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On Poverty

I have been meaning to write on this subject for many months now. The Blog Action day (October 15) sort of gave me an excuse to go ahead and do it.

Over the course of my trip, I’ve seen the most severe poverty I’ve seen in my life. From tin shacks in the Solomon Islands to stick shelters in Cambodia, I’ve seen some things which were truly shocking. Intellectually, you know these things exist and you’ve seen photos and television shows about it, but until you can see it first hand, it doesn’t really sink in.

I’ve spent a lot of brain cycles thinking about poverty on my trip. I have no answers, but I have come to some conclusions based on the things I’ve seen. I may very well revise this list in the future as I see and experience more, but I feel confident with the following observations.

Poverty is the default condition of humanity.
Go back even 100 years, and pretty much everyone on the planet was poor. Go back 200 or 1,000 years, and this was definitely true. I don’t think there are many people who would prefer to be a nobleman in ancient Rome versus an average person today. The question of “why is there poverty?” is the wrong question. Do nothing, and you’ll get poverty. The recipe for creating poverty is easy. The truly horrible poverty in the world today isn’t a result of prosperity which disappeared, it is a case of prosperity which never happened. The problem with poor in the developing world is that they still live a material existence similar to those 100 or 1,000 years ago did. The greater and more important questions is “why do some countries become rich?”, which incidentally was the same question Adam Smith asked 200 years ago when he wrote An Inquiry into the Nature and Causes of the Wealth of Nations..

Decades of civil war helped create conditions which lad to some of the worst poverty I’ve seen in East Timor

Decades of civil war helped create conditions which lad to some of the worst poverty I’ve seen in East Timor

Culture Matters
Cultural institutions may be the most important thing which determines the overall, long term prosperity of a country. This is good and bad. Good policies cannot overcome cultural institutions which prevent growth, and bad policies can be overcome by positive cultural attributes. I can give two examples of this: In Hong Kong I several times walked into or by a store which had bouquets of flowers all around. I thought someone might have died or perhaps there was a wedding. I eventually saw a card on some of the flowers written in English. The flowers were sent there in celebration of a new business opening. Look at the names of many Chinese businesses and you’ll see references to fortune, prosperity, and luck. Something about Chinese culture encourages entrepreneurship. When I was in Samoa, I remember talking to a cab driver. He mentioned that most of any money he earns (up to 90%) goes directly to his village. While he doesn’t mind helping his village and his family, there is little incentive to work or take risks because almost everything goes to the chiefs. Most of the GDP in Samoa now consists of remittances from people who left to work in New Zealand or the US, away from the village structure. Institutions which were developed to cope with a pre-industrial life do not always adapt to modern economies.

The girl on the left made me come the closest to crying on my trip. She and her friend were both orphans, but she couldn't speak and I believe was born with a cleft pallet.

The girl on the left made me come the closest to crying on my trip. She and her friend were both orphans, but she couldn't speak and I believe was born with a cleft pallet.

We Confuse Types of Poverty
We use the word “poverty” to describe people in the US who make less than $20,000/year. Earning that much would make you wealthy in most countries on Earth. Poverty here in Cambodia (where I’m writing this) describes a totally different phenomenon than what the word is used to described in developed countries. This is not to say that some extreme poverty doesn’t exist in the US and other developed nations (American Indian reservations, the rural south, Australian aboriginal lands come to mind) but from a strict material stand point, they are apples and oranges. We should develop a different word or vocabulary to describe the type of poverty which exists in the developing world.

There is no lack of motivation
All over South East Asia I’ve seen people working, hustling, and doing what they can to make ends meat. In Phnom Penh I was struck by how the street level of almost every building is in some way devoted to commerce. Every village I went through in Indonesia and the Philippines had people selling and offering services in addition to farming. You often have large numbers of people competing in the same line of work, because the work has a low capital requirement for entry. Massage parlors, tuk tuk drivers, food carts, and roadside gasoline vendors are all good examples.

Despite the per capita GDP numbers, you could find extreme poverty in Brunei directly across the street from the National Mosque and a mile away from the largest palace in the world.

Despite the per capita GDP numbers, you could find extreme poverty in Brunei directly across the street from the National Mosque and a mile away from the largest palace in the world.

Numbers Lie
When I go to a new country, I always look at economic data for the places I visit. I have concluded that for the most part, they do not really tell the story of where a country is at economically. The best example of this was when I crossed the border between Brunei and Malaysia. On paper, Brunei has almost twice the per capita GDP of Malaysia. When I crossed the border into Malaysia however, instead of seeing a poorer country, I thought the average condition of houses, roads and buildings was better than in Brunei. Anecdotal evidence is really a much better indicator, even if it is much harder to work with for academics. Condition of roads, state of the power grid, mobile phone usage, home construction techniques, number of cranes you can see in major cities, are all better indicators than the quantitative ones you’ll see in reports.

Conclusion
I don’t believe there is a silver bullet policy which will bring people out of poverty. While the recipe to make poverty is easy, each country has its own set of issues to face: different governments, different cultures, different ethnic mixes, different histories, different geographies, and different sets of resources.

Organizations like Kiva.org I think are great ways to do something on a personal level. They use techniques which I believe are much better than the heavy handed “give stuff away for free” approach which often destroys local crop markets, making matters much worse.

There is much more I could have written on this subject, but a blog post should only be so long. This will definitely be a chapter in my book which I’ll be writing in 2009.

  • 9 Comments... What's your take?

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Comments

  1. “Poverty is the default condition of humanity” – this thought really caught my attention. For me, if it’s the default condition, then we’d better do an action to customize the life we are having right now. Poverty is not forever. People need to realize that. Thanks for the post!

  2. Enlight says:

    The Wheat price is doubling around the world—wheat makes bread.

    The one kilo of cooking oil in Egypt was 8.50 Egyptian pounds last January, in March it went up to 13.50 a Kilo. Most Egyptians only make 350 to 500 Egyptian pounds a month.

    Over 20% of Corn and Soybean is being used to make fuel that is causing worldwide food prices to increase.

    Most Westerns have no clue what fuels the poverty around the world.

    Natural disasters has ruined the rice, corn and other crops that has increased food products, such as milk and beef that is a cause of corn feed, not sweet corn.

    Problems with Wheat, Corn, Soybean, Barely, and Rice, this world will be a problem.

  3. Jonny says:

    Interesting thoughts – I'm not sure I would call Singapore or Cambodia a democracy, indeed I think even many western democracies still struggle to give everyone an equal voice, and there are certainly many examples of hardcore corruption there too. Singapore may not be a democracy but it is without doubt one of the least corrupt countries on the planet, certainly within Asia, and again in Europe the least corrupt countries such as Norway and Sweden also have the best quality of life.. the difference being in Singapore they do not neccessarily need to prove guilt to punish someone for corruption.

    I think poverty is relative though – yes it is tempting to say stop whinging about living on a low salary in the US or UK yet at the same time the effect it has on peoples motivation for life is massive, and although perhaps not quite as extreme the problems those countries poor face are similar – poor nutrition, poor access to healthcare and a lack of access to quality education. Certainly you can't compare their existance with someone who earns 15 rupees a day in rural India, but you certainly can't say they are rich either.

  4. Jac says:

    Hi, I just stumbled across your blog this evening – great reading.

    I recently returned from an extended period travelling and like you, spent a lot of time thinking about the poverty I witnessed while I was in Asia. Interestingly, I returned home and went along to an exhibition that was showing photos from my home city in 1955. A lot of these photos shocked me; showing grim living conditions similar to what I'd seen in Asia. I wonder just how far removed from developing countries parts of western societies really are…50 or 60 years? Not long in the grand scheme of things.

    Anyway, I'm inspired to respond to your post because the conclusions I reached about poverty in developing countries surprised me. Often, we consider political systems to be key to resolving endemic poverty. Most of the time, we think democracy is the best political model that can fight poverty. I used to.

    While I was in Cambodia, I volunteered with a local NGO (an incredibly rewarding experience in so many ways) and through that, learned about the horrible realities of Cambodian 'democracy'. When we take a western style of government and implement it in a developing country with no regard to their culture, values, history, recent experiences or traditional systems of government, you end up with a mess. Democracy in Cambodia is not working, the government is hindering progress, busy lining their own pockets and creating a dynastic-style cohort of powerful families. I ranted a little here – http://www.jacsjourney.com/?p=122.

    Later, I paid a brief visit to Singapore. Ostensibly a democracy, but with only one party having held power in the last forty years and strict penalties for criticising said government: it's anything but democracy. Yet, economic success in abundance.

    I came to the conclusion that while I would take to the streets to fight for my democratic rights, democracy does not work everywhere. Or even most places. And it doesn't resolve poverty. Economic success and democracy don't necessarily go hand in hand. A wide range of other factors must combine to end poverty. Countries must chart their own way; a way that fits with their culture, values, institutions, history, resources. Of course richer countries should support – we have a responsibility to do so. But we must remember that wealth does not mean we know best and implement our own solutions where they just don't fit.

    Thanks for this great post.

  5. Wendy says:

    I'm not sure if I agree with the opening lines of your first point:

    “Go back even 100 years, and pretty much everyone on the planet was poor. Go back 200 or 1,000 years, and this was definitely true. I don’t think there are many people who would prefer to be a nobleman in ancient Rome versus an average person today.”

    I believe that poverty is relative. Yes, ancient Roman nobleman didn't have the same amount of money than we do today, but relative to their cost of living in those days and the amount of inflation since those days, you can hardly call them “poor” by any means. Just as you point out later that most of the “poor” in developed nations aren't actually poor compared to those in developing countries because they make more money, they may be poor relative to the cost of living and those around them. (I'm kind of playing devil's advocate with that last statement. Part of me believes that people don't save and spend wisely, but at the same time, a lot of it is relative to the society. There's definitely more involved than money, dollar for dollar, even though there is absolute poverty in the world. I won't argue with anyone that you're poor when you're making less than $1 USD equivalent a day.)

    And a couple of other points, just for thoughts:
    1. If there's no shortage of hard working people in Asia, why is there still poverty in those countries? Just because their society place value in working hard, doesn't mean that it can eliminate poverty.
    2. Anecdotal evidence is definitely useful, but it's also difficult to quantify, as you've pointed out. I remember in one of my college classes, I was describing a taxi driver that I had met in Beijing who was barely making ends meet for him and his family, as an example of (the lack of) economic progress in China. Another student, who had also been in China recently, was telling about how this small village that she visited had internet and all these modern technologies. So while both anecdotes are true, it's hard to make sweeping generalizations with them, and that's partly the problem with them. (And reading back on what I just wrote, it may have to do with the relative poverty that I was writing about earlier.)

    I think this article is a good start on trying to understand poverty. But the problem isn't acknowledging that it exists, but what can actually be done about it. Kiva.org is definitely a good organization that empowers people in developing nations.

    (I'm sorry for hijacking your comment section with my long rant. This is a topic that I feel strongly about, but even so, I have many conflicting internal arguments with myself.)

  6. Laura says:

    I'd also like to add that there is a difference between what we in developed countries define as poverty, and what rural folks living on meager incomes would define it. There is a difference between living on little but being self-sustainable and the wretchedness of urban slums. Example–I traveled a bit in rural Oaxaca where indigenous folks still follow their community practices of devoting individual time to cleaning the village, growing crops for the village, running the tourist centers, etc. All of these people are “poor”, but they are not wretched. They have enough to eat, their town is clean and sanitary, and if someone in the village is in need, the town helps out.

    This would not work for the urban poor, but I think it skews statistics when one says a certain number of people in the world are poor. Being poor does not always mean living in wretched circumstances.

  7. A. says:

    A really great post. I'd very much like to echo Neil Duckett, because as you yourself say, we confuse types of poverty. I too believe that micro-finance organisations are a way forward, and in fact blogged about one myself today.

  8. Thank you Gary. My brother lives in Cambodia with his wife and a lot of this resonates personally with me.

    Best wishes!

  9. Neil Duckett says:

    Nice read Gary. I especially want to mention “We use the word “poverty” to describe people in the US who make less than $20,000/year. Earning that much would make you wealthy in most countries on Earth.” ….. i've seen several posts on “Poverty” that pretty much mentions people falling on tough times in the Western world due to interest rate hikes … etc …. i haven't responded to them directly and wont but really wish people would open their eyes a bit and look at Poverty on the global scale, not what they 'think' is poverty.

    Anyway, great stuff getting behind a great cause.

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About Gary Arndt

My name is Gary Arndt. In March 2007 I set out to travel around the world...
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