EconomyRich country, poor town

Rich country, poor town

(Expansion) – Mexico is a country with great wealth, but essentially poor. How is this possible? We are one of the main international tourist destinations, leaders in manufacturing, we have a great diversity of natural resources, a competitive workforce and we export all over the world.

True, but there is also another side to Mexico, the reason why we are a developing country and not a developed one. And when I say that we are essentially poor, I do not mean that poverty is an intrinsic quality that defines us as Mexicans, but rather that the base of the population is essentially poor (or very poor).

In this context, it is crucial to explore measures that help not only lift people out of poverty, but are also useful in keeping them in a state where they cannot return to it and that, in the medium and long term, provide the conditions for the country to develop.

Identifying the problem is part of the solution and, fortunately, we have the help of the to know what we are facing. First, it must be mentioned that poverty is not only an economic aspect or that can be measured merely by income, it is also a social issue, of rights. For CONEVAL, poverty is multidimensional because it considers that people can present certain , six to be exact, in addition to economic well-being (income).

So, let us not be fooled when we hear that more resources have been allocated to social programs, if those resources were granted at the expense of the social rights of the population, because what is the use of a family receiving monetary support if now they have to buy the medicines you need on your own because the health system does not have a budget.

Unfortunately, within the group of people who live in poverty there are more and there are fewer of them, and those who suffer from it more than anyone else are people in a situation of extreme poverty, that is, those households that subsist on incomes below the (LPEI) and who accumulate more than three social deprivations. It is hard to imagine that a family can live in minimum desirable conditions with so little, but this was the reality of more than 10 million Mexicans (2020 data).

Identifying the problem is part of the solution, but what can we do about it? In this blog we explore some proposals. In the short term, it is essential that the government be able to guarantee people a minimum of well-being that helps them fend for themselves; that in the medium term, more robust measures can serve to keep the ship afloat; and in the long term, we would expect these policies to be reflected in higher economic growth and lower inequality rates.

First, the most immediate needs of the population should be met through social food and health programs, because a person who does not eat cannot work, and if he cannot work, he cannot pay for his food, right? Cash transfers or targeted social programs can help us reduce inequality, but it is necessary to know who to offer them to, if they would be subject to certain conditions being met, and for how long.

If we were to provide support on a discretionary basis, there would be no incentives for this money to be used in factors that increase productivity or improve the skills of the beneficiaries.

When people can work, it would be time to take the next step: create conditions so that they can join the world of work, especially the formal one, since work is the source of a country’s wealth, and the more favorable the conditions are to take it out, we would expect households to be able to receive higher incomes. In this sense, four concrete actions could be carried out to give continuity to our plan to eradicate extreme poverty.

In the first place , we could guarantee access to quality education through a program of conditional cash transfers (CCT) and a system of schools where parents can exchange government vouchers so that their children can attend the school of their choice, encouraging thus the competition between educational institutions.

Secondly , it is essential to generate job opportunities in the sector . A person who works from does not have social security. Informal workers hardly receive a pension, they have access to formal credit (mortgage, consumer, automobile, SME, among others), insurance against unemployment or major medical expenses. And since most of the population works in these conditions, it is imperative to create more formal jobs and eliminate barriers for those who wish to join them.

Third , it would be helpful if our government promoted the creation of a universal social security system. Regardless of whether you are a formal or informal worker, we should all have the certainty of being able to attend to a quality hospital or health center, and since social security contemplates tripartite contributions in the Afores compared to those that voluntary contributions of informal workers , the universal system would reduce the incentives to remain in the informal sector and would make it easier for workers to join the formal savings, credit and insurance market, instruments that are useful for facing adversities, financing long-term projects and smoothing inter-temporal consumption.

Finally , I would like to highlight the importance of investing in technical and professional training of the workforce, better known as human capital. Mexico is rich in resources and low-skilled labor, but what if workers were able to produce more elaborate manufactures or if greater knowledge could reduce operating costs? Then the workers could make better use of the available capital, increasing their productivity and the incentives to continue investing in both factors. Thus, investment in human capital would translate into higher income for households and greater economic growth.

In such a way, the measures we are talking about would not only help people get out of poverty as long as they are granted subsidies, they would also be useful in keeping the population in a state where they cannot return to it and, inequality is a matter of fairer distribution of wealth and not misery. For this reason, I believe that it is worth dedicating our efforts to working for those who need it most and for the good of our country.

Editor’s note: Alan F. Flores Martínez (@alanflors) is a graduate of the Bachelor’s Degree in Economics and a student of the Master’s Degree in Applied Economics at the Autonomous Technological Institute of Mexico (ITAM) and performs Social Service in The opinions published in this column correspond exclusively to the author.

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