Can New Social Programs Bring About a New Period of Political Incorporation in Latin America?
15 Pages Posted: 13 Aug 2009 Last revised: 28 Sep 2009
Date Written: 2009
Judging from historical precedents, it is possible that new social programs, namely non-contributory social protection and conditional transfers, could underwrite a new period of political incorporation in Latin America, cementing political loyalties and institutional channels of popular participation. This paper looks at this question in two parts, political and fiscal, with the central question being whether the relationship between the informal sector and these programs could be sustained - and if sustained, whether it could involve political loyalties strong enough to “shape the political arena” (Collier and Collier 1991) and defend democracy. It has argued that the loyalties are probably shallow but also likely to induce some positive regard for democratic rules, because democracy plainly favors the emergence of this programs. Fiscally, the limits are more severe the poorer the country. In terms of tax policy, it has argued that a VAT is probably the best source of revenue, both for the political sustainability of redistribution and from the standpoint of fiscal efficiency. As for a new period of incorporation, it concluded that the heterogeneity of the informal sector and the nature of the benefit relationship make this unlikely - especially in poor countries where the informal sector is largest. The paper closes by speculating that in such countries, universalism will be hard to sustain, possibly to be supplanted by clientelism toward politically strategic parts of the informal sector.
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