Blog Archives

February 28th, 2014

2/28/2014

Dear all,

I am always surprised to see how much time we and others are spending on discussing goals and on identifying and developing indicators or indices of measuring the attainment of these goals – and how little time (if any) we devote to discussing the middle part, i.e. how to get from the goals to achieving the impact. There exists a serious problem that I have started calling ‘the missing middle’: international negotiations and agreement on who is expected to contribute what: in terms of policy measures to be taken nationally and/or regionally, as well as policy measures –like official development assistance (ODA), climate finance and other types of finance or changes in international regimes like TRIPS – that would facilitate the attainment of the established goals.

Certainly, setting goals has a certain value. However, most of the goals that are being mentioned are reflected in national and international policy statements already; and sometimes, as Gabriele Köhler mentioned, they may even fall back, behind already agreed-upon goals. Yet, the most important shortcoming of the current discussions on the Post-2015 Agenda is the missing middle part: the fact that, for the most part, we are keeping mum about who is to contribute what.

I think it is high time to refocus the discussion on the required means; and when I say ‘means I mean more than finance, because, in many cases, more could be achieved for sustainable and inclusive growth and development by revisiting international regimes in order to ensure their ‘development proofing’: making sure that they do not undermine but support international cooperation and development.

I attached a paper I wrote some time ago on the ‘missing middle’ issue.

If we were to focus on the middle part between goals and impact, what would, in your view, be some of the priority issues to negotiate and agree on: financing for the Green Climate Fund; more TRIPS flexibility and technology transfer in the area of climate, clean energy or global health; enhanced external shock facilities for poorer countries; enhanced natural disaster insurance; more reliable humanitarian assistance; delivery on long-standing ODA promises; greater efforts on the part of industrial countries to reduce unemployment, poverty and insecurity in their countries so that their tax payers’ support of international cooperation may not decline? And are we devoting enough policy attention and other resources to the global water issue?

Looking forward to the continuation of this debate,
With best regards,
Inge

...................................................................................

Inge Kaul
Adjunct professor
Hertie School of Governance, Berlin, Germany
Email: [email protected] [email protected] Tel.: +49-30-887-09092
www.ingekaul.net

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February 27th, 2014

2/27/2014

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Thanks Owen. You are correct: It is important to establish social protection not only as a SD-Goal, but also strongly at the SDG-target and indicator levels, as one of the most concrete policy measures that governments can take to eradicate poverty, reduce inequalities/promote equality, and to promote decent work, food security, health , inclusive economies, gender equality and women's empowerment, human rights, peaceful societies – i.e. most of the forthcoming SDGs. Let's do it!

You asked why is it important to advocate for a stand-alone goal on Social Protection Floors for All: My experience in the interface between developing country governments and their "development partners" (aid agencies) is that they are both going to choose from among these 19 (or less) focus areas where they concentrate government / donor spending. For instance the EU (and many others) have a rule according to which country programmes should be focused on max. three (3) sectors. This means that unlike the World Bank for whom social protection now represents 14-16 % of total lending, most other governments and aid agencies are going to concentrate their investments not on SP but onto 3 of the 19 (or less) sectors now listed.

To build national SYSTEMS of Social Protection, including SP-floors, governments (and donor partners) will have to invest money onto the budget lines of – and in support of – the Ministries of Social Affairs, Community Development, Women and Children. In my country this Ministry has the largest budget among all ministries, and social protection cuts poverty to half of what it would be without SP. In poorer countries the "Social Protection Ministry" typically has the smallest budgets. No wonder that the human right to social protection is not realized for all.

Another point about poverty "eradication": It is a much better goal than poverty "alleviation" or "reduction". Yet, poverty is not like smallpox (and hopefully malaria one day) that we could ever completely eradicate. That's why we – ALL - are always going to need social protection. Only a small part of the world's poor are chronically poor, most of them are transient poor, which means that they move out of and back into poverty, depending on many factors, e.g. seasons, climate, economic shocks, or on their capacity to respond to various lifecycle risks of impoverishment. In fact, without reliable permanent social protection systems we would all be vulnerable to impoverishment in the case of unemployment, old age, disability, catastrophic health care costs, etc.

That's why it is critically important – also when fixing the SDGs - that we underline the need for Social Protection FOR ALL, not only for the poorest and most vulnerable. Within universal SP-systems we can give special priority for those whose needs are greatest. But, from the sustainability point of view it is important that also we – the non-poor – know and trust that the national SP systems protect also us. This way the political support and willingness to pay – and cross-subsidization from the fortunate to the less-fortunate – can be secured. In the long run, systems designed only for the poor would become poor systems. Let's build strong systems of SP for ALL!

Timo Voipio

Senior Adviser for Global Social Policy and Decent Work

Development Policy Department, Ministry for Foreign Affairs of Finland

Email: [email protected]<mailto:[email protected]>

Tel. +358407782954

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February 26th, 2014

2/26/2014

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There is, as Timo says, no *stand-alone* social protection heading among the 19, but it is referenced in two of the 19 (‘eradication of poverty’ and ‘promoting equality’) and although not mentioned under ‘decent work and employment for all’, social protection is of course one of the four pillars of decent work.

I’m genuinely uncertain whether, this far out, it’s worth adding a 20th heading to a list which is undoubtedly going to shrink anyway. We might win that battle – having expended much energy - only to pretty much immediately lose it again in the winnowing process. Wouldn’t it be more strategic to make sure that social protection makes it through as a key concept (and social protection floors as a key policy) in the final list, by embedding it more strongly in the existing 19 headings?

But as I say, I’m genuinely uncertain which is the best call, and I know that global trade unions are leaning towards calling for a 20th heading.

Owen Tudor
Head of European Union and International Relations
TUC, Congress House, 23-28 Great Russell Street, London WC1B 3LS
T: +44 20 7467 1325 F: +44 20 7467 1343 M: +44 7788 715261

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February 25th, 2014

2/25/2014

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Dear friends and colleagues,

For the benefit of academics, NGOs and observers outside the government circles, let it be known also in this e-discussion forum: Governments in all countries of the world have been today (24 Feb) busy reacting to a letter (http://sustainabledevelopment.un.org/content/documents/3272cochairsletter.pdf) and report (http://sustainabledevelopment.un.org/content/documents/3276focusareas.pdf) sent to them on Friday 21 February 2014 by the Co-Chairs of the UN Open Working Group on Sustainable Development Goals (OWG-SDG).

At the end of its "stock-taking phase" the OWG published a document that identifies the following 19 "focus areas for further consideration" in the next phases leading to the setting of the global Post-2015 development goals: 1. Poverty eradication; 2. Food security and nutrition; 3. Health and population dynamics; 4. Education; 5. Gender equality and women's empowerment; 6. Water and sanitation; 7. Energy; 8. Economic growth; 9. Industrialization; 10. Infrastructure; 11. Employment and decent work for all; 12. Promoting equality; 13. Sustainable cities and human settlements; 14. Sustainable consumption and production; 15. Climate; 16. Marine resources, oceans and seas; 17. Ecosystems and biodiversity, 18. Means of implementation; 19. Peaceful and non-violent societies, capable institutions.

A simple list like this does not do justice to the careful and balanced thinking of the OWG in their 8-page document. In their letter the Co-Chairs underline that the document "does not constitute a zero draft" of the OWG's report and that "the focus areas identified here are not exhaustive (and) do not preclude inclusion of other issues". The OWG is going to present its Final Report to the UN in September-2014, leaving one full year time for inter-governmental dialogues and negotiations before the next global development agenda for years 2015-2030 is going to be fixed by the UN-Summit in Sep-2015.

A question arises, however, when looking at this list of 19 Focal areas - from the point of view of a development policy maker: A list of 19 topics is already very long for bureaucratic ministries and agencies to swallow. If an important focus area such as e.g. the right to social protection floors for all is excluded from this list now, how likely is it that it can be lifted onto the list of the "ten or so" final SDGs by September-2015?

Should we advocate for a stand-alone SDG on Social Protection Floors? This was the key question discussed a week ago in an event organized in New York by the SPIAC-B (Social Protection Inter-Agency Cooperation Board).

UN-insiders were somewhat hesitant, arguing that even without being mentioned as a stand-alone SDG, social protection is surely going to feature very strongly among the SDG-targets and indicators: Social protection is one of the most direct and effective policy measures that governments can use e.g. to reduce inequalities and food insecurity, protect people against catastrophic health care costs, promote social inclusion, meaningful participation, decent work, sustainable livelihoods, aggregate demand and inclusive growth, as well as to empower women as individual holders of the right to social protection (not just as "dependants" of their husbands). All these benefits of social protection are also implied in the OWG's report – but should be articulated much more strongly and clearly.

On the other hand, as convincingly argued by the "Global NGO Coalition for Social Protection Floors" (http://www.ilo.org/newyork/events-and-meetings/WCMS_235025/lang--en/index.htm) if only very few focus areas can ultimately be selected to be SDG, why not select "Social Protection Floors for All" as a stand-alone SDG? By achieving that goal governments could achieve several other goals at the same time?

Besides, a lot of political support could surely be raised in support the "SPF-for-All" as a SDG. Excellent global advocacy materials and arguments already exist, and advocacy networks are in good shape, as a result of the successful advocacy campaign to establish the Social Protection Floors Recommendation (No. 202) at the International Labour Conference 2012 (http://www.ilo.org/dyn/normlex/en/f?p=NORMLEXPUB:12100:0::NO::P12100_INSTRUMENT_ID:3065524).

I agree. Social protection for all is a good goal, as well as a smart means. What do you think?

Timo Voipio
Senior Adviser for Global Social Policy and Decent Work
Development Policy Department, Ministry for Foreign Affairs of Finland
Email: [email protected]
Tel. +358407782954

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February 23rd, 2014

2/23/2014

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Dear Robert (If I may),

I think your intervention on the potential links between "subsidies" and "long-term investment and productive strategies" appears very much timely since the discussions on subsidies in this on-line forum started dealing with different nature and functions of subsidies, and the relations between subsidies and other forms of policy tools. I think your concern raise at least two important issues we have to think about when discussing "benefits" in general and specifically subsidies. Firstly, when the analysis focuses on the impact of benefits on the poor households or the poor only, (i.e. how much a specific benefit accounts for the consumption of the poor), we often misses out its externality, both positive and negative, in terms of its impact. For instance, a fuel subsidy (particularly a certain form of fuel not much used by the poor) can be regressive in terms of its cost-benefit to the poor, the same subsidy can also have a positive impact if there is a set of institutions creating increasing returns of fuel subsidies to employment. Fuel and energy related subsidies which are in favor of industries as well as the rich and active policy tools to create jobs (such as policies to induce productive investment) can converse the regressive nature of fuel subsidies in terms of overall reduction of poverty and inequality. The experiences in many rapidly industrialized countries including South Korea in the 1960s and 70s are good examples. Increase of employment in formal sector and wage compression between workers combined with fuel and energy related subsidies resulted in the reduction of inequality as well as poverty in those countries. (We have a forthcoming book on the South Korea case dealing with these issues http://www.amazon.com/Learning-South-Korean-Developmental-Success/dp/1137339470/ref=sr_1_2?s=books&ie=UTF8&qid=1392888650&sr=1-2 ) These experiences highlights the importance of the institutional complementarity between redistribution, protection and production functions for poverty and inequality reduction (Please see our Transformative Social Policy Approach http://www.unrisd.org/unrisd/website/document.nsf/(httpPublications)/C77A2891BC2FD07FC12572130020B2AC?OpenDocumen t). Secondly, we need to think about how to link economic policy, or more specifically industrial policy and social policy in various development contexts. Social protection has been brought back into the development discourse as a major tool for poverty reduction but the productive aspect or its relationship with production has been insufficiently highlighted and less rigorously researched. Although the impact of social welfare benefits on human capital accumulation and social cohesion have been indeed emphasized and highlighted, many questions of how various mechanisms to translate a wide range of benefits including education, health care, pensions, housings and so on, into productive outcomes have been remained unanswered . Welfare benefits are not only the ends themselves as often argued by those of human rights based approach, but also the crucial means to enhance productivity. Diverse ways in which social protection schemes are linked with the policies directly related to production such as industrial policy should be researched and explored further.(One of the purposes of UNRISD's new research project on New Directions in Social Policy is to explain this link also. http://www.unrisd.org/80256B3C005BCCF9/search/069C37E36996ED64C1257C1600505C03?OpenDocument ) Deep understanding about diverse institutional configurations of social and economic polices will also help us to assess the nature of diverse subsidy schemes and their impacts on the poverty and inequality in a much broader sense.

Yours,

ILCHEONG YI
Research Coordinator
United Nations Research Institute for Social Development
Palais des Nations, 1211, Geneva 10, Switzerland
Email: [email protected]

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February 23rd, 2014

2/23/2014

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Dear Colleagues,

This has been a very comprehensive and well-researched discussion on the very significant issue of subsidies in developing countries, especially fuel subsidies. The distortions and inefficiencies of such subsidies have been rightly heavily criticized, while the design and administrative challenges of alternatives have been shown to raise new problems. What I have not seen is any exploration of what I would call the classical development economists’ alternative, namely moving big chunks of the subsidies to investments in public transportation and cleaner, more efficient energy sources. In this view subsidies are only justifiable in a context of long-term investment and productivity strategies. Social protection policies are certainly an important component of public policy in developing countries, but shouldn’t there be some greater emphasis on putting some of the vast and wildly inefficient subsidies for fuel especially into more productive investment and incentives?

Robert Johnston
United Nations Statistics Division (retired)

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February 21st, 2014

2/21/2014

0 Comments

Thank you, DG.

The case could not be made better...

The next concrete step that policy makers around the world need to do, is putting the Social Protection Floor as a tangible, realisable, affordable and effective Goal into the the post 2015 Sustainable Development agenda- after having adopted the SPF unanimously as a social development strategy already in 2012.

So if the consensus is there, the language is there, the case is made, what stops us from giving social protection as a social, societal and economic necessity into the goals that the global community wants to achieve in the next two decades.

There is one thing that we can all do today: sign up to the online petition of the New York based NGOs and the Global Coalition for the Social Protection Floor. We want a million signatures before the UN open working group publishes its proposals for the SGDs later this year.

Take an action today to end poverty: Add your signature in support of the Social Protection Floor Initiative http://www.gopetition.com/petitions/signature-campaign-social-protectionfloor.html

Michael Cichon
President
International Council on Social Welfare
email: mcichon@icsw.org
www.icsw.org

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February 20th, 2014

2/20/2014

Today, an entire generation of young people faces the prospect of a more uncertain, less prosperous future than did their parents. Many are already in desperate situations hardly able to fall any further.

This is a reality no policy maker can afford to ignore.

Even before the global financial crisis erupted in 2008, half of the world was living below the US$ 2 a day poverty line, millions went hungry and too many had no prospect of securing a decent job.

Six years of weak economic recovery and a faltering policy response have left millions more behind, without jobs and with less affordable food and services.

As a result, we are faced with a deep social crisis, a crisis too of social justice.

Disturbing – and rising levels of inequality – in advanced and developing economies are widely acknowledged as cause for great concern. Today the wealth of the top one per cent of the global population equals that of the poorest 3.5 billion people.

Are policy-makers ready to act?

Social protection measures are essential elements of the policy response. Countries with strong social security systems have reduced their poverty rates by more than half through social transfers and have significantly reduced inequality.

Social protection is both a human right and sound economic policy. Social security enables access to health care, education and nutrition.

Well-designed social protection systems support incomes and domestic consumption, build human capital, and increase productivity.

Experience since 2008 has also shown that countries with such systems were able to respond more quickly and effectively to the crisis.

Yet over 76 per cent of the world’s population continues to live without adequate health and social protection coverage.

And in the present environment, extension or maintenance of protection may meet with scepticism or be set aside for the future.

It is timely to recall those countries that historically have built sound economies and decent societies with social protection. And more recently, countries in a range of circumstances - from Brazil to Thailand and China to Mozambique have been making considerable efforts to make social protection an integral part of their development strategies. They are showing that affordability cannot be the excuse for inaction.

In 2009, the ILO and UN launched the Social Protection Floor Initiative advocating social protection floors for all. Then, in June 2012 the International Labour Conference adopted the path-breaking ILO Recommendation Concerning National Floors of Social Protection (No. 202). It provides good guidance.

In the face of the social crisis – and the crisis of social justice, we urge policy-makers and policy making to converge on the vision and ambition of a real global socio-economic recovery - a recovery for all - and a Post-2015 Development Agenda that helps lift all out of poverty.

There are options and the choice can be made to prioritize macroeconomic and fiscal policy decisions that promote inclusive growth with decent employment and social protection. This is the strong and sustainable foundation of social justice.

Guy Ryder
ILO Director-General
Route des Morillons 4
CH-1211 Geneva 22
Switzerland

February 15th, 2014

2/16/2014

Dear all:

Read with interest the discussion on system of price subsidies and target/untargeted grants. The experience of Egypt might be interesting.

Just to give a background, despite of a period of sustained economic growth experienced in Egypt during the decade proceeding the uprising of 2011, incidence of poverty increased over the same period. Nevertheless, allocation to social protection in Egypt was very high and represented almost one third of the overall government expenditure in fiscal year 2011/2. The bulk of the social protection spending is on the system of subsidies, which was estimated at 8.47 percent of the GDP in 2011/2. It is also important to note that spending on key social sectors is one of the lowest in the region and very much below international recommended spending levels (Share of budget allocation to Education and Health stood at 10.5 and 4.7 percent for Education and Health, respectively). This imbalanced and distorted public spending pattern represents an area for active evidence based advocacy to arrive at the optimal policy mix that maximizes the society’s social welfare, especially at a critical time when there have been debates about future policy directions and opened space for discussion on the budgeting issues.

The experience of politically fragile systems, as the case of post-revaluation of 2011 in Egypt, highlights the importance to differentiate between the different types of subsidies and not lump them in the same basket. For instance, the food subsidy (bread, oil etc), which costed 1.2 percent of GDP in 2011/2, is not only popular, but also significantly contributed to keep poverty very shallow in Egypt (theoretically, it is only required 0.151 percent of GDP to eradicate poverty assuming costless and perfect targeting).

Closer look at the different subsidy schemes shows that allocation to the energy-products subsidy alone counts for 6.09 percent of GDP in 2011/2, which costs more than the combined spending on health and education for the same year. While it is tempting to call for reforming the energy-products subsidy, it is still important not lump all fuel items in the same basket. For instance, LP subsidy is important for the poor and constitutes about 5 percent of the value of consumption expenditure of the poor HH. Same for the kerosene subsidy (lowest 2 quintals capture more than 57 percent of the allocation). In the other end, the gasoline subsidy is highly regressive (93% goes to richest quintile).

I argued in a study for removing only the gasoline subsidy of the subsidized energy products. If it is lifted, poverty was estimated to increase by only 0.02 of one percent. The exact saving can be re-injected in the form of a universal system of child cash transfers (universal child grant age 0-6, and conditional universal grant on school attendance for age 6-14). The main findings were: the proposed measure has the potential to lift around one fifth of poor Egyptians out of poverty with greater impact on children (reduction of 28.2 percent among children age 0-14). Moreover, the cost of the system is projected to even decline as a percentage of GDP over time, benefiting from a favorable demographic profile. This is true when the value of the benefit amount is maintained in real term as well as a percentage to per-capita GDP. Against this evidence, my answer to whether the government 'should' do it is perhaps yes, but whether they 'will' depends on the process they chose (top down or inclusive dialogue and part of a social contract).

Amjad Rabi
Chief, Social Policy & Economic Analysis Section
UNICEF Nepal, Country Office
UN House, Pulchowk
Phone: 5523200 Ext: 1139
Cell: 9851107906
Email: [email protected]

February 15th, 2014

2/15/2014

Dear all,

Just an add-on to the very good comments below:

When thinking about past policies of the World Bank, the new approach going “universal” and supporting UHC is surely welcome. It refers to mental health – a topic rarely highlighted by the Bank - and household impoverishment arising from private health expenditure. So far, so good.

But what means UHC for the WB? Who and what is covered? Checking out the latest documents on this topic (http://www.who.int/healthinfo/country_monitoring_evaluation/UHC_WBG_DiscussionPaper_Dec2013.pdf) is rather disillusioning: You might assume that the meaning of “universal coverage” is that all people in a country have access to needed services…“ However, the targets set for 2030 by the authors of the paper are that 80 % of the poorest 40 % of the population have coverage to ensure access to essential services… What about the remaining poor, close to poor and low income populations? Is this equity? Further, so called essential services that will be traced are limited to the few MDG-related services and services related to chronic conditions and injuries: what about all the other diseases that kill people and stop them from working? Is this the concept what we wanted to see when discussing universal health coverage?

Xenia Scheil-Adlung
Health Policy Coordinator
Social Protection Department
International Labour Organization
4, rte. des Morillons
CH-1211 Geneva 22
Tel: +41 22 799 6612
Fax: +41 22 799 7962
[email protected]

February 15th, 2014

2/15/2014

0 Comments

Dear Isabel, dear all

I follow this discussion with great interest, and wish to express my total agreement with Isabel Ortiz, while adding a note of concern on the World Bank from my field of work- health.

She is absolutely right to demand that we look at the global picture.
In the debate between universalism versus targeting, we should remember that the European models of social protection were 'universal' not in the banal sens that it included 'all persons' (the sense that the Bank tends to give to the word 'universal'), but in the sens that each contributes according to his means and receives according to his needs - and therefore even the well to do have an interest in the system. It is a system of solidarity between employed and unemployed, the young and the old, the rich and the poor. Interestingly, the country with the highest rate of economic growth in 2011, China, adopted the French tripartite system. That is the reason the large textile multinationals are moving out of China towards Bangladesh and other countries with least labor regulations they - the companies- don't have to pay into a system of social protection for their employees but they do in China today.

Unfortunately, in France, our successive governments have been constantly decreasing corporate contributions into the system over the years, which is a disguised way to decrease real wages and a dangerous slope towards the dismantling of the national system of social protection.

As members of civil society, some of us have participated in several WHO-World Bank-Governments meetings in which UHC (Universal Health Coverage) was the topic in 2012-13. We heard and saw a majority of governments speak against 'targeting', several rich, poor and emerging country governments did so, only to hear the Bank representative give a summary of the discussion saying that 'targeting' was a good option!! Similarly, Sri Lanka, or Thailand and others offer to help desiring governments set up national universal systems of social protection as well as functioning primary, secondary and tertiary systems of health delivery, (all part of UHC) yet the World Bank representative and meeting chair sums up the discussion saying that providing vouchers for the poor to 'buy in' health services (ie from either public or private suppliers) is a good option!

Today the Bank appears split on the issue, and true, there are some progressive elements new in health who, at least, are open minded, when it comes to UHC. But the world wide trends are more in the direction of systems of financial insurance on the private model. And, as is the case according to my Indian friends (PHM India), it can mean public State money to finance vouchers for the poor to buy from private providers!.

Then, many contributors speak of 'costs' and it is important to bear in mind that the costs to one stakeholder may be the benefits to another!

Reducing the 'costs' to the national government may not be a rational objective if it means that government will have more 'money' to repay its foreign debt (the IMF policy of SAP for years, no?). If a government is sovereign in terms of its currency, then spending on social security is the best investment possible with very high returns.

The terrible Greek experiment shows that reducing State expenditures into social security type of expenses to, allegedly, attain a certain debt to GDP ratio, not only does not achieve that ratio, (no change in 5 years) but drives a large size of the population into absolute poverty!

Tomorrow, Aid agencies / Bank could propose to the very poor Greek populations, targeted safety net programs.

Today 'health' is attractive field of development studies because it is also seen by the private sector as the most profit making industry (right after armaments). If we have public financing of comprehensive social protection system with a concomitant development of public services (as was the case in the UK, France after the war- I only speak of what I know), the money is profitably invested into a system whose outcome is a stronger workforce, a society tending towards increasing solidarity and decreasing inequality - I'm not saying it was perfect, but it tended in the right direction.

For an excellent overview of health economics I recommend the book of Julian Tudor Hart, The Political Economy of Health Care: a clinical perspective. 2006. (Bristol Policy Press)

So, with Thandika Mkandawire, we should be very weary of targeting, and the fact that some programs are better in 'means testing' than others, does not make the system any good.
The Bank also use "equity" as an argument against the limited coverage of small social protection systems in Sub Saharan Africa (which I know well) - They argue that limited social protection for public employees, for example, are 'inequitable' because they don't cover the informal or very poor sectors. So the Bank argues for the dismantling of these limited schemes in favor of targeting. In fact, scientifically, the argument is absolute nonsense, like saying that proper water for some part of the population is not 'equitable' because it is not feasible to have clean water for everyone overnight!

Some countries are able to resist and try instead to provide for an extension over time of these limited social protection schemes to larger and larger segments of society.
Concerned parties are organizing a world conference in Quito later this year, if all goes well (it would be a follow up to the Brazilia inter-ministerial conference of December 2010, a conference entitled: "Towards universal systems of social security" a great initiative bringing together Ministers of health, trade unions, NGOs and 'experts' (such as UNRISD's) wishing to develop these type of systems.

By dividing the poor or very poor from the rest of society, the targeting programs generally supported and promoted by the World Bank, the regional development banks and a large array of think tanks and development agencies, further contribute to the terrible drive of economic liberalism - financial power globally- and in the name of 'development aid', these programs effectively prevent national development and further contribute to shrink the State and its national attributes. In fact, targeting can, in its worse form, be seen as a tool to undermine democracy!

If there is no real economic development in LMIC, then the support for 'the very poor' is dependent on foreign aid, and contributes towards what Erik Reinert called "Welfare colonialism", (his assessment of the MDG, and Reinert is certainly not a fringe radical) and if we take an average country among the poor, for example, Senegal, 80% of the population is poor, so what does it mean to engage in research to identify 'The Poor'?

Garance Upham

NGO Forum for Health, Geneva

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February 14th, 2014

2/14/2014

0 Comments

Dear Isabel,

I very much liked your 'summary' of the discussion so far regarding subsidies. When I read it I recalled two experiences I had as a teenager in the then very poor mining and forest areas of Northern Sweden (1950s). The first observation relates to human dignity. All people in that area lived in poverty but all had a very strong dignity, because they were equally poor. It was not until I grew older and met much less poor people and was reminded about my poverty, that I lost my dignity. As a human rights scholar I believe that 'dignity' is the single most important aspect in the realisation of human rights.

My second experience I recall comes from the mid-1960s, when Tage Erlander still was Prime Minister in Sweden. The social democratic government had introduced a new child allowance programme, which meant that as a child we all could be sure to buy some new clothes twice a year. One day, in a TV discussion, our leader of the right wing party accused Tage Erlander of wasting public money by providing this child allowances also to less poor and richer children, who did not need it. Erlander said "The child allowance programme must be universal so that ALL children feel that they are the same; that they all have dignity. Do not worry, members of your party have an important role to play – by paying much higher taxes than the poor, they will ensure the success of the programme".

Best regards

Urban Jonsson
Dar es Salaam
Former Unicef

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February 13th, 2014

2/13/2014

Thanks Sarah for the response which I very much agree with.

this is the right response to clarify the issue once and for all.

Best Regards.

Mawutor Ablo
Director - Social Protection,
Ministry of Gender Children & Social Protection
P O Box MBO 186
Ministries,
Accra, Ghana
TEL: + 233 20 8164216/+ 233 24 2628598

February 13th, 2014

2/13/2014

0 Comments

Just to clarify again (and I promise this is the last time), that cash transfer programmes can not be seen as 'compensation' for policy reforms with negative impacts.

And context matters very much. In Ghana, where fuel subsidy reform was inevitable and the deficit runs at almost 12%, arguing for increased fiscal space for social protection was crucial. The doubling of LEAP to 150,000 households will indeed make a major difference in those people's lives as the evaluation shows. And the resulting future further expansions must also be supported.

On the targeting, absolutely agree that we must be careful, but having a well-targeted programme for which the majority of benefits reach the extreme poor is better than a non-existent universal programme. The PMT was in place when the Bank did its review although it has been revised since then and the targeting improved (happy to discuss more on that bilaterally). https://www.google.com/url?sa=t&rct=j&q=&esrc=s&frm=1&source=web&cd=3&cad=rja&ved=0CDUQFjAC&url=https%3A%2F%2Fopenknowledge.worldbank.org%2Fbitstream%2Fhandle%2F10986%2F13081%2F9780821395936.pdf%3Fsequence%3D1&ei=iqz8UqXjD_LH7Aa9h4HoCw&usg=AFQjCNHC-Da1W7UqhEkJ_2HYvxi-boDnDA

Best wishes
Sarah
_______________________
Sarah Hague
Chief of Social Policy/ACMA
UNICEF Ghana
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February 13th, 2014

2/13/2014

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Thanks to all for the lively discussion. Here’s another view from Surya Sethi, who’s usually pretty neoliberal, arguing that the phaseout of Indian cross subsidies in the energy sector would be disastrous: http://www.business-standard.com/article/opinion/surya-p-sethi-another-scam-in-the-making-113122200637_1.html .

-Sameer Dohani

Action Aid

Surya P Sethi: Another scam in the making

An open letter to the prime minister on the Rangarajan formula doubling the price of KG basin gas

I understand your Cabinet has approved a doubling of the wellhead price of the Krishna-Godavari (KG) Basin gas. The fig leaf justifying this shameful decision is the proposed bank guarantee that would recover overpayments to Reliance India Limited (RIL), if a future tribunal concludes that RIL hoarded gas in the past. Sir, your government is party to RIL's repeated violations of its performance commitments under the Production Sharing Contract (PSC) governing the KG Basin concession. Given the already muddied performance criteria, enforcing the guarantee will be akin to recovering water from a sieve. The proposed bank guarantee does not fool anyone with some understanding of the sector and considering what happened in the KG Basin. So Sir, drop the futile bank guarantee and simply ensure that the PSC governing RIL's concession is enforced strictly and transparently.

ALSO READ: Reliance gets its price, time we got our gas<http://www.business-standard.com/article/companies/reliance-gets-its-price-time-we-got-our-gas-113122000554_1.html>

The Comptroller and Auditor General's findings and other independent reports reveal how crony capitalism benefited RIL. The pre-qualification norms were diluted to ensure RIL qualified. The claimed size of gas discoveries, the field development plans and the investment outlays proposed escaped rigorous due diligence. Above all, RIL's commitments under the PSC and the field development plans were not enforced.

RIL's clout was on full display when, despite serious objections from me and the then Cabinet Secretary, the 2007 Empowered Group of Ministers approved the price of $4.20 per million metric British Thermal Units (MMBTU) based on an RIL-crafted formula that was unique in the world for pricing natural gas. The $2.34/MMBTU bid by RIL, in a global tender, for the same gas was ignored. A sham price discovery exercise was permitted to justify the higher price that the approved formula delivered.

Sir, your Cabinet's decision will compound this largess driven, yet again, by another indefensible formula that has no parallel, anywhere in the world, for estimating the wellhead price of conventional natural gas. The Rangarajan Committee's formula is incapable of estimating this price since none of its elements represent such a price.

It is incorrectly argued that higher prices, even for producing fields with established reserves, will enhance India's energy security. The PSC has no provision for revising wellhead price of gas from fields already declared commercial. Doing so only shifts the contractor's risk burden to gas consumers. Thus, it completely abrogates the responsibility the Supreme Court placed on the government for pricing and allocating natural resources. Ironically, the apex court fixed such responsibility through its pronouncements in a case involving the pricing and allocation of the same KG basin gas.

The wider implications of mismanaging India's energy sector are disastrous. Inappropriate energy sector policies are at the core of the current fiscal imbalance, both on the external and the domestic account. Importantly, India's socio-economic parameters that remain at or below sub-Saharan levels cannot be improved without providing affordable and adequate access to modern commercial energy to every Indian. Unfortunately, India's energy policies are not geared to achieving this objective.

Sir, some of your learned Cabinet colleagues have made price increases the mainstay of energy sector reforms. Handpicked "Expert Committees", support their arguments with dubious analysis. Allow me, Sir, to demolish the myths they together propound to mislead the nation on energy pricing.

Myth 1: The Indian energy sector is heavily subsidised: India's energy sector has many cross-subsidies but no net subsidies. Oil and gas taxes alone contribute 15 per cent of the central government's revenue and 20 per cent of total state government revenues. The erroneous policy of promoting surplus refining capacity through incentives funded by the Indian taxpayer has, in addition, forced your fellow taxpayers to subsidise foreign buyers of surplus Indian petroleum products. India exports petroleum products at prices well below those paid by domestic consumers. Quite paradoxically, petroleum products have emerged as the lead export of an energy-deficient and energy-starved India. Contrary to common belief, even coal carries no subsidies. Instead, haulage of coal and petroleum products by rail, cross-subsidises passenger fares.

Myth 2: India's energy prices are low compared to international levels: The effective cost of all primary and secondary commercial energy sources to Indian end-users is among the highest in the world, if compared correctly. Based on capacity to pay and purchasing power parity; even merit goods like kerosene and LPG, are over-priced despite massive cross-subsidisation. This is why over 70 per cent of your fellow citizens either lack access or have grossly inadequate access to modern commercial energy.

Myth 3: India is highly dependent on imported energy: The government and its "experts" repeatedly cite high import dependence as justification for raising energy prices. India imports less than 28 per cent of her primary energy consumption. Import dependence remains below 37 per cent even if one only considers India's commercial energy consumption. This compares with an almost 100 per cent import dependence of Japan. And yet, Indians already pay more for energy than the Japanese based on a defensible comparison. In any event, the economic justification for raising the price of a domestic resource whenever its consumption is supplemented through higher priced imports and denominating the domestic price in the dollars is, in itself, debatable. The selective application of such a policy to pricing different products within the energy sector, as also across different sectors, compounds price distortions.

Myth 4: India's power sector makes heavy losses because of low tariffs: The Indian power sector, taken as a whole, does not make losses. All energy sector enterprises, except the state distribution companies, are profitable. Ironically, it is the state distribution companies that generate the bulk of the cash flow that delivers the returns to the others. A fair reallocation of risks and rewards in the sector would actually see tariffs going down rather than up. Average Indian power tariffs are grossly non-competitive by global standards. The proposed increase in the price of domestic gas will make matters worse.

The deafening silence of both major political parties on the proposed doubling of the wellhead price of natural gas compelled me to write this open letter. India's energy intensity of GDP today is half of its 1990 level. However, the energy intensity of agriculture has doubled over the same period. The consequences of the proposed hike in domestic gas prices will be detrimental to India's food security.

Since an entrenched oligarchy is the defining feature of our governance structure, I humbly plead you, to not burden the nation with Rangarajan Committee's madness that only benefits a select few. At stake are the Indian industrial, agricultural and services sectors and households. Nip the proposed domestic gas price hike in the bud before it gets labelled as yet another scam under your watch, I invite an open debate with anyone of your "experts" on the inappropriateness of both the 2007 formula and the Rangarajan Committee formula for determining wellhead price of domestic gas. I am equally willing to debate any other issue raised above.

Respectfully yours

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February 12th, 2014

2/12/2014

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Dear Isabel,

I fully agree. I think that one of the big challenges we face is how neoliberal ideology has dominated the social security debate, with calls for “targeting the poor”, conditions, workfare, etc. We’ve called it Tea Party Social Security, since the Tea Party would be proud of it. It essentially mimics the approach of 19th Century Poor Relief and programmes like LEAP are great examples: how on earth can a programme reaching 2.5% of the population have any meaningful impact, especially, when - as you point out for Nigeria - the vast majority of the population in developing countries is living in poverty? If anyone is interested, I wrote a blog on the rise of neoliberal social security, which can be found at the link below:

http://www.developmentpathways.co.uk/resource-centre/blog/post/32-the-rise-and-rise-neo-liberal-social-protection

While a BIG sounds attractive, I actually think that a move to a lifecycle social protection system is probably a better and more natural approach. It’s what most countries end up doing and it does direct resources to more vulnerable individuals (children, older people, people with disabilities, widows, etc). And, it will end up with countries investing significantly more in social protection, with greater redistribution and equity. But, this will only happen over a period of decades. There are no quick solutions. but it’s important for countries to start on the right track. It’s gratifying to see that Mexico is eventually moving away from the poor relief (Oportunidades) model by implementing a universal pension, although there is a long way to go.

On the topic of fuel subsidies, we need to take care not to advocate for the elimination of alll, without careful analysis. Kerosene is a good example. Bart notes that, in Asia, 15% of Kerosene subsidies go to the lowest income quintile, which isn’t too bad: it’s almost equitable distribution. It will be a much higher percentage of income in the poorest households than in those who are better-off and removing the subsidy could cause significant damage to those on the lowest incomes, especially if it is replaced with a poverty targeted cash transfer that excludes the majority of households on low incomes. And, as I said earlier, most people in Asia are living in poverty still and highly vulnerable to falling into greater poverty at any point in time so they also benefit.

Best,
Stephen Kidd
Senior Social Policy Specialist
Development Pathways
Bloxham Mill, Barford Road
Bloxham , Banbury
Oxfordshire
OX15 4FF
Office: +44 (0) 1295724118
Mobile: +44 (0) 7850537485
www.developmentpathways.co.uk

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February 12th, 2014

2/12/2014

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On the topic on discussion: fuel subsidies, Bart Edes mentioned one element to support the elimination of fuel subsidies and its replacement with cash tranfers to poor poeple that will be negatively affected. He afirms that fuel subsidies increase energy intensity and energy inefficiency. I do not agree with it, since what matters is energy intensity and consumption per head and not as fraction of GDP. Stadistics from IAE and from EIA do not show that developing countries, have the highest energy consumption per head. It is the USA the largest energy and oil consumption per head.

I do agree with Jayati and others in critizising the elimination of fuel subsidies without deep consideration of economic and political effects.

The 20 years or so of the existence of conditioned cash transfers in Mexico and other Latin American Countires do not show radical improvement in poverty. Cahs transferes are related to minimun wage, so their real value has tended to decrease pari pasu with the fall of the minimum wage. Further more, the growth tedence of the Mexican Economy since 1982 has not been strong enough to improve job creation, informality, precary employment and to put a break to the deterioration of labour incomes.

Alicia Puyana
profesora investigadora de la Facultad Latinoamericana de Ciencias Sociales (FLACSO

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February 12th, 2014

2/12/2014

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There are many other, context-specific issues to consider in this whole debate. Some of them are well discussed in this paper, with reference to India.http://web.iitd.ac.in/~reetika/WP325cash.pdf

Jean Dreze
Honorary Professor at the Delhi School of Economics, and Visiting Professor at the Department of Economics, Allahabad University.

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February 12th, 2014

2/12/2014

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Colleagues,

I am putting down some notes regarding what might be an emerging socially-informed principle for a policy on handling sovereign liquidity problems in developing countries that could strike a somewhat familiar chord with some veteran debt campaigners. The notes reflect what seems implicitly some new thinking in international policy circles, albeit thinking that could be snuffed out in the end (wont be the first time). I started thinking again about these issues when I was asked to make a presentation at a debt workout discussion in Berlin and I attach the short paper for that meeting for those who are not following the recent discussions, which go beyond the points I want to make here.

In other words, I recently noticed that the Paris Club has now defined a class of rescheduling treatments called "Exceptional treatments in case of crises" (http://www.clubdeparis.org/sections/types-traitement/reechelonnement/traitements) that covers cases of natural catastrophes (Honduras, Nicaragua, Indonesia and Sri Lanka), peace building (Liberia), and "rocketing" import commodity prices (Togo). Also, the IMF staff produced a paper last spring that proposed refinancing of obligations to private creditors falling due during a period of an IMF program for countries that had already reached a certain degree of debt vulnerability and that might thus also face a solvency problem, especially if they were to borrow a lot during the liquidity crisis (It was not clear to me if the proposal was supposed to apply to bilateral official debt servicing as well). The IMF Board asked the Staff to prepare a follow up report for discussion in early summer. Finally, there seems renewed interest in countercyclical forms of private sovereign financing, which a decade ago were discussed in the form of GDP-linked bonds, as adopted in Argentina's bond exchange, or the commodity-price linked.Brady bonds of an earlier. era. The newest variant is the Bank of England proposal for contingent convertible bonds ("cocos"), which would automatically extend maturities and give liquidity relief during a Fund-supported adjustment program (http://www.bankofengland.co.uk/research/Pages/fspapers/fs_paper27.aspx),

These proposals step away from the usual presumption in sovereign and also private finance, which is that repayment obligations are fixed and unalterable, except in dire emergencies (why we have insolvency regimes, if only for non-sovereigns). This is the fundamental distinction with equity finance (or Islamic finance, as I understand it) in which the provider of funds shares in the risk faced by the recipient of the funds. If there is a temporary need for additional funds, the debtor is meant to borrow them and repay when the need eases. If the private creditors fear the borrower will have difficulty repaying, then the interest charge and the tenor of the additional loans will be disadvantageous and/or the borrower will have difficulty arranging private financing, even just to roll over maturing claims. In the case of the sovereign debtor, the next step is to visit the IMF and get official funds and an adjustment program (in the 1970s, the Fund offered virtually unconditional "compensatory financing" to help meet externally caused temporary liquidity needs, but that is another story). The debt-management strategy (and legal principle: "pacta sunt servanda") is to squeeze other government expenditures so as to maintain debt servicing as government revenues and borrowing options fall.

This is what is being challenged. Financial specialists phrase the new approach as not "bailing out" the existing creditors with public money, which is precisely what official financing during a liquidity problem does. This reflects unhappiness at the tender treatment of banks and bankers in recent crises. The argument ought to be made as well in terms of the creditors already collecting a risk premium on their loans to cover potential interruption in debt servicing and thus they should actually face such a risk. A different argument has been made by NGOs in regard to debt relief for poor countries, in that government priority should be first to meet domestic social safety net obligations and then pay debt servicing (the proposal is more detailed; see Henry Northover, "Human Development.Advocacy for Debt Relief, Aid, and Governance," in me, José Antonio Ocampo and Shari Spiegel, eds., Overcoming Developing Coutnry Debt Crises (Oxford, 2010). It took much of a decade from the start of the HIPC Initiative to the MDRI, but that view -- or at least that principle -- carried the day in the end in the sense of redirecting BWI and AfDB debt servicing to MDG outlays. Can such a perspective be resurrected?

Thoughts?

Barry Herman
Julien J Studley Graduate Program in International Affairs
The New School for Public Engagement

72 Fifth Avenue, Room 624

New York, NY 10011, USA
Mobile: +1-212-671-2480
Email: [email protected]
Faculty web page

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February 11th, 2014

2/11/2014

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Dear Michael,

Please let me congratulate you on an excellent proposal.

I am very pleased that access to essential health services is highlighted, and that you note that social protection must be embedded in a wider matrix of appropriate social policies.The contrast between South Africa's generous cash transfers and limited engagement with non-communicable diseases is a striking example of this.

Last week, I published a paper in the International Journal of Epidemiology which shows that South Africa has the highest rate of hypertension for people aged 50+ ever recorded for any country. As we know, South Africa has an excellent set of cash transfers for older people. Less that 40 per cent of hypertensives were aware that they had dangerously high blood pressure and only 8% had the condition controlled through medication. Control rates were as low as 3% for the poorest wealth quintile. Hypertension is the leading cause of mortality globally, so this is clearly an important issue. Stroke, which often results from hypertension, is the leading cause of disablity in LMICs.

This clearly demonstrates the need to see cash transfers as part of a wider set of interventions aimed at enhancing the wellbeing of groups such as older people. It is good to know that the government of South Africa is now piloting what should become a new national health insurance scheme. That said, our study found that health insurance does not automatically enhance health outcomes. This requires supply-side interventions and good health awareness.

All the best,
Peter Lloyd-Sherlock
Professor of Social Policy and International Development
University of East Anglia, UK

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February 11th, 2014

2/11/2014

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Dear friends,

attached you find a joint proposal of a coalition of about 75 (and counting...) major national NGOs, I-NGOs and trade unions for a social protection goal to be included in the post 2015 Development agenda. It basically calls for a social protection floor as defined by ILO Recommendation R. 202 of 2012 for everybody by 2030.

The joint statement was presented yesterday to the NGO Forum of the Commission for Social Development in New York by Odile Frank of PSI on behalf of the Global Coalition. It will also be discussed in more detail during a CSocD side event sponsored by FES, ILO and ICSW on 18 February .

Incidentally, referring to the subsidies vs transfers and universalism vs. targeting debate of the last few days:

The SPF focuses on outcomes and not on means of social protection and demands universality of protection through income security and guaranteed access to essential health care. This is a wider concept and encompasses the possibility to create income security through universal cash transfers, targeted social assistance transfers, or direct provision of goods and services or any combination thereof. The central objective is to ascertain that all residents - when needed - have access to transfers in cash or kind that ensure a non-discriminatory and non-stigmatising adequate level of income and health security as of right. The level of income and and the nature of health security are to be determined in participatory national processes. A basic income for all would be one of the options to achieve income security but not the only one.

We hope that by instrumentalising the SPF concept - that has been accepted by 184 countries in 2012 - we can make progress towards having the Global Society accepting the development objective to ensure adequate income and health security for all by 2030.

We hope we have found a set of words that we can all ( including Guy..) can live with. Once we have the objective of adequate income and health security for all accepted by all, we can then return and happily debate what the best means to get there are ...

Best regards to all,

Michael Cichon
President
International Council on Social Welfare
email: mcichon@icsw.org
www.icsw.org

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February 10th, 2014

2/10/2014

1 Comment

The Asian Development Bank's Asian Development Outlook 2013 highlighted the need to constrain artificially stimulated energy demand in Asia and the Pacific. The report recognized that energy subsidies are well-intentioned, or at least popular, but that they increase energy consumption, distort energy development planning, and, when applied unevenly, provide incentives for adulteration and illegal cross-border sales. Worse, the main beneficiaries of energy subsidies are not the poor. If the intent is to make energy more affordable to the poor, only the poorest 20 percentile should benefit from the subsidy. In fact, the poor in Asia benefit little from subsidized fuel prices because many lack electricity and gas connections, few own vehicles, and most use public transport sparingly.

The IEA (2011a ) surveyed nine Asian countries with the highest fossil fuel subsidies, along with two countries in Africa, and found that only 15% of the benefit of kerosene subsidies— and a paltry 5% of subsides for liquefied petroleum gas—went to the poorest 20th percentile. As the stated intent of energy subsidies is to provide affordable energy to the disadvantaged, the better solution would be to give the target populations direct cash benefits or energy coupons. Poor households are identified for benefits like food distribution, education support, and medical treatment. The energy subsidy could be similarly targeted. For example, a cash payment scaled for the energy used by a typical energy-poor household, not tied to the household’s energy consumption, would extend access without encouraging wasteful use. In fact, a beneficiary household would have incentive to use less energy and keep the surplus from the

payout to pay for other needs. This achieves the objective of restraining energy use without creating the perverse incentives that so f requently drive energy systems off track.

Replacing general energy subsidies with subsidies targeting the energy poor can immediately restrain energy demand without denying those in need. It can go a long way toward laying the foundation for Asian energy security.

Regards,
Bart

Bart W. Édes
Director, Poverty Reduction, Gender and Social Development Division; Officer-in-Charge, Public Management, Governance and Participation Division
Chair, Social Development and Poverty Community of Practice,
Asian Development Bank

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February 10th, 2014

2/10/2014

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Well said Isabel.
Thank you

Best wishes

John Christensen
Director, Tax Justice Network

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February 09th, 2014

2/9/2014

Dear Isabel,
My feelings exactly! Thanks for expressing it so well.

Jayati GhoshProfessor of economics at Jawaharlal Nehru university, New Delhi, and Executive Secretary of International Development Economics Associates (Ideas).

February 09th, 2014

2/9/2014

Dear friends, colleagues,

Thanks for a very interesting discussion. I would like to call your attention to the fact that the policy of removing subsidies and replacing them with targeted safety nets to the poor is being discussed in 100 world countries – so this debate is very relevant.

This policy is nothing new. Williamson’s description of the Washington Consensus in earlier decades was based, among other, on fiscal discipline/expenditure cuts and redirecting public expenditures such as subsidies (except defense) to support economic growth with some targeted pro-poor expenditures. This was also very well described by Richard Jolly, Andrea Cornia and Frances Stewart in their “Adjustment with a human face” (which inspired this e-discussion).

Today, decades later, the same prescriptions are applied again. An analysis of austerity measures worldwide reviewing 314 IMF country reports from 2010 to 2013 (http://policydialogue.org/files/publications/Age_of_Austerity_Ortiz_and_Cummins.pdf) indicates that governments are considering the following adjustment strategies: (i) elimination or reduction of subsidies, including on fuel, agriculture and food products (in 100 countries); (ii) wage bill cuts/caps, including the salaries of education, health and other public sector workers (in 98 countries); (iii) rationalizing and further targeting of safety nets (in 80 countries); (iv) pension reform (in 86 countries); (v) healthcare reform (in 37 countries); and (vi) labor flexibilization (in 32 countries). Many governments are also considering revenue-side measures that can adversely impact vulnerable populations, mainly through introducing or broadening consumption taxes, such as VAT, on basic products that are disproportionately consumed by poor households (in 94 countries). Contrary to public perception, austerity measures are not limited to Europe; in fact, many of the principal adjustment measures feature most prominently in developing countries.

The removal of subsidies, supported by IMF official policies, has been generally welcomed by social protection practitioners – it has provided a source of fiscal space to provide social protection, either targeted (Cockburn, Hague) or universal (Standing). Others are more cautious (Kidd, Ghosh, Fajth), for different reasons.

Lawson (Oxfam) called our attention to fuel riots. Many social protection practitioners understand food riots, but tend to dismiss fuel riots as less important. Wrong. A recent analysis of world protests 2006-2013 (http://policydialogue.org/files/publications/World_Protests_2006-2013-Final.pdf) reveals that fuel and energy riots have been as prevalent as food riots, and should not be underestimated. The removal of fuel subsidies—a main element of fiscal austerity in developing countries—and unaffordable energy prices have sparked protests in many countries (eg. Algeria, Cameroon, Chile, India, Indonesia, Kyrgyztan, Mexico, Mozambique, Nicaragua, Niger, Nigeria, Peru, Sudan, Uganda). For example, in Nigeria, where the majority of the population lives on less than $2 per day, cheap petrol is viewed by many as the only tangible benefit they receive from the state, hence the massive protests since 2012 when Minister of Finance Okonjo Iweala removed a fuel subsidy that kept food and transportation costs low.

A few takeaways from this discussion:

1. Policy reforms are complex, we should avoid “one-size-fits-all” agendas, the net welfare effect of any reform must be properly understood prior to engage in any policy advise. Clearly we are to avoid regressive fuel subsidies that may only benefit wealthy corporations, but we should be very careful about the renewed Washington Consensus advise of dismantling subsidies anywhere and replacing them by targeted safety nets to the poor.

2. Designing a meagre safety net to the poorest is an insufficient compensation mechanism if other non-wealthy households were also benefitting from subsidies. Recent studies, including by the IMF, point how income inequality is a gross obstacle to development. As global recovery remains fragile, many developing countries are trying to develop their internal markets to encourage national demand. A safety net to the poorest is very insufficient to these objectives.

3. Hence the debate on universalism vs targeting. While many practitioners (understandably) are compelled to alleviate hardship to the poor and thus focusing on minimal targeted interventions, we should aim for more. Yes, the fight for social justice starts by combatting the worst forms of poverty and neglect, but it does not end there – remember human rights are universal, a reason why UNICEF, ILO, WHO, UNRISD, and many other UN organizations defend universalism – including recently the World Bank (http://www.worldbank.org/en/topic/health/publication/universal-health-coverage-study-series ) . The drive for social justice is also about fighting abuse and creating equitable societies, which should make us question where are the public savings from subsidy reforms going, and how could they best used to reduce inequalities, promote inclusive development and prosperity for all. The huge savings from the removal of subsidies should allow us to be more ambitious in our development thinking, and consider adequate universal social protection systems and other necessary policies that work for all citizens – instead for a few.

Best regards,

Isabel Ortiz
Director Social Protection
International Labour Organization
4 Route des Morillons
CH-1211 Geneva 22 Switzerland
Tel. +41.22.799.6226; EM: [email protected]

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