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Bangladesh: Social Unrest, Elections and a Failed Social Model

07/01/2014

Bangladeshi children

Bangladesh has just experienced troubled elections boycotted by the main opposition party, amid strikes and violence. It is not a happy country. Yet, in many respects, since independence the country has made good progress. While many commentators in the 1980s wrote off the country as a basket case, its economy has expanded: since 2000, its GDP per capita – in PPP terms – has risen from US$900 to over US$2,000 in 2013. The rate of extreme poverty has also fallen substantially. Regardless, Bangladesh remains a country in which more than 80% of the population lives in poverty – when measured against a US$2 per day poverty line – with over 40% of children experiencing malnutrition. Indeed, it is a country in which a rickshaw driver is regarded as relatively affluent.

The current social unrest has many causes. But, a fundamental reason has been the social model followed since independence, epitomised by incredibly low government revenues of only 13% of GDP – remarkably, this is less than in 1995 – some of the lowest in the world. Rather than investing in social policies that build the nation by strengthening the social contract between citizens and the state – such as good quality health, education and social security systems offered on the basis of universal access – Bangladesh has followed a neoliberal doctrine of low taxes and minimum social investment. As a result, the social contract remains weak: citizens do not perceive that government is committed to delivering the quality of services they demand.

The failed social model is epitomised by the country’s social security system. Although Bangladesh spends around 2% of GDP on social security, it “targets” its programmes at those living in extreme poverty (even though the majority of those in extreme poverty miss out). In contrast to other low and middle-income countries, it has not developed entitlement schemes that offer benefits on the basis of citizenship, such as the universal old age pensions found in many other countries. Instead, social security schemes in Bangladesh are viewed as “handouts for the poor”: those in the middle and more affluent families are excluded (apart from public servants who are eligible for a pension). Similarly, investment in the health and education sectors has been negligible: they remain as poor quality services for low-income families.

Development partners have not helped. When I was in DFID, I tried to persuade our Bangladesh office to support the government in reforming and strengthening its social security system – as a means of building the state – but without success. Instead, development partners preferred to invest in powerful NGOs – such as BRAC – enabling them to build their own public services. Because of the relatively good quality of these services, they placed the services provided by government in a further bad light, again contributing to a weakening of the national social contract. 

Things are beginning to change. Some development partners have begun to engage in policy dialogue with government on the national social security system. Unfortunately, some are still promoting the same tired old message of “targeting the extreme poor” without realising that this will not strengthen the social contract and build the nation. Some are even promoting our dear old friend – the proxy means test – despite the irrefutable evidence that it functions as a lottery and weakens social cohesion. As an indicator of old-fashioned thinking, the World Bank recently managed to persuade the government to take a US$500 million loan for workfare, perhaps the least likely social protection instrument to build a nation.

If politicians in Bangladesh are committed to building the nation and moving beyond the cycle of political and social unrest that has blighted the country in recent decades, a paradigm shift in social policy thinking is required. Entitlement schemes need to be established that deliver benefits to citizens rather than to the “poor.” As in many other countries, a universal old age pension would be a good place to start: a recent report by HelpAge International provides evidence that a pension could be provided to everyone at a reasonable cost (at the same level of investment as the universal pension provided by Nepal). If such a policy were adopted, the government could promise citizens to provide them with a specific amount of cash – in other words redistributing the nation’s wealth to everyone – and, importantly, it would be able to deliver on that promise – since universal pensions are the easiest social security instrument to deliver – providing physical evidence that the government cares for all citizens. The pension could be the start of efforts to strengthen the social contract and build the nation, and could be followed by similar commitments to develop other public services as entitlements, ensuring a similar quality of service for everyone.

Of course, all of this depends on breaking with the current neoliberal model and increasing taxes. Realistically, over time, Bangladesh needs to more than double its current government revenues as a percentage of GDP, a significant challenge (although it would still be low by international standards). But, it can only do this if it moves from delivering programmes for the “poor” to building public services for all citizens. The more affluent will only accept higher taxes if they also benefit from the services financed by the taxes. It will not happen overnight – it took decades in developed countries – but it does need to begin.

Perhaps by the time of the next election there will be a political party that has learnt that elections can be won by promising – and delivering – good quality services for everyone, even if this implies an increase in taxation (and even though the initial investment may be modest). If so, a process could begin of building an inclusive Bangladesh that contrasts with the current situation of a country that effectively serves the interests of a small elite by avoiding meaningful redistribution.

COMMENTS 8

  • Dear Reagan,

    Thanks again for your comment. Denmark took decades to get to where it is at present. Interestingly, one of its first entitlements was a pension that it established in around 1880, and that began to build confidence in the state as being able to deliver services. If you’re interested in the development of social policy in high income countries, I’d recommend reading Peter Lindert’s book “Growing Public”.

    Best,

    Stephen




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  • Dear Colin,

    Thanks. I’m certainly not against directing resources to families that are vulnerable or on low incomes, when it is appropriate. The point I’m making is about the broader philosophy at play in a country: is it a country committed to higher taxes, more redistribution and higher quality public services delivered as entitlements; or is it a country that believes in low taxes and the small state and, therefore, restricts its public services to the “poor” as a means of reducing costs. Some things are best delivered as entitlements with inclusive universal access: health, education, pensions, etc. But, this doesn’t apply to everything.

    A programme like Shiree seems to be great – I fully support your work – and evidently it is important to find the right families for these types of schemes. I’ve recently designed a similar scheme in Laos, with a selection methodology that tries to identify the most appropriate families (so I’m definitely not against this). But, Shiree isn’t a state social service. It’s similar to NGO schemes in high income countries that should, necessarily, try to reach the most vulnerable, and complement – but not replace – the state’s delivery.

    Indeed, even in countries with a strong commitment to universal entitlements and redistribution, there is always a need for additional support – some form of safety net – for those who are still in need, even after they access any entitlement schemes. Universal access cannot be provided in everything (New Zealand, for example, has a great universal pension but its housing benefit for older people is directed at those on low incomes). Rather it is the overall philosophy underpinning the design of the architecture of social policy that is important, and we can get a good idea on that by examining the level of taxation in a country.

    If you’re interested, there’s an article in today’s Guardian discussing a similar topic of social cohesion and building the nation in the UK (the issues in Bangladesh are common to many nations, although in terms of their specifics, they vary). I’m struck by the quote: “The essential spinal cord of any modern nation is not a balanced budget, though that is not irrelevant, but the welfare state. If we cannot provide effective welfare, pensions and healthcare for one another, we are not a community or a nation.” You can find the full article at:

    http://www.theguardian.com/commentisfree/2014/jan/08/modern-britain-can-survive-bind-nation

    Best,

    Stephen




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