On Poverty

Posted: October 15, 2008    Categories: Travel

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.

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