A large portion of the world’s inhabitants are poor. What do I mean by “poor”? I mean that 80 percent of the world’s population lives on less than $10 a day and the poorest 40 percent of the population accounts for only 5 percent of global income (Shah 2013).
The negative effect of poverty on one’s life is clear: it means shorter life expectancies, higher risk of infant mortality, higher medical expenses, less opportunity for education, and less productive capacities (Borgen 2018). However, the causes of poverty are much more complex and deep-rooted, which is possibly why the symptoms of poverty are what we see addressed by articles and what charities usually focus on. For instance, the charity called Tom’s shoes focuses on the absence of shoes in some places (the symptom of poverty) but the charity doesn’t address the systemic problems that caused shoes to be scarce in the first place.
When we get into the discussion of poverty, there is often an “elephant in the room” that many people believe but don’t want to say: that wealth is the product of hard work, determination, and good moral character. Poverty, then, is the opposite. Let’s dispel the surprisingly persistent lurking pachyderm. While in many individual cases, hard work contributes to wealth creation, it is not the only factor that determines economic success. Hard work needs to be combined with opportunities to result in wealth creation. That means that poverty is not the failure of poor individuals to work hard, rather it’s the failure of social, political, and economic systems to adequately supply opportunities for hard working individuals to take advantage of.
What do I mean by “systems”?
It’s a bit complicated, but systems include everything from the national economy, global economy, policy environment, institutions, culture, natural environment, and beyond. These systems can make some activities very profitable (extracting oil and gas, for example) and some activities very unprofitable (for instance, protecting the environment). These systems influence individuals’ choices and incentivize some behaviors over others.
What should be done about poverty?
This question gained prominence in the 1950s and, like any difficult question, has spawned several schools of thought. Most discussions about poverty in the 1950s and 60s were largely concerned with the role of industrialization in economic development, which had transformed the economies in many countries in Europe, the U.S., Canada, Japan, etc. (Phillips, 2013). Industrialization, the engine of economic growth, brought along an unprecedented reduction in poverty. Therefore, decision-makers at the time thought the best solution for poverty reduction was to industrialize countries (Phillips 2018). Most foreign aid was geared towards large-scale industrialization which largely failed, leaving many countries (who had taken loans from international organizations such as the International Monetary Fund (IMF) and the World Bank) in debt and worse off than when the project had started (Feldstein 1988).
The 1970s brought a new glimmer of hope in the form of the Green Revolution, which raised agricultural productivity in Mexico, India, and other countries through the introduction of high yielding varieties (HYV) of wheat and rice, and increased use of fertilizer and irrigation. Agricultural outputs increased and brought these countries closer to food security. The encouraging results lead to hope for more innovations and the same results in other countries, especially on the African continent (Encyclopedia of Food and Culture 2003).
However, the Green Revolution was not easy to replicate, and the burst of increased productivity didn’t continue to solve problems. The 1980s and 90s were times of disillusionment and pessimism in terms of foreign aid (Pingali 2012).
Then, in the 2000s, new frameworks were developed to understand poverty through the lens of access and livelihoods. Famously, Indian scholar Amartya Sen analyzed famines to find that starvation occurs not due to insufficient food at the aggregate national level, but lack of access to food. This shifted thinking away from raising productivity towards increasing people’s purchasing power and ensuring that access is universally guaranteed (Geiser et al. 2008).
That’s where we’re at now. I imagine our thinking about foreign aid and poverty alleviation will transform and radially change over the next decade, and change again the decade after that and so on until we achieve Utopia or the Earth explodes (whichever comes first), but for now, understanding access and livelihoods is the best framework we have.
How does our conception of poverty affect us in 2018?
Civil society organizations, also known as non-governmental organizations (NGOs), can help create channels of access to resources and build individuals and communities’ capacity to create a virtuous cycle where increased productivity leads to more purchasing power, which leads to more productivity, breaking the cycle of poverty.
NGOs bridge the gap between what is provided by the government and the free market. The government is constrained by budget concerns or inefficiencies, and the free market is constrained by the need to be profitable and the lack of incentives to enter risky areas. NGOs are concerned with the protection and promotion of vulnerable groups who might not have influence in the government or aren’t profitable enough to interest to the free market.
Clinton Fellows like myself work with NGOs and social enterprises (companies with a social mission in addition to striving for profitability) to support vulnerable groups and empower communities and individuals. Our journey is inextricably tied to the way we conceptualize poverty and vulnerability, but the discussion is not limited to those of us working in the social impact space. As the world becomes increasingly connected, the way we think about poverty greatly affects how we develop solutions to the problem of poverty and, most importantly, how we treat people living in poverty.
- Borgen, C. (2018). “Top Effects of Poverty: The Borgen Project.” [online] The Borgen Project. Available at: https://borgenproject.org/5-effects-poverty/ [Accessed 27 Nov. 2018].
- Encyclopedia of Food and Culture. (2003). “Green Revolution.” [online] Available at: https://www.encyclopedia.com/plants-and-animals/agriculture-and-horticulture/agriculture-general/green-revolution [Accessed 3 Dec. 2018].
- Feldstein, M. (1988). “Developing Country Debt.” International Economic Cooperation, [online] pp.233-320. Available at: https://www.nber.org/chapters/c9789.pdf [Accessed 3 Dec. 2018].
- Geiser, U., Ejderyan, O., Tuor, R. and Backhaus, N. (2008). “DFID’s Sustainable Livelihoods Approach and Its Framework.” Globalisation and Livelihood Options of People Living in Poverty. [online] Available at: http://www.glopp.ch/B7/en/multimedia/B7_1_pdf2.pdf [Accessed 3 Dec. 2018].
- Phillips, K. (2013). “The History of Foreign Aid.” [online] Radio National. Available at: https://www.abc.net.au/radionational/programs/rearvision/the-history-of-foreign-aid/5162100 [Accessed 3 Dec. 2018].
- Phillips, M. (2018). “The Long Story of U.S. Debt, From 1790 to 2011, in 1 Little Chart.” [online] The Atlantic. Available at: https://www.theatlantic.com/business/archive/2012/11/the-long-story-of-us-debt-from-1790-to-2011-in-1-little-chart/265185/ [Accessed 3 Dec. 2018].
- Pingali, P. (2012). “Green Revolution: Impacts, Limits, and the Path Ahead.” [online] Available at: https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3411969/ [Accessed 3 Dec. 2018].
- Shah, A. (2013). “Poverty Facts and Stats: Global Issues.” [online] Available at: http://www.globalissues.org/article/26/poverty-facts-and-stats [Accessed 27 Nov. 2018].