Policy for the poor

Economy February 02, 2016 01:00


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POVERTY reduction has taken centre stage in Thailand for many decades, yet underprivileged households and pockets of poverty are still prevalent.

Government policies specifically designed for the poor are numerous and stretch across a broad range of sectors: land-title issuance to farmers, soft loans for agriculture, support for agricultural commodity prices, the Bt30 health programme, 12-year free education, 50-unit free electricity, free public buses, student loan programmes and subsidised homes, just to name a few. 
One cannot deny that these programmes have, to an extent, alleviated poverty and lessened the burdens of many poor families. However, one also needs to accept the fact that parts of these same programmes have been wasteful where the benefits did not reach the poor. 
In some extreme cases, some of these poverty-reduction programmes have been deployed as a mechanism to transfer wealth indirectly to the rich, while others were implemented merely to gain political popularity but were disguised as policies for the poor.
Putting together a mechanism to direct benefits to the poor is difficult. Moreover, designing a programme to lift families out of the vicious cycle of poverty is much more difficult. Given these challenges, policies designed for the poor generally end up becoming poor policies. 
Let’s look at some of the policies for the poor and see how they fell short of their promises.
The first difficulty is locating these poor families. Poor people are often mobile. They move from place to place in search for jobs. Often they do not have a permanent contact address. Some live under bridges or as squatters on public land. 
A second and often very serious challenge is that the poor lose opportunities when accepting government assistance. Poor children cannot attend the 12-year free schooling because that means they must forgo the opportunity to earn income. In other words, 12-year free schooling is in essence not free for the poor. Hence some poor children cannot benefit from the 12-year free school programme. 
Giving free land to landless farmers faces a similar problem. Although giving free land titles to farmers has been practised in Thailand for many decades, many ended up selling these lands to those who could make better use of it and hence offered to buy it at a high price. 
The student-loan programme suffers from a similar problem, as many young Thais would rather join the labour force to earn income than attend university.
Other government policies aimed at helping the poor simply provide opportunities for the better-off families to share some or most of the benefits of such programmes. 
The rice-pledging programme failed to benefit poor rice farmers as they produced only enough rice for their own consumption and did not have enough excess rice to join the pledging scheme. The beneficiaries of the programme were generally large-scale rice farmers, millers or those involved in rice storage. 
The free-electricity programme benefited some poor families, but the rich who owned several houses tended to benefit much more, as each house they owned was entitled to free consumption of the first few units.
As you can see, many policies designated for the poor end up being poor policies. 
The policy for the poor that I like the most is the free-bus programme. Public buses are classified as being inferior goods that only poor people use. Therefore, providing free buses will always benefit the poor and the rich will never benefit from such a programme. 
Putting together policies for the poor simply needs to satisfy two conditions. First, solve the root causes of poverty and, second, make sure that only the poor have accessibility to government assistance. 
The root causes of poverty generally involve lack of know-how and lack of opportunities. In this regard, programmes that are useful for the poor are skill improvement or job-training schemes. 
On accessibility, it is important that government assistance is confined to provision of inferior goods. These are the kinds of government assistance that are suitable only for the poor, such as shelter homes, public buses, and basic healthcare or subsistence foods. 
Any government assistance programmes that fail to satisfy these two conditions generally end up being poor policies rather than policies for the poor. 
Adis Israngkura PhD is associate professor, School of Development Economics, National Institute of Development Administration.