Thursday, January 24, 2008

Whatever happened to those fingerprint thingys anyways? 

Recently I pointed out how why I believe Venezuela would do better to eliminate price controls on most (all?) products and replace them with subsidies targeted to the poor. This would give incentives for producers to produce more, would reduce the contraband problem, and would target government subsidies to only those who really need it instead of giving it to everyone.

One objection that was raised is that being able to properly identify those who should qualify for the benefit and then making sure only they get it may require administrative capacities that Venezuela simply doesn't have.

Indeed, that is a very important point. If a proposed solution simply isn't doable then it isn't really a solution after all. So the issue of whether or not Venezuela could properly administer subsidies targeted to the poor is something we should look at.

At the present time the main issue revolves around food (in fact just yesterday the state oil company PDVSA started handing out packets of food to anyone who bothered to stand on a line to get it) so I would like to take that as the concrete example to examine. The question then becomes how can the government determine who should get subsidized food and then make sure that those people, and only those people, actually get the food rather than it being stolen or diverted.

I think the most difficult part is actually determining who should be eligible for the discounted food. Yet even that is not impossible and while the government may not be able to make a perfect list of who should get it it can at least exclude a lot of people who should very obviously NOT be getting it.

For example, a very large portion of the Venezuelan workforce works for the government and of course the government knows exactly how much each of those millions of people earns. Therefor it could easily set some earnings threshold above which those people would not be eligible for the discounted food.

Similarly people with large incomes in Venezuela must file tax returns with the government. The government knows their earnings and could easily exclude those above the earnings threshold.

Further the government also already has a food subsidy program called "cesta ticket" which provides meal coupons for those in certain jobs. Again, given that some of these people are already getting subsidized food the government could decide who among them should not be eligible for other food subsidies.

Just using this already existing information the government could do a lot to exclude the people who least need any subsidies. So while the list of who would be eligible for the subsidy would not be perfect it would be pretty good and it would at least exclude millions of people who should NOT be getting government subsidies.

Next comes the task of making sure that only those determined to be eligible get the food and that the subsidized food isn't somehow stolen along the way. This actually turns out to be the easier part for a rather curious reason.

Remember all those very expensive fingerprint reading machines the government bought to use with elections and that wound up being so contraversial?

Well, they are stored in warehouses somewhere in Venezuela collecting dust 99% of the time. Yet they could actually be very useful in making sure the subsidized food only goes to the intended recipients. Here is how.

Everyone who would be part of the subsidized food program would get a card and have their fingerprint read. A huge central database would be created and it would include their fingerprint scans.

Lets say for the sake of the example the food packets are distributed once a month through the Mercal stores. The fingerprint machines would be in the Mercal stores and would be connected to the central database (just like they used to be during elections). A person comes into Mercal to get their monthly allotment of food, their fingerprint is scanned and eligibility verified by the computer and they are given their food.

People who aren't eligible won't be able to get the food because their won't be in the database and you can't fake fingerprints. Further, people won't be able to get more than they should by going to various Mercals because the central computer would know they already got their allotment and deny it to them at other locations.

Finally, this system would help prevent theft by the people actually distributing the food. To see why take an example - each month a store might be given 1,000 packets of food. For every packet distributed there would have to be a legitimate fingerprint scan recorded by the central computer. If there were 800 legit scans that month then the store would have to have 200 packets left over and if it didn't then you would automatically know something was wrong. So this would actually allow for a very robust accounting of how the food is distributed and make theft if not impossible at least very difficult.

The only remaining way food could be diverted is if individual people could wind up selling their subsidized allotment rather than consuming it to get money. But even if that happens (and it would to some extent) the government doesn't really have to care that much - it already carried out its mission of making sure they had ACCESS to subsidized food - that they later wasted it is not something the government can be responsible for.

Now this may all sound like a big and costly undertaking. In point of fact I don't think it would be that costly because Venezuela already has pretty all the necessary equipment. It has the fingerprint machines sitting around doing nothing. It has the computers sitting around doing nothing. In point of fact, all the government employees responsible for running very much the same system during the election are probably sitting around doing nothing most of the year. So its not unthinkable you could even have them oversee this (or at the very least train others to do it). And of course Mercal employees could just as easily be trained to run the scanning equipment as the drafted poll workers are.

So in looking at this we can see that Venezuela could almost certainly implement a pretty good food distribution system aimed at those who really need it and can very conveniently use EXISTING systems and capabilities to do it.

Of course, I am sure readers will find some possible flaws. Others I am sure will find ways to better refine this idea. Still others may come up with entirely different ideas that would be even better.

The real point here isn't about what should be done with the finger print reading machines. It is that the powers that be in Venezuela need to start spending more time finding solutions to problems and less time denying that the problems exist or looking for excuses as to why they can't be fixed. I don't think the Venezuelan government so much lacks for resources and capabilities as it lacks for the will and determination to fix problems.


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