An easy choice

The case for abolishing the TCB.

Here in Bangladesh we have one of those grand luxuries not available to others elsewhere: We have that grand local example of not what not to do.

I refer, of course, to the neighbours over in India.

The value to us is that if India says the solution to a problem is to do it this one specific way, then we know, absolutely, that that’s not actually the way to do it.

It’s remarkable how they manage it but really very useful for us that they do the grand examples of what not to do.

The lesson from this is that we need to abolish the Trading Corporation of Bangladesh (TCB).

Change the law to strike it out of existence, kill the budget and wave goodbye to all those hard working people.

Now, I know, you’re going to say but the TCB provides low-cost items for the poor, Cooking oil, lentils, sugar, the TCB buys these at market prices.

And distributes them at subsidised prices to one crore poor families.

To which my answer is yes, yes, it does, that’s why we’re going to close it.

Our example of what not to do is the Indian system of vastly corrupt purchase and direct distribution of foodstuff to the poor.

Given that’s what they do we know it’s the wrong thing.

But why?

It is possible, of course, that I think we should do this just because I’m a foreign capitalist who wishes to oppress the poor even more.

It’s also possible to suggest that as this is the way that our Indian neighbours alleviate poverty state distribution of subsidized foodstuffs then this is obviously what we shouldn’t be doing.

But the real answer is that we can alleviate more poverty for the same cost by doing it a different way.

We want to be more efficient here, that is.

It would be an odd concept for some that we want to be efficient in reducing poverty.

“Efficiency” has all those overtones of profit, of pushing people to extremes, of, in fact, simply being too uptight about everything.

My answer would be, “yes?” If we’re trying to alleviate poverty don’t we want to be uptight about it?

Push people to do it the right way? In fact, couldn’t we say that alleviating poverty is hugely more important than anything like mere profit?

Therefore, we’ve got to be even more efficient than the capitalist bosses when we try to do it, don’t we?  

Which brings us to two different things about the efficiency of reducing poverty.

It is always more efficient to subsidize people by giving them cash than it is to provide them with goods or services to the value of the same amount of cash. Sorry, yes, this just is true.

The reason is that all of us enjoy our own agency. That ability to decide exactly what it is that we want, when we want it.

The other way of saying this is that preferences differ from person to person.

So if we give the same things to a group of people the value received by each person differs by how they value each of the things they’ve been given.

It costs us the same amount to provide those things to each family, but each family values them differently –

Because each family has those slightly different values and has a preference for agency in being able to choose which they get.

Sorry, but this just is true.

Even handing out cheap or subsidized food, there will always be those who prefer chickpeas to lentils, however strange that idea might be.  

So, to maximize poverty alleviation we should hand out money to the poor, they then go make the choices of what they want with it.

The cost to us is the same, the value received is higher, we’ve been more efficient, more productive, in our allocation of the poverty-alleviation budget. The world’s a richer place. 

We can also be rather more specific. The TCB is subsidizing “two litres of soybean oil, 2kg of lentils, and 1kg of sugar will be sold to each of one crore families.”

The net savings to each of those families will be Tk350. Now think a little.

The TCB buys those goods, stores them, transports them, keeps the little list of who is allowed to have them, sells them, and then claims all those costs back from the government.

Or, we could take that list and send everyone on it Tk350. 

I’ve already insisted that the cash makes the recipients richer. But which is cheaper for us? Running the whole of the TCB process or sending out the cash? 

Quite. It can cost us less, make the poor richer, by just giving them the cash. Abolish the TCB.

And, of course, the reason we want to alleviate poverty the efficient way is because it’s too important a thing for us to not do so that way therefore we want to do more of it.

Which does mean doing it efficiently.

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