My HeyDay

"Philanthropy can appeal to people who want to be loved more than they want to make a difference", writes Jacqueline Novogratz , after many years wandering through Africa, continent where she arrived as a naive aid-idealist. And after facing during decades the limits, contradictions and corruption plaguing development aid, evolved to an aid-realist - at least avoiding to become another aid-cynical.

Novogratz also says many other interesting truths:

"It is so often the people who know the greatest suffering--the poor and most vulnerable--who are the most resilient, the ones able to derive happiness and shared joy from the simplest pleasures", and continues in a pessimistic tone, "That same resilience, however, can manifest itself in passivity, fatalism, a resignation to the difficulties of life that allows injustice and inequity to strengthen and grow..."

Aid agencies and organizations are frequently more doing experiments -and failing- than being effective. Add that there is no accountability for their actions, and the flux of knowledge between them is overrun by competition and egos. Said that, things may and should change in the way they operate... or they should disappear. Critical is how knowledge is shared and managed. For this reason, I am pretty optimistic with this new initiative from the social entrepreneurs of Ashoka, in order to solve the chronic ineffectiveness of development aid: in Changemakers.com they collectively look at social problems and discuss and propose actions to solve it, one problem at a time. This is a good start, coming from below.

Labels: development

For more than a century and a half, Partido Colorado and Partido Nacional ruled Uruguay. But with the victory of Tabare Vazquez in the 2005 presidential elections, the left party Broad Front took office with a long-pending redistributive agenda.

One of the first priorities of the new cabinet was to introduce a fairer tax reform. In Uruguay, as it is usually the case of small nations, equality is a highly ranked social value. And it is also highly correlated with satisfaction with democracy across the region. Even if Uruguay's poverty line and inequality levels (0,45) are the lowest in Latin America, the long corporatist tradition of the country, tweaked by the liberalization in trade and capital unleashed in the 1990s, emphasized an unfair distribution of the tax burden, coming mainly from [formal] workers' shoulders and poor households' pockets.

Same tax burden, but a more equitable burden distribution

Tabare's government wanted to increase vertical and horizontal equality of the tax system, and to do so he had to reduce consumption taxes -which affects mainly to the poor- and increase the weight and progressiveness of income taxes.

• Income tax levels became more progressive and went up for the richest, especially the 10% richest, who saw a 150% increase compared to the previous system:

• Consumption taxes went down for everybody, especially the poorest, who consume most or all their income:

• The tax burden became fairer, more efficient, less economically disturbing, and more Western European. Inequality post-tax and poverty levels dropped a little bit, but the whole system provided future governments with the right tools to raise more revenues if they are willing to expand further social policies. At the end of the day, equality is mainly achieved through social expenditure, not taxation --but you need to have the money first:

The reform revealed the scheme of winners and losers: businessmen protested, and the most negatively affected groups demonstrated, mainly medical doctors, lawyers and other very well-paid liberal professionals. But again, a sense that equality was a social value to be pursued in Uruguay mitigated their resistance, adding to the countermeasures of this tax reform: a general improvement in the quality of government-provided services, especially universal healthcare.

Beautifully done, Tabare.

Labels: democracy, development

In Brazil, because people pay very high taxes when buying stuff -indirect taxes- and income taxation is so low and barely progressive, a very poor family will pay 33% of their total income in taxes, meanwhile the super rich will have to pay just 23%.

In Brazil, income inequality has historically been among the highest in the world, despite some modest improvements under Lula.

In Brazil, several attempts to reform this crazy tax system since 1995 have repeatedly failed to be enacted. In every attempt, party discipline evaporated and some members of the Parliament switched to the other side of the aisle just before the vote, or there were "sudden" corruption scandals in the media discrediting the reformist government of the time.

Write your own conspiracy theory down here...

Labels: Brazil, development

1. It's good to be again at 90ºF / 32ºC. This has been my last winter.

2. Either you are a Real Madrid supporter or a Barça supporter, as I am. And there is no reconciliation between both worlds. The cab driver stopped talking to me, for 40 minutes, after noticing I was from Barça (he was madridista). On the other side, the border guy became a best friend forever of mine because of that, and I skipped paying the 10$ tourist fee.

3. As I noticed several times before in Washington, my Spanish is hard to understand for Salvadorans. The other way around also applies.

4. Classism is quite less obvious in El Salvador than in other Latin American countries, due in part to a national sense of equality, due in part to the racial blend of Europeans, Amerindians and Asians that Salvadorans usually are, regarding of the social class.

5. The national cuisine includes too much fried stuff to keep people reasonably fit. Pupusas are tasty and good, yeah, but for breakfast everyday, really? :)

I was talking to a recently graduated Salvadoran lawyer about the political situation: "If the FMLN (the exguerrilla leftist party) wins next week elections, it'll be fine. And I plan to go for grad school to Chicago, with a scholarship. But if they don't, or if the elections are so close that the ruling party (ARENA) uses fraud to remain in power, I'll stay to protect my family here and fight against the fraud". The right-wing ARENA party has been in power the last 22 years, since the end of the Salvadoran Civil War. Much of the country's current problems, corruption, nepotism and unhealthy policies are a direct responsibility of ARENA's management of the country. Using the phantom of communism, associated to the exguerrilla, they managed to stay in power for two decades, even if it is also true that their power has been fading especially since 2003. Now many Salvadorans look with envy to the integration process going on in Latin America under different umbrellas, either the ALBA alternative or the Southern Cone old experiment, and the prosperity they don't enjoy. Maquilas, either in the sweat-shop version or the higher standard glass-and-iron office for the middle class who is bilingual, are the skeleton of the Salvadoran economy, preventing workers from properly unionizing and keeping reasonable wages. And all this pressure cooker, just moderated by the constant emigration to the US, is fuelling the vote for the opposition party.

Many civic organizations, including the non-profit I am collaborating with, are really mobilized to get out the vote and ensure that there is a healthy transition in power, but the ruling party has been too long in power to leave it easily. Anyhow, I plan to attend a free concert of top Salvadoran pop bands, organized by Democracia y Desarrollo next weekend. The idea is to promote a conscious and meditated vote of the youngest, but obviously the indirect effect is to increase the vote for the change.

Good luck, FMLN!

Labels: democracy, development, salvador