Comments on: Brazil v South Africa: what can the BRICS tell us about overcoming inequality? http://www.oxfamblogs.org/fp2p/?p=14020 duncan green poverty to power oxfam development Wed, 19 Jun 2013 14:07:07 -0500 http://wordpress.org/?v=2.8 hourly 1 By: Diego Sánchez-Ancochea http://www.oxfamblogs.org/fp2p/?p=14020&cpage=1#comment-448236 Diego Sánchez-Ancochea Wed, 20 Mar 2013 14:32:50 +0000 http://www.oxfamblogs.org/fp2p/?p=14020#comment-448236 Brazil´s reduction of inequality is indeed a major story, and I am glad we are all focusing on the labour market, minimum wages and some significant reforms in social policy. This is obviously important. At the same time, it is important to recognize some weakness of the current model if we want to avoid the love for miracles that has always dominated the literature: 1. Is the data on the very rich in Brazil really credible? Is their relative income really going down sharply? I have doubts, particularly when one considers commodity prices, stock market valuations and the fact that managers in the financial sector makes receive higher wages in Sao Paolo than in New York or Hong Kong. 2. What is the quality of employment we are creating? Are formal but job productivity jobs a concern? How can we try to improve in this area in the future? Or should we abandon our past concern on productivity? 3. Are policies in this area changes significantly? Will the change in the future? My comments are not a call to focus on the glass "half-empty"; Brazil is indeed a successful case to study. But I think we need to focus more than we are doing on: a. How are the very rich (the top 1%) doing in different developing countries and what is their likely political and economic behaviour in the future. b. To what extent are economic and social policies changing in a way that they will create good jobs and better social services in the future. My coauthor Juliana Martínez Franzoni and I attempt to do this (http://www.desigualdades.net/bilder/Working_Paper/27_WP_Mart__nez_Franzoni_and_Sanchez-Ancochea_online.pdf) and find that economic policies are improving less than some redistributive ones in several Latin American countries. Brazil´s reduction of inequality is indeed a major story, and I am glad we are all focusing on the labour market, minimum wages and some significant reforms in social policy. This is obviously important. At the same time, it is important to recognize some weakness of the current model if we want to avoid the love for miracles that has always dominated the literature:

1. Is the data on the very rich in Brazil really credible? Is their relative income really going down sharply? I have doubts, particularly when one considers commodity prices, stock market valuations and the fact that managers in the financial sector makes receive higher wages in Sao Paolo than in New York or Hong Kong.

2. What is the quality of employment we are creating? Are formal but job productivity jobs a concern? How can we try to improve in this area in the future? Or should we abandon our past concern on productivity?

3. Are policies in this area changes significantly? Will the change in the future?

My comments are not a call to focus on the glass “half-empty”; Brazil is indeed a successful case to study. But I think we need to focus more than we are doing on:

a. How are the very rich (the top 1%) doing in different developing countries and what is their likely political and economic behaviour in the future.

b. To what extent are economic and social policies changing in a way that they will create good jobs and better social services in the future. My coauthor Juliana Martínez Franzoni and I attempt to do this (http://www.desigualdades.net/bilder/Working_Paper/27_WP_Mart__nez_Franzoni_and_Sanchez-Ancochea_online.pdf) and find that economic policies are improving less than some redistributive ones in several Latin American countries.

]]> By: Charles, HelpAge International http://www.oxfamblogs.org/fp2p/?p=14020&cpage=1#comment-448020 Charles, HelpAge International Wed, 20 Mar 2013 09:52:48 +0000 http://www.oxfamblogs.org/fp2p/?p=14020#comment-448020 It's a relief to see the "magic bullet" story of the Bolsa Familia finally being put in its place. I've read countless articles in The Economist that point primarily to the (admittedly well-branded) Bolsa Familia as the main driver of inequality. As you rightly point out, the minimum wage (and particularly the fact it is the minimum for the the near-universal pension system)that has been perhaps the greatest direct driver of reducing inequality. I think you'll be interested in this brief by Development Pathways(hot off the press)that shows this clearly: http://www.developmentpathways.co.uk/news/pathways%E2%80%99-perspectives-9-bolsa-unfamiliar-stephen-kidd-and-karishma-huda/ The Brazil story and the role of right-based social protection leaves me with two big questions, 1. If the success of countries like Brazil has been substantial investment in entitlements-based social protection, why is the social protection development debate still so narrowly focused on short-term poverty-targeted programmes that differ little from the poor laws that Europe rejected a century ago? 2. If social protection is a core driver in reducing inequality, why has it been relatively marginal (especially rights-based social protection) from the current post-2015 debate which seems to be looking mainly at groups-based inequalities? Interested in yours and others' thoughts. You may also be interested in a recent briefing HelpAge published comparing pensions in Brazil and South Africa: http://www.pension-watch.net/download/4f059575e1321 It’s a relief to see the “magic bullet” story of the Bolsa Familia finally being put in its place. I’ve read countless articles in The Economist that point primarily to the (admittedly well-branded) Bolsa Familia as the main driver of inequality. As you rightly point out, the minimum wage (and particularly the fact it is the minimum for the the near-universal pension system)that has been perhaps the greatest direct driver of reducing inequality. I think you’ll be interested in this brief by Development Pathways(hot off the press)that shows this clearly: http://www.developmentpathways.co.uk/news/pathways%E2%80%99-perspectives-9-bolsa-unfamiliar-stephen-kidd-and-karishma-huda/

The Brazil story and the role of right-based social protection leaves me with two big questions,

1. If the success of countries like Brazil has been substantial investment in entitlements-based social protection, why is the social protection development debate still so narrowly focused on short-term poverty-targeted programmes that differ little from the poor laws that Europe rejected a century ago?

2. If social protection is a core driver in reducing inequality, why has it been relatively marginal (especially rights-based social protection) from the current post-2015 debate which seems to be looking mainly at groups-based inequalities?

Interested in yours and others’ thoughts.

You may also be interested in a recent briefing HelpAge published comparing pensions in Brazil and South Africa: http://www.pension-watch.net/download/4f059575e1321

]]>