pro-poor policies and middle-class revolt

A thoughtful post from Stephen Kidd on the unintended consequences of targeted, pro-poor social expenditure.

From Turkey to Brazil, the middle class are out on the streets protesting. ….

My own view is that “pro-poor policies” must bear much of the blame. In recent years, most international agencies and developing countries have – in some way or other – signed up to “pro-poor policies.” In practice, this has been interpreted as targeting resources at the poor, a form of Tea Party international development. By targeting the poor, budgets have been reduced and taxes have been kept low. ….

Including the rich and middle class in the social security system is relatively easy, as seen in the success and popularity of Brazil’s inclusive old age pension. However, health and education services face a Catch 22 situation: the rich won’t use public health and education services because they are poor quality; but the quality of services won’t increase unless they are used by the middle class and rich.

It is this conundrum that needs to be the focus of social policy in developing countries. Instead of prioritizing greater access of the poor to poor quality services, social policy needs to be oriented towards encouraging and persuading the middle class and rich to use public services. One way to achieve this is by progressive governments significantly increasing their investments in these services, which means higher taxes. It’s a challenge but not impossible. In fact, this is exactly what happened in many developed countries as public services evolved. In the UK, for example, the National Health Service was created following the Second World War as the result of a real commitment from government to tax and spend. A good quality service was created that served the rich, middle class and poor. Since that time, spending on health has been “protected.” All British political parties now fear to even suggest cutting the National Health Service.

Stephen Kidd, “Pro-poor policies and the rise of an alienated middle class in developing countries“, Just Kidding, 8 July 2013.

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