An honest look at poverty and economy in Colombia

This is an article warning the incoming government in Colombia not to fall into the same simple thinking of the old government. The article criticizes Colombian economic policy on a number of fronts. As a sort of aside it criticizes the Familias en Accion program instituted under the last government. This program is essentially a charity hand-out to poor families instead of a job-creation program (and it's been somewhat politicized to boot, but the article doesn't touch on that).

But the article's main point is to add some nuance to the view that economic growth creates employment and reduces poverty, because growth does not always lead to these things. The author gives the very good example that in recent years Colombia's GNP has often grown or shrunken as a result of international oil or mineral prices. This type of growth doesn't create employment, because the same amount of resources are being extracted, hence requiring the same number of workers. It's just that the higher world prices mean that company owners are getting more for the same product. Likewise the article points out that economic growth that concentrates wealth in a few hands doesn't decrease poverty unless there are effective measures for redistribution. Finally, improving investor confidence isn't necessarily a desirable goal in itself, either. For example, investment in more oil pipelines doesn't create a lot of employment. If certain investments don't lead to more jobs and less poverty, then the new government would be well-advised to avoid them. The article advises that the types of investment and growth the government should be promoting if its serious about job creation and poverty reduction are in agriculture and industry.

I want to add a wrinkle to the themes touched on by the article. I have noticed during the presidential campaigns that various candidates, in particular the final two contenders and the eventual winner, have focused on "formalization". This term refers to the drawing of informal workers into the formal economy. Such a measure would have a lot of positive aspects. People like market women, recyclers, street venders, etc. operate mainly in the informal economy, which means they neither pay taxes nor receive certain government benefits like pensions. Bringing them into the formal economy would improve the quality of life of these independent businesspeople and offer them access to credit and services to expand and improve their enterprises, all while bringing money to State coffers and regulating the safety and quality of the products and services offered in Colombia. These are all good reasons to promote formalization.

But many politicians also include formalization as part of their job creation plans. This is either naive or deceptive on their parts. Formally counting a heretofore informal job is a way to increase official employment numbers, but it is not a creation of jobs. The people working in the informal sector are already fully employed and contribute to the Colombian economy and job market. Bringing them into the formal sector makes them more visible, but they exist even before they are formalized. Proposing formalization as a way to create jobs implies that informal jobs are illegitimate, inferior, or even nonexistent, while at the same time playing a shell game to make it look as if the government has aided employment.