Friday, January 10, 2014

The strange obsession with school uniforms in Honduras

I’ve come up with a clever, no-cost way to reduce poverty and increase school attendance in Honduras.
Get rid of school uniforms.
The uniforms - white dress shirts, navy blue pants or skirt, black shoes and white socks - are mandatory in public schools. Teachers are quite crabby about it, to the point of telling kids to stay home if they aren’t dressed in the right kit.
No desks, but kids better have uniforms
For many parents, the costs are huge. Some children don’t go to school because they don’t have the right clothes.
It’s getting worse. The government’s latest tax increases took the sales tax from 12 per cent to 15 per cent. It also applied the tax to items that had been exempt - including school uniforms.
La Prensa reported on the issue this week, and quoted typical prices for school uniforms - $6.50 for pants, $7 for shirts, $12 for leather shoes. (Which, based on the experience outfitting the Angelitos kids, will last about as long as you would expect a pair of $12 shoes to last.)
So, figuring two sets of clothes (one to wash) and three school-age kids, estimate $120 for the uniforms. That’s before backpacks, notebooks and all the other things on the mandatory supply list that teachers send home.
That’s a lot of money in a country where 74 per cent of the population lives in poverty and 47 per cent in extreme poverty. 
We’re acquainted with a woman with two school-age children, and little steady employment. She worked for 12 hours cleaning and plucking chickens one day this week, and was paid $5. 
That’s not atypical. For her, school uniforms and supplies and the fees levied through the year are a huge challenge.
Get rid of the uniforms, and poor families have more money to spend on things they need and one less reason to keep children home from school.
I can’t think of any good argument for the uniforms. It’s not as if poor children will be singled out for having bad clothes. Almost everyone is poor. (And people with any money send their children to private schools.)
And blurring individual differences isn’t necessarily such a great idea. 
In fact, Honduran schools would do well to put a lot more emphasis on individuality and creativity and a lot less on rote learning. 
Schools are generally dismal. An international test of math and science knowledge in 45 countries found Honduran students ranked at the bottom, with South Africa and Botswana.
Children here aren’t less intelligent. But they don’t learn much, for a variety of reasons. In the U.S., 68 per cent of students performed at the intermediate level in the math tests; in Chile, 23 per cent. In Honduras, four per cent. When one in 25 students is doing OK in math, a country has a bleak future.
I admit to a strong anti-uniform bias. I went to public schools, but did my final year in a Quebec public high school where grey flannels, white shirt, tie and blazer were required. The pants itched. The costume had nothing to do with our education. It seemed mostly like a chance for those with power to demonstrate it by telling other people what they must wear. 
Letting Honduran kids come to school in whatever they have to wear simply makes sense. Any barrier to education hurts kids, families and the country. And uniforms are a barrier.
The other interesting aspect is that Honduran parents put up with all this. They don’t, generally, show up at the school and insist that their children be allowed to attend in flip flops instead of leather shoes. They don’t demand better from the schools. The failure rate is extremely high, but parents don’t demand to know why their children didn’t learn enough to advance to the next grade. 
My hope is that Paul’s Law will abolish school uniforms in Honduras. My best guess is that parents would save more than $40 million a year, with most of the benefits going to poor families. More children would be in school.
And a small blow would be struck to the culture of conformismo.

Thursday, January 09, 2014

Another bad quarter for Postmedia, and a plan that's not working

The latest grim quarterly report from Postmedia sharpens questions about the company’s future.
Continuing declines in revenue and circulation are too great to be solved by the company’s current approach.
The corporate strategy is straightforward. Cut costs, find ways to get readers to pay more, in part through innovations like tablet editions, and convince advertisers that they should pay more for more effective ads.
It might work, if revenue was not continuing to vanish at such an amazing rate. 
Revenue fell 8.4 per cent compared to the same quarter a year earlier, or $17.7 million. Print revenue - the largest category - was down 12.2 per cent.
Revenues have been eroding for two years - down 7.4 per cent in the 2012 fiscal year and 9.6 per cent in the 2013 year. Print revenues were down 10.3 per cent and 13.4 per cent in the same two years.
Based on the first quarter results of this fiscal year, which ended last Nov. 30, the decline isn’t slowing in any significant way.
That highlights the problems with Postmedia’s strategy.
Cost-cutting can only work if revenues, at some point, stabilize. Otherwise, it’s an endless process of cuts that weaken the quality of the products and services and lead to more revenue losses and more cuts.
In the quarter, Postmedia revenue dropped $17.7 million, but its operating expenses, despite the major cost-cutting initiative and falling circulation, were only reduced by $13.7 million.
The corporation launched its cost-cutting ”Transformation Program” in July 2012, with a target of $102 million to $135 million in annualized savings within three years.
But since Dec. 1, 2011, revenue has fallen by $165 million. The expense-reduction program goals are far short of what’s needed. And the gap looks to keep growing.
New revenue generation initiatives haven’t worked either. Postmedia was enthusiastic about increasing digital revenues for a while, but they actually fell 5.1 per cent in the quarter.
And the plans to increase the number of people reading and paying for digital products have been slow to show results. Postmedia said 135,000 people have registered to access the newspaper websites, now paywall protected. But it won’t say how many are paying customers and how many receive free access as subscribers. Digital circulation revenue is up only $300,000 over a year earlier, a suggestion that few new paying customers are signing up.
And at the same time, print circulation was down 13.4 per cent over the previous year. Price increases offset the loss in customers, but prices can’t keep rising indefinitely.
It’s another grim quarter. Postmedia needed to show that the revenue declines were at least slowing significantly. That would have given hope.
As it is, unless the corporation comes up with a more effective, bolder strategy, and a much faster rollout, the future looks bleak.
(For earlier posts on Postmedia, see here and here.)

Wednesday, January 08, 2014

Tax increases in Honduras, and linking aid to fair, effective tax policies

Taxes are big news in Honduras, as the outgoing Congress pushes through a bunch of last-minute increases.
The Congress is controlled by the National party, which won the November election. The increases are a way to get the unpopular deeds done before the new president takes over in two weeks.
It doesn’t look much like good governance, mostly because there are apparently no studies of the impact of the increases, or whether they are the best way to raise more revenue.
Taxed into poverty?
I was going to write about the increases anyway, but a Guardian blog post this week added an interesting element by arguing that donor countries should cut aid to at least some countries with lousy tax policies. (I’ve become a bit of a development geek, after two years as a Cuso International volunteer. The issues are complex, interesting and important.)
The blog post, by Kieran Holmes, is based on a British Commons committee report that recommended chopping aid to Pakistan unless the government started collecting more in taxes from its own people. 
Why should British taxpayers subsidize the government if Pakistan’s citizens - especially the rich - won’t pay up?
It’s an easier argument to make in the case of Pakistan, which is a middle-income country able to find money for a giant military budget, but seeks foreign aid for education and basic services. In poorer countries - like Honduras - an end to aid would mean disaster.
But the principle is interesting.
Honduras collects about 16 per cent of GDP in tax revenue, more than Pakistan but not enough to cover expenses. Government debt is up to 42 per cent of GDP, at high interest rates because there’s a lack of confidence in future repayments. The accepted ceiling seems to be about 35 per cent.
Holmes argues in his blog post that big donors - organizations and governments - should also consider how the tax revenues are raised and whether the system is equitable and supports poverty reduction and development.
The latest round of Honduran increases would not likely meet that test.
The government is already much more dependent on consumption taxes - sales taxes - then taxes on income. Sales taxes were expected to bring in about $1.1 billion last year. Income taxes about $865 million.
That’s out of whack with many countries. In Canada, the government takes in $3.50 in income taxes for every $1 in sales taxes.
And most economists would agree that the dependence on sales taxes serves the interests of the rich. Income taxes are generally progressive - the more an individual or business earns, the more paid in taxes.
Consumption taxes - sales taxes - are at best flat, and often regressive. Low-income people see a higher proportion of their income taken in taxes than the much more affluent. (The Honduran sales tax regime includes exemptions for some necessities - the “canasta basica,” or basket of necessary goods. That theoretically reduces burden on the poor.)
The latest round of tax increases in Honduras increases the burden on the poor and middle class. The basic sales tax rate jumps from 12 per cent to 15 per cent. That’s pushed up the cost of almost all goods and services by about 2.6 per cent. The list of tax exemptions designed to protect low-income consumers was dramatically - and apparently incompetently - trimmed.
The inflation rate was about five per cent before the tax increase. Price increases - including for the buses that people need every day - will make life harder for the poor. (That is to say, for Hondurans. About 74 per cent of the population live in poverty, and 47 per cent in extreme poverty.) 
The leading social watchdog group predicts the tax increases will push another 100,000 people into poverty over the next four years. A spokesman for the government says it’s impossible to predict what will happen as a result of the increases, which serves to show the lack of research on the impact on the economy and families.
It’s all made more confusing because the tax system is a total mess. Tax evasion of all kinds is the norm, with estimates of 20 to 40 per cent of taxes owed going uncollected. There are a huge number of exemptions - fast food restaurants pay no taxes under a tourist-promotion tax break. The tax collection agency doesn’t work, according to the incoming director.
Holmes says funders have a right to push governments toward fair, effective tax systems in return for aid, and the ability to help them achieve those goals.
Based on the tax chaos and unfairness in Honduras, he might have a point.