Bernardo M. Villegas
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How to Avoid Killer Economy

           Pope Francis included in his messages during Lent and Easter a constant refrain:  we must do everything possible to avoid in both developed and developing countries a "killer economy."  As he wrote in his Apostolic Exhortation "The Joy of the Gospel,"  "Just as the commandment 'Thou shalt not kill' sets a clear limit in order to safeguard the value of human life, today we also have to say 'thou shalt not' to an economy of exclusion and inequality.  Such an economy kills.  How can it be that it is not a news item when an elderly homeless person dies of exposure, but it is news when the stock market loses two points?  This is a case of exclusion.  Can we continue to stand by when food is thrown away while  people are starving?  This is a case of inequality.  Today, everything comes under the laws of competition and the survival of the fittest, where the powerful feed upon the powerless.  As a consequence, masses of people find themselves excluded and marginalized:  without work, without possibilities, without any means of escape....Human beings are themselves considered consumer goods to be used and then discarded.  We have created a 'disposable' culture which is now spreading.  It is no longer about exploitation and oppression, but something new.  Exclusion ultimately has to do with what it means to be a part of the society in which we live; those excluded are no longer society's underside or its fringes or its disenfranchised--they are no longer even a part of it.  The excluded are not the 'exploited' but the outcast, the 'leftover.' "

          The Pope does not deny that hundreds of millions of people all over the world have graduated from the "excluded" to the "included" in the last thirty or so years.  As an editorial in the Financial Times (April 19, 2014) asserted, "Since 1981, the number of people living on less than $2 per day, the definition of poverty set by the Asian Development Bank, has almost halved.  The rich world may be engaged in a debate about rising inequality in western societies.  But economic growth in China, India and Africa has made the world far more equal than it was." In China alone, close to 400 million people have been liberated from dehumanizing poverty over the last thirty years, thanks to a combination of the strong political will of the State to improve infrastructures and basic services and the introduction of market-oriented policies since the time of Deng Xiao Peng. 

          But the warning of the Pope is very timely.  There is a great danger that many of these households that are just above the threshold of poverty may quickly rejoin the "excluded" unless the world leaders maintain the vigil over global poverty.  As the Financial Times editorial warned:  "This is no time for complacency, however.  While policy makers are undoubtedly working hard to reduce poverty still further, there is a risk that those with incomes above $2 per day will soon slip back into the ranks of the worlds' poor.  The reason to be fearful is that the world looks set to face years of subpar growth.  The emerging market growth spurt of the past 30 years is coming to an end.  The dramatic poverty alleviation we have seen may therefore be quickly reversed."    As I have written in a previous column, the group that is most vulnerable to a relapse to absolute poverty is what has been referred to as the "fragile middle."  The individuals in this group live on more than $2 per day.  They, however, are still below the $10 per day level that would provide financial security in most developing economies.  Any sickness in the family or a natural disaster can bring them back to the ranks of the very poor.

          There is a consensus among those who have studied the phenomenon of world poverty that the most effective measures to uplift more people from poverty and to prevent the "fragile middle" from falling back to their former position are a relentless focus on rural infrastructures, improving the quality of basic education up to the secondary level; the provision of rural clinics and hospitals; giving access to potable water to the poor; and the efficient and honest implementation of a conditional cash transfer program to the poorest of the poor.  These are especially applicable to the Philippines because 75 percent of the poor are in the rural areas and an even higher percentage of those in the "fragile middle" also live in the countryside.  Thanks to the circumstances in the Philippines which still have a young and growing population, a surefire insurance for the fragile middle to avoid slipping  back to the "excluded" is to have at least one member of the household to be counted among the 10 million Filipinos who are working abroad.  OFW remittances are a most effective means of helping the fragile middle to stay afloat even in the worst natural calamities or human tragedies.  We should thank Pope Francis for reminding us of our responsibility to the excluded.  For comments, my email address is bernardo.villegas@uap.asia.