Silver bullet

The past few days, there has been an abundance of discussion about the poverty situation in the country.

Two events conspired to bring this about: the Ultra tragedy where poverty is used as scapegoat for calamitous crowd behavior; and, the release of several surveys showing three-quarters of our people rating themselves poor.

I suspect those two events are related in a way: much of the discussion about poverty happens in the television network hit by the calamity and might, understandably, be interested in dispersing the blame for the event.

I suspect, too, that surveys that ask respondents to rate themselves rich or poor will, given our cultural nuances, tend to overstate the extent of their poverty. Nearly as a cultural trait, Filipinos are wont to flaunt their poverty and conceal their comforts. That way, they minimize the possibility that poorer cousins will beg for support or that the taxman cometh.

Which is not to say, of course, that the poverty is largely imagined.

The poverty is real. We see it everyday. We hear all tragic stories about it. It assaults our senses at every turn.

What is so often imagined is that there is a silver bullet that will end poverty tomorrow. That is part wishful thinking and part severe despair.

It is always easy to blame government exclusively for the prevalence of poverty. That is particularly useful for rabble-rousers and political aspirants. That line, to be sure, has been used effectively time and again in taking down incumbents in the guise of kicking the rascals out. Time and again, it has served to kick new rascals in.

No argument: government can do better than it has done the past few generations. Corruption can be reduced, policies improved and subsidies better targeted to create more desirable conditions for broad-based wealth creation.

But government can raise, if it was at all possible, social spending by a hundred-fold and the poverty profile will probably remain basically the same. To state it another way: poverty cannot be eradicated by throwing money at it.

Poverty – and its inverse, prosperity – is a complex condition, as all the sophisticated studies show. There is no single factor that explains why some societies are rich and others poor, why some people are efficient at generating wealth for themselves and others totally at a loss on how to lift themselves from the quagmire.

The most common simplification of the poverty equation is to say that if enough jobs are created, people will not be poor. Therefore existing jobs need to be protected at all costs; every effort must be exercised to prevent jobs from dying or being exported. The "rights" of those already employed must be attended to and the "rights" of the unemployed be observed.

But the economy is much more complex than that.

There are jobs that do create value and jobs that create only opportunity costs for those performing them. In the effort to protect obsolete jobs, new activities that may more efficiently create wealth are suppressed. Little wonder that in the old economies of Europe, where job protection is well evolved, high unemployment has crept in. Meanwhile, in economies such as that of the US where workers may be easily hired and fired, unemployment is low.

There is such a thing as rigidity in the labor market that keeps workers securely employed but poor. As certain as they are about job security, they are also certain of sustained poverty. Observe our public sector.

Some societies are resource-rich and yet poor. Others are resource-starved and yet prosperous. We are an example of the former; Japan and Singapore are examples of the latter.

More and more, students of comparative development are moving to a consensus that culture matters.

This is not anything new. The father of sociology, Max Weber, did observe in his time that the Protestant ethic appears to be the single most important factor distinguishing those societies of Europe that progressed rapidly and those that remained stagnant.

The social sciences have generated much more insight into progress and prosperity since Weber’s time. These insights suggest that societies that flourish tend to be equipped with a culture that enables efficient economic transaction and high levels of productivity.

That culture of prosperity, so to speak, is characterized by a host of values. Among these values are: integrity, obedience to rules, punctuality, credit discipline, work ethic and innovativeness.

The theoretician Francis Fukuyama, for instance, argues that societies where there are high levels of trust tend to be more prosperous than societies with low levels of trust.

For instance, in a society of high trust, one can efficiently drive through a green light confident that no idiot will cheat on his red light and cut across your path. Unless there is such confidence, people will keep watching over each other’s shoulders and the cost of enforcing rules and contracts (the cost of doing business) will be very high.

Going by that illustration, the number of people hired by the MMDA to wave buses along Edsa is telling testimony to the deficiencies of our culture.

The sum of this evolving insight among scholars of social development is quite provocative: some societies may be pre-programmed by their culture to fail and, thus, to be poor. Governments may go through the motion of making large social investments and friendly countries might extend a lot of official development assistance but to little avail.

The sum of this evolving insight is a conclusion that might, at first blush, seem terribly politically incorrect: the culture of the poor makes poverty an intractable phenomenon.

If there is, indeed, a silver bullet to solve the prevalence of poverty, it must be aimed at the culture of the poor. That is the beginning of the solution.