universal pensions in Nepal

June 18th, 2013

Nepal is one of the poorest countries on the planet. In the United Nations Human Development Index, Nepal ranks 157 out of 187. Yet its senior citizens receive a pension from the government as a right, not as charity. Wealthier countries could do worse than follow the example of Nepal.

Nepal introduced a universal pension scheme in 1995, the first of its kind in the region.

In 2009, the age of eligibility was lowered from 75 to 70 and the government increased the amount to 500 rupees (US$6.50) per person per month.

Krishna is 75 and receives the pension which is vital for paying his medical bills.

He said: “I live with my wife and we have three daughters and two sons. Only one son is unmarried and lives at home with us, as he has psychiatric problems and is unable to work.

“Both my wife and I receive the pension. Sadly my wife is sick with intestinal problems and so the pension money is spent on my son and then on my wife’s medication.

“Very often I have to take my son to the specialist hospitals for treatment and the constant travel is very expensive.

“Our pension is a very important source of income to us. I heard about the pension from the radio, as they announced that they had changed the eligibility age.

“I feel that the pension is just enough, as it covers medical costs for both my son and my wife.”

“Life story: Krishna, 75“, HelpAge International, undated.

 

Now Krishna receives a pension, he can afford medication for his wife and son.      Photo: Sarah Hertzog/HelpAge International 2010

 

According to national income estimates for 2011 (the latest available), the 500 rupee pension was equivalent to only 13.4% of Nepal’s per capita GDP, so the pension is modest, even by the standards of Nepal. The minimum wage for unskilled labour (3550 rupees a month) was seven times larger in 2011, but most of the population no doubt works in the informal sector for less than the statutory minimum wage.

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Mexico’s changing social pensions

June 17th, 2013

I recently came across this excellent article by political scientist Pablo Yanes, who compares two noncontributory age pensions in Mexico.  The first began in 2006 as an add-on to a conditional cash transfer programme (Oportunidades) targeted to poor families with school-age children. The second began in 2007 as a universal transfer with geographic targeting. (It was restricted to senior citizens living in rural areas.) The article was published two years ago in the Economic and Political Weekly, a left-leaning magazine from Mumbai (India).

Oportunidades is the federal government’s main social programme; its predecessor was Progresa. …. Currently, Oportunidades covers 5.8 million households in Mexico. ….

The introduction of [a monthly transfer for 820,000 Oportunidades household members aged 70 or older] was a large shift (even as it maintained targeting and conditionality) …. It represented an adjustment in the objective of breaking the intergenerational transmission of poverty – the heart of the Oportunidades programme consists of scholarships for children aged between 9 and 21 years. The new programme was no longer about addressing the poverty of today’s children but about today’s senior citizens. However, this aspect of the programme is almost closed due to the existence of a programme of transfers for senior citizens called Setenta y Más (“Seventy and Over”). ….

The case of Setenta y Más is very interesting because it expresses the transition from an individually targeted and conditional programme to a territorially targeted one that has no conditions. By 2010, the programme had incorporated a little over 2.3 million people in rural areas and small cities. …. [This] shows that there are different paths for transfer policies, and also that it is possible to go from a model of individual targeting to territorial targeting as a halfway point towards universality, and from conditional transfers to unconditional transfers. All of this within the same country, Mexico, and within the same government agency, the Secretaría de Desarrollo Social (Ministry of Social Development). ….

[There are many obligations for families participating in Oportunidades.] There is also an obligation with respect to senior citizens that remain in Oportunidades rather than in Setenta y Más. The obligation is of “delivering to the senior citizens the monetary support intended for them”. As the mother of small children in the home is usually the titular receiver of the transfers in Oportunidades, the absurd situation of the money intended for the senior citizens being delivered to the daughter who, in turn, must deliver it to the senior citizen, ensues. This introduces a lamentable relationship of power within the family nucleus in which the senior citizen is rendered child-like and has no direct access to resources that are his by right, and so depends completely on the intervention of the daughter.

Even worse, according to the same operational rules, the support is terminated when “the senior citizen leaves the household”. So, the possibility of an independent life or at least a separate house is negated. The senior citizen under Oportunidades must get her support from the daughter and will lose it should she live in a different home.

This serves to illustrate the contrast between being a senior citizen under Oportunidades and under Setenta y Más, two federal transfer programmes aimed at the same group of people. In the first case, the citizen receives a $25 monthly transfer, in the second, it is $40. In the first programme there are conditions, in the second there are none. In the first he must get the money through his daughter, in the second he gets it directly. In the first programme she loses her income if she leaves the household, in the second she only loses it if she moves to a location with over 30,000 inhabitants.

Pablo Yanes, “Mexico’s Targeted and Conditional Transfers: Between Oportunidades and Rights“, Economic and Political Weekly 46:21 (21 May 2011), pp. 49-54 (ungated link).

Please read the full essay, but skip the political boilerplate on the first page, unless the “crisis of the Fordist-Keynesian model” interests you. The remaining five pages are very informative and, mercifully, ignore the Fordist-Keynsian model.

Mr Yanes, in May 2011, was director of the Social Evaluation Council of Mexico City. He now heads the Social Development Unit of ECLAC’s office in Mexico. ECLAC (Cepal in Spanish) is the United Nations Economic Commission for Latin American and the Caribbean, with headquarters in Santiago, Chile.

Much has changed since Mr Yanes wrote this essay. In 2012 the outgoing president of Mexico, from a centre-right party (the PAN), unexpectedly ended the geographic test for 70 y Más pensions, but added a pension test. This means that every Mexican resident who satisfies the age test has a right to a pension: either contributory (social security) or noncontributory (70 y Más). Since about 30% of Mexico’s senior citizens receive a contributory pension, noncontributory pensions will go to the remaining 70%.  This is universality of a sort, one that I refer to as a “universal minimum pension” to distinguish it from a true universal pension, which has no test other than age and residence. This type of social pension has been in effect in Sweden since 1913 and in Lesotho since 2004.

This year, the incoming president, from the traditional, centrist party (PRI), lowered the age of entitlement to 65 years, converting “70 y Más” into “65 y Más“. By the end of 2013 an estimated 5.54 million Mexican senior citizens – 70% of the 65+ age group – will be receiving “65 y Más” pensions. Those excluded have earned the right to contributory, earnings-related pensions that are always larger than the modest “65 y Más” pension. The original “70 y Más” scheme was initiated in Congress by members of the centre-left PRD, and received support from some of the PRI, and even PAN congressmen. Mexico’s universal minimum pension has the backing of all three major parties, so unpaid workers such as housewives, and workers in the informal sector, can be very confident that they will receive at least a basic pension in their old age.

Recipients of old age benefits from Oportunidades fell from 820,000 at the end of 2006 to 219,000 in 2007, and further, reaching 37,000 at the end of 2012. By the end of this year, if not sooner, all remaining senior citizens in Oportunidades will have transferred to 65 y Más. The transition to unconditional old age benefits will then be complete. I suspect that this surprises Mr Yanes as much as it does me.

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US atrocities in Vietnam

June 17th, 2013

There is much that we do not know about the American war in Vietnam, in part because the US government is hiding evidence collected by its Vietnam War Crimes Working Group. American journalist and historian Nick Turse gained access to some of these forgotten files and, in a new book, reveals that events like the My Lai massacre were not isolated incidents. Rather, they were widespread consequences of orders to “kill anything that moves”.

In rural Quang Nam province in June 1966, four unarmed local people approached a group of Marines in an attempt to retrieve the body of an elderly man killed the day before by US troops. They wore white, carried a white flag bearing a red cross and brought a letter of introduction in English from an official of the pro-US south Vietnamese government. The troops blindfolded them, destroyed the letter and flag and ordered them to leave. Once they were about 40 metres away, the soldiers opened fire, killing two and wounding a third.

This account was among hundreds Turse found in 2001 while in Washington researching a doctoral thesis on post-traumatic stress order. He stumbled upon boxes full of forgotten archives from the Vietnam War Crimes Working Group, a once-secret US military project launched to document alleged American atrocities in order to keep them quiet.

Turse copied about a third of the documents before they were removed from public view the following year. Their accounts of civilian massacres, rapes and torture form the core of his book, which includes interviews with soldiers involved as well as victims and witnesses. ….

Whistleblowers were frequently left to twist in the wind, ignored, reassigned for speaking out or even – a fact that has echoes in today’s National Security Agency scandal – placed under investigation. Even those convicted rarely received more than a slap on the wrist.

Borzou Daragahi, “The wartime horror inflicted on Vietnam“, Financial Times, 17 June 2013 (registration required, downloads subject to a monthly limit).

FT correspondent Borzou Daragahi is reviewing the New York Times bestseller Kill Anything That Moves: The Real American War in Vietnam, by Nick Turse (Metropolitan Books. 2013).) There are numerous ungated reviews on the web, for example this one by Peter Van Buren for the Huffington Post (18 March 2013).

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John le Carré on US/UK spies

June 16th, 2013

Half a century ago, after a decade of service in UK intelligence agencies, John le Carré expressed his confusion and disgust in a novel, The Spy Who Came in from the Cold. Today he is less confused, but still disgusted by US and UK intelligence services.

I wrote The Spy Who Came in from the Cold at the age of 30 under intense, unshared, personal stress, and in extreme privacy. As an intelligence officer in the guise of a junior diplomat at the British Embassy in Bonn, I was a secret to my colleagues, and much of the time to myself. ….

[The novel looks at] the same old question that we are asking ourselves 50 years later: how far can we go in the rightful defence of our western values, without abandoning them along the way? My fictional chief of the British Service – I called him Control – had no doubt of the answer:

“I mean, you can’t be less ruthless than the opposition simply because your government’s policy is benevolent, can you now?”

Today, the same man, with better teeth and hair and a much smarter suit, can be heard explaining away the catastrophic illegal war in Iraq, or justifying medieval torture techniques as the preferred means of interrogation in the 21st century, or defending the inalienable right of closet psychopaths to bear semi-automatic weapons, and the use of unmanned drones as a risk-free method of assassinating one’s perceived enemies and anybody who has the bad luck to be standing near them. Or, as a loyal servant of his corporation, assuring us that smoking is harmless to the health of the third world, and great banks are there to serve the public.

John le Carré, “I was a secret even to myself“, The Guardian, 13 April 2013.

The 50th anniversary edition of The Spy Who Came in from the Cold, with “Fifty Years Later”, John le Carré’s introduction, will be published by Penguin in August 2013.

What are secret courts? Why do we need them? To protect Britain’s special relationship with the United States, we are officially told; to protect the credibility and integrity of our intelligence services. Never mind that for decades we have handled security-sensitive cases by clearing the court whenever necessary, and allowing our secret servants to withhold their names and testify from behind screens, real or virtual: now, all of a sudden, the credibility and integrity of our intelligence services are at stake, and need urgent and draconian protection. ….

The true reason for the existence of these gruesome secret courts, I suggest, beyond the desire to protect our state from embarrassment about the nature of our wrongdoing, is twofold: the disproportionate influence of the US/UK intelligence community on our democratic institutions, and the urgent need of our respective political establishments to import a Bush-style secret state to Britain. For Barack Obama, far from dismantling Bush’s secret state when he took power, has diligently recrafted and extended it. In consequence, the CIA has become a fully fledged, unaccountable fighting arm, big on extrajudicial killing and derring-do, but short on the hard grind of intelligence gathering, which is where the Brits traditionally believe they have the edge. As part of his deal with the CIA, Obama, on taking office, promised not to rake up the past, which meant not naming or shaming the agency’s torturers, or those at the highest level of the administration who had guided their henchmen’s work down to the smallest, awful detail. But the past doesn’t go away that lightly, and the most pressing task for our secret courts will be to keep the lid on the CIA’s unlawful activities under Bush, and our own complicity in them, thereby incidentally clearing a path for them in the future.

John le Carré, “The influence of spies has become too much. It’s time politicians said no“, The Guardian, 15 June 2013, p. 18.

John le Carré is the pen name of David John Moore Cornwell (born 1931). Cornwell left MI6 in 1964 when his cover was betrayed by Kim Philby to the KGB,  but he continued to publish espionage novels under his pen name.

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IMF denounces US austerity

June 15th, 2013

This is welcome news! The IMF, in its annual report on the US economy, warns that excessive US fiscal tightening is harming growth.

The International Monetary Fund said on Friday that an “excessively rapid and ill-designed” deficit reduction plan had hampered the “tepid” recovery in the US economy.

In its annual report on the US economy, the IMF said growth this year would have been as much as 1.75% higher than the sluggish 1.9% forecast had spending cuts and tax increases been introduced more slowly. It forecast 2.7% growth for 2014.

“The deficit reduction in 2013 has been excessively rapid and ill-designed,” the IMF said. “These cuts should be replaced with a back-loaded mix of entitlement savings and new revenues, along the lines of the administration’s budget proposal.” ….

“The automatic spending cuts (‘sequester’) not only exert a heavy toll on growth in the short term but the indiscriminate reductions in education, science and infrastructure spending could also reduce medium-term potential growth,” said the IMF.

Dominic Rushe, “IMF warns US economic recovery has been slowed by ‘ill-designed’ cuts“, Guardian, 14 June 2013.

A transcript of the IMF press conference, with Managing Director Christine Lagarde and others, is posted here. A video of the same press conference is posted here.

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Martin Wolf interviews Sir Mervyn King

June 15th, 2013

The governor of the Bank of England talks to FT columnist Martin Wolf on a variety of topics, including solutions for the euro crisis, and the ‘audacity of pessimism’. What surprised me was a short question and answer that comes at the end of the interview. Sir Mervyn’s response might explain why governments are so willing to rescue failing banks, at least the large ones.

What is puzzling, I say, is that people still take seriously the idea that the bankers’ economic interest is also our economic interest.

“There’s always been a willingness to be overly impressed by people who appear to be extraordinarily financially successful,” he [Sir Mervyn] says.

Martin Wolf, “Lunch with the FT: Sir Mervyn King“, Financial Times, 15 June 2013.

Sir Mervyn King (born 1948) leaves office at the end of the month. He will be replaced by Canadian central banker Mark Carney (born 1965). Carney is the first non-Briton to be appointed governor since the Bank of England was established in 1694.

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China’s unemployed university graduates

June 14th, 2013

Further to previous posts – on May 29th 2013, Dec 12th 2010 and Oct 22nd 2010, here is another report on employment prospects for university graduates in China.

“The dichotomy situation is very serious in China’s employment market, ”Jiming Ha, Goldman Sachs China strategist said in a press conference this week. “ Put it simply, university graduates rush in for a white-collar job pays 2000 RMB (US$326), but nobody wants to do the blue-collar job which pays 5000 RMB (US$815).”

Higher educational attainment has not generally led to better employment prospects for graduates. Vivek Tanneeru, a research analyst with US-based investment firm Matthews said in an article that in China, unemployment rates among college graduates are four times that of those with just a primary education. What’s needed is an educational system emphasising practical skills that address real world demand.

Lydia Guo, “China: students go for foreign universities“, Beyond Brics (an FT blog), 14 June 2013.

All FT blogs can be accessed without limit and without subscription, but free registration is required.

In 1998, China produced 830,000 new university and college graduates. By 2010, the output exceeded six million. I haven’t seen recent figures, but the number is undoubtedly larger now.

Because of this glut of university graduates, the number of high school graduates who take Gaokao (the National College Entrance exam) fell this year to 9.1 million, “the lowest in five years since numbers peaked in 2008 at 10.5 million”. The number of Chinese students who sit an international test like the US-based SAT (Scholastic Assessment Test) is growing, but remains tiny compared to the millions who sit the domestic entrance exam.

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Stephen Kidd is blogging!

June 13th, 2013

British anthropologist Stephen Kidd’s new blog is worth visiting. Here are extracts from two of his first three posts, with links to the full blogs.

The campaign in the UK against social security has strong parallels in developing countries. As in the UK, politicians in developing countries often claim that social security will breed dependency and laziness. These arguments have been used by agencies such as the World Bank to create support for schemes that force behaviour change on poor people. Conditional cash transfers (CCTs) have becoming increasingly popular, despite strong evidence that conditions achieve nothing. Similarly a growing number of workfare programmesare being established – often with significant financial support from international donors – despite growing evidence that they may harm child nutrition and do not reach the poorest. Indeed, it could be argued that supporters of CCTs and workfare are merely recreating the type of poor relief that was common in nineteenth century Europe, when support for the poor was made conditional on participation in the workhouse.

Stephen Kidd, “The rise and rise of neo-liberal social protection“, Just KIDDing, 3 May 2013.

 

[T]he main social security scheme in Brazil is the old age pension rather than the much-vaunted Bolsa Familia. It is the old age pension that mainly impacts on poverty and inequality in Brazil, not Bolsa Familia, which, at best, ameliorates poverty for a minority of poor families. Brazil’s old age pension system provides almost universal coverage and, increasingly, other Latin American countries are implementing similarly inclusive schemes that aim to reach broad sections of the population, whether they be poor, near-poor, middle class or, in some cases, the rich. A few examples are:

  • Argentina, in 2009, instituted a new child allowance which, combined with its existing family allowances, ensures that 85% of children aged 0-18 years benefit from social security; in addition, its pension system reaches 93% of older people (mainly through contributory pensions);
  • Bolivia instituted a universal pension – the Renta Dignidad – in 2007 and also has a grant for all children entering primary school;
  • Chile’s pension reform of 2008 means that almost all older people now receive a pension;
  • Ecuador’s tax financed old age pension is growing rapidly and currently reaches around 65% of older people; when contributory pensions are taken into account, overall coverage will be much higher
  • Mexico’s new tax-financed pension system is expected to reach 70% of over-65s in 2013, with many others benefitting from contributory pensions;
  • In Venezuela, pension coverage increased by 600% under Chavez and now reaches almost all older people;
  • Uruguay has long provided almost universal pension coverage, mainly through a contributory system.

Stephen Kidd, “Is Latin America transitioning from poor relief CCTs to a more progressive and inclusive vision of social security?“, Just KIDDing, 10 June 2013.

Dr Kidd is a Senior Social Policy Specialist at Development Pathways, an NGO based in London (UK).

Regarding Mexico, only residents with access to a contributory pension will be excluded from the new non-contributory pension of about 40 dollars a month. The pension test is expected to exclude an estimated 30% of Mexico’s over-65 population from benefits. The new universal minimum pension replaces a pension of about 25 dollars provided by Oportunidades to households for each elderly member aged 70 and older. Oportunidades is a conditional cash transfer scheme, similar to Brazil’s Bolsa Familia, that targets poor families with children in primary school (grades 3 through 6).

The bottom line is that, beginning this year, every Mexican from age 65 will have a right to at least one pension. Those who receive a non-contributory federal pension are allowed to receive a second, non-contributory pension from a state government. In Mexico City, for example, all residents from age 68 receive a cash pension that is now equal to about 75 dollars a month. Those who qualify for the 40 dollar federal pension can continue to receive a universal pension from the local government, for total monthly benefits of about 115 dollars. Only those with access to a contributory pension (about 40% of the residents of Mexico City) will be denied the federal benefit. Mexico’s non-contributory pensions are modest, but they are now given to individuals, not families. If a spouse receives a contributory pension, this has no bearing on an applicant’s right to a non-contributory pension. Moreover, all pensioners are free to supplement pension benefits with income from work, remittances from friends and family, or withdrawals from personal savings without this affecting their eligibility for a non-contributory pension.

Update: According to Ms Rosa Icela Rodríguez Velázquez, Secretary of Social Development for the local government, only 35% of the elderly residents of Mexico City receive a contributory pension. This is lower than the earlier estimate of 40% that I relied on.

Recordó [Rosa Icela Rodriguez] que el Distrito Federal es la única entidad del país que ha hecho ley que los adultos mayores tengan derecho a la pensión alimentaria. “Es muy bueno que exista esto, porque solamente 35 por ciento de los adultos mayores de la ciudad reciben pensión o jubilación del Issste o el Seguro Social, el resto no tenemos ninguna. En el caso de las mujeres, 80 por ciento no tienen ninguna pensión, ninguna jubilación, porque por desgracia el hogar no jubila ni pensiona”.

Gabriela Romero, “Entrega el gobierno a 1,162 nuevos adultos mayores la tarjeta de pensión alimentaria“, La Jornada, 29 May 2013, p. 35.

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overstated inflation danger

June 12th, 2013

Martin Wolf thinks that fiscal stimulus helps lift countries out of recession, so is frustrated by those who oppose this policy in the mistaken belief that deficit spending necessarily leads to high inflation.

Almost three years ago, at the World Economic Forum’s “Summer Davos”, in Tianjin, I heard a Republican politician say that the US would be in hyperinflation within two years. I was stunned. Yet a large number of people believe that hyperinflation is coming. If the US is in trouble, so, surely, is the UK. Is there anything in such predictions? The answer is: possibly, in the very long run. At present, however, the risk is that inflation may be too low, not too high. Paradoxically, that increases inflation risk in the long run.

Martin Wolf, “The overstated inflation danger“, Financial Times, 12 June 2013.

There is much more at the link.

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regulating the spies

June 12th, 2013

Many would like to see the United States restrict the activities of the CIA and the National Security Agency. FT columnist Geoff Dyer thinks that the 1975 Church committee is a useful model for Congress to follow.

In 1975, Senator Frank Church of Idaho launched a special investigation into the excesses of US intelligence services. The probe, sparked by a New York Times article about illegal domestic spying, explored a wide range of covert activity, including the attempted assassinations of Cuba’s Fidel Castro and Patrice Lumumba, Congo’s independence hero.

The 14-volume report became a case study of out-of-control government bureaucracy. Although critics accused the Church committee of neutering the Central Intelligence Agency, it led to three decisive changes: assassinations were prohibited, the surveillance of Americans by intelligence agencies was banned and a new apparatus of oversight was installed.

Now, after more than a decade of the “war on terror”, the intelligence services are facing many of the same accusations that led to the Church committee.

Geoff Dyer, “America: Church versus state“, Financial Times, 12 June 2013.

This informative article continues at the link. Non-subscribers (registration required) can download 10 free FT articles each month. Blogs do not count against the 10 free downloads, but you must register.

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