Welfare 2.0 for the Poor

Article excerpt

Byline: Mac Margolis

In the name of fiscal necessity, American lawmakers may soon take shears to the social safety net. Alan Simpson, co-chair of President Obama's special deficit-reduction committee, has predicted that "the bloodbath will be extraordinary." But even as the U.S. mulls deep cuts, and Europe reels from its own austerity measures, a countertrend has emerged throughout Asia, Latin America, and the developing world. The biggest player is China, which recently rolled out an unprecedented plan to alleviate rural poverty. But India is also expanding its net, ramping up pensions for the elderly. And here's the kicker: most of the 72 "social pension" plans counted in a recent survey by the World Health Organization and the International Labor Organization were found in emerging economies--nations that, until recently, were too poor to help themselves.

The question now is whether they can avoid the problems that have plagued programs in the West. If poorly devised or haphazardly run, social-welfare programs can become economic chest wounds, sucking wind from the broader economy. …