Direct cash transfers to very poor will create parasites- Nandlall, economists

Last Updated on Wednesday, 8 August 2018, 12:02 by Denis Chabrol

Economics Adviser at Venezuela’s Central Bank, Carlos Mendoza Potella.

Opposition People’s Progressive Party (PPP) presidential candidate hopeful, Anil Nandlall and two Economists are opposed to direct cash transfers of some of Guyana’s oil revenues to very poor households.

“What the data shows is that policies of this nature develop a degree of dependency that destroys the human initiative. It destroys families, it destroys communities. It creates not only a sense of dependency but it creates parasitism. It makes the human being into a parasite, dependent only on the largess that will come from the State,”  Nandlall said.

Nandlall, University of Guyana Economist Dr. Thomas Singh and Economist at Venezuela’s Central Bank Carlos Professor Mendoza Potella are all opposed to conditional disbursements to ordinary people to improve their health and education status.

Nandlall said he expected government to accept Professor Clive Thomas’ recommendation for cash payments, but he said experiences in other countries have shown that it destroys private and individual initiatives.

“It destroys the work ethic of a people. It destroys the determination and the drive to succeed at a personal level because why you want to do that when somebody is going to send you a cheque,” said Nandlall on his People’s Progressive Party’s (PPP) radio station, Freedom Radio.”If we follow this advice of Professor Clive Thomas, we will create a country of parasites. We would create a country where nobody would want to work. We will create a country where nobody will want to work, where there is no professionalism, there is no work ethic. Who will want to work when they know whether they work or not they will have a fat pay cheque coming to them every month,” he added.

Opposition MP and former Attorney General, Anil Nandlall

Stressing that people would not want to work if they know that they would get a cheque every month, Nandlall said the government was not interested in wealth creation. “Here, we are making people parasites, we are making them dependent on a pay cheque,” he said. Instead, he recommended that government uses some of the oil earnings, which are expected to flow from 2020, to invest in the university, grant scholarships, improved access to the Internet, boost manufacturing and agriculture, develop cheap sources of energy to process produce and woods.

Singh favoured people being paid based on productivity or the transfers would result in resource allocation problems.

Noting that in the United States, people had doled cash out by the State to satisfy their preferences such as alcohol instead of their needs, the University of Guyana Lecturer suggested perhaps government could consider running a pilot project on cash transfers with a small section of the population to determine how it will work. “Do it on a small scale as a field experiment where there is a controlled group and a treatment group. Give the treatment group conditional transfers, and another control will be transfers but without conditionalities…and if it’s determined it will work then we scale it up. I certainly do not recommend doing it because it seems to be the most natural logical thing to do,” he told Demerara Waves Online News.

Dr. Thomas Singh

Even if the cash transfers are linked to certain conditions, Singh said the poor would most likely place a short-term value on the monies they would receive if Distinguished Economics Professor, Clive Thomas’ suggestion is accepted. “The poor tend to have a very high rate of time-preference. If that is so, they might be unwilling to spend on education, for example, with the extra money even if they say make it conditional because the returns are far in the future so I’m saying it’s a difficult proposal even if you say it’s in the future,” he said.

Professor Mendoza Potella, who is a petroleum adviser at Venezuela’s Central Bank, told Demerara Waves Online News that the oil revenues should be used to create jobs instead of giving free money to persons because “that makes no economic sense”.

“Go to work. I can’t give you money if you don’t work. It is a parasitic. You are growing parasites,” he said. “That will cause a society of beggars”.

Instead, he recommended that the State invest oil revenues in providing high quality free health care, free education from nursery to university, more housing, electricity and water and increased food production.

United States-based Guyanese Economics Professor, Tarron Khemraj and International Financial Analyst,

Economics Professor, Tarron Khemraj (photo from New College of Florida)

Sasenarine Singh welcomed Professor Thomas’ recommendation. Khemraj, however, suggested that the emphasis that cash transfers must be accompanied by initiatives to educate people for the job market. Singh said such disbursements should be capped at US$90 million annually and made to persons who are registered taxpayers and contributors to the National Insurance Scheme.

Professor Thomas floated the idea of direct cash transfers to poor Guyanese last Sunday at a public forum held at the Friendship Primary School, East Coast Demerara. The event, which was organised by the Buxton First of August Movement, focussed on the topic “The Coming Oil and Gas Economy: Prospects for Empowering the Poor and Revitalizing the Village Economy”.