

    Your claim that cash distribution will provide no development and a spoiled population contradicts most recent international findings as well as all the reasoning I and others keep putting forth. Repeating your position without countering with reasons or data speaks more about you than about your position. The article links posted by moctavio and by Kolya should at the very least keep any educated person from continuing to respond to those supporting cash distribution with the disrespect that you evoke. Do you really think someone like Pedro España would be proposing something to spoil the poor and lead to no development for them?! Do you really think moctavio would?! Kolya? Me?

    I’ve said it before, I believe a cash distribution proposal would bring Venezuela into the first world economies in record time, and as an *additional* benefit, it is populist enough to win an election against chavez if it is made the crux of the electoral campaign.

    Heck, I’ll even suggest a slogan: “Pide tu Plata!”

  23. Kolya Says:

    Oops. Just read a follow-up to the post I linked to above. Here Quico, with the help of a few graphics, explains things in a simpler matter:

    http://caracaschronicles.blogspot.com/2007/07/torres-for-dummies.html

    As Quico writes, the key is that with Torres’s proposal people become citizens instead of supplicants. As supplicants, they depend on the state. As citizens, the state depends on them.

  24. Kolya Says:

    Torres, my apologies for not paying close attention to your argument. Frankly, I was rather dismissive of it and until now didn’t realize for how long you were making the same argument. It seems that no old blog comments comments survived, but with a google I found a three-year old post by Quico about your proposal. Since he has not talked about it recently, I forgot that back then he also came around to support your idea. (Whether he still does, I don’t know.) It’s obvious that at some level I was influenced by Quico’s argument that implementation of your idea is probably the best way to eliminate the dysfunctional national dynamics caused by oil money. It all sort of clicked now, though. A delayed reaction.

    http://caracaschronicles.blogspot.com/2007/07/torres-in-bethlehem.html

  25. Mike Nelson Says:

    “POPULISM POPULISM POPULISM will get you votes…”

    firepiggette, respectfully, isn’t votes exactly what the opposition wants and needs right now?

    The first order of business is to unseat Chavez and his “government”.

    It was populism that put him in power in the first place and it will take populism to get rid of him.

    It’s only after that happens, that “development”, as non-Chavistas envision it (correctly, imho), can begin.

  26. firepigette Says:

    Torres,

    POLULISM POPULISM POPULISM will get you votes but no development and a very spoiled population.

    Venezuela……………….

  27. torres Says:

    I am thankful for, and energized by the newfound support.

    Kolya: Wow. You seem really get it! Thanks for holding the fort, even with the usually missed arguments. Kudos to you! You’re absolutely right: it’s their money, not for us or anyone in government to decide what they should be spending it on.

    firepigette:

    “We can’t base a viable and sensible project on respect for people to do only whatever they please.” Actually, what the evidence from the article points to is that we can. Freedom of choice and money to spend are exaclty what make for a healthy consumer market.

    “Giving them a small amount will not solve safety issues which I think should come first” Ask them if they would welcome 10USD/day/person, or if it is too small an amount to make a difference in their lives. Then ask yourself if what you think should come first is what should come first for someone who thinks differently.

    “The kind of education we desperately need…” My proposal should get people to learn the responsibility you mention more than any kind of schooling or education possible. You, yourself, have mentioned that the ultimate teacher is experience. Cash distribution will teach fiscal discipline through trial and error experience, as well as through observing others’ successful and failed attempts. To boot, it will achieve that education while getting them out of hunger, rather than having to wait decades for a new educational system’s results to kick in.

    “Sounds good to me.” Me too. Glad to see that you are willing to consider Pedro España’s version of a cash distribution proposal. To me, that’s awesome. I’m happy to support it as well.

    moctavio:

    “why not get rid of poverty” Hear, hear!

    “I think the proposal is to do this as a first measure, assuming whomever is doing it is attacking the distortions in the economy to stabilize it.” I would point out that by doing it, one *is* attacking the distortions in the economy because you are taking some of the money away from those who are currently misspending it, and putting it in the hands of those who currently are not benefitting from it, and these would start spending it on those aspect of the economy that best provide the goods and services they perceive are of their highest priority.

    Ricardo:

    “creating the conditions to have a free-market oriented economy is the path to follow” That is exaclty what cash distribution creates. Making *all* citizens consumers of a free, competitive market, instead of only *some* citizens being a part of it. The market will immediately cater to the poor’s needs in the most efficient way possible, more efficiently than any government program could: http://www.boston.com/bostonglobe/ideas/articles/2010/07/18/free_money/

    I read and reread your comments and no matter how hard I try, it still seems like you prefer a large government misspending than the poor people misspending the same amount of money. I understand you would prefer a small government wisely spending, over either of those two options, but you seem happy to keep hungry people from receiving money until the large government gets its act together and makes itself smaller. Is that a correct reading of your comments? Do you really see that happening?

    Mike Nelson:

    Bingo. Kudos to you for allowing the idea to take root. The cash distribution proposal is not only good for the poor and the economy, it’s a good way to win electoral support. And if it fails to win a rigged election, it is the kind of viral idea that stabs both at the petro state and communist models’ hearts. There is no need to tell people the idea is an oppo idea because chavez’s communist model simply cannot adopt a cash distribution policy…

    I would point out regarding those not in need being nudged to give their part to those in need that such nudging is not necessary. By merely spending or saving the money in whatever they want, they are helping the economy, which helps the poor, by voting with their money on which vendors provide the best goods and services in the best conditions, or, if the money goes into a bank, the bank must find someone to whom to lend the money so they must offer competitive lending rates. In the same way, the poor need no nudging in their spending either, since regardless of their spending choices, these choices become votes in favor of certain products and services as provided by certain providers. That helps the market, regardless, and themselves in the best way they would think so.

    loroferoz:

    You mention several suggestions that you would prefer to cash distribution. Several of them are about fixing certain things that are currently wrong with government. I’d point out that by taking the oil revenue out of the governments hands, and distributing directly to the citizens, you’ve achieved most of your suggestions by simply forcing the government to cut down its massiveness to a size and level of efficiency constrained by the amount of money derived from taxation.

    “A good system should reward the most (and the less) enterprising and smart for providing the best service to others at the least price” Exactly why cash distribution is not just a relief, it is a cure. The providers of the goods and services that best provide for the poor will get rewarded by the poor consumers who choose them. Free, competitive market at work for those who need the most.

    By the way, nobody is talking about creating money for the cash distribution. This is about getting oil (or other) revenue into citizens hands directly, before it gets into government grubby misspending hands. This is about the government depending on the citizens for taxation money, rather than the citizens depending on government for handouts.

    Alek Boyd: Good memory. I presented my cash distribution proposal publicly for the first time even before chavez’s first coup attempt, but I didn’t mention it in blogs until about 6 years ago. I’m glad it seems common sensical to you. It does to me, too.

    FC: “since when does anyone appreciate what’s freely given to them?” It seems that since day one when cash is given to poor people: http://www.boston.com/bostonglobe/ideas/articles/2010/07/18/free_money/

    Perolito: “a direct cash alternative to subsidies would be ideal, since it would allow for the economy to be re-energized as people will be spending more and therefore creating more demand for certain products.” Exactly. (Cesta-tickets would bulk up the government. Cash is the simple way to go.)

    An Interested Observer: ” Combining this with creating opportunities is a beginning of a real solution to poverty.” Same note I made to moctavio, the “this” being combined in itself creates opportunities, thus is a real solution to poverty. (Off-topic: “SE LE SUSPENDA EN EL EJERCICIO DEL CARGO.” page 32 of 86 of that Expediente judicial we once mulled over. You said it was all you needed to know that it had been done before deportation to support the actions fully.)

    JAU: “Similar to giving cash, but not the same.” Cash is simpler. Regarding PDVSA, the way I see it, the money in the cash distribution proposal should come from the sale of natural riches to the oil companies, not from the profits of the oil companies. If it were up to me, I’d privatize PDVSA and have government be merely responsible for the selling of oil to PDVSA and any other oil company that wishes to buy it, the money from such revenues going directly to the people instead of the government’s own use.

    Albert Einstein: “If at first the idea is not absurd, then there is no hope for it.” Words I live by.

  28. firepigette Says:

    “I think the proposal is to do this as a first measure, assuming whomever is doing it is attacking the distortions in the economy to stabilize it.”

    Sounds good to me.

  29. Kolya Says:

    On the direct cash transfers issue, it seems that most who strongly object to the policies discussed by Drake Bennett (in the Boston Globe article) did not bother to read the article. Bennett’s piece, which also includes caveats and doubts, presents research-based evidence that should be seriously considered and not simply dismissed in knee-jerk fashion. My guess is that Prof.España’s argument, which impressed Miguel, is also based, at least in part, on the results of those real world studies that Bennett writes about. And these programs, by the way, are not touted as cure all panaceas–nobody is talking about painless solutions to intractable problems.

    Although there is plenty of overlap, Torres’s idea is somewhat different from the ones above. From what I have recently seen elsewhere, though, the same dynamics seem to apply: Torres carefully and patiently lays out his argument, but those who object to it primarily dismiss it in a knee-jerk fashion. (I’m writing this as someone who used to object to Torres’s idea, but who lately is finding his case more and more compelling–in both the moral and practical senses.) Lastly, Venezuela is a poor country that happens to be oil rich. Because of the oil crutch Venezuela is a victim of the infamous “resource curse”. Torres’s proposal could well be a way to liberate the country from this curse. Then, perhaps, Venezuela would be able to build a more normal and balanced economy that does not depend on oil.

  30. moctavio Says:

    I think the proposal is to do this as a first measure, assuming whomever is doing it is attacking the distortions in the economy to stabilize it.

  31. loroferoz Says:

    Ok, Mike,

    It won’t be that harmful in unintended consequences, and the intended consequences might be good.

    As long as the money these people are paid is real money and no specially-created-fiat. Meaning it does not come from financial operations that produce both deficit and inflation.

    To me at least, it is supremely important that money and work reacquire the value they have in more normal, stable countries. Money printed out of the blue to pay people so they can buy food up until next week at just the prices of next week (but not the week after) will do more harm than good, and a lot harm at that.

  32. Ricardo Says:

    Yes, Alek, I generalized just to make my point. Of course not every cash-receiving fellow will become lazy.

    Most people already receive money in the form of government subsidies. What do they do with it? Why, waste it, of course. Venezuelans are a bunch of mal-acostumbrados (yes, I’m generalizing again, just for point-making) that think they live in a rich country and that whomever is in charge has the duty to just give people whatever they need to live the good life. They’re wrong.

    A cash-giving policy in Venezuela will only last while oil-prices are up. When it comes down, we will have yet another Chavez-like ‘revolutionary’ down the road again, and again, and again.

    You’re right that people have the right to be lazy, but heck, let them be lazy AFTER they earn their money.

  33. Mike Nelson Says:

    loroferoz,

    I know where you’re coming from about the Misiones but you have to keep in mind that the “Torres Plan” means money for all Venezuelans and is not incumbent on the recipients doing anything more than receiving it and hopefully spending/saving it wisely. Different animal in my books.

    Speaking of “make-work” though, that’s another good idea the opposition should consider as a useful plank in their platform, useful for them as well as the workers. Yeah, I know that Chabysmo does their version of same but again, the difference would be that nothing more would be expected of the workers beyond actual working and the work itself should have as its mandate to not only provide tangible benefits to the country and the workers but to re-instill pride in Venezuela and Venezuelans, and not to exemplify obeisance to Chavez, Chabysmo and the Cubans.

    One last thing about Torres’ plan, it would be great if those Venezuelans who don’t need the money on offer sign some sort of social contract to promise to give their share to others more in need – like their housekeepers, etc. for example. A little charity goes a long way.

    As GB Shaw said,”The government that robs Peter to pay Paul can always count on the support of Paul”. That’s probably Rule #1 in Chavez’s playbook and it needs to be undermined in any way possible.

  34. loroferoz Says:

    Mike Nelson: The most probable result is that chavismo has already taken the idea and it’s called “Misiones”. Handouts in exchange for ideological education, or for make-work.

    Firepigette: I agree with you in 95% of what you said in the last comment. Most scientists will pay good money for furniture and recognize that carpenters do something they have not bothered to learn. But I will appropriate this one for the a Top 40 list of BS beliefs of Venezuelans: “people can actually believe that the government will behave differently from the people themselves.”. It sums up most of the failures of the last 40 years.

    moctavio: Eliminating the Armed Forces would go a long way towards helping Venezuelans even if the money was burned. But getting rid of poverty is FIRST and FOREMOST doing the hard work.

    Just inflation and devaluation and printing money as usual will get the end receivers of handouts back to grinding poverty and hunger in a few years. Saving will be a cruel joke. Buying food, only if the handouts keep up with inflation. For cash handouts to have an effect different from buying food until next week, you have to make it worthwhile having money saved next week, as well as some credible expectation that next week will be somehow better.

  35. moctavio Says:

    Of course it is not the cure, but simply eliminating the Armed Forces would give you more than you need for this, for example. Yes, the Government has to improve quality of life providing not only crime protection, but also things like running water, electricity and other infrastructure. But if someone were to take over tomorrow, why not get rid of poverty and then go do the hard work.

  36. firepigette Says:

    MO,

    4% of the budget to help the poor sounds good to me.

    However on the side

    I have plenty of family in the barrios now.Their problems have much more to do with crime and safety than with food.Giving them a small amount will not solve safety issues which I think should come first.

    Many years ago, my husband who was from a small village in Oriente sent money each month to 12 families for more than 14 years to eat better and pay for medicines…these families mostly consisted of women and children whose husbands had left and grown children who did not help their families.

    I think there is a problem in Venezuela that no amount of money can correct, and formal education does not touch.Some of these neglectful ” children” were lawyers and engineers.This problem is a lack of responsibility.People don’t want to help their fellow man but like to think the government should.

    It is incredible to me that people can actually believe that the government will behave differently from the people themselves.

    The kind of education we desperately need is not to become scientists or lawyers -it is the education that teaches people to cooperate, to think deeply and for oneself, to take personal responsibility, to value ethics, and to honor oneself and others.A carpenter’s work is just as valuable as a scientists.

    Cash distribution in the way I understood it from Torres will have the exact opposite effect in my opinion.

  37. Mike Nelson Says:

    “Nothing will ever be attempted if all possible objections must first be overcome.” – Samuel Johnson

    While Mi Negra might have gone over like a lead balloon during the last presidential election, through no fault of the idea in and of itself but due to too many other factors to dredge up here, I think someone in the “think tank” of the opposition should seriously contemplate resurrecting the concept AND making sure that it’s branded as an “opposition” campaign promise in the minds of the populace. (Note to Leopoldo)

    Nobody’s saying, least of all Torres, that the plan is some sort of replacement for all the “normal” economic, social and political activity that must take place to alleviate the severity and breadth of poverty in Venezuela but the benefits are two-fold: it will help the poor almost immediately and will help the opposition gain votes and support.

    Now what if Chabysmo co-opts (i.e. steals) the idea before it can be rolled out by the opposition? The poor will still be helped (which is a good thing) but the opposition will have to drill it into the people’s minds that the opposition thought of the idea first and that it won’t solve the problem of poverty without all the aforementioned good policies to follow up – policies that are the opposite of what Chabysmo has done so far, is still doing and will continue to do until it takes a barrel full of bolivars to buy an arepa con queso de mano, that is if there’s any to be had.

    I could go on but you get the drift.

    /rant

  38. loroferoz Says:

    “We are talking about human beings whose daily lives are miserable, because they can’t eat complete meals, which is what poverty means in Venezuela. I think we can assign them them 4% of the budget in to order to alleviate the misery.”

    Which means relief. It is a worthy end for charity and for government. But recognize it: RELIEF, in no way CURE.

    People got out of poverty and got an education and became middle class in Venezuela during the ,1950s,1960s, 1970s, up until the 1980s. Lots of immigrants from abroad. Lots of immigrants from the countryside. Why? because they were able to do it working a job or starting a business.

    It is more important to produce the right conditions for ending poverty.

    Life is grossly unfair in what we get when we start. It’s not all about merit if you are prosperous or poor. But:

    The poor and disadvantaged are tricked and deceived, as well as injured and humiliated when they are led to believe that the government will do anything and everything for them and then does not perform its most basic functions. And even worse, makes it impossible for others to fill in.

    How about life? freedom from petty and gross oppression? Working and producing and knowing that your money will still buy things ten years in the future, that you actually will live and prosper and retire? You, by your own hand!

    A good system should reward the most (and the less) enterprising and smart for providing the best service to others at the least price. So that they produce for others and give more than they use, naturally.

    Yes, cash might be given off. But in the presence of the usual conditions and inoperative government, it is only relief. Worthy but not enough. Particularly if for some reason the handouts end.

  39. Gerry Says:

    A suggestion on how to alleviate poverty. A change in policy.

    Do you want to to start a small business?
    For local, national or export service?
    Look at our registry of all categories of business opportunities in “your location”.
    We will help you.
    We have interest free loans and expert advice to assist you.
    We will help you prepare a business plan to ensure the viability of your enterprise.
    Education in your chosen field will be provided free of charge.
    You will pay no taxes on your business for five years.
    You may sell your business at any time and keep the profits, but they will be taxable.
    At the end of two years if you are not profitable we will appoint a qualified person to advise you and help you turn around. We want you to succeed!

    Under a ministry of development who would be charged with providing and updating a list of possible endeavors 15% of net oil income will be made available for loans.
    Loans are to be paid back at the rate of 5% of your profits until the loan is paid off. If you sell you or the new owner must pay off the loan in its entirety.

    The poor we will always have with us.

  40. Kolya Says:

    I’m not naive enough to believe that one day everybody will enjoy equal opportunities in life. And I’m enough of a hard-nosed realist to know that contingency (“unearned” contingency and circumstance) plays an enormous role in life. By saying that I’m by no means diminishing the importance and merit of qualities such as industriousness, determination, persistence, initiative, and so on.

    FC talks about earning things. I have nothing against it. But there are plenty of things in life, good and bad, that we did not earn and yet are crucial to what we are. We did not “earn” things we had no control over: we did not earn our parents (whether they were lazy and irresponsible or loving and hard-working), nor did we earn the socioeconomic level under which we were born, nor did we earn our IQ, gender and skin color. We had zero say on these things, so we cannot be held morally accountable for them. And yet all these things played a huge role in our lives.

    As a human being, the middle-class child is not any more entitled (or deserving) of good food and good schooling than his poorer counterpart. But which child has a better chance of getting proper nutrition and a decent education?

    “since when does anyone appreciate what’s freely given to them?”

    I do. Perhaps not with all things, but with a lot of things. For instance, what did I do to get my good and kind parents? Nothing. But I certainly appreciate them. I was no more entitled to good parents than someone who had cruel and inconsiderate parents deserved his. I never let myself forget this.

    And, once again, let us remember that Torres is not talking about free hand-outs. He’s talking about individual citizens getting the share that it is due to them by virtue of them being citizens. Moreover, as Torres also noted, implementation of such policy may eventually (by no means immediately) liberate Venezuelans from the curse of the devil’s excrement (the resource curse.) This is not utopic la-la land. This is simply giving citizens their small (but rightful) share and then, perhaps, to slowly rebuild the national economy without using oil as a crutch.

    I agree with Mike Nelson: kudos to Torres. At this point, I’m more agnostic about his argument than either Alek and Mike, but Torres certainly made a very strong and cogent argument. As Amieres wrote elsewhere: Viva Torres!

  41. moctavio Says:

    Well, I disagree with a lot of people. We are talking about human beings whose daily lives are miserable, because they can’t eat complete meals, which is what poverty means in Venezuela. I think we can assign them them 4% of the budget in to order to alleviate the misery. Yes, you want Government to be small, but hey, even with correct policies in place it will take years (if not decades) to create the jobs required for these people to have what they need. Helping them today, saves you money in health care and even more support later.

    As to what to do with the money (the rest) to decide now to work on alternative energy resources is not even needed. Venezuela needs education, what to do with that education will come later. Venezuela lost its oil/energy/science capabilities that took 3 decades to build. Venezuela is closer to competing in software or web based technologies, for example, than in oil or energy. Throwing money at specific areas would be as wasteful as Mercal or PDVAl is or are. Without the human resources, you will not have that. And to have stable human resources, you need a stable economy that is attractive to the young and capable. Today’s isn’t. Until inflation is controlled (Dollarize, dollarize, dollarize!) the people you need to create anything will all leave for places where they will have better salaries and reources to do their work.

  42. firepigette Says:

    It is not a matter of respect in this case.It is about the practical consideration for the country as a whole.We can’t base a viable and sensible project on respect for people to do only whatever they please.

    The money should be invested in alternative energy projects so that when the wells run dry there is an alternative energy source. Long term economic planning to create sustainable jobs is what’s needed not short term dribbling away of funds..

    Venezuelans have always had a let-the-chips-fall-where-they-may mentality which has fostered a concomitant sense of entitlement. ?The something- for- nothing expectation doesn’t just distinguish people’s personal outlook; it also characterizes a Venezuelans’ relationship with government. Perhaps the best example is how Venezuela subsidizes gasoline.

    Venezuela will never prosper in a stable way until this something- for nothing- and automatic entitlement are ghosts from the past

    .”National patrimony belongs to all of us, and I deserve my share of the spoils????.” cries the populace.

    Automatic entitlement is a sure sign of narcissism, the kind of thinking that is a kissing cousin of Chavismo.Populism at its absolute worst.

  43. Mike Nelson Says:

    Years ago when Torres first came up with the idea (or at least brought it up in the blogs) I was at first skeptical but it didn’t take long for me to get on board.

    Nobody can predict what everyone would do with their share of the ‘bounty’ but her plan would open up a lot of possibilities in people’s lives, especially for the poor, and it’s infinitely do-able within a relatively short time frame.

    Such a plank in the oppo campaign could prove to be just what the people have been waiting for to justify them voting oppo and just as importantly joining the fight to protect that vote come September.

    Mi Negra on steroids AND meth.

    Kudos to Torres for staying on point.

  44. loroferoz Says:

    Let me put on my hard-nosed liberal hat.

    They would probably do much better in neglected, past policies that DID WORK WONDERFULLY in Venezuela before CAP came along in 1973, and DID REDUCE POVERTY mainly by turning many Venezuelans into middle class.

    Instead of giving out cash, why not?

    -Keep inflation at acceptable levels and try for monetary stability vis a vis other currencies. Contract no new State debt if possible. The worst thing that can happen to a worker and saver is to see her savings and salary go up in smoke. It’s frustrating and produces a set of incentives that are beyond wrong. It might even require the government to give up certain powers associated with control of the Centrl Bank, a job that it has done badly.

    -Repair the education system. Particularly create institutions (or take down the barriers for private creation thereof) like technical schools and technical and specialist high schools (there were several, before 1969) that teach skills and professions in high demand, that poor people can use to get a job or set up a business, or even go on to the university with the advantage of previous experience and useful knowledge (and run circles around the other students, I have seen it). This would help the rebuilding of an industrial base better than State meddling and protectionism.

    -Take down all the useless bureaucracy and tolls that every enterprising person in the Third World finds standing in their way when setting up business or hiring personnel (or firing someone). A lot of this ballast seems to have accumulated since the 60s. Why not toss it overboard? Make Venezuela a friendly environment for setting up business.

    -Guarantee private property as a fundamental human right. This goes without explanation if you want independent citizens and prosperity, and not State sponsored “clients” and squalor.

    -Identify the limited number of services which might have to be provided by the State (because they have to be provided always and urgently) and concentrate on providing them efficiently and without delay (that’s WHY they should be public!). Emergency medical attention, police, public infrastructure such as roads and bridges, national coast guard and national guard. Or else allow private enterprise to enter the market, with tax incentives for providing to the less affluent.

    And for those in favor of giving out cash: It might produce RELIEF, but probably NO CURE, in the face of the usual conditions where you feel that working will not get you anywhere, where some bureaucrat is going to pull the curtains on your plans because he just wants to, unless you pay up, where a policeman or a criminal (or a continuous a superposition of both) is bound to take your wealth or your life without being punished, where past and present good intentions mixed with stupidity add up to apathy and a surreal system of doing things.

  45. Alek Boyd Says:

    Disagree and agree with Ricardo at the same time. Agree re small government, creating conditions for people to succeed, following the other path, etc. Disagree with throwing everyone in the sack of those who want to spend lives waiting for the monthly payment, sitting idle, etc.

    People deserve respect. Let them decide whether to become entrepreneurs or useless parasites.

    Torres has been proposing this idea for years, at least 6 if my memory serves me well. It was commonsensical then, it is common sensical now, and will be in the future. Alas common sense is not politicos’ forte, is it?

  46. Kolya Says:

    [Second attempt. My first attempt, it seems, failed. Perhaps I clicked on the wrong button.]

    Drake Bennett is the article of the Boston Globe piece. As I said, the whole piece is worth a read. It seems that there real-world research data to back up the claims of the advocates of direct cash transfers to the poor. A couple of excerpts:

    “In the last decade, however, the governments of the nations where most of the world’s poorest actually live have begun to turn to an idea that seems radical in its simplicity: Solve poverty and spur development by simply giving out money. … Typically the money — disbursed through banks, post offices, state lottery offices, and even, in rural Africa, ranging armored cars with ATMs on them — goes directly to the poor, rather than being spent on particular projects by government or international aid officials. The regular infusions of cash augment the paltry budgets of poor households, alleviating the pinch of deprivation, but proponents also see them as a long-term path out of poverty, and even a catalyst for economic growth. Research has credited cash transfers with improving the health and education of poor children, and there is also evidence that cash transfers nurture microenterprises, improve crop yields, and allow the poor to begin to save and invest. On a broader scale, some development experts argue that giving the poor more money to spend expands consumption and markets, and can boost local and national economies. Cash transfers don’t just lift people out of poverty, in other words, they lift entire countries as well. In the process, they may render superfluous large swaths of today’s aid industry.”

    “Economists and other development experts are beginning to examine just how the world’s poorest people actually spend their money. What they’re finding is that, because the stakes are so high, the very poor are often quite financially savvy. For the staunchest supporters of cash transfers, it’s more evidence that just giving the poor money is, dollar for dollar, among the best uses for aid.”

    “One of the most prominent proponents of direct cash transfers as a poverty-fighting measure was none other than Milton Friedman, father of the neoclassical Chicago school of economics”

    “The success of these programs has shown development economists something they didn’t necessarily expect: that very poor people are, by and large, careful shepherds of money, and giving them more of it is not a recipe for indolence, debauchery, and waste”

    To read the whole thing:

    http://www.boston.com/bostonglobe/ideas/articles/2010/07/18/free_money/

    (And remember that what Torres advocates with respect to oil money is slightly different: they are funds that citizens get by virtue of being citizens, regardless of socioeconomic status.)

  47. firepigette Says:

    Basically agree here with FC,

    Each country is different but I would say that in Venezuela, cash distribution would only worsen the’ El Dorado Syndrome’ that so far has been our demise:

    Wealth has been seen as a finite resource that is found and shared, not created or produced.Recall the old myth of ‘El Dorado’ which is forever in the minds of Venezuelans either consciously or on the level of subconscious.

    In Venezuela for many of us,mango trees belong to everyone who happens to ‘walk by’.

    I would prefer solutions that truly empower people, not this one.

  48. Kolya Says:

    I was first quite dubious of Torres’s idea when I first heard it from him months ago (if not longer.) Now, after reading the Boston Globe article and rereading Torres’s argument, I’m quite intrigued by the idea. I’m rather agnostic about it primarily because the cynic in me says that as good as it sounds, something will get badly screwed up in the implementation. But then, would it be any worse than what Venezuela has now? On the other hand, if I ignore the cynic in me and only read Torres’s argument on its merits, I think he makes a solid case. And remember, as he keeps on saying, that cash is not a free hand-out, it is cash that already belongs to the people.

    I have not yet read the NYT’s article that Miguel mentions in the post, but, folks, before making any further comments on how such a thing would never work, I hope you first read with an open mind the Boston Globe article (link provided by Torres above.)

  49. FC Says:

    I have to agree with Ricardo. After all, since when does anyone appreciate what’s freely given to them? You only truly begin to appreciate what you have when you have to actually go out and EARN it.

  50. Ricardo Says:

    No, Torres. That’s why I end my previous comment saying the government burns money away. For me, good government is a small government..

    Cash giving is not the way to go. As Matt rightly points out, creating the conditions to have a free-market oriented economy is the path to follow. Give people the opportunity and conditions to become entrepreneurs instead of sitting on the porch waiting for life to go by and gov’t money to cash in.

    Programs like Bolsa-Familia only create conditions for lazyness and corruption.

  51. bob Says:

    everyone who has ever quoted any number to “do this incredible do gooder thing for one simple price” is a lying sack of crap. it’s a very common tactic, makes good pr. feed the world people regularly quote some ridiculously low number to make sure no1 ever goes hungry again, it has as much connection with reality as singing kumbaya to bring world peace does.

  52. Perolito Says:

    Well…the infamous Carlos Andres Perez actually instated a cash-based project called “beca escolar” targeting poor elementary school students and their families. So I guess the equalizing-criteria was the fact that the kids were matriculated elementary students living in the poorest areas. Trust me when I say that this program was HIGHLY successful, it however, was used as a political tool more than a way to lift people out of poverty.

    I agree that a direct cash alternative to subsidies would be ideal, since it would allow for the economy to be re-energized as people will be spending more and therefore creating more demand for certain products.

    What about the Cesta-Ticket program? Wouldn’t extend it do the trick? Taking into account that these “tickets” may be used to purchase not only food but all kinds of stuff, could make the Cesta-Ticket a good alternative.

    I do share Hernando de Soto’s view that land-ownership is a key component in paving the road toward development. Many people in Venezuela do not owe the land in which they’ve lived for decades. The green/sustainable movement also offers great ideas not only for development but also conservation. The Israeli Kibuts come to mind.

  53. An Interested Observer Says:

    The Brazilian program creates conditions that depend entirely on the would-be recipients, thus putting power in the hands of the poor.

    The Venezuelan “program” creates conditions that depend partly on the would-be recipient, but leaves ultimate decision-making with the government, keeping power out of the hands of the poor.

    No wonder Hugo isn’t interested.

    I agree with Matt Kiely – programs like this can alleviate poverty, though they rarely solve it. Combining this with creating opportunities is a beginning of a real solution to poverty. And Hugo gets the first one wrong, and goes the opposite direction entirely on the second.

  54. JAU Says:

    I would give away share of PDVSA to each Venezuelan, non saleable, non hereditary, just give them the right to receive dividends straight from the company for the duration of their life. When you are born, PDVSA awards it to you.

    Similar to giving cash, but not the same.

    PDVSA might be broke now but something has to be left there, if not sell all other ‘basic industries’ and with that money finance at least part of the revival of PDVSA.

  55. torres Says:

    Ricardo, it seems you see the money being better misspent by those in current power than by those in current poverty…

  56. Matt Kiely Says:

    The best India did for its poor, was to liberalize its economy thereby cutting its poverty rate in half, lifting 300 million people out of abject economic hardship:

    http://reason.com/archives/2009/02/20/slumdog-thousandaire

  57. Alek Boyd Says:

    And so, we’ve come full circle, haven’t we? How does giving cash to people, seen as the most efficient and pragmatic approach elsewhere, differ from Mi Negra?

  58. Ricardo Says:

    Miguel, I wouldn’t call the Brazilian program ‘successful’. The ‘Bolsa Familia’ (which existed before Lula took over and, as a good leftist, changed the name and claimed its creation) does not give the people ways to get out of it. North-Eastern Brazil, the region that has benefited the most, is facing a manpower shortage in low-level positions because many have decided to stay home and wait for the Government to deposit the money on their accounts instead of actually working for a living.

    I’m against giving people money just because. If you don’t demand some sort of accountability on what they’re doing to help themselves, the government may as well burn the money out (which is what it does in most other cases anyway).

  59. Deanna Says:

    I don’t know whether Kuwait is still doing it. Sometime in the ’50s or ’60s, they started giving (I believe it was $10,000 annually) cash to each Kuwaiti family and gave scholarships to young people to study abroad. All this from their oil production. At that time $10,000 was quite a lot of money. I don’t think you can find extreme poverty in Kuwait. I know also that in the state of Alaska, people don’t have to pay income tax and I believe get part of the profits from oil. I may be wrong, but there seems to be a lot of experience around the world on how to get rid of poverty.

  60. deananash Says:

    Of course, what’s missing is the WILL to lift the country out of poverty.

    Remember, the cynical poor – and Chavez – want to bring everyone down to their level, not lift the poor up to a reasonable standard. That way lies the end of their control (read power)….

  61. torres Says:

    Using the definition of poverty of 2USD/day per person, and assuming an average of 1USD/day income for those below the poverty line, he must be estimating around 35% of Venezuelans being covered by his program (3.5billion/365/27million).

    I used to think along those lines until I factored in the likelihood of things going wrong in creating and running a system that must identify/register then update a list of deserving citizens, not to mention the overhead costs even if things do go right. I prefer an overall equal amount to all citizens, thus avoiding any bureaucratic structure, and making life simpler to the recipients by not having to prove how deserving they are to anyone.

    Later, the idea that the money belonged to the people to begin with, trumped, for me, any other consideration, fortunately supporting the above.

  62. bruni Says:

    OT for my readers. My latest post on the “escuaca” treatment.
    http://www.cuentosintrascendentes.blogspot.com/

  63. bruni Says:

    The advantage of a direct cash bonus is that the goverment does not have to convert itself into what it is not (a food distributor, for instance).


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