Opinion

How poor is poor

BREAKTHROUGH - Elfren S. Cruz - The Philippine Star

July 4, 2019 | 12:00am

I have been reading that one of the greatest social and economic successes of the 21st century is the reduction of poverty. Many economists have attributed this to globalization, capitalism and the liberal idea of limited government. But if these were true, how does one explain the rise of populism – a political ideology that actually pits the “people” against the elite.

Perhaps we need to review those statistics that define who are the poor. The official agency for measuring poverty is the Philippine Statistics Authority (PSA). According to this institution, the poverty threshold per family per month in 2018 was computed at P10,481. Therefore, my interpretation is that the PSA is saying that anyone who earns more than P10,481 is not poor.

The PSA explained that poverty threshold is the minimum required to meet the basic food and non-food needs like clothing, fuel, light and water, housing, rental of occupied dwelling units, transportation and communication, nondurable furnishing, household operations and personal care and effects.

The PSA also said that there is a “food threshold” or the amount needed to meet the basic food needs for a month for a family of five. It explained that “food threshold” is the minimum income required to meet the basic food needs, satisfying nutritional requirements set by the Food and Nutrition Research Institute ( FNRI) to ensure that one remains economically and socially productive.

I am sure that the economists, researchers and technocrats of NEDA, PSA and FNRI are well meaning. However, as a non-economist and non statistician, I looked at these poverty statistics and tried to convert them into real-life scenarios. It would seem that a family of five with earnings of P10,500 a month { a figure above the poverty threshold) will be able to lead a decent life and meet their basic food and non-food needs.

Let me begin with the figure for the basic food requirements – P7,500 per month. In a family of five, each member will have a food budget of P1,500 a month or P50 a day or Php 17 per meal. I suppose some people will still try – statistically – to prove that a person can survive on P50 a day for food. After all, one can point out that they do not really need viands to survive or they can just eat two meals a day. But the question is whether that family member with a food budget of P50 a day really feels that he or she is not poor?

After deducting the food threshold budget, a family of five will have approximately P3,000 to satisfy their basic non-food needs. What are these? PSA says the list includes fuel, light and water, housing, rental of occupied dwelling units, transportation and communication, health and education expenses, nondurable furnishing, clothing, household operations and personal care and effects. When I read this list, my personal reaction was – are those economists and statisticians serious? Do they really believe that a family can satisfy their basic non-food requirements with a budget of P3,000 a month?

How much does a family really need to earn to be able to lead a decent life or as the Catholic Church puts it, a life of “human dignity”. I am looking for a more realistic appraisal of the monthly income required for the basic food and non-food requirements for a family. I remember that sometime last year, I think, NEDA Secretary Pernia was quoted in media as saying that the monthly income for a family to lead a decent life was P42,000 a month. Perhaps, NEDA can compute a more realistic poverty threshold.

I am also reminded that many businessmen confuse philanthropy and corporate social responsibility. According to the World Business Council for Sustainable Development, CSR is the “...continuing development by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society at large.”

Democratic socialism

In my last column, I asked whether liberalism and capitalism are obsolete. If they are obsolete, what is the alternative. Right now, the common answer is populism and that is why we have seen the rise of populist leaders in the US, China, Russia, Turkey, Brazil, Italy and other countries.

There is another alternative to capitalism – democratic socialism. Right now, two of the four leading Democratic Party presidential candidates in the US have called themselves Democratic Socialists. These are Elizabeth Warren and Bernie Sanders. A third candidate is Kamala Harris who is espousing social democracy which is a form of democratic socialism. In Germany, the second biggest political party is the Social Democratic Party.

Broadly speaking democratic socialism is a political philosophy that advocates political democracy alongside a socially controlled economy. Democratic socialists argue that capitalism is inherently incompatible with the values of liberty, equality and solidarity. Both Sanders and Warren, for example, propose the abolition of private health insurance and propose that there be only one state owned health insurance. They also propose, like in Germany, that labor unions should be represented on corporate boards.

If Warren, Sanders or Harris wins, we could see democratic socialism or social democracy becoming a worldwide trend.