Growth rates and poverty rates

NO HOLDS BARRED
By Ike Señeres

It is good to know that presidential front runner Noynoy Aquino is not impressed by the 7.3 % growth of the economy as reported by the outgoing Arroyo administration. He really has to do better than that, because he promised to remove corruption as a way of removing poverty.

Senate Minority Leader Nene Pimentel almost hit the nail when he said that the prosperity of a nation should be measured in terms of the alleviation of the poverty of the masses. He is only partly correct, because the proper measure should be poverty reduction, and not poverty alleviation.

Since Noynoy is now talking economics, he should now take the trouble of finding out the difference between poverty alleviation and poverty reduction, a very important dichotomy that has escaped the appreciation of many of our past Presidents.

To his credit, Senator Mar Roxas was correct when he said that government claims about economic growth are just like “pie in the sky”, if the benefits of the growth would not trickle down to the broader masses of the people. Perhaps Mar should explain this better though, since “trickle down” economics has been debunked by many economists.

Economists would argue that the gross domestic product (GDP) and the poverty rates are two independent measures that are not exactly directly related with each other. That may be true technically, but in practical terms, a bigger GDP should translate to higher incomes for more people, and that should result in more people going up above the poverty line.

Without directly hitting the National Economic Development Authority (NEDA), Nene said that the report was produced by “people who are eager to cover up the misdeeds of their masters”, suggesting that the figures might have been fabricated, since “they do not reflect an improvement” in the lives of the people. He seems to be talking in a qualitative sense, meaning that he is still talking about poverty alleviation, and not poverty reduction.

The problem with GDP reports and poverty rate data is that both of these are produced by the NEDA, thus making them prone to suspicions of cover up, a popular thinking that was expressed by Nene. Somehow, someway NEDA officials should be the ones who should see the connection between the two, one way or the other.

As far as I know, there are specific objective targets about poverty reduction, but these were apparently not reported by the NEDA, for one reason or another. Officially, the poverty rate in the Philippines is about 33% as reported by the government, but many believe that it is the other way around, meaning to say that it could go as high as 67%.

There are no specific objective measures pertaining to poverty alleviation, because these are qualitative characteristics and are therefore hardly measurable. Fortunately, these could be measured in terms of access to basic goods and services, based on the belief that having access to these goods and services could somehow lessen the impact of poverty, which is what poverty alleviation is all about.

I can understand that the Liberal Party was simply using a figure of speech when they made a campaign promise that they will remove corruption as a way of removing poverty. Now that the campaign is over, they should go back to the reality that at best they could only reduce corruption, and as a result of that, they could possibly reduce poverty as well.

By how much could a new President really reduce poverty quantitatively given a fixed term of six years? What could Noynoy possibly do in six years that Gloria was unable to do in nine years? No matter what poverty reduction target he will adopt, he will have to match that with real and practical resources and policy frameworks.

From a cloud of suspicion and dishonesty that characterized the outgoing administration, Noynoy now promises honesty and “living under the light”. Hopefully, in the coming months and years, NEDA will not be compelled by their new masters to do any more cover-ups. Hopefully too, they will know the difference between poverty alleviation and poverty reduction.

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