Thesis: Politics determine the level of prosperity or poverty of a nation.
October 31, 2006 is the deadline for receipt of submissions to UNICEF for a training program on social policy and social protection that includes a comprehensive curriculum on public policy, social protection and budget policies and budget process. The course gears to national budgets in the context of poverty reduction and national development strategies. MDGs are in full focus.
I have been a close observer of development programming processes ever since I worked for the private sector, later UNDP and UNICEF, two great UN international aid organizations. The private company I worked for in Sri Lanka was involved in over 90% of the engineering projects in where the government was the customer. We attended a number of government meetings and talk about national budgets. Governments put together a national budget with big gaps between wishes and plans. In the plans too, a big chunk depends on foreign aid, either UN or bilateral aid. I remember, in the mid-1970s that almost 80% of the Bangladesh development budget was dependent on foreign aid.
In context of national income and product accounts, economists give a simple national income definitional equation as:
Y = C + I + G + X – Z,
Where “Y” is national income (gross national product), “C” is household consumption, “I” is enterprise investment, “G” is government expenditures for goods and services, “X” is exports of goods and services, and “Z” is imports.
Thus, UNICEF’s course may deal only with the “G” part of the equation. However, the other symbols, especially “C”, “I”, and “X” create jobs that reduce poverty and take people off the welfare list. Employment is a key factor to reducing poverty in the developing world so that goods and services in “X” also export to the developed world. To achieve these ends, there is nothing better than a good education and health and sanitation systems. Of course, countries are not self-sufficient so they must import “Z”. The “X” and “Z” balance is the trade balance.
Then there is the quality and quantity of “G” expenditures that matter for social development and poverty reduction. If too much of “G” spends on guns then there will be less of “G” for bread and butter. It is easy to exaggerate, but there are bound to be differences between the national budgets of those elected democratically and those of authoritarian regimes. Therefore, although the UNICEF course may offer a suite to lever resources for children and women in developing countries, it is unlikely that all those levers can apply equally in all developing countries.
How big “G” is becomes another great issue. When invited to Poland in 2000, I also spoke within the context of management accounting for the public sector about the privatization of the public sector. Meaning that many governments in developing countries undertake certain expenditures because they think the market cannot provide it.
A national budget reflects the political aspirations of the government. When there is a socialist mandate that government can provide all goods and services then private business owns by government. Thus speaking, William Jenkins in Political Analysis: A Political and Organizational Perspective (1978) rightly said that Public Policy is ‘a set of interrelated decisions taken by a political actor or group of actors...”. In Sri Lanka in the late 1950’s it was a political mandate that private business would nationalize and that political mandate was implemented inconsequential to the fact that many countries with a strong private sector and small government have better living standards. Reducing poverty calls for promoting efficient labor markets and reducing people’s exposure to risks. Part of that risk would mean that governments not support any forms of nationalism of language, religion or ethnic groups. One can assume that equality of races is a conditionality of economic success. For instance, when there is a wish that even no single sex should endow with basic rights that are different from anyone else, then women and the girl child lose out in most parts of the developing world.
When dealing with government, budgeting is a part of politics; budgeting loses out in technical expertise. Most of the literature on budgeting assumes a democratic system with well-informed public opinion. However, most decisions of government expenditures are part of a political process. Politicians exercise great power over the budget process and less consideration goes to the economic factors. Dysfunctional political systems are one major cause of poverty in the developing world. Just look around and see the millions of people that disperse out of their homes and live below substandard conditions until they starve to death or murdered due to political idiocy. Those unlucky people have only one future, they are stuck with one “official” future, and the one dictated and imagined by the political powers that remain in office as long as their power holds. These societies stay buried in the past and fall behind (How Backward are some parts of the Developing World?).
No doubt, UNICEF is dealing with an important beneficiary client, the child and the mother. Adults are already corrupt. Children are the future; so educating children and giving them good health will provide a usable labor market. Education and good health is a social insurance against poverty, and so is child protection. Who can deny that children are the future of the labor pool for the prosperity of any country? Of course, prosperity of a country would not mean that the poor would get less poor. There must be public policies to make consumption transfers to the poor to enhance the status of those who remain marginalized.
We live in an imperfect world. The world is full of wrong beliefs that affect UNICEF’s capacity to deliver programs that benefit all women in all countries on an equal footing. It is a defining issue that UNICEF will not find it possible to integrate some national economies into public policy when customs, religion or political systems disfavor women.
Although UNICEF reaches 60 years, the problems at issue are so enormous that they may not resolve in the next 100 years or more. Of the 25 countries with the highest teenage birth rates (15-19 years of age), 22 countries are in Africa with Niger boasting the highest of 233 births per 1000 girls in this young age group, when South Korea has 3 per thousand births in the same age group. Some African countries also have more than half-a-million refugees each with thousands of women and children among them. In addition, when we talk further of the lowest primary enrollment or least literate Africa stands out again because young girls deprive of an education. Then there are the other problems of child pornography, child prostitution, and child labor and child soldiers. Of course, the situation in Afghanistan, the Congo and Iraq is pathetic. Yet, these are just the tip of the iceberg of the enormous challenges that UNICEF face concerning, women and children (boy child and girl child) in the developing world. UNICEF is sure to address these issues in its investments for children, with particular emphasis to the girl child and women, and propose in coordination with other UN agencies politically acceptable ways to correct this wrongdoing.
It would be hypocrisy to pretend that there are no preconditions for getting equal rights to the girl children and women. The only course of correction is political persuasion and ensuring that the money gets into the hands of the beneficiary group and not the hands of corrupt bureaucrats. Ongoing audits of development projects by independent auditors would ensure that accountability remains strengthened. The journey will take as long as there are dysfunctional political systems to deal with. The best plans, the best strategies, the best budget systems will add to zero when dysfunctional political systems create poverty at speeds that exceed the social inputs to end poverty. UNICEF cannot proscribe to governments what they should not do. However, UNICEF has to push other partners in the UN system when government action negates the wellbeing of women and children in a particular country or countries. Nevertheless, it is better to carve a path while undertaking the long or never-ending journey and achieve some success in some parts of the world. It is worse to do nothing; therefore, UNICEF’s contributions are a necessity for the developing world.
The world is much in turmoil with disorder on occasion of lumbering political insanity in some countries. It would be fitting then that the UNICEF course assembles in regional offices (and not New York or Europe) so that political insanity in the region could also be a subject of discussion for budget policies and investments for children (and women). For example, some developing countries are well on their way to prosperity. However, internal political tensions in a neighboring country could spill thousands to millions of refugees to its neighbors and strain the public systems of other countries. Africa is a class example where chaotic political systems, civil war or racial bias supported by governments is amassing millions of refugees to neighboring countries. North Korea going nuke will only start a cold war in Asia, with neighboring countries pumping more resources for defense and leaving less for social development; what a shame. Notably, to reduce poverty some countries need freer markets and fewer tyrants in the country or their backyard.
Furthermore: (1) Poverty reduction in the developing world cannot ignore a number of economic factors concerning tariffs with is much debated by WTO and UNICEF attends. Tariffs are a mess for both the developed and the developing world. Just the paperwork and bureaucracy to support a complicated tariff system with over 10,000 categories is a load of wasted and costly effort and a markup for the consumer. It is the individual and not a statistical group that finally stems success in eradicating poverty, for freedom of the individual is the highest social justice for humankind. Here again, it is what the political system dictates that matters more than economic sense. While WTO actions may not directly help the poorest of the poor, it is only when a farmer can sell his grain then only he could employ other people to harvest it. (2) Financial pioneer of ‘micro loans’, Muhammad Yunus should have won the Nobel prize in practical economics in addition to the peace prize. Some of Dr. Yunus’s theories of micro-finance may suitably include in the UNICEF course.
Finally, participants to this course are well advised, as a prerequisite, to read the book: ‘The End of Poverty’ by Jeffrey Sachs.
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