Where will the poor go this year? (Part 2 of 2)

HS Dillon ,  Jakarta   |  Tue, 01/06/2009 11:10 AM  |  Opinion

What are the prospects facing our poor? In the short-run, no one would dispute that in this global economic crisis, demand has begun to rapidly shrink. To maintain a positive growth momentum, governments will need to use public policy to augment domestic demand. This being an election year, the incumbent regime will be only too happy to adopt the "normal" policy solution of cash transfers, and just doing more of the same along extant poverty reduction programs.

This has its obvious advantages, but it can create welfare-dependency and does not address the supply constraints (other than augmenting demand) that keep people in low-earning jobs. However, this can also be affected through a modality that addresses key supply constraints, and, by fostering efficiency, places the economy on a higher long-term growth trajectory.

To embark upon such a path, we would first need to go back to basics! Outside of smallholder agriculture, it is hard to work in a very concentrated way (i.e., picking winners in industry or the services sector). Given that the financial crunch has decreased the availability of capital and because key support services such as credit, technology and market access constraints are not functioning well in smallholder agriculture, the government can address these in a coordinated and coherent manner.

Furthermore, job creation in smallholder agriculture is less expensive than in other sectors; the multiplier effect of incomes generated in smallholder agriculture is greater (farm households consume more domestically generated goods and services) and the poverty reduction impact of smallholder agriculture growth is higher. Moreover, as all the pundits are now predicting that the urban sectors will experience major distress, agriculture will yet again emerge as the employer-of-last-resort for the urban displaced.

It would, thus, be best if we were to focus on a big push to get the rural sector moving. We also need to push higher rural incomes through productive agriculture and SME development (rather than rural make-work schemes) but the focus has to be on productive income generation. Odds are that this will not happen in a bottom-up fashion on its own, nor does it make sense for it to be pushed from the central government.

Hand in hand, the local and central governments could help develop agriculture and the SME sector by applying pressure from without and building capacity from within. Therefore, striking a central-local balance is of paramount importance.

The long-run challenges are no less daunting: In their final year, the self-serving legislators are springing booby-traps to subvert substantive democracy. In collusion with like-minded officials in the executive and the judiciary, they are passing laws to maintain the status-quo and to avoid any accountability to their constituents.

It is now incumbent upon all of us taxpayers to push the government, private sector and the people to work with nature as grateful children, and not behave as masters of the universe. We need to integrate "sustainability friendly" interventions into a "big push" program for agriculture and SME development that uses "new lessons" on how to get the rural economy moving -- i.e., treating farmers as businesspeople; leaving commodity choice decisions up to farmers; expanding the accessible technology shelf; providing farmers resources to drive technology outreach services; building partnerships, especially in marketing and processing with the private sector to keep domestic markets contestable; linking rural infrastructure development to market opportunities and providing incentives for businesses (including farmers and SMEs) to adopt sustainable technologies (not only on farm, but also things such as clean power, watershed management and forest/biosphere protection).

During this holiday season, it would be good to bear in mind that "from those to whom much is given, much is expected". All rich Indonesians should now reach out to their poor brethren and lend a helping hand such that they can begin to stand on their own, just like many of the richest in the world have already done.

A reality check: All of us have unwittingly been long-time beneficiaries of Indonesia's widespread poverty. How else could we afford so many maids and drivers? To help us move in the right direction, let me paraphrase Bill Gates' commencement address at Harvard more than a year ago:

"We had just assumed that if millions of children were dying and they could be saved, the world would make it a priority to discover and deliver the medicines to save them. But it did not. For under a dollar, there were interventions that could save lives that just weren't being delivered. If you believe that every life has equal value, it's revolting to learn that some lives are seen as worth saving and others are not."

We said to ourselves: "This can't be true. But if it is true, it deserves to be the priority of our giving." So we began our work in the same way anyone here would begin it. We asked: "How could the world let these children die?"

The answer is simple and harsh. The market did not reward saving the lives of these children and governments did not subsidize it. So the children died because their mothers and their fathers had no power in the market and no voice in the system.

But you and I have "both".

As head of the Coordinating Agency for Poverty Reduction in 2001, I was shocked when one of our foremost economists showed me that 20 percent of the income of the top 10 percent of our earners would completely fill the poverty gap.

Can you comprehend that? There wouldn't be a single poor person left in Indonesia if our richest citizens had the heart to give away just a fifth of their incomes! Imagine what the impact would be if these generous souls -- as they so often portray themselves -- were to give a fifth of their wealth to the poor and needy?

Placing our country on a more equitable -- hence sustainable, path -- calls for HEART! A compassionate heart, one which enters into discourse with the poor and sees the world through their eyes, treats them as equals and does not just offer words of sympathy.

It also requires a stout heart to rout the corrupt politicians in the next legislative elections, and to elect a president who not only has a solid pro-people track record, but also dares to take on those who espouse terror and undermine our pluralistic democracy.

All that we need to do is work as hard as the volunteers for Obama, and pitch in a la Bill Gates. Then our grandchildren celebrating the end of 2008 will no longer still be asking the same question: Where will the poor go this year?

The writer was Head of National Coordinating Agency for Poverty Reduction, 2001.

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