Economics, Literature and Scepticism

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I am a PhD student in Economics. I am originally from South Africa and plan to return there after my PhD. I completed my M. Comm in Economics and my MA In Creative Writing (Poetry) at the University of Cape Town, where I worked as a lecturer before starting my PhD.

Tuesday, September 11, 2007

Where’s My Trickle?

Posted by Simon Halliday | Tuesday, September 11, 2007 | Category: |

So I was reading Paul Krugman’s Op-Ed today. He was talking about how the tax cuts in the US are meant to have affected your every day middle-class American. You can see the article at the following URL, or email me and I’ll put it up (though the NY Times may be a hater if I do that) I stole his title 'Where's my trickle?' it was too catchy not to use it!

Anyway, I thought about how apt this is for South Africa. One of the reasons that people have been rioting on the N2 is because they are basically wondering “Where is my trickle?” Probably in stronger language that that, and quite probably not as astutely stated, but that’s basically what they want to know. They want to know where their houses, high quality services and access to better quality education all are. They want to know “Why are we still so poor?” Now, I’d be the first to say that policy takes a while to have an effect on actual outcomes, but there are numerous examples world-wide of projects that have worked for the poor and done so within a relatively short period of time.

A much-quoted and referred to example is Mexico’s PROGRESA project (now Opportunidades), that targeted poor families and was run as a randomized evaluation pilot project for the now larger scale Opportunidades. What made this program so important was that it offered a conditional cash grant rather than just a random ‘here-you-go’ grant (As an aside: PROGRESA targeted women in the household, you don’t need to be a genius to realize why). As a consequence, children’s school attendance, test scores, health outcomes, nutrition and other outcomes improved. Once more, this requires massive bureaucratic buy-in and competent individuals on the ground monitoring and evaluating what people are doing. Note too that there is evidence that simply monitoring schools by government has a positive effect – not only monitoring student attendance, but monitoring teacher inputs (basically just checking whether they arrive to teach!).

What astounds me is that we haven’t had something similar to this put in place in South Africa. Why don’t we hear of more pilot projects by government to implement poverty-alleviating policies? Why don’t we go to individual families directly and give them their ‘trickle’, rather than telling them that they’ll eventually be affected by policies that benefit those who are already rich and who don’t really need that great an incentive to get richer? Why aren’t there more incentive-compatible policies put in place to ensure that families act in such a way that they will be less likely to remain in poverty, rather than reinforcing behaviours and conduct that isn’t going to help the current generations or those that follow? I don’t get it.

Personally, I’m not too worried about where my trickle is – in fact I’ve probably received one or two immoral trickles as a direct consequence of apartheid. I don’t need policies to help me directly. But the poor in our country desperately do. They need something and they need it now. They need government to affect their lives directly in such a way that government is doings its best to help them, and also to help them help themselves. Anyway, enough. Read the Krugman. Read Duflo’s article on monitoring (I can provide the reference if you want it). Google papers on PROGRESA there are loads. Arrivedeci, Si.

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