Poverty is man-made and we can unmake it

We can think about poverty in more creative ways

Poverty, in nearly all cases, is not natural, especially in today’s connected world. Here’s just one of many examples: food is so abundant in the US that we waste 40% of it. And yet 1 in 6 children in America don’t know where their next few meals are going to come from.

So if the food exists and the means to get it to hungry children exists, then something else besides nature and the laws of physics is working to keep that food from the hungry children, right?

That seems to me the basic argument against the theory that poverty is inevitable, that it’s part of globalization or automation or economic growth. I’ll make the case another time, but even supply-side theory doesn’t, as far as I’ve studied it, say that you can’t grow businesses and economies without starving children.

The real questions are why and how do we fix that kind of inequality? Can we fix it? Should we fix it? If the answer is yes, we can and should, we have to start with a different theory of why such poverty and inequality exist. I say it’s because we let it exist. We make it exist. It’s entirely manufactured, because under our current systems, it’s profitable to some (including me and most likely you) and tolerable to most.

I recently read the marvelous Why Nations Fail by James Robinson and Daron Acemoglu, which shows that nations fail or succeed based on the kind of economic and political institutions they have. Not their culture, geography, history of colonialism, or race. It’s the choices they make that lead to prosperity or civil war. I’ll have much more to say about the book and its authors, in part because I’m shamelessly trying to become friends with them.

Failing institutions are extractive: they extract wealth from the many and funnel it to an elite few. It’s why Zimbabwe’s dictator Robert Mugabe just happened to win the national lottery a few years ago (he kept the money). It’s also why the rich get richer while the average white male American hasn’t seen his real income grow since 1970.

This article  from Max Lawson of Oxfam makes the point with surprising examples. Most surprising is that, despite serious institutional hurdles and violence, Zimbabwe is making surprising progress in girls’ education.

Lawson talks about “a feeling of despair that such huge divides cannot be bridged; that the inequality crisis we face, which keeps millions of people trapped in poverty, is simply too big for us to change.” That attitude makes charity more like something you do to feel good, than something you expect to create real change. It means accepting defeat.

But we don’t have to accept defeat. In some corners, we’re already learning how to win.

This sense of fatalism is fuelled by arguments that current levels of inequality are due to the seemingly immutable forces of globalisation or technological change. These are undoubtedly powerful trends, of course – but they are in no way the full story. Inequality is not inevitable. It is a policy choice.

For proof, look at Namibia. Here is a country that inherited the highest levels of inequality in Africa when it gained independence from apartheid-era South Africa in 1990. Yet the Namibian government has since managed to systematically reduce the gap between rich and poor, more than halving the poverty rate from 53% to 23%.

Source: Inequality is not inevitable, it’s a policy choice. For proof, look at Namibia | Inequality | The Guardian

Inalienable: the pursuit of happiness

We pursue wealth hoping it will bring happiness. But as sad, angry rich people everywhere can tell you, that can fail (and make you feel pathetic). Old Capitalism built our world, but it brings violence and exploitation. New Capitalists believe we deserve better.

What if we pursued happiness directly, and treated money as a side effect? What if we did it both individually and as a society? That’s the central question of this blog. Whether you’re an economist, entrepreneur, activist, or just tired of systems of violence and foolishness, I’ll bet you agree it’s worth answering.

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By | 2017-08-02T08:35:35+00:00 August 2nd, 2017|Profit|0 Comments