Wednesday, May 28, 2008

Abhijit Banerjee on the merits of universal public services

The MIT economist seems to be in India, with the result that business newspapers have profiled and interviewed him. Here he is, talking about the importance of aligning interests of the middle class with those of the poorer classes:

In one sense, the system is not designed to work, i.e., deliver the goods, as employees are the top priority of the system. Political will needs to be generated, and that can happen when the interests of the middle class coincide with those of the poor. If there is demand from the non-poor, the likelihood of the administration taking action is greater.

For instance, availability of railway tickets gets a priority over streamlining the public distribution system (PDS). If concerns of the poor can be tied up with that of a segment that can complain, government will respond faster.

At another place, he talks about how targeting services just to the poor is inferior to universalization of the same services:

Targeting does not work. It leads to corruption. Universalising is more effective. I favour direct cash transfer to people. Technology should be used more aggressively. The administration of the old age pension system in South Africa is an example of cash transfer system that has worked with active use of technology. The government should not shy away from giving money.

It makes more sense to get rid of all the schemes and programmes for poverty removal, stop topping up expenditure on existing schemes and instead give money to people directly. ...

Among the bloggers I read, Kuffir has been a strong and passionate advocate of shutting down a whole bunch of (leaky and corruption-ridden) 'poverty alleviation' programs in favor of a direct dole. [See his posts here and here and the links therein].

* * *

Related: Earlier posts on Abhijit Banerjee's work (with links).