Here’s what readers were most interested in reading on DefeatPoverty.com in 2009:
1. The Caste System in India Lives
4. Does Microfinance Impact Poverty?
8. Is the World Getting Better?
10. Microfranchising
And the top 5 most read new posts in 2009:
2. Kiva provides Microfinance Loans in USA
3. Microfinance Heats Up in East Africa
I thought that the change I voted for was going to prioritize a more rational and facts-based approach to addressing the major issues of our times. I thought that we actually were going to start to abandon our top-down, failed-from-the-start approaches to helping the poorest and to start “exploring” new approaches that might actually work.
Bjorn Lomborg leads the Copenhagen Consensus Center (Facebook page), a think-tank that recommends to governments and philanthropists around the world about the best ways to spend aid and development money … based on primary research and the consensus opinion of a lot of smart people who look at the data. Bjorn thinks that climate change is a major issue and he thinks we’re thinking about it all the wrong way.
In an op-ed piece today, he argues “Investing in energy R&D might work. Mandated emissions cuts (haven’t and) won’t.”
What is an example of a better investment?
Focusing on investments to reduce the at-risk malaria population (mosquito nets, environmentally safe indoor DDT sprays and new therapies) would save 78,000 times more lives than the same money spent on climate change.
Some more Bang for the Buck recommendations.
If you have an open mind to hear a perspective not getting the media attention in Copenhagen this week, I highly recommend that you read Bjorn’s article.
Please post your thoughts in comments about what you think of Bjorn’s thoughts and reasonings.
RECOMMENDED READING
Out of Poverty: What works when traditional approaches fail
by Paul Polak
Polak, a psychiatrist by training, shifted his full-time efforts to working on poverty over 25 years ago. He founded International Development Enterprise to focus on helping small, developing country farmers earn more income. IDE has already helped millions of very small farmers earn their way out of extreme poverty in countries including Bangladesh, Cambodia, Ethiopia, India, Myanmar, Nepal, Vietname, Zambia and Zimbabwe.
While this isn’t the best written book (the content could have been delivered in less than half the pages), the content is worth hearing. Polak recounts many stories of individual farmers, their challenges, their failures and their triumphs. The net is you’ll understand some better facts about smallholder farmers and what practical ideas will help them step out of poverty.
Getting the facts right
Here’s the tone of the book quoting from the preface: “I hate books about poverty that make you feel guilty, as well as dry, academic ones that put you to sleep. Working to alleviate poverty is a lively, exciting field capable of generating new hope and inspiration, not feelings of gloom and doom. Learning the truth about poverty generates disruptive innovations capable of enriching the lives of rich people even more than those of poor people.” Polak believes that we (in the West) are misinformed about why the rural poor stay poor and why most of our efforts don’t help them.
Polak’s Three Great Poverty Eradication Myths:
Poor people are poor because they don’t have enough money
Kind of obvious … it’s what the poor tell you when you ask them … but Polak argues that the “poverty experts” have much more complicated answers which is why they are so often distracted from actually helping the poor become not poor. Poverty experts argue that the poor are poor because (a) they don’t have power; (b) they are uneducated; (c) they get sick/disease too often; (d) they need clean water; (e) they need better seeds/fertilizer (or no fertilizer); etc. etc. etc. and the granddaddy of all … they need ALL of these things before they can have any hope of moving out of poverty. Polak argues that “finding a practical solution requires a different strategy … finding the simplest single ‘lever’ capable of producing the biggest positive result.” The answer is – increasing income.
#1 Way for Small Farmers to Earn More Money
Polak believes that growing high-value vegetables, fruits and herbs as a cash crop during the dry season using drip irrigation is the #1 opportunity for small one-acre farmers (and even “landless” people) to earn upwards of $500/year which is enough to start them on the positive cycle towards getting out of < $1/day poverty. IDE has focused R&D on building a drip and sprinkler irrigation products affordable and sturdy enough for these farmers. Combining this with their affordable treadle pumps and a few other inventions to assist with water movement and storage, provides a scalable, practical solution.
Here are some additional highlights that I gleaned from this book:
The Economist published an article called, A partial marvel, last month which summarizes the results of various research which evaluates the value of microcredit in helping the poor. The Net: Not everything (as expected) is rosy.
Here are a few highlights:
Jagdish Bhagwati, an economist specializing in international trade and a professor at Columbia University, has written a very indepth book arguing that economic globalization overall has (and is having) a tremendous positive impact on the poor. He looks closely at the many critiques and perceptions of globalization and provides responses to many of them.
He notes the ironic fact that “anti-globalization sentiments are more prevalent in the rich countries of the North, while pluralities of policy makers and the public in the poor countries of the South see globalization instead as a positive force.” (p.8)
In commenting on anti-capital sentiments he notes, “I often wonder … how many of the young skeptics of capitalism are aware that socialist planning in countries such as India, by replacing markets systemwide with bureaucratically determined rations of goods and services, worsened rather than improved unequal access because socialism meant queues that the well-connected and the well-endowed could jump, whereas markets allowed a larger number to make it to the check-out counter.” (p.15) He notes that anti-capitalism, anti-corporation and anti-Americanism attitudes (for various different reasons) have have unfortunately turned into anti-globalization rhetoric.
Some people argue that Bhagwati is a free-market-with-no-limits zealot. I found Bhagwati to be very balanced in this book. He owns his own bias to taking a macroeconomic viewpoint while showing sensibilities for how there are impacts on a microeconomic level. He critiques the ultra-liberal and ultra-isolationist international trade viewpoints. He also provides many critiques of globalization practices and provides suggestions about how to reduce ill-effects, abuses and impact on the displaced. For instance, he argues for gradualism in changing short-term capital restrictions in order for the developing nations’ financial institutions to mature and prevent another Asian-type financial crisis.
Topics he tackles include:
I found the last section of the book on how to improve governance to make globalization work better a bit dry and lacking in pragmatism … but this is a hard topic with much political complexity.
So, overall, I highly recommend this book for anyone who wants to get smarter about globalization benefits, problems and how to drive the benefits of globalization to more equal distribution.
Guns, Germs and Steel: The Fates of Human Societies
By Jared Diamond
This is not per se a book on poverty. The reason I list it here though is that if you want to get a non-Western, Judeo/Christian perspective of how human history might have developed and why certain people groups prospered and dominated more than others, then Diamond provides a good read. He looks back at anthropologic discoveries to attempt to piece together how different people groups ended up where they did and what enabled certain civilizations to develop more quickly than others. Here are a few of his findings:
The White Man’s Burden: Why the West’s efforts to aid the rest have done so much ill and so little good
Boy, has this book started a lot of controversy in the international aid community. You’ve even got Nicholas Kristoff writing an oped piece in the New York Times in response to his book! Easterly, a Professor of Economics at NYU and previously an “insider” at the World Bank, doesn’t pull any punches in asking the hard questions about the results of international aid. He’s an economist, so his book is full of numbers and statistics supplemented with a number of humanizing stories.
In a nutshell, he asks “After $2.3 trillion over 5 decades, why are the desperate needs of the world’s poor still so tragically unmet? Isn’t it finally time for an end to the impunity of foreign aid?” He points out that despite spending all of this money, we still don’t deliver vaccines and other medicines costing < $1 and insecticide-treated mosquito nets at a few dollars to those who need them and die without them. The main issue, he argues, is that our international aid agencies (he focuses mostly on multilateral and bilateral government orgs including USAID, The World Bank and the International Money Fund) are run by planners, not the entrepreneurial, finding-what-works “searchers”. We in the West are very utopian with a grand plan to eliminate poverty always the goal and what the politicians like to talk about.
The Big Push Strategy has no Basis in History
Easterly’s argues through his research data that the following legends persist and drive much of the “Big Push” thinking behind international aid strategy today:
These “legends” are core premise for the “spend more on aid” supported by Jeff Sachs and others. Easterly questions the existence of this poverty trap concept as there have been many success stories of countries growing wealthy without significant aid (e.g. East Asian Tigers including Hong Kong, Singapore, Taiwan and South Korea). A few notes
Some additional highlights from the book (I’m skipping a lot of other interesting stuff):
International Aid Needs Massive Reform
So, is Easterly against international aid? Surprisingly, not. He argues for significant reforms to focus on what works, smaller initiatives (vs. grand plans) and more accountability. So, his grand plan is that there is no grand plan. History argues that it is the initiative of the people themselves along with their governments are the only path to sustainable economic growth. In conclusion, Easterly summarizes:
“Aid won’t make poverty history, which Western aid efforts cannot possibly do. Only the self-reliant efforts of poor people and poor societies themselves can end poverty, borrowing ideas and institutions from the West when it suits them to do so. But aid that concentrates on feasible tasks will alleviate the sufferings of many desperate people in the meantime. Isn’t that enough?”
Scary for the status quo in international aid, but great news for the customer!
Untouchables: My Family’s Triumphant Journey Out of the Caste System in Modern India
by Narendra Jadhav
If you want to understand India and how to be effective in accelerating impact on poverty there, you need to understand the caste (pronounced “cast”) system and how it affects how the vast majority of people think in India. For outsiders, the caste system is often perceived as a thing of the past. For, wasn’t the caste system abolished when India declared independence from Britain over 50 years ago?
To see the caste system in action, all you need to do is open up any Indian newspaper and turn to the classifieds section for people seeking marriage partners. Almost all of the ads are explicit about the caste system of the ad buyer as well as the caste requirements of the spouse they are looking for. The explicit caste recognition is less front-and-center in other social spheres, but it is very much there under the surface and affecting how people think about themselves and each other.
This book is a biography of a dalit family living through The Great Depression, the India independence movement and up to today. Dalits are also known as the out-castes or untouchables. They are lower than the lower-castes as they are below the caste system. It is a story of triumph and yet a call to continue to fight to break the caste slavery system.
Narenda Jadhav, born in 1953, says that the caste system is still very much in place. It is still in people’s minds and affects how they see the world every day. Jadhav is a very successful economist and is the chief economist for the Reserve Bank of India (India’s central bank.) And Jadhav is a dalit.
Dalit is the more politically correct name for the out-castes or untouchables. These are people who are so low-on-the-totem-pole that they are not even in the caste system. They are lower than the lowest caste and therefore have no caste. This “matters” in India because castes are connected to occupations. For instance, there is the sweeper caste (who sweep streets), the milk caste (who raise animals to produce milk), the merchant caste (who conduct trade), etc. Historically, and still in much of India, people work in their caste occupations hoping to do a good job so that they when they are reincarnated they will move up to a higher caste. You can find out what caste people are from by asking their name.
The problem with the dalits is that they don’t have an association with an occupation type. So they are relegated to the most demeaning type of occupations including picking up cow dung, begging, scavaging and the like. They are treated like dirt by everyone including the lower caste peoples. They are denied education because they are considered too low for it.
In this book, Jadhav shares the story of his parents growing up through the depression era and through the Indian independence movement. His parents, dalits of course, were illiterate, extremely poor who were born in rural India and moved to Mumbai (formerly Bombay.) You get to see inside the lives of a family on the economic edge and without justice. Yet you see their determination to have their children have a better life.
His father, Damu, catches the dream and becomes a follower of Dr. Ambedkar (affectionately known as Babasaheb) who himself a dalit became a central person in defining the constitution of the new, independent India. Through the biography, Jadhav tells the story of how Ambedkar rallied dalits (now estimated at some 400M+ in India) to assert themselves. He first tried to work within the Hindu religious system for equal rights for dalits. He later gave up this approach and led a mass conversion (literally millions of people) of dalits to Buddhism as an act of liberation. Jadhav provides very interesting color commentary on what that looked like from the eyes of an ordinary dalit.
Damu followed through with Ambedkar’s personal recommendation to educate his children in order for them to escape the tyranny of the caste system. Damu followed through on this and many of his children even went on to college and to having prominent roles in the new India.
While I think that Jadhav has done us all a great service by telling this story, I think you must view the unique success of Jadhav (and his siblings) as an anomaly, not the norm. Just like we can find success stories of African-Americans, this doesn’t mean the equality and justice has been and is being served to all African-Americans in the USA [or pick your own example in another context.]
The caste system is, unfortunately, very much alive and well in India today and is a form of slavery as powerful as other slavery systems in history. About 100 years ago, Jotirao Govindrao Phule, wrote a book called Slavery which articules the how the Hindu religion (he calls it Brahminism) initiated and perpetuates the evil caste system in India. Dr. Ambedkar praised this book: “Mahatma Phule, the greatest Shudra of modern India who made the lower classes of Hindus conscious of their slavery to the higher classes and who preached the gospel that for India social democracy was more vital than independence from foreign rule.” That is, Ambedkar, Phule and others believe that the more important independence which India needs is liberation from the oppressive caste system.
The End of Poverty: Economic Possibilities for Our Timeby Jeffrey Sachs
This book seeks to lay out the facts — both historical and present — on the state of global poverty and with concrete recommendations about how to move forward.
Here are a few facts:
He advocates two goals by 2025: (1) End extreme poverty; and (2) Enable all poor a place on the economic development ladder. He demonstrates how a modest 0.5% of GNP provided as as official development assistance (ODP) by the developed countries through 2015 would be adequate to achieve the UN Millenium Development Goals (MDG) which target reducing extreme poverty by 50% from 1990 levels. Since Sachs was one of the key contributors to MDG, he provides details into why these goals were chosen and how they can produce these (seemingly) dramatic results. He then declares a 2025 goal to extend MDG objectives for 10 more years at a decreasing % of rich country GDP investment level to finish off the task. Why a decreasing investment level? Because with fewer poor people, growing GNP in poor countries and continued growth of overall GDP in developed countries, the cost for ODP is simply lower.
One thing that stuck out to me is the lack of follow-through that the USA has had towards promised aid to developing nations. The US has publicly committed (signed multiple documents) that it will make “concrete efforts” to contribute 0.7% of GNP to ODA. Our current level is about 0.2%. We spend all told about $15B on aid per year (vs. $450B on military.) And of the $15B, more than half is on activities other than ODA (e.g. paying USA consultants.) For the USA to reach 0.7% of GNP as ODA here is what it would take … “With the U.S. per capita GNP rising by around 1.9% per year, the extra amount represents less than one third of a single year’s growth in GNP. So, if the U.S. were on track to reach a $40,000 disposable income by, say, January 1, 2010, it would instead reach the same income on May 1, 2010, one third of a year later.” (p. 304)
More blog postings based on this book and Sachs:
The Mystery of Capital: Why Capitalism Triumphs in the West and Fails Everywhere Else
by Hernando Desoto
I think it is pretty much unanimously agreed to by most economists that in order to unleash the full potential of the wealth creation process of capitalism that a nation needs to have a reasonable and predictable methodology for defining and managing property rights.
I highly recommend Hernando de Soto’s book, The Mystery of Capital (subtitle: Why Capitalism Triumphs in the West and Fails Everywhere Else), where he explores the history of property rights in the developed world and the state in developing world nations. He argues for the essential nature of well-defined property rights to transform the trillions of $ of “dead capital” (property which is owned through the unofficial “extra-legal” market) into leveragable capital which we take for granted in the developed world. One of the most interesting sections is when he describes the extended time (75+ years) it took in USA for property rights to become reasonably established. He argues that we expect developing nations to implement our current system in a very short period of time which isn’t the process the USA (and all other developed nation systems) went through! It is inherently a political process and politics takes time for new systems to soak into the fabric of the society and displace the entrenched status quo which has many beneficiaries.
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