http://www.businessday.co.za/articles/Content.aspx?id=116211

Volley of factual blanks in war on social grants

STEVEN FRIEDMAN
Published: 2010/07/28 08:08:17 AM

A VERBAL war on people who cannot answer back is not a pretty sight — even when the people waging it are firing factual blanks. Attacks on the social grants, on which the poor rely to blunt poverty’s edge, have become a common pas time among commentators. As a sign of the times, only a few days ago, national radio chose to portray the Organisation for Economic Co-operation and Development’s report on our economy as a criticism of grants — despite the fact that the passage it cited to illustrate this was fairly marginal to the analysis.

Clearly, those in the middle class who seek to shape the national debate feel that using public funds to sustain millions who need them is a problem.

As usual, we are told that grants “create dependency”, are “not sustainable” and are a poor substitute for job creation.

None of this is new — it is common around the world for the well-heeled and the well- connected to denounce payments to the poor. Usually, myths are trotted out to show that grants are a drain on the public purse and are never put to good use. Because the poor are usually unorganised and voiceless, those who attack grants can often pass off myth and rumour as fact, which is precisely what has been happening here.

The claim that grants cause “dependency” assumes that middle-class people get nothing from the public purse. But our middle class consists of people who were either beneficiaries of a very generous white welfare state — the World Bank estimated shortly before apartheid ended that subsidies to the urban middle class in SA were the highest in the world — or are benefiting from programmes that look after black business and professional people.

The well-off have received far more help than the poor ever have.

This argument also ignores research evidence, which shows that most poor people do not fritter grants away but use them to generate economic activity . Social grants have boosted retailers in rural areas and have, although off a low base, ensured that economic wastelands have become places where people trade.

Here, as elsewhere, most of the myths about grants — such as the claim that they cause teenage pregnancies — continue to do the rounds, despite the fact that research contradicts them. (One economist, asked to provide the source for his claim that “most” teenage women in rural areas are pregnant so that they can receive grants, said a friend had told him!)

Social grants are not only our most effective form of poverty relief, they are a stimulus to the market economy in the areas where poor people live.

The “sustainability” argument makes much of the claim that more people receive grants than pay income tax. But everyone in this country pays tax on the goods they buy. And a few million people can help millions more indefinitely, as long as what the better- off must pay is affordable.

Social grants here are not a significant burden on income-tax payers and, as long as this is so, grants are sustainable however many people pay income tax and however many receive grants.

Ending grants, or sharply reducing them, may also be extremely politically unsustainable. People around the world rarely, if ever, rebel because they want things they never had — usually they rise up because something they had is taken from them. So depriving the poor of grants would threaten social order and could cost far more politically than it would save economically.

The argument that jobs would be better than grants is true but ducks the question of how the jobs are to be created. For a variety of reasons, it is a fantasy to believe that this economy will create enough formal jobs to mop up unemployment for decades, if ever. Because many people will remain without formal jobs, we will need programmes to sustain them and enable them to contribute — grants are a particularly effective form of support because they allow poor people to decide for themselves what their priorities are, rather than leaving it to middle-class policy makers to decide what they need.

Part of the elitism of the anti-grants brigade is a belief that government programmes that give poor people what the government thinks they want are “development”, while grants are “dependency”.

But because most government officials know as little about the needs of the poor as the commentators who attack grants, most official programmes get the needs of the poor wrong. Our experience with grants shows that poor people know their own needs better than commentators or bureaucrats, which is why it is spending on grants that is “developmental”, not the social programmes run by the government.

It is not clear how threatened social grants are at present, both by the middle-class chorus and the mess the government is making of distributing them. What is clear is that much of what the mainstream debate says about grants is far more of an indication of poor people’s lack of a voice than a reflection of reality.

Social grants are probably the government’s key achievement of the past 15 years — it is in all our interests that we celebrate them rather than trash them.

– Friedman is director of the Centre for the Study of Democracy.