Brazil—at its current level of almost a trillion reais a year,
five thousand reais per capita, with its financial and intellectual
 infrastructure—already has the necessary
resources to eradicate poverty.

Cristovam Buarque

The world today faces two realities: on the economic side, a downsizing of the state, the privatization of economic activities, market-oriented reasoning, commercial opening, and respect for fiscal limitations with a commitment to monetary stability; on the social side, a serious landscape of poverty, worsened by the increase in social inequality, which is leading to a separation or a partition system as each part of society develops separately—one, rich and included in modernity; the other, poor and excluded.

There is no indication that the economical reality will be replaced by some new structure in the next few years, or that the social reality will improve on its own through the simple evolution of the economy. The challenge of the years to come will be to discover forms of public intervention that can overcome social partition, eradicating the landscape of poverty from Brazilian society without waiting for changes in the economic reality.

The road to take is not a repetition of the failed proposal of enriching the wealthy in the hope of a later distribution of the product; neither is it the idea of a liberating social revolution. Welfare programs of the type used in rich countries are even less applicable to Brazil. The alternative proposed here is the creation of a system of social productivism: employing the poor population through social incentives so that Brazil will produce the essential goods and services for the whole of its population.

The eradication of poverty in Brazil calls for a massive effort of the type used in the Abolition of Slavery, as much an ethical commitment as an act of political will. Even so, there is one difference: in place of a legal solution, poverty demands a comprehensive program—a Golden Program.

Instead of waiting for the revolution or for economic growth, this program uses the eradication of poverty as a way of inducing economic growth from the base and lets the next generations, free from poverty, invent a new utopia and struggle to build it.

1. THE PERSISTENCE OF POVERTY

Few social themes are more disturbing and difficult to explain than the persistence of poverty in Brazil. What could explain why, after more than one century of continued growth and after the construction of a powerful economic structure, the Brazilian population continues to display a dramatic panorama of poverty? Why, after becoming the world's eighth economic power, does Brazil continue to be one of the countries with the worst social indicators, worse than those of many poorer countries?

Up until the sixties, theorists assigned the blame to the lack of economic infrastructure, the lack of incentives for foreign investments, the lack of a national capacity for investment, the concentration of land ownership, the national culture of preferring leisure to work. Little by little these causes ceased to exist. Few countries have an economic infrastructure to match the stature of Brazil's. When they are employed, Brazilians work more than the workers of other nationalities; foreign investments came by the dozen; land distribution will no longer solve the problem of the 80 percent of the population that is urban; thanks to fiscal incentives, Brazil has one of the highest investment potentials of all the countries in the world.

Then new causes were suggested: protectionism maintaining an inefficient industry; excessive regulations standing in the way of investments; closed financial markets keeping out more foreign capital. The reforms started in the nineties solved all these problems. But poverty persists. And its persistence calls for a new explanation.

a) Economic growth does not reduce poverty

In the seventies, I had the opportunity to work within the SUDENE (Superintendency for the Development of the Northeast) system, which sought to eradicate poverty in the Brazilian Northeast by means of the so-called fiscal incentives, and at the Inter-American Development Bank, which sought to eradicate poverty in all of the Latin American continent by following the same philosophy: injecting endless capital into the region or country as an effort to induce economic growth in the hopes of a natural distribution of the income to the entire population.

Thirty years later, a visitor to the Brazilian Northeast or to any country in Latin America will notice that the poor areas of the continent have grown at a rapid pace since then; they have become rich in economic and urban infrastructure, in their production capacity, and in economic diversity. But poverty persists. The mistake in the fifty-year fight against poverty in Brazil and other Latin American countries was to believe—or falsely promise—that economic growth would reduce and eradicate poverty. The theory held then was that wealth spreads as it grows, trickling down to the poor. According to this idea, poverty would be eradicated by production to meet the demands of the rich, thus creating jobs for the poor and paying them wages to lift them out of poverty.

Based upon this principle, the entities fighting poverty justified the fiscal incentives by which the government paid for the installation of industries that would produce for the rich, claiming that this would create jobs for the poor. Automobile factories, hotels, mansions, airports, economic infrastructure—all these generated, according to the reasoning of that era, benefits for the poor, who worked as waiters, bricklayers, porters, factory workers and flanelinhas¹ and were seen as beneficiaries of the wealthy sector's progress.

A temporary increase in poverty was even justified to make that system work in the hope that future wealth that would come to everybody. The inflation that impoverished the poor, while the rich had their own, monetarily adjusted currency, was justified as the government's way of investing to support the industries, thus building the infrastructure; the fiscal sacrifice, which took money from schools, hospitals, water and sewer systems to finance industrialists, was justified as a means for creating employment. The concentration of income was even justified with the argument that it benefited the poor since, without the rich to buy the products manufactured by the industries, there would be no jobs to lift the poor from poverty.

But poverty persisted for two reasons: since there was not enough employment for everybody, the wages remained low; and, above all, since poverty is not a phenomenon of the economy. The true cause of the persistence of poverty in Brazil is the belief that poverty is the opposite of wealth, and that, in order to eradicate the poverty of the poor, it would be first necessary to further enrich the wealthy and wait for the income to trickle down to the whole population. This can be valid for very poor countries that have not yet acquired a minimum of infrastructure, income or potential.

In Brazil, poverty persists because of the obsession with the search for wealth.

b) The growth of inequality

Beginning in the late eighties, it became evident that growth would not eradicate poverty, and that it could even threaten the ecosystem. Instead of reorienting the social model, however, Brazilian governments preferred to stick with the alternative of explicitly concentrating the development for the few.

In these last ten years, the rich have obviously enriched themselves more quickly than the poor have left poverty, thereby increasing the social gap to the extent that today's Brazil demonstrates more than inequality: it is an example of social separation. After fifty years of hearing the false promise that increasing national wealth reduces social poverty, Brazilians are now being promised that globalization will enrich the country's poor up to the global levels of the wealthy in the rich countries. But in the process a separated society is being built, setting the rich in Brazil apart from the poor.

Meanwhile, Brazilian politicians continue to be split between those who promise wealth for everybody thanks to the foreign investments that will come after state controls have been lessened, and those who promise to raise everyone from poverty thanks to guarantee of quality state services for all. A stand-off between the left wing's promises of the paradise of public services and the right wing's promises of the paradise of global economy with neither side offering any concrete proposals for the immediate eradication of poverty. It is as if the abolitionists, one hundred years ago, had promised to end slavery after they established socialism, while the rest of the country had said the same result would be achieved after Brazil became rich and developed.

c) Definition of poverty

For fifty years, the Brazilian poor believed in the logic that the needs of the poor could be met by catering to the demands of the rich. But growth does not generate employment for everybody, nor does it pay enough wages to meet the needs of the poor. The workers built the hotels and the houses for the rich, they produced the cars and other products for the rich, but when they went home, there was no running water, sewerage, or garbage collection. Their children had no schools, or attended low-quality ones; their families went without a satisfactory healthcare system. Brazil became wealthy in proportions unimagined by even the most optimistic, but poverty persisted because the wealth has not been distributed, and because the ticket out of poverty is not an increase of income but, rather, a change in the availability of essential goods and services.

The line that separates the rich from the poor is not horizontal, separating those above or below a certain income level; it is vertical, separating those on one side from those on the other, the ones who have access from those who are excluded from five goods and services: food; basic, quality education; efficient healthcare; comfortable, efficient public transportation; housing with drinkable water, garbage collection and sewerage.

The strategy for the eradication of poverty, therefore, does not depend upon the increase of social income or economic growth, but, rather, upon public policies that assure everybody direct access to these essential goods and services. The economy is a necessary condition, but it is not the way; it is merely the basis of the strategy. And Brazil—at its current level of almost a trillion reais² a year, five thousand reais per capita, with an expected public-sector revenue of above four hundred billion, with its industrial and agricultural potential, with its financial and intellectual infrastructure—already has the necessary resources to eradicate poverty, once this goal is pursued and investments are made for that purpose.

d) Social productivism

The strategy of increasing the national wealth by creating employment should continue, but without the mistaken claim that this will eradicate poverty. Another lie was the attempt to import the Keynesianism that gave people jobs with the sole purpose of creating income, as in the case of the make-work projects. This strategy lies when it states that a poor mother can flee poverty when she receives a minimum-wage salary for painting curbs in the rich neighborhoods, while at the same time leaving her underage children locked up at home, thus repeating the vicious cycle of poverty in the uneducated next generation.

The way to eradicate poverty is to employ the population directly in the production of essential goods and services, to create a social productivism that turns the unemployed poor into producers of what Brazil needs to eradicate poverty from its society. Of the five essential goods and services, three will not be available in the marketplace to the employed workers with a low or medium income: education, healthcare, water and sewerage are not services that can be bought in the marketplace by those who live on low or medium wages. Either the state offers these services publicly, or the poor will not have access to them.

Employing the poor in the production of essential goods and services creates an income, while at the same time producing that which is necessary to eradicate poverty. The unemployed are treated as potential energy to be used in the production of the essential goods and services. Two problems, unemployment and poverty, are thus combined and both are solved. Two separate entities when they meet, they can mutually cancel each other. But someone has to pay for that.

e) The social incentives

For almost fifty years the fiscal incentives served to dynamize regional economies and to enrich society, especially those who had access to them, but no concrete effect was generated in the struggle for the eradication of poverty. Instead of financing companies that produce to cater to the demands of the rich, social incentives directly pay those who produce to meet the needs of the poor population. Through social incentives the poor receive the necessary income to guarantee the purchase of nourishment and public transportation; and, at the same time, they produce essential goods and services, such as education, healthcare and housing with drinkable water, garbage collection and sewerage.

Social incentives can be direct, when the poor are paid to produce social goods and services, or indirect, when those who are not poor are paid to produce essential goods and services.

2. DIRECT SOCIAL INCENTIVES

Expanded leave

Education begins in preschool. According to the traditional vision, some promise quality state childcare centers for all children, while others promise that all parents will be rich enough to pay for good childcare centers for their own children. These are two lies. The economy will not guarantee jobs that pay enough to cover the costs of childcare centers for everybody. The government will not have the financial resources or managerial capacity to administer the 30,000 to 50,000 centers necessary to serve a population of 3 million poor families with 0-5 year-old children. Meanwhile, children insist upon growing up without waiting for either a social revolution or the development that would make Brazil as rich as the European countries.

A simple, immediate solution consists of remunerating poor mothers so that they themselves or some adult in the family can take care of their children, or so that they can finance small local childcare centers. This extends to all families the right already acquired by the mothers with a job: leave to take care of their children. With this universal, expanded maternity leave and without the need to wait for state childcare centers, poor families will have the conditions necessary to care for their children. In place of make-work projects for mothers forced to lock their children at home, or domestic work, caring for the children of rich and middle class mothers, they can take care of their own children, making sure that they attend school in good condition for continuing their studies. The cost of paying one minimum-wage salary a month per family, and furnishing a basket of educational toys to all the poor children will be R$ 3.5 billion a year (US$ 1.43 billion).

Bolsa Escola (School Scholarship)

The lack of education is one characteristic of poverty, and it is a vector that perpetuates a vicious cycle of poverty. To break this cycle, it is necessary to make sure that the poor children study in spite of poverty. The Bolsa Escola takes advantage of the financial needs of the poor in order to induce their children to study in exchange for remuneration. This program, contested when it was proposed at the University of Brasília in 1987 and defended in the campaign for the government of the Federal District (Brasília) in 1994, is being introduced throughout Brazil and in several other countries. By paying half a minimum wage salary to each family, the Bolsa Escola for ten million children would cost R$ 4.3 billion (US $1.76). Granted for 15 years, the time necessary for the children now being born to complete their middle-school education, the Bolsa Escola would be a decisive element in the definitive eradication of poverty in Brazil.

Poupança Escola (School Savings)

The Bolsa Escola induces regular school attendance by depositing half a minimum wage salary in a savings account for each Bolsa Escola student who passes his or her final exams. The Poupança Escola induces the students to pass to the next grade and finish their basic education. This money can be withdrawn only when the student concludes the secondary course. The Poupança Escola's maximum cost for ten million children is R$ 900 million (US$ 370 million) a year for eleven years, if all the students finish middle school. This is much less than the billions now wasted as result of the immense number of students who repeat grades. When the time came for that amount to be paid, the Poupança Escola would have already proven its own success, that of the social incentive, and that of Brazil's Golden Program.

Escola em Casa (School at Home)

Five hundred thousand middle-school youths from poor families will be hired at a cost of half the minimum wage a month each to serve as tutors and private teachers for classmates and younger children. For as long as Brazilian students attend schools with only half-day sessions, this program will create an additional income for poor families, engage the youths in educational instead of street activities, and keep the children busy with their homework and other educational activities. The total cost of this program is R$ 540 million (US$ 222 million) a year.

Civic service

For six months each, two million youths a year will be incorporated into civil services, into the armed forces, and into civil organizations for civic, physical, technical and professional education, and as a form of community support at an individual cost of R$ 200 (US$ 82) a month, of which R$ 100 (US$ 41) goes to the youth and R$ 100, to the institution, at a total cost of R$ 2.4 billion (US$ 986 million) a year.

Construction of schools

The construction of 30,000 new schools in four years, at a cost of R$ 1.5 billion (US$ 616 million) a year, would employ the low-income population and would constitute a great leap forward in the education of children from poor families.

Construction of water and sewerage systems

Although contracted by companies, the installation of water and sewerage systems is another example of a social incentive because most of the resources go to pay for the low-income construction work and the product stays in the homes of those who do not now have indoor plumbing. The five-year implementation of treated water, sewers, and garbage collection for all houses in Brazilian cities would have a total cost of R$ 2.5 billion (US$ 1.03 billion) a year.

Rural resettlement and agricultural industries

Resettlement of two million landless families would have an annual cost, over five years, of R$ 5 billion (US$ 2.05 billion), and the establishment of 100,000 family agricultural industries, over five years, would cost R$ 200 million (US$ 82 million) a year.

Formation of workforce and microcredit

A program for workforce formation and the creation of a microinvestments fund would cost R$ 3 billion (US$ 1.23 billion) a year, which includes funding of R$ 6 billion (US$ 2.46 billion) for the Banco do Povo [People's Bank] over a four-year period.

Bolsa Alfa (Literacy Scholarship)

This program would pay each of the 20 million illiterate adults a remuneration of R$ 100 (US$ 41) to learn to read, this amount to be paid on the day when he/she writes his or her first letter in the classroom. When the government buys that first classroom letter written by the formerly illiterate person after at least three months of perfect attendance, it is transferring income to the poor population, but, above all, it is eradicating illiteracy in a short amount of time. For the four-year period, the Bolsa Alpha's would cost R$ 500 million (US$ 205) a year.

3. Indirect Social Incentives

University inclusion

Up to R$ 800 million (US$ 329 million) a year would cover the costs of a program by which, for one semester, all university students would be obliged to be literacy workers for four hours of classes a week. Allied with the Bolsa Alpha, this program would not only eradicate illiteracy in four years, it would also create a new mentality in the "social partition" consciousness of our youths and higher-education level professionals. This is a fundamental way to fight for the eradication of poverty.

Hiring teachers and increasing teachers' wages

Over four years, 500,000 new teachers would be hired in Brazil for basic primary and secondary education, and the medium wage for all teachers would be raised to R$ 1,000.00 (US$ 411.00)—an almost 100 percent increase over the current average. In 2006, this would mean a cost of R$ 14.4 billion (US$ 5.92 billion) a year. This is an indirect incentive because these teachers are not from poor families, but, by breaking the cycle of poverty, it would result in an improvement in education.

Hiring of civil servants

It takes more than teachers to make a school. Universal education up to the conclusion of secondary school will necessitate the hiring of sixty thousand civil servants at a cost of R$ 860 million (US$ 353 million) per year.

Healthcare at Home

The establishment of a system of "healthcare in the home" or "family healthcare", for one hundred million people at an annual cost of around R$ 3 billion (US$ 1.23 billion) is an indirect social incentive because most of the costs go to healthcare professionals; beneficiaries, however, will be the poor covered by the system.

University Scholarship

Grants will go to up to 400,000 students in private universities who are taking courses in the areas of specialization needed to carry out the Golden Program, such as teachers, health professionals, sanitary engineers, at an annual cost of R$ 1 billion (US$ 411 million).

4. It is possible

a) The investment in the program

The gross cost of a program for the eradication of poverty in Brazil at its maximum level would be R$ 44.4 billion (US$ 18.25 billion) a year. On the other hand, the cost is in fact much less than that because taxes take back about 30 percent of it, reducing the net cost to R$ 31 billion (US$ 12.8). This amount is still not the real cost because, when in effect, the program reduces expenses in several areas, such as welfare assistance, which would be partly unnecessary; healthcare, by preventing simple diseases caused by malnutrition; education, by ending the repetition of grades; and safety, with the decrease of violence.

It is possible to estimate that the real disbursement for the entire program would not exceed R$ 25 billion (US$ 10.27) in the years of maximum expenses. That equals about 6 percent of the projected revenue for the Brazilian public sector, about 2 percent of the national income. Implementation could begin with about R$ 10 billion (US$ 4.11 billion) in the first year, of which R$ 4 billion (US$ 1.64 billion) was already used in 2001 by the Fund to Combat Poverty.

The Golden Program is an investment. Should its subprograms be maintained for 10 to 15 years, it would become unnecessary, having accomplished its goals. The children of the program's beneficiary families will no longer need that type of support. Brazil will have overcome its landscape of poverty.

b) Ethics and mathematics

Political speeches are usually divided between those suffering from unrealistic utopianism and those imprisoned by financial limitations. The former propose the solution of all social problems without taking into account the limitations of resources; the latter prefer to ignore social problems in favor of considering that there are no resources.

In the name of ethics, the first ones ignore the mathematical limitations; the others ignore ethics in favor of these limitations. In fact, both groups ignore politics:

the first for not understanding that politics does not create resources; it merely reorients those available in society, which is itself always under the dictatorship of finances;

the others for not considering the fact that within the financial reality, even under the dictatorship of finances, politics can change the allocation of resources as long as there is political will in accord with the rules defined in society.

A political speech always needs to keep one foot in mathematics, but it is only justified if it has the other fully planted in ethics. Without ethical sensibility, there is no reason for concentrating resources in the struggle for the eradication of poverty; without consciousness of the mathematical limitations determined by finances, however, speeches about ethics fall into demagogy.

When coldly limited to the reality of the current distribution of resources, the political speech loses sensitivity and ethics and begins to accept poverty as an inevitability, just as slavery was once thought to be inevitable.

The solution is to accept the mathematical limitations of resources but also to reject the ethical reality of how society's resources are now distributed. Most of the political speeches of those who desire a world without poverty, state that it can be done by means of simple government determination, through decrees, as was the case when slavery was abolished by the Lei Áurea ("The Golden Law"). And most of the conservative speeches do not take into account the need for the eradication of poverty, affirming that Brazil has no way to do this.

Every time that a proposal is made, the "lack of resources" objection is raised. This way of thinking is similar to that of many slave owners who claimed to favor the end of slavery but could see no possibility of this occurring since the governments at the time did not have enough resources to buy all the slaves before freeing them. The utopian desire collided with the limits of resources until the government purely and simply came up with the abolitionist law by decree.

The greatest part of society, including many abolitionists, was unable to consider the possibility of the immense unpaid debt to the slave owners caused by the abolition law. It took society centuries to want to abolish slavery, decades without finding the necessary financial resources to buy all the slaves to free them, decades without the technical imagination to come up with the idea of freeing the slaves by passing the debt on to the oppressors. The political will was then capable of accepting this technical solution, which compensated for the lack of public resources by laying the burden for the end of slavery on the shoulders of the slave owners, who had invested immense fortunes in their purchases.

Resources are limited, but, by distributing them within these limitations, the dreams can become reality. In the case of slavery, the distribution was made by decree when the abolitionists had gained enough power, along with the Crown and the Government, for the Golden Law to be signed by decree. In response to the political reality of the moment, on behalf of the Emperor, a juridical technique granted freedom, turning the power of someone to own a slave into the right of everyone to be free. It was a simple, powerful transfer of the slave owners' resources to the slaves, done by an elite embarrassed by slavery, pressured by the abolitionist movements, and subjected to conflicts of the liberationist slaves' movements. And, also, the elite was starting to pay a high price for maintaining slavery.

In the case of slavery, political will linked the dream of abolition with the limitations of resources by employing the legislative solution of the Golden Law. In the case of eradicating poverty, there is not one isolated law that can accomplish this social miracle. To link the ethical dream with mathematical limitations, it is necessary to find the correct technical solutions, defining the group of programs, measures and instruments appropriate for the "Poverty Golden Law," which will be financed through the exercise of political will.

c) Politics and technique

Unlike in the times of slavery, when many considered that the system was permanent and that its abolition would risk social and economic disarray, today everybody says they would like to eradicate poverty. At that time there were religious impediments for the abolition of slavery because a considerable part of theology considered slavery to be a system created by God, while today all theology acknowledges the need to eradicate poverty. There were also ideological impediments because it was then believed that slavery sustained part of the social and economic system, while nowadays it is a widely accepted truth that poverty stands in the way of development and threatens the social structure.

Finally, in the times of slavery there were strong legal impediments to its abolition, especially those that defended the slave owners' rights to maintain the property for which they had paid; today, on the contrary, the laws and the Constitution defend the end of poverty.

Unlike in the times of slavery, today there is no legal, ideological or moral impediment to our moving towards the elimination of poverty. The impediments are, therefore, political since the eradication of poverty demands a transfer of social resources from one use to another, and, above all, they are technical due to ignorance of the means to achieve eradication.

The two impediments, political and technical, are tied together because the first depends on the costs defined by the second.

The Golden Program offers a group of measures that together would serve to eradicate poverty under two premises:

monetary stability, keeping the total public-sector expenses within the limits of available resources, without fiscal deficit;

democracy, always defining expenses and budgetary changes through the Congress, with no "packages" allowed.

5. It is not enough

At this time in the history of Brazilian society, the eradication of poverty is its greatest ethical goal. But, obviously, by itself this objective is not enough. Besides eradicating poverty, Brazil needs to build its wealth, and for that reason it should continue its efforts for economic growth.

The Social Incentives Program for eradicating poverty has an ethical goal, but it also has an immediate influence on economic growth. While distributing the income that covers social incentives, the Program will necessarily create an economic dynamic by means of a Keynesianism that is socially productive and financially balanced. Instead of waiting for growth to eradicate poverty, the eradication of poverty induces the economic growth. A growth from the base.
 

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¹ "Little flannel boys": people who "keep an eye" on your car, or "help" you to find a parking space at a public place in exchange for a tip; they're usually young and carry a piece of cloth, like the orange flannel used for polishing; hence the name.

² Brazilian currency, the real. Rate: US$ 1.00 equals approximately R$ 2.50, at the time of this writing.

Translated by Marcelo Carvalho. Originally published as "Incentivos Sociais" in the January 2002 issue of Revista República.

Cristovam Buarque (cristovambuarque@uol.com.br) is the President of the NGO Missão Criança and the author of the book A Segunda Abolição [Abolishing Poverty: A Proposal for Brazil]. He is the former governor of the Federal District of Brasília and ex rector of the University of Brasília.

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