Properly devised social protection tends to spur growth and development and a lack of it has a definite hobbling effect on the rate of change in prosperity that a country aspires for. In fact, in the deafening din about the market economy we tend to forget that social protection, as is understood in the sense of public welfare, has a definite defining role in the process of development led by the market.

In my previous blog I discussed one aspect of inequality and shocks and how it may affect development. In continuation of that let me point out that there is no economy in this world that hasn’t had the crippling experience of inequity and poverty during some interval of its history however developed it may be now. In continuation of that let us now take, for example, the experience of the Nordic countries seen in the material, social and health perspective. The relatively near absent inequity there is attributed to an efficient institutional system that focuses on equal opportunity for all when it comes to education, social and health management. And the tool used to achieve this goal that is the aspirational struggle for a lot of countries, has been through progressive taxation and institutionalized welfare steps.

The Nordic countries boast of a very high average academic capability per citizen that itself has arguably led to the sustainability of what is in some quarters described as a social democratic political structure that has successfully married democracy with socialism in the sense of universal equal opportunity in access to the basic needs of life.

The reason for social protection being the necessary condition for achieving development lies precisely in the creation of equity in access to basic amenities of life, including education. Poverty is first defined by lack of access to basic amenities of life. And the lack of this access is the first reason for an un-empowered citizenry. If we look at the dynamics, the process in a simplistic way works in the following manner.

If a person is born in an economic stratum that is characterized by a struggle for existence, it can be safely assumed that he would also spend his life merely struggling to live and exist. There is no gainsaying the fact that such a situation closes his window for bettering his life unless of course he by a quirk of fate wins a lottery or something. And market economy by itself will not provide him the opportunity to rise above his station.

This is where social protection becomes important. Instead of chance or a quirk of fate, if there is social protection mandating access to education and health, and also a provisioning system that takes care of the child’s absence as a denied source of supplementary income to its parents, it would boost the process of development. Education empowers through creation of employ-ability with awareness and access to healthcare take away the worry and the resultant pressure of creating provision for it from the next to nothing income that the poor earn. Access to basic minimum requirements of life frees up enterprise in the poor, in turn, opening up that closed window towards a better life.

Social protection thus expands the economic bandwidth of a nation. As the nation turns prosperous so does its tax kitty on the one hand, on the other, as the people thus also turn prosperous the pressure on the government coffer in the long run also lessens thereby creating surplus for investment in basic research and infrastructure. Therefore there is no gainsaying that social protection is a necessary condition for economic development. The policy challenge here is innovative creation of instruments of delivery of such protection specially in a hugely populous country like ours.

Without splitting hair over categories, one could safely say that poverty is the consort of inequality, or if one wants to be blunt one could also say that poverty is the necessary outcome of lack of equality. Before going forward it’s important to be definition-ally clear about the distinction between equity and equality. Equity, as we all know, is all about giving what a person needs to be successful and equality is about treating everybody the same.

The argument here is that one needs to address the issues of lack of equality and shocks in order that the poverty may be effectively ameliorated. Without getting into too extreme a situation to flesh out our logic let us take the example of flood and agriculture. A natural devastation like flood tends to kill all the standing crop in the affected area. It is a loss for a rich and a poor farmer alike. But the impact of the loss differs between them given their differing prosperity levels. In the first case the loss may be bearable given the accumulated wealth that a rich farmer may have and during the next season he will have ready access to cash to invest in new crop. In the interim period, his needs will also be met from the accumulated reserve that he will have access to.

It doesn’t require an academic rigor to understand that he who has access to accumulated fund to tide over a shock that affects the income flow and return on investment will yet be able to recoup his economic situation.

The case however is exactly opposite when it comes to a poor farmer. With no surplus to depend on every flood, forces him to greater degree of poverty. Given the economic situation that describes a poor farmer, it may be safely assumed that he is heavily indebted, maybe even with his land mortgaged. A flood would mean he not only has to feed his family without any legitimate flow of earned sustenance till the next cropping season, it may also mean he will have lost whatever little land he had to call his own to raise funds for the purpose. The next season will see him as an agricultural labour trying more desperately to meet both ends meet.

In a situation as described above we can clearly see the role that lack of equality and equity plays. In a society that doesn’t discriminate in providing equal access to everybody in basic need satisfaction will almost axiomatically have created a protective infrastructure that allows none to slide into abject penury thereby preventing enhanced poverty resulting from such economic shocks as floods or any other disruptive event.

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