Category Archives: Poverty

Can money buy happiness after all?

Can money buy happiness after all?

Life satisfaction and income (from “The Economist” daily charts)

And so they have managed to prove that human beings can never have too much income.

Or have they?

Looking closely at the graph presented above, we can verify the use a logarithmic (log) scale on the x-axis and of a linear scale on the y-axis. This type of representation is known as a lin-log plot.

Lin-log representations have to be interpreted in a particular way. Here, a 45º line (similar to the ones above) means that Y = log (X) or, more specifically, that “Self-Reported Life Satisfaction” = K (Constant) + log (“Self-Reported Annual Income”).

Therefore, in this singular presentation, this set of straight lines in different colors implicitly tell us that, no matter the country, increases in income hold diminishing returns in terms of satisfaction.

Please note that the core interpretation made by those at The Economist magazine is not wrong: in fact, the study suggests that the relationsip between income and satisfaction is always positive (meaning that more money will never hurt your overall satisfaction).

Is just that the Easterlin paradox still applies after all: increases in income hold greater returns in terms of satisfaction for individuals experiencing low levels of income.

This is common sense, I mean, if I have millions of dollars in my multiple bank accounts, an one euro increase in one of them is pretty much negligible no? However, for a number of households facing severe deprivation all around the world one dollar can be a matter of life and death.

Now, if we depart from this atomistic vision of satisfaction (as presented until here) and take the satisfaction of your community as a whole, think about the huge aggregate satisfaction gains that would result from the very rich willing to somehow give some of their income to the very poor who value it much more.

Wouldn’t the rich folk even get some additional satisfaction from the exercise of active citizenship?

Taking the diminishing returns of income referred above, couldn’t this ‘community’ gains even generate greater satisfaction for the rich than the passive accumulation of income?

May I ask: in what kind of society would you prefer to get your satisfaction?

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What we really pay taxes for

«Taxes» must be the most employed word in Portugal these days and with tax increases always comes the same question: what do we pay taxes for?

Those on the right side of the political spectrum can give you a clear answer: for nothing (unless, of course, there are ‘urgent’ and ‘unavoidable’ needs for ‘budgetary consoliation’, as we, they say, experience today).

Hardcore neoliberal policy markers often defend the called ‘trickle-down economics’ approach, arguing that tax cuts on the rich, at expense of cuts on the welfare state machine, «the fat», would pump both savings and investment, leading the way to the construction of vibrant societies. Such circumstances, they would continue, constitute environments prone to economic growth and job creation, benefits shared, in relatively equal fashion, among all citizens of a country or region.

Short version of the story: the rich get a banquet, while the poor put on a fight for the crumbs. That’s ok, that’s just normal not to throw privileges out the window.

Culturaly speaking, most common arguments from the right emanate from prejudiced conceptions of «the poor» as lazy, perhaps drunk, perhaps dirty, primitive, weak and most certainly unvirtuous – as an object or some sort of a dead body, with no soul. A zombie. The decent folk, they say, must not carry such weight on his shoulders. Autch, be aware of the back spasms sir.

However, and here starts the interesting part, the right is not alone such dehumanizing discoursive practices. The leftist rational for charging taxes to feed of the social state has been disappointing so far and it goes something like this: «the poor are not so well off as we [the rich], they are victims of quite a lot of hard luck and it won’t hurt us to give them some help». Oh thank you my lord for such kindness and generosity!

Such ‘paternalism’ derives itself from unfairness, verticality and distance, reinforcing the oppressive structures operating within our societies. Charity represents an act of oppression as long as it does not imply a real feeling of «togetherness», a feeling of unity around the common struggle against a system that exploits some in benefit of others.

I believe taxes and, more broadly, the Welfare State, to be necessary to promote inclusive development, social change and poverty erradication, by providing universally the tools necessary to deliver emancipation.

Those who have the resources must understand they need to contribute not to maintain the status quo but to level the playing field instead, helping those in the bottom of the social pyramid to build the new capacities they need to live fulfilled lifes.

Social justice, in this sense, and quoting from the great Paulo Freire, is about getting everybody out there «living for themselves instead of living for others».

Transparency International CPI2012 shows Portugal must target corruption

Transparency International has just released its Corruption Perceptions Index 2012 and Portugal scores 63/100, ranking 33rd this year, one place below last year’s position and 3 points above the Cape Verde islands.

As austerity strengthens there’s no similar counterpart in anti-corruption measures to be issued by the political and governmental power in order to provide greater accountability of its actions and that of its employees.

It’s sad to verify such reality as prevalent corruption constitutes a “dirty tax”, leading to the appropriation of resources by public officials and to undesirable allocations of public investment from a development perspective.

Austerity combined with corruption leads to increasingly higher taxes with increasingly lower returns, a familiar cenario to most southern Europeans. On the other side, less corruption means better public investment with lower costs.

Said that, it’s frustrating to see Portugal ranking a barely positive grade as government officials demand so much from its citizens. Not only corruption takes away scarce resources from the economy but it also deteriorates competitiveness, budget consolidation and social stability, three major vectors of the structural adjustment programme itself.

Public distrust undermine political institutions,  triggering widespread trickle-down corruption and the construction of rent-seeking societies as a whole. In other words, if the wealthy and the powerful are corrupt and their corruption is tolerated by the guardians of the law, then there’s no real incentives for any other citizen to comply other than their ability to sleep at night.

Quality public investment is one of the most important channels of development and poverty alleviation. Low quality public investment often hurts the more vulnerable households who need it most, enhancing inequality and perpetuating poverty cycles. That playing along with the lack of information and accountability of the government officials creates the potential for greater social arrest and, consequently, further corruption, as can be seen in the case of Greece.

The above constitutes argument for the implementation of a strong anti-corruption policies, enhancing transparency and accountability towards closing the ever increasing gap between formal political institutions and the civil society.

Governance is an issue for a 38 years old Portuguese democracy approaching its midlife crisis at a fast pace. Portugal CPI (63/100) is below EU15 average CPI (72/100) and in line with EU27 average CPI (64/100). However, Portugal CPI is above PIGS (Portugal, Italy, Greece and Spain) average CPI (51,5/100), mostly because of the aberrant CPIs presented by both Italy (42/100) and Greece (36/100).

The 16 point difference between the Portugese score and the EU15 – PIGS average CPI (79/100) sugests that Portugal can learn something from the experience of its neighbours, although there’s no applicable recipe for erradicating corruption.

It is clear that anti-corruption measures must play a significant role in shaping the future of the structural ajustment plans applied in southern Europe as Italy and Greece, especially, are perceived to be among the 3 most corrupt EU nations (the other is Bulgaria). In case these national governments don’t deal directly with such problems it is likely that further pressions for deviant behaviour emerge along with strengthened austerity.

The PALOP (African countries with Portuguese as official language) average CPI is 36/100. Mozambique (31/100 CPI), Guinea-Bissau (25/100 CPI) and Angola (22/100 CPI) rank among the most corrupt countries in the world. Botswana (65/100 CPI) and Cape Verde (60/100 CPI) are among the examples to emulate in Africa.

Some thoughts on US upcoming elections

I’m no expert in none of the topics below. However, and since there is a widespread disbelief about the importance of next American elections, I felt like pointing out a couple of points I believe to be worthy of consideration for non-American citizens. It isn’t like we have a voice but, in the age of globalization, we sure could use some.

First of all, America’s approach to economic policy remains very influent, while setting the tone for economic policy worldwide. As Stiglitz points out:

(…) Romney has not really distanced himself from the Bush administration’s policies. On the contrary, his campaign has featured the same advisers, the same devotion to higher military spending, the same belief that tax cuts for the rich are the solution to every economic problem, and the same fuzzy budget math.

Therefore, if you are not exactly in line with “austerity politics” or, more broadly, with “structural adjustment” and economic contraction, then Romney’s not your guy. While we global citizens are trying to make the push for the implementation of adjustment policies more prone to economic growth, job creation and to overcome deprivation, we can use some support from a candidate like Obama, more keynesian-oriented, than the righ-winged, business as usual, Reagan-inspired Romney.

In fact, the area where we can express greater praise for Obama is precisely in fighting deprivation – health deprivation, to be concise. As the The Economist explains:

The other qualified achievement [of Obama’s Administration] is health reform. Even to a newspaper with no love for big government, the fact that over 40m people had no health coverage in a country as rich as America was a scandal.

Obama deserves praise not only for doing the right thing, building capabilities for the more vulnerable american households, but also for the example Obamacare represents for all the developed states, urging to get rid of their social responsabilities in favor of budget consolidation. I’d like to see similar commitment to providing better education for the very same vulnerable households, in a country where the poor get poor health, poor education and very poor opportunities.

However, there’s a major challenge in chasing such noble social goals: America cannot continue to tax like a small government while spending like a big one. Some adjustments are necessary and they need to be done as soon as possible and in a way that reduces the widening gap between the rich and the poor.

Additionaly, environment and climate change cannot be ignored no more. While both Romney and Obama did not pay great attention to this issue during the campaign – at least before “Sandy” crushed in – Obama is more likely to do something about it than the very skeptic market-solves-all-bads Romney, trapped in a party of “climate deniers”.

Regarding trade, well, we don’t need a trade war between America and China at this point of our lives. We really don’t, Mr. Romney. Obama wins again.

Is is also commonly accepted today that balanced regulation enables markets to operate better, not the contrary, as some highly iluminated minds around Romney seem to believe. Even though Obama has not excelled on his trade and commerce policies, it is hard to imagine how Romney could even do better.

Said this, Obama has not been perfect. Far from it. As strange as it may sound, it was during Obama’s mandate that China overtook the US as Africa’s largest trading partner. Quoting from Reuteurs:

In 2009, China overtook the United States as Africa’s largest trading partner. According to the Brookings Institution, President Hu Jintao of China has made up to seven trips to Africa, five as head of state, and has visited at least 17 countries. In contrast, Obama’s 20-hour 2009 sojourn in Ghana has been his only trip to sub-Saharan Africa as president.

“We would have expected to see more American involvement instead of a retreat. If you go to many countries and ask them about who is doing more, they will tell you China,” said Mwangi Kimenyi, a senior fellow at the Brookings Institution.

In my personal opinion, Obama’s lowest point was reached in the day America got their public enemy number one, Osama Bin Laden.

I did appreciate the departure from the previous approach to the «War on Terror», sustented on “all muslims are suspects of terrorrism and all suspects of terrorrism can die and suffer if for the good of National Security”. Obama has managed to focus on terrorrists, dropping religion.

Anyway, war is still war, an invasion is still an invasion, aggression is still aggression and I still don’t understand why the Americans forced the occupation of  Afghanistan andI still don’t like OTAN and what it represents. It just doesn’t make sense in today’s world, I have expressed it before.

I must say I was extremely disappointed with Obama the day I saw him celebrating cheerfuly the murdered of another human being, even though it was for the good of National Security (or was it revenge?). Osama Bin Laden was a criminal and I do not support criminals; however, criminals belong to justice, not to graveyards. Martyrs belong to graveyards, and, as I see it, we sure didn’t want any more of those.

Four years ago, I had great expectations for Obama. I’ve spent Election’s night celebrating his announced victory. We all thought he could make the difference in a increasingly multipolar and globalized world. He proved he cannot do such thing, at least alone. He proved to be a lot weaker than we thought, in a variety of topics.

But Romney just shouldn’t represent a viable option in today’s world.

We are the 99 percent. Are we? (Part 2)

The UNDP Human Development Rankings for 2010

Human Development Rankings:

Dark Blue: Very High; Ocean Blue: High; Light Blue: Medium; Almost-white blue: Low; Grey: Data Unavaible.

The 99%? I wonder about what the other 82% says about us. Don’t you?

World Day to Overcome Extreme Poverty

Wherever men and women are condemned to live in extreme poverty, Human rights are violated. To come together to ensure that these rights be respected is our solemn duty.

Father Joseph Wresinski

#october17th