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Submitted by Erick on
I find this comment very interesting and it would be nice for it to receive further remarks. I believe we could all agree that a universal subsidy is highly inefficient; however, the proposition requires a deeper analysis given its suggested application in developing countries. I saw a similar situation unfolded in Bolivia at the beginning of 2011 (it is important to point out that even a government with socialist tendencies understood that it was the right thing to do). The Bolivian government decided to eliminate the subsidy, and almost immediately there was a sharp increase on the prices of transportation and the basic goods of the family shopping basket (not to mention many others). It was such a catastrophe that after a few days, the government had to retract and reinstall the subsidy. To make matters worse, the prices did not went back to their original levels registered before the well intentioned subsidy elimination. I think the challenge in this case, is how to effectively implement our well reasoned ideas in developing countries. In addition, it would also be helpful to discuss over the proposition of ideas for securing that the redistributed revenues among the citizens are truly compensating them, and that those citizens are in fact using them wisely (especially among the lowest income quintile). Thanks for giving way to the interesting conversation that the post has already generated.