Welfare Economics

“Poverty, like beauty, lies in the eyes of the beholder.” Mollie Orshansky

According to official estimates, there are at least 3 million extremely poor people in Bolivia (about 38% of the total population). Judging from their very low incomes, they shouldn’t be able to buy even the minimum basket of subsistence goods. The majority of people in this group does not have electricity in the house, and thus none of the convenient inventions that run on electricity. Still, only a minority of them (18.5%) actually feel extremely poor (see Table below).

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The recent Cumbre Andina de Naciones held in Tarija brought controversy about the particular conditions that Bolivia put forward to negotiate conditions of a free trade agreement with the European Union. One of the arguments held by the Bolivian government to distrust the agreement was that special clauses where required to protect genetic patrimony and ancient knowledge concerning the use of medicinal plants.

This subject is highly controversial, and since the government is so close to Anti-globalisation movements and several NGOs, we couldn’t expect any different posture. But one thing is political posture and another one is reality.

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Governing a country is a lot like raising children. You have to make sure your subjects are kept safe and healthy and receive a useful education they can live on in the future. You also have to teach them what is right and wrong, and what are their rights and obligations. You should abstain from violence, but still be very clear about what kinds of behaviors are unacceptable.

Good parenting will lead to responsible, independent citizens who contribute to society, whereas bad parenting will lead to spoilt, immature, dependent and/or corrupt citizens who constitute a liability to society.

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“100 years from now we will know that the biggest crime against humanity was vaccines.” Guylaine Lanctot, MD

As previously stated in the newsletter Vaccination Controversy: What is Fact and What is Myth?, vaccination requirements in the U.S. are much more extensive than in Bolivia, so there is a much higher likelihood of adverse side effects in the former, and indeed many horror stories be found on the Internet (1).

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Next week I will be participating in the 20th Anniversary Event for the Joint-Japan/World Bank Graduate Scholarships (JJ/WBGS) Program that will take place in Tokyo, Japan on June 6th. Thanks to this Program I was able to undertake my Ph.D. studies at the Institute of Social Studies in The Hague-The Netherlands.

In its 20 years of existence, the JJ/WBGS Program has awarded 2,586 scholarships, selected from nearly 53,000 applicants from all over the world. Since the inception of the Program, the Government of Japan has provided over 174.1 million dollars to the Scholarship Program, being the Program’s objective to help create an international community of highly trained professionals working in the field of economic and social development.

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“The Aid Industry is completely out of control.” Simon Maxwell

The last decade has seen a tremendous increase in remittances from migrant workers in developed countries to left-behind relatives in developing countries. So much so that global remittances are now at least the double of official development aid (1).

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The perception that women are disadvantaged and discriminated against in Bolivia is almost universal. Achieving gender equality is of so high priority that it is very difficult to get a research proposal funded, unless you promise to analyze the gender dimension of whatever topic you are interested in.

But is that perception still true?

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Economists usually make the simplifying assumption that salary is roughly equal to productivity, but that is at most acceptable for informal and self-employed people who are not exploited by an employer, not subsidized by tax-payer money, do not exploit non-renewable natural resources, and do not pay significant taxes.

A few examples from La Paz will illustrate what I mean. A typical self-employed mini-bus driver who works 12-15 hours per day 7 days per week will typically take home around $100-120 per month, implying an hourly wage of about a quarter of a dollar. A driver formally hired by the public sector, on the other hand, will typically earn at least the double, say $250 per month for working 8 hours per day 5 days a week, implying an hourly wage of about $1.50, i.e. 6 times higher than the mini-bus driver.

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Giving birth the natural way (vaginally) is extremely painful and often inconvenient, which is why some women decide on a planned Cesarean section instead. According to the latest national health survey in Bolivia (2003), 47.1% of mothers in the richest quintile have C-sections, while this only happens to 4.0% of mothers in the poorest quintile. Such a large difference is obviously not due to more pregnancy complications among the rich. C-section rates vary greatly from doctor to doctor, but the rate medically justified is usually around 10-15%.

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“All paid jobs absorb and degrade the mind.” Aristotle (384 BC – 322 BC)

“When a man tells you that he got rich through hard work, ask him: ‘Whose?'” Don Marquis

Most poor people work in the informal sector in precarious, low-paying jobs with no forms of social security. So key to improving the living standards of the poor seems to be to improve the quality of their jobs.

But what exactly constitutes a good job?

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