Business Day: Attack on social grants is based on prejudice

Attack on social grants is based on prejudice

DESPITE their racial and other divisions, our elites readily agree on one thing — that they know what is best for the poor.
Published: 2011/02/23

Steven Friedman

Our national debate regularly treats poor people with thinly disguised contempt but one issue invariably triggers an orgy of poor- bashing: social grants. While grants are probably the greatest achievement of the post- 1994 period, politicians, academics and commentators vie to voice their deep embarrassment at a programme that allows poor people to take their own decisions rather than relying on those of the elite.

The latest grant-bashing was triggered by a statement by President Jacob Zuma in his state of the nation address: “Since we are building a developmental and not a welfare state, the social grants will be linked to economic activity and community development, to enable short-term beneficiaries to become self-supporting in the long run.”

So deep are prejudices against grants that no one seemed to notice that the statement showed either that Zuma does not understand how grants work or that his government is planning something of which it should be deeply ashamed.

By promising that the government will link grants to “economic activity”, he seems to be assuming that grants are paid to those who can work but don’t. In reality, they are paid to people past working age, the ill and disabled, and to children through the parent who is raising them. Since surely not even our elites would urge that pensioners and the disabled be denied grants unless they work. The only group to which this could refer are the parents of children receiving the child support grant. So is the government planning to force poor parents to dig ditches before their children receive grants? Or is it so out of touch with its own programmes that it believes, wrongly, that grants are encouraging laziness among potential workers? We do not know — and it is a symptom of a national debate more interested in labelling the poor than in championing their interests that no one has bothered to ask.

None of this means commentators and politicians have ignored grants. Talking heads across the spectrum have rushed to lecture the government and the poor on the dangers of giving people a meagre sum to address some basic needs.

The assault on grants is based on prejudice, not evidence. Grants do not consume massive resources — about 3% of the budget goes on grants. And so they are not unsustainable — they require so small a contribution from those who pay income and company tax that we could carry on providing grants even at lower levels of economic activity. And they do not create dependency — grants are, in the main, used to stimulate productive activity and local economies grow on the back of them. Evidence to support these claims is available to any politician, commentator or interest group leader who bothers to look.

So why is the one useful tool current policy offers to the poor regularly denounced by elites on the left, right and in between? Because they threaten another belief that holds our elites together — that the poor need their betters to decide for them.

This is why elites have rushed to support the job-creation programme Zuma announced in the same address. Elites like these programmes. First, they hope they will ensure that the poor no longer make any claims on their conscience by turning them into solid, working citizens. Second, the programmes are devised by and implemented by elites and so they ensure that elites decide what the poor need and when they need it. So political parties and commentators all endorse the programme as a real response to the crisis — far superior to those embarrassing grants.

The only problem is that there is no prospect whatsoever that the favoured “solution” of the elites will end unemployment. Job-creation programmes are notoriously tricky — there is no guarantee they will create many jobs because the gap between what planners think economic actors will do when they are implemented and what they actually do is too great. And even if the government somehow perfects the scheme, ensuring that people and firms respond in exactly the way they are meant to, the size and scale of unemployment means that millions will not find formal jobs for many years.

Whatever the elites do, millions will continue to need grants for years. Grants will also remain the only effective way to meet the needs of the poor because they allow poor people to work out their own needs.

Making grants conditional on work or, worse, cutting back on them, will not promote development — it will ensure that it does not happen. The problem is not grants — it is the ceaseless attack on them by elites, who cannot accept that the poor know far more about what they need than the elites do.