It is urgent to improve social policy. Social spending absorbs a good proportion of fiscal spending and urges to initiate a gradual reform process to increase its efficiency and effectiveness.
Today, social programs have multiple problems. On the one hand, coverage is inorganic and inefficient. On the other, they are designed to face chronic, permanent poverty. However, at present, in Chile, poverty is dynamic, temporary. Being defined in this way, the eligibility criteria are rigid, so if the condition of the subject varies minimally, this runs the risk of losing all the benefits that social programs give it, which generates negative incentives, such as the trap of poverty and labor informality. This, because, in fact, social policy faces people with low income with confiscatory taxes. Therefore, people are driven to make efforts to hide that stopped meeting the requirements to receive funds. A program with a different design would not generate these perverse incentives.
In turn, Chile’s social policy has shown to have a low capacity to reduce income inequality. This is precisely due to the fact that such social policy is composed of hundreds of low -scale programs and doubtful effectiveness, each created to meet a particular need, whose relevance has been repeatedly questioned, but the programs survive.
The problem is that each of these programs has those who defend it to Rajataba. They are on the one hand who manage them and acquire some power to do so. And they are, on the other hand, the beneficiaries who fear losing the benefits if the policy is reformulated (in some cases because they are aware that they no longer meet eligibility conditions). These people, both in bureaucracy and in society, have rigidized the grid of social policy and do not allow innovation.
It is urgent, then, to establish a plan to change this policy and focus on a small number of initiatives and put the center of social policy a program that transfer cash. This should replace a good part of the programs that constitute the existing dysfunctional social policy. And do so without allowing created interests that are alien to the objectives of social policy prevent it.
Making a concrete proposal is not the objective of this column. But a first step in the aforementioned address would be to implement a program that transfers effective to formal low -income workers. This generates an additional virtuous incentive, since it encourages people to look for formal work.
By ClaudioFARO UDD
