A Lesson Brazil Is Learning: We Are the Wealth

    Brazilian people

    Brazilian peopleRecently, the United Nations Development Program (UNDP) held a meeting in Cairo, Egypt, to discuss the importance of Income-Transfer Policies – initiated in 1995 in Brasília with the Bolsa-Escola and transformed into the Bolsa Família in 2004 – in the reduction of world poverty.

    Participating in the meeting were UNDP representatives from 56 countries. During this meeting, former New Zealand Prime Minister and current UNDP Administrator Helen Clark said something surprising: “Africa is a rich continent.” Although surprising, this statement is correct since it affirms that a people’s wealth lies in its population.

    For Ms. Clark, the challenge of abolishing poverty involves a mobilization of the population to produce the goods needed by the poor. Income transfer is the road for this mobilization so that the poor come together to produce that which they need, thus creating the surplus that traditionally characterizes wealth.

    Called “Productive Post-Keynesianism,” this logic’s best-known instrument is the Bolsa-Escola, the program through which a mother receives payment for participating in her children’s production of education.

    When poverty is treated as if it were a lack of income, the poor population is seen as reducing per-capita income and not as inducing production. With her observation, Ms. Clark presented a new vision: first, because, if the poor person is producing, he or she has become wealth; second, because she affirmed that poverty is not a question of income, but, rather, of the offer of goods and services.

    In the traditional Keynesianism of the rich countries, the government transfers income to the unemployed population merely to create demand and, therefore, dynamize the economy, with no need for producing the public goods needed by the population. On the other hand, Conditional Income Transfers generate a product that increases the offer of the goods and services the poor need. These programs transform an idle workforce into an active one; they increase the offer and transform necessity into demand.

    The Bolsa-Escola guaranteed income by creating a Social Protection Network (known by its Brazilian acronym RPS) and, at the same time, it placed the children in school, serving as a Social Ascension Ladder (EAS in Portuguese). That is also the proposal of the Bolsa-Família.

    The book A Segunda Abolição, published by Editora Paz e Terra in 1999 – which was distributed in Cairo in its English-language version, Abolishing Poverty – describes other programs, many of them established in the Federal District between 1995 and 1998, such as the hiring of the unemployed workforce to produce what would improve the standard of living of the poor population. Today, for example, it is necessary to accelerate employment for tree planting, thus confronting the ecological problem.

    In summary, the transfer of income must be conditioned upon the work of the beneficiary, producing that which he or she needs. Without this, the resource represented by the beneficiary will continue inactive.

    Besides its productivity, the new Keynesianism has social and ecological aspects, and it needs to have fiscal responsibility. The transfer financing must be made with reduction of superfluous State spending, stanching of corruption, and guarantee of fiscal balance.

    At the same time, the transfer must be made democratically, which demands combining the available resources with the amount of time possible for execution of the program. The greater the social will to make the transfer, the less time will be necessary to combat poverty.

    What is most important is the concept raised by Helen Clark that wealth lies in the persons: you are the wealth.

    Cristovam Buarque is a professor at the University of Brasília and a PDT senator for the Federal District. You can visit his website – www.cristovam.org.br – and write to him at cristovam@senado.gov.br.

    Translated from the Portuguese by Linda Jerome LinJerome@cs.com.

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