Give a man a RM5 fish or a proper social safety net?

 

A government minister needed to dig himself into a hole. So he asked his civil servants to design him a “Dig-a-Hole for the Government” policy, which of course they were more than eager to do.

Drawing on their decades of collective experience of digging governments into holes, the civil servants assembled a group of innocent youths, who were otherwise happily unemployed and causing nobody any harm. They equipped each one with a spoon.

After a short, government-funded, on-the-job TVET course, costing millions in taxpayers’ money but generously provided at short-notice and at “cost-price, plus-plus” by relatives of the civil servants, the hapless youths began digging with their spoons.

After a week the minister came to review the progress and found that very little had been achieved for all the time and money that had been spent. He demanded change.

“Don’t worry minister,” cried the bureaucrats, “we have many more ideas in our policy toolbox.” Bringing him said “toolbox of wonders” they gleefully opened it to reveal their wide portfolio of policy innovations.

The minister looked into the box and to his amazement found the solution to all of his problems – MORE SPOONS!

Within days of becoming prime minister, Anwar Ibrahim instructed civil servants to come up with targeted subsidy schemes. At the time I wished them the best of luck but predicted that, other than for utilities and petrol, targeted schemes will not work and we will just get more spoons.

For example the Menu Rahmah cheap meal scheme, is just a scaled-down version of any bigger subsidy scheme, albeit roping-in the private sector, and it fails for the same reasons.

First, Menu Rahmah does not target the poor because anyone can buy the food. How can a stallholder distinguish between a millionaire in shorts and slippers and an unemployed single mother dressed smartly for a job interview?

Second, it is expensive. If each member of the 127,000 hard-core poor families had one RM5 meal per day for one year it would cost RM927 million.

Third, it benefits companies, not the rakyat. The RM927 million potential spending, from their own pockets, is a direct cash transfer from the poor to the rich.

Fourth, it distorts the market as smart consumers switch to RM5 meals, leaving other stallholders with unsold RM6 meals looking like money-grubbing profiteers.

Finally, although there is no direct evidence of corruption yet, someone is making money out of this and it is not the hardcore poor. Perhaps the app provider will make some money, who knows?

By contrast a social protection scheme in the form of a cash transfer of RM600 per month through a universal basic income, a reverse income tax or whatever you want to call it, would cost less than the RM927 million potentially spent on Menu Rahmah for a year.

So give a man a RM5 ikan bakar and he will eat it himself in 15 minutes, give his family a social safety net and they will all eat and cover many other small expenses for as long as the social protection is provided.

Well-meaning or not – and the jury is still out on that – subsidies, food parcels, free tablets for students or any other form of civil-service designed policy spoon is not going to solve low-incomes, hard-core poverty or cost of living issues and will more likely make things worse.

So while the prime minister was right to give civil servants first shot at possible policy solutions, it is probably now time for some fresh eyes on the problem of subsidy reform, cost of living and social protection. Hopefully these will come soon. - FMT