Every year, the development industry spends around $150 billion fighting poverty. Last year, it spent approximately $161 billion.
Progress is not only slow but whatever “progress” is made is also shallow. Development indicators, such as children in school, life expectancy, infant and maternal mortality, and so on, may go up, but they mostly mask the shaky foundation upon which these positive indicators are built. And poverty, for the most part, still persists.
Here are three reasons why the current poverty fighting model needs to change.
First, the opposite of bad isn’t necessarily good. It’s simply, not bad.
Similarly, the opposite of poverty isn’t prosperity. The end of poverty doesn’t signal the end of suffering, struggle, and susceptibility to major shocks.
Extreme poverty is a technical term defined by development experts in wealthy countries. It means those who live on less than roughly two dollars a day. When someone lives on more than two dollars a day, they are “technically” not living in extreme poverty. Yet there are billions of people in our world who live on more than two dollars a day, who are still suffering immensely.
For many of them, the end of their poverty was not the end of their struggles. So, the purpose of the development industry should not simply be to end poverty. It should be development. Unfortunately, today, we have a system that manages poverty. This needs to change.
Second, by focusing on fighting poverty, organizations spread themselves too thin.
Poverty almost always shows itself as a lack of resources: a lack of schools, hospitals, roads, food, water, sanitation, and so on. And so, to tackle poverty organizations spread themselves thin by (unsustainably) providing these resources. Yet, decades after providing these resources to many poor countries, poverty still persists.
This happened to me in 2009 when I co-founded the nonprofit organization, Poverty Stops Here (PSH). Initially PSH built water wells so people could have access to water. Then we started funding schools in different communities. But we also knew mosquitoes and malaria were a problem, so we purchased and distributed mosquito nets to people. Our final project was providing microloans.
All those programs were good, and we meant well. However, they were unsustainable and inefficient. They didn’t give us the opportunity to focus on the root cause of the problem.
PSH’s activities are a microcosm of the broader development industry. This happened in Afghanistan where the United States and its allies did everything from building institutions and developing infrastructure to investing in education and healthcare systems.
But once the United States and other countries pulled out, it didn’t take long for Afghanistan’s economy to crumble. From healthcare to education, much of the gains made in Afghanistan evaporated. Focusing on fighting, alleviating, or eradicating poverty is too heavy a task, even for the world’s richest country.
Third, a system built to fight poverty creates flawed incentives.
When a system is built to fight poverty, each component of the system is built–unintentionally–to maintain poverty. That’s because, if poverty does go away, the poverty fighting system will become redundant.
A sick patient who becomes well no longer needs a doctor. A broken vehicle that’s fixed by a mechanic no longer needs a mechanic. A poor country that wins the fight against poverty no longer needs the people, resources, and an entire system designed to help it.
Viewed this way, fighting poverty is a zero sum game–when a poor country wins, those in the poverty fighting industry lose.
A different–and much better–system is one that’s built to create prosperity. A prosperity creating system is designed to transform nonconsumers into consumers. This isn’t a zero sum game. It’s infinite and its impact is often exponentially positive.
Consider what happened when Henry Ford turned millions of nonconsumers of cars into consumers. At the time there were few paved roads on which cars could be driven, few gas stations, and few Americans rich enough to afford a car. But Ford’s affordable Model T car changed all that.
In fact, so many Americans purchased cars that annual production skyrocketed from 20,000 in 1909 to around two million in 1922. This led to significant development in the country. School attendance shot up; agriculture became more efficient, and so did logistics and distribution; suburbs began to develop which led to a housing boom. New businesses and industries–tourism, hotels, fast food, auto repair shops, auto insurance, gas stations, and so on–experienced tremendous growth. Not to mention all the industries that supported the actual production of automobiles–rubber, wood, steel, glass, paint, etc.
Similar growth happened when millions more people gained access to the computer globally. And today, we see the same thing happen as people–even those in poor countries–gain access to mobile phones.
There are no easy solutions to ending global poverty. But continuing to build an industry focused on fighting poverty is clearly not the answer. It’s time we changed our paradigm.
