Eyes on Guatemala

The Economist has published an article on malnutrition in Guatemala. Hunger is not new in the country, with half of the children population not eating enough Guatemala is the six-worst country in the world, but in some Maya communities children chronic malnutrition can reach 75% (the Economist says 80%). These figures are astonishing, especially because the problem is not food scarcity.

But this as well is hardly new. It was 1981 when Amartya Sen published his Poverty and Famines: An Essay on Entitlement and Deprivation demonstrating that hunger is mostly caused by inequality rather than scarcity. There is no lack of food in Guatemala if you have the money to buy it. In Guatemala City is taking place, as we speak, the 14th Festival Gastronómico Internacional so it seems difficult to talk about a famine or about an emergency (according to the Longman Dictionary an emergency is “an unexpected and dangerous situation that must be dealt with immediately”). The problem is the lack of a functioning state. Because a state cannot function with tax revenues estimated at just 10% of GDP.

Democracy is highly unrepresentative in Guatemala. Who should push for a better redistribution of resources has no voice. National newspapers point constantly the finger at the government (presidency, parliament, judiciary) in a impressive campaign of delegitimation. The Rosenberg tape was just part of it. I’m not defending the government, but saying that criticising it and attempting to systematically destroy its credibility are not quite the same thing. While the headlines cover crime, corruption and hunger the real battle within the country is on the tax reform. A battle that so far every government has badly lost.

Friday, 28 August 2009

Understanding Capitalism

Nobel-winning economist Amartya Sen argues, in an article published on The New York Review of Books, that the way out from the crisis passes through a better understanding of the ideas that contributed to build the actual economic system. Adam Smith, John Maynard Keynes, Arthur Cecil Pigou, should be read, not just quoted. And I quote

Smith viewed markets and capital as doing good work within their own sphere, but first, they required support from other institutions—including public services such as schools—and values other than pure profit seeking, and second, they needed restraint and correction by still other institutions—e.g., well-devised financial regulations and state assistance to the poor—for preventing instability, inequity, and injustice. If we were to look for a new approach to the organization of economic activity that included a pragmatic choice of a variety of public services and well-considered regulations, we would be following rather than departing from the agenda of reform that Smith outlined as he both defended and criticized capitalism.

We must understand how institutions work and make them work better. But not just aiming at economic growth.

There is a critical need for paying special attention to the underdogs of society in planning a response to the current crisis, and in going beyond measures to produce general economic expansion.

A crisis not only presents an immediate challenge that has to be faced. It also provides an opportunity to address long-term problems when people are willing to reconsider established conventions. This is why the present crisis also makes it important to face the neglected long-term issues like conservation of the environment and national health care, as well as the need for public transport (…).

Sunday, 22 March 2009

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