Poverty in El Salvador: Beyond the propaganda

The electoral campaign has turned into an endless list of proposals: the candidates and the parties offer more than they can actually accomplish during the three year administration period that the mayors and congressmen will get if they are elected on March 16th. Among these unrealistic offers there is the promise to fight against poverty. We will present in this editorial a global approach to both the problem of poverty in El Salvador and the poor –excuse the redundancy- electoral proposals about this subject.

To understand the complexity of an issue such as poverty it is necessary to consider that this problem is part of a wider context. The first problematic axis is the structural dislocation of the country, which has three fundamental economic sectors: agriculture, industry, and the financial sector. There are revealing pieces of information about the deterioration of the agricultural sector. Between 1975 and 1999, the evolution of the macroeconomic indicators reveals how the basic exportable products (coffee, cotton, sugar) became no longer important. The deterioration of the agricultural sector is so critical that some authors speak about the end of the agricultural-exportation model. The crisis of this model began during the eighties, and it finally collapsed during the nineties. During this period, the global behavior of the national economy stopped working along with the sector of agricultural exportation.

Parallel to the crisis of the agricultural sector, the industrial sector has shown a clear sign of stagnation. This fact reveals the deterioration of an economic model implemented during the sixties, which is being replaced by an economic model centered in the area of the services, the maquila, and the family remittances. The tendency towards an industrial stagnation becomes evident when the structure of the GNP and the contribution of the leading economic sectors form 1970 to 1999 are both examined. From 1970 to 1974, the active economic sectors (agriculture, forestry, and fishing, industry and mining) represented 60% of the GNP, while during 1999 it only represented a 31%. During those three decades, it went from a 20.4% (1970-1974), to a 21% by 1999. This means that the sector did not grow significantly over the last 30 years.

Contrary to the deterioration of the agricultural sector and the stagnation of the industrial sector, the expansion of the financial sector has led the way to the concentration of millions of dollars in the hands of the families who control the banks, the insurance companies, and the pension system. It is necessary to mention that the expansion of the financial sector has affected the other two economic sectors. These sectors are now drowned into debts, the high interest rates, the lack of investments and the technological setback. Some pieces of information not only show the predominance of the financial sector, but the deterioration of the agricultural exportation model and the rise of an economic model divided in three sectors, anchored in the remittances and the maquila. The sectors that do not produce commercial products at an international level -commerce, restaurants and hotels, banks and insurance companies, transportation and storage, etc.- represented, during the period between 1970 through 1974, a 40% of the GNP, while during 1999 they represented a 69%. In the meantime, the remittances and the exportations of the maquila sector have developed a particular importance for the economic stability: from 1980 to 1984, the remittances only represented 1.5% of the value of the exportation of the primary products, and 5.8% of the exportation of coffee. During the nineties, the remittances represented 11.2% of the GNP, and reached a value that was three times higher than the exportation of coffee was. The available information indicates that for the year 2002, the remittances reached a total amount of $1,968 million, which is equivalent to 91% of the total deficit of the commercial balance. For 2002, the maquila generated a set of exportations with a value of $1,627 million, and this is equivalent to 58.9% of the total number of exportations.

The poverty that affects most of the population makes sense in a context such as the one formerly described. This problem is connected with the incapacity of the productive apparatus to generate an adequate level of employment, speaking in terms of the different kinds of jobs and positions, and a fair salary. Unemployment, underemployment, and low wages become the permanent difficulties for those who want to have a decent and a secure home, and reach an adequate level of health and education. The extreme poverty is the most accurate expression of that social precariousness that affects most of the Salvadorans, and this problem is attached to the structural dislocation of the national economic apparatus.

In El Salvador, in order to have access to the basic elements that allow a family to have a decent life it is necessary to make three minimum wages in the urban area; and almost six, in the rural area. In terms of percentages, for the year 2000, 39% of the urban homes and 97% of the rural families lived in poverty. Approximately, 52% of the families of the urban area are not able to purchase the basic food basket. Some unofficial figures for the years 2001 and 2002 point to the same direction: the minimum wages do not allow the urban and the rural inhabitants to purchase the basic food basket.

The problem of poverty in El Salvador, therefore, is very complex and it is much more difficult to resolve than many of the candidates believe. Both imprudence and ignorance lead them to make promises that they will not be able to fulfill. They do not realize that they intensify the civilian suspicion about the political system and the country’s institutional performance.

The questionable aspects of the electoral campaign

Ever since the race towards the March 16th election began, a series of elements have emerged, and it is necessary to examine them. The electoral campaign has not only turned violent -human lives have been lost already-, but it has also hidden some dirty aspects. The low blows are common, specially when they come from some of the sectors of the official party, which take advantage of their control over a considerable part of the news media in order to discredit their adversaries.

A clean electoral campaign, without physical or verbal violence, and a respectful attitude towards the opposition is, without a doubt, a sign of democratic maturity and a sample of a high political culture. The dream of any society is that, during the campaigns, the candidates would give more importance to the presentation of their proposals to resolve the social and the economic problems, instead of inquiring into the personal lives of their opponents. In all of the democratic societies, the electoral campaigns, in these conditions, become a constant preoccupation. It is always desirable to reach the maximum level of the political rights, but when violence appears, it puts such rights in danger and undermines the democratic principle of the free political expression.

Even if the most advanced societies have been able to reduce or to eliminate the intimidation and the threats against the physical integrity of the political adversaries during the electoral period, to end with the dirty campaigns remains an unfinished task. Despite of the good intentions that are always present, during the campaigns it is difficult to control the low blows or the use of the media as instruments at the service of certain interests. During the campaigns, several reporters like to dig deep into the personal lives of the politicians to take out the worst part of their past. Such behavior is not a crime. On the contrary, it could help the voters to see the authenticity of the candidates and/or their negative behavior. However, the analysis takes a radical turn when we see stories that are only aimed to discredit certain people.

In El Salvador, the Electoral Code contemplates a series of mechanisms against the least civilized aspects of the electoral campaigns. Article 228 establishes that “those who, during the electoral propaganda, insult, defame or slander, or those who either promote or participate in public riots or cause any damage to the property of others will be punished according to the regular laws”. On the other hand it forbids that “anyone injures the morals, the honor or the private life of the candidates with the electoral propaganda”. For those who infringe such dispositions, the regular laws will be applied. In addition, the Supreme Electoral Tribunal (TSE, in Spanish) has the authority to intervene when there are anomalous situations. According to article 295, “the political party, coalition, any kind of news media, and the natural or juridical people who infringe what Article 228 establishes (…) might have to pay a fine that could go from 10,000 to 50,000 Colones”.

However, contrary to what the Electoral Code stipulates, the typical features of the present political campaign are violence, public disorders, calumnies and death. Opposite to what could be expected from the TSE, this institution has shown its little capacity to dissuade the political parties. The militants have behaved against the law. In addition, the process of the Salvadoran democratic consolidation, and a culture of respect for the political adversaries did not necessarily become stronger features after the Peace Agreements were signed.

There is no doubt that the electoral violence that we are experimenting at present is the continuation of the violent situation that prevails in the country. It portrays the emotional state of the society in general. The intention to harm the political opponent is still a part of the amount of issues that the political activists consider –some of its leaders contemplate these issues also-. It would be interesting if the TSE wondered whether there is a direct relation between the political violence of the activists and the behavior and the message of the leaders. That could be a way to question if it is morally valid that the hymn of one of the political parties refers to the death of its opponents.

Another relevant issue for the present electoral campaign is the behavior of the journalists. In El Salvador, as well as it happens in the rest of the world, the news media are somehow dominated by the powerful sectors. ARENA is one of those sectors. Once the nexus between those who have the power and those who own the news media are revealed, it does not seem strange if people see the biased information, a discreditable coverage that goes against the Electoral Code.

The last suspicious performance connected with the way the news media cover the electoral campaign has to do with the revelations of El Diario the Hoy about an alleged misappropriation of funds at the City Hall of San Salvador. On the one hand, there are plenty of unanswered questions about the alleged investigations made by this newspaper. In addition, the Canadian Ambassador for Central America put his finger on the right spot when he questioned the professional performance of the investigators who have not even been able to reveal the identity of the main suspect, the most important stockholder of the company that was denounced. On the other hand, it is evident that the interests here are purely electoral ones, when the newspaper insists on condemning (almost obsessively) the leaders of the FMLN, whose names do not appear in the documents.

The worst part of this case is to condemn the accused ones from the very beginning. The newspaper does not allow those who have been denounced -and literally condemned to ostracism- to reply for the accusations. In addition, several social organizations claim that they are defending the right of free speech in order to avoid any kind of judicial demand, under the pretext of the weak administration of justice in El Salvador.

In this context, any reporter can discredit and insult whoever he wants, and there is no possibility of asking for an explanation because that reaction would be taken as an attack against the freedom of speech. To request the presence of a reporter or the presence of the representatives of a news media at a court house when he claims to have proofs against someone should be a normal procedure.

The new fiscal measures

Last week they made public the fiscal measures that the government is implementing in order to improve the tax collecting system. The Ministry of Hacienda (the Internal Revenue Service) is now using a tax collecting policy with the objective to end with the fiscal evasion. At the same time, it intends to reduce –through the implementation of an Executive decree- the expense of the different institutions that belong to the public sector. As a first achievement, they highlight how this Ministry successfully collected $141.7 million during February, when by this same date, during the last year, they had only collected $123.1 million. Their goal is to obtain $1,731 million by the end of the year in the concept of taxes. In order to do that, this institution will be paying attention to a series of commercial establishments, to observe if they are giving receipts to their customers.

A measure of this kind is after, among other things, the reduction of the present deficit of the public sector, in order to improve the way that can lead to an economic stability. A few years ago, those who are experts in these matters would have said that the dynamic of the growth of the public expense could cause an economic instability, since during the last years the public debt has been continuously growing at an accelerated rhythm. However, it is important to observe the possible consequences that both the increasing fiscal pressure and the reduction of the regular expense might bring.

A strong fiscal pressure, such as the one that the Ministry of Hacienda intends to implement, even if it is positive because it is aimed to end with the evasion of taxes, it can also affect the income of the social sectors that live in poverty. To this date, as a general procedure, 57.1% of the revenue that the government obtains comes from the Value Added Tax, and 29.4% comes from the income taxes. The Value Added Tax is an indirect tax, and because of its nature levies goods and services regardless of the purchasing power of the buyer. Therefore, the effort that the government should be making would have to be aimed to reduce that regressive taxation.

Some people say that there is a regressive taxation in a country when the taxes usually affect those who have the lowest incomes. That is why it is necessary to end with the evasion of the income taxes; in that sense, the Salvadoran government is taking a step forward.

A taxation that mostly relies on the collection of the income tax is a convenient type. Theoretically, the income tax should have different levels and the rates should be proportional to the level of the income of the individuals. Therefore, those who earn more money should pay more money.

In addition, among the measures announced by the Ministry of Hacienda there is the reduction of the regular governmental expenses. In reference to this subject, the Executive power has issued a decree that intends to establish a budget cut for the expenses on fuel, cell phones, and coffee breaks, among other expenses. They are also talking about freezing job positions and salaries inside the different institutions of the state. This measure is aimed to hinder the inadequate administration of the governmental resources. Nevertheless, this action could have more implications than those expected by its promoters.

Among other things, the government should understand that there are certain kinds of regular expenses that the different public institutions make, which are not precisely unnecessary, but, on the contrary, are important for its performance. Therefore, the definitions “regular expenses” and “unnecessary expenses” should not be understood as the same thing. It is essential to see that the austerity policy does not affect the activity of the governmental institutions. In summary, even if this measure is fundamentally aimed to reduce the regular expenses of the different institutions of the state, it is important to understand that there are certain branches that, before the reduction of its financial resources, will not have an optimum performance.

In this sense, to freeze the job positions at the public apparatus, prevents them from hiring new personnel, and that, as far as the executive decree is concerned, means to make significant changes inside the institutions. Just as one of the newspaper put it, “the institutions will cover the new activities as a product of the institutional objectives, including those that will emerge because of the changes in the functions and the administrative reorganizations” (La Prensa Gráfica, 03-04-03, page 3). If these changes are implemented, the governmental institutions will be expected to keep working more efficiently.

It is important to wonder how the different institutions will obey the decree. It will be interesting to observe the behavior of the expenses of the Legislative Organ, which is actually one of the governmental institutions that spends more resources on traveling expenses, meals, and accommodations. For the Ministry of Education, a decree of this nature becomes an obstacle to hire new teachers in order to resolve both the urban and the rural education needs. For the public health sector, on the other hand, this measure could intensify its problems, since it reduces the budget aimed to cover the health needs of the population at the ISSS as well as at the net of national hospitals.

Therefore, any budget cut on the public expense, even if it should be aimed to try to strengthen the governmental finances and achieve a fiscal stability, it should also consider the social and the economic impact more carefully.

It seems as if the Salvadoran government in not willing to allow, as far as it is concerned, an improved growth of the public sphere. This could question the efficiency and the performance of the different institutions that belong to the national public apparatus. At the same time, the search to reach that objective should not let anyone ignore the basic needs of the population.

The administration of the public finances is especially important for the government of any country. They are basic mechanisms to reach a fair social development. Therefore, an appropriate and a reasonable use of these resources should be aimed to resolve the most fundamental economic and social problems that a society has. An irrational administration of the state’s resources could unleash an economic instability which can be shown by a considerable public deficit, and an intense bureaucracy, which could be an obstacle for the correct performance of the governmental institutions. The corruption and the lack of transparency of the public activities run the risk of growing worse in these conditions.

It is important for the citizenry to make an effort to be informed about the administration of the public funds. There should be a special interest for the “public affairs”, an issue that does not only concern the politicians, but the citizenry in general. The citizenry should realize that the taxes people pay are those that finance the expenses of the state.