The poor: a problem that will not go quietly away!

www.vheadline.com Posted: Wednesday, January 29, 2003 - 1:37:17 PM By: Oliver L Campbell

Date: Wed, 29 Jan 2003 12:35:17 -0800 From: Oliver L Campbell oliver@lbcampbell.com To: Editor@VHeadline.com Subject: Mr Willke's Letter

Dear Editor: I refer to Mr. Willke’s interesting e-mail of 28 (www.vheadline.com) January where he expounds the problems of education and inequitable income distribution in Venezuela ... I would, however, have liked him to suggest some solutions as well.

I passionately believe that a lack of sellable skills is main problem of the poor in Venezuela. In a recent article I wrote “It is essential these people (the poor) are brought into the economy by learning useful skills. This means reforming the education system so more technical institutes are created which provide practical instruction and training to those who are not cut out for an academic education. A technical qualification will be given the recognition it deserves and carry its own prestige. At the same time, a host of young people will acquire the dignity and intense satisfaction that come from being employed and doing a worth while job.”

I do not disagree with Mr. Willke that inequitable income distribution is a problem in Venezuela as, indeed, it is in many countries. The trouble is how do you reduce it?

Venezuela already has a progressive system of income tax and an inheritance tax of 40% ... we all know that value-added taxes hit the poor more than the rich. The only thing I can think of is a wealth tax of some kind, and that certainly would be difficult to introduce.

The centrally-managed economies had some success because they could dictate salaries. The result was, for instance, that a medical doctor with years of training did not earn substantially more than, say, an electrician. However, this type of economy proved to be very inefficient and most countries that had it (including Russia), have now moved to a market economy.

My point is, that in a market economy, it is very difficult to reduce inequitable income distribution. For instance, how do you lessen the large differentials in salaries where the general manager earns, say, twenty times what one of his manual workers does?

The only practical way to eliminate this is through education or ... as I prefer to put it ... through the acquisition of skills required in the market place. Those countries that have tried to introduce an incomes’ policy, like the United Kingdom, have soon abandoned it as unworkable.

You can, of course, throw money at the problem of the poor by giving them hand-outs, allowing them to use public services free of charge, and improving the infrastructure of the sectors where they live e.g. the 'ranchos' of the large cities ... this has all been done, but it is only a temporary palliative (panitos calientes), and the aim surely must be to enable them to earn a reasonable living.

The Chinese have a saying "Give a hungry man a fish and he will be hungry again ... teach him how to fish and he need never be hungry again." If money has to be thrown somewhere, it should be at the construction of technical schools all over the country. This will mean increasing taxation ... but it is the cost of rectifying the indifference of governments over the last 50 years.

I agree with Mr. Willke that whichever government is in power, it will have to address the problem of the poor: it is not a problem that will quietly go away.

Oliver L Campbell oliver@lbcampbell.com