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Up and Out of PovertyPreface
Many books have been written about the scourge of poverty. They offer different theories on poverty and different solutions. Some outline macro solutions, and others deal with micro solutions. Our book takes a very different look at the problem and offers a different model for helping the poor escape from poverty. We examine the power of “social marketing methodology” to abate the suffering of the poor. This preface describes the major approaches to fighting poverty and how our approach adds to the set of tools for helping the poor achieve a better life.
Of all the problems facing mankind—disease, hard drugs, crime, corruption, armed conflict, global warming, nuclear risks, environmental sustainability—poverty is among the most persistent and shameful. Furthermore, poverty contributes greatly to the other problems. The poor suffer more from disease, and their hopeless condition leads some of the poor into lives of crime, hard drugs, and armed conflict. This means that the cost of poverty far exceeds the cost that the poor themselves bear. Poverty pours its poison on the rest of mankind.
Until the nineteenth century, the poor received little attention. Poverty was seen as inevitable. Governments and do-gooders could do little about it. The Industrial Revolution exacerbated the problem by attracting poor rural peasants to the cities in search of work. This led to the establishment of shantytowns and poorhouses. The plight of the poor became more visible. Caring researchers such as Beatrice and Sidney Webb in the U.K. started to count the poor and write about their plight. Charles Dickens, in Oliver Twist, vividly dramatized the conditions and exploitation of the poor.
The concept of creating antipoverty programs began in the nineteenth century and continues today. One sixth of the world’s population earns less than $1 a day. Another 2 billion of the world’s 6 billion people earn less than $2 a day. In the year 2000, the United Nations outlined its multilateral plan for reducing world poverty. The United Nations formulated the Millennium Development Goals (MDG)—eight goals with eighteen accompanying targets, designed to significantly reduce poverty levels by 2015. Target 1 was to cut in half between 1990 and 2015 the proportion of people whose income is less than $1 a day. The goal is ambitious and is not likely to be achieved, given the tumultuous new circumstances of rising food and energy costs and continued armed conflict in the world.
Experts have put forth different theories of the causes of the problem and therefore have advocated different measures to cure the problem. We can distinguish between experts who see poverty as having a major basic cause and those who see many causal factors at work.
The simplest theory is that the poor have brought the condition on themselves. The assertion is that many are shiftless, lazy, and uneducated and prefer to live on handouts rather than exerting effort to lift themselves out of poverty. The implied solution from this view is to either find a way to change their attitude and behavior or leave them in their penurious state. Granted, some of the poor are responsible for their condition. However, there is evidence that most of the poor would be ready and willing to escape their penurious conditions if they could find employment and have a decent place to live.
Another simplistic theory is that poverty is the result of the poor having too many children. Each new child makes a poor family poorer. The argument goes further to say that the Earth has a limited population “carrying capacity” for resources and food to permit a decent standard of living for six billion people (let alone the 9 billion people projected by 2020). Therefore, poverty continues to be a problem because of overpopulation. This is a variation on Thomas Malthus’ proposition that the rate of population growth will exceed the rate of growth of food supply, resulting in starvation, war, and the continuation of poverty.1 The major modern version of this view is found in the book The Limits to Growth.2 Here the solution follows that much poverty would abate if poor families would limit the number of their offspring voluntarily or by edict. China represents the latter in restricting families to only one child. Certainly this has been one of the major contributors to China’s impressive reduction in the number of families living in poverty.
Another singular theory is that poverty persists because the poor don’t own any fungible property on which they could borrow money. They lack tradeable assets. This theory has been propounded by the highly respected though controversial Peruvian economist Hernando de Soto in his book The Mystery of Capital: Why Capitalism Triumphs in the West and Fails Everywhere Else.3 De Soto argues that the real source of wealth is real property—that is, well-defined and socially accepted property rights. Property is an asset that can be used to get or make a loan or mortgage, or obtain insurance or own stock, and other things that make capitalism so effective in producing economic growth and prosperity. But de Soto says this doesn’t work in poor communities and countries because the institutions don’t recognize the assets of the poor. The poor have plenty of assets (land, homes, businesses), but they typically lie in the extralegal, informal realm. The legal system has not adapted to this reality. The costs of making these assets legal (obtaining proper title to a house, registering a business) are so prohibitive in terms of time and money that the assets end up being “dead capital.” The poor cannot use their assets to achieve any of the normal capitalist tools to achieve upward mobility. Because these assets are not recognized, they create an extralegal style of living within their informal social circles. For de Soto, the singular solution is to push the legal system to allow the monetization of these assets so that the dead capital becomes alive.
Besides these grand singular theories, the majority of experts recognize poverty as resulting from many interrelated causes, all of which must be addressed in an integrated fashion. Consider Paul Collier’s views in his book The Bottom Billion: Why the Poorest Countries Are Failing and What Can Be Done About It.4 According to Collier, the billion people at the bottom live in “trapped countries.” He identifies four elements that cause countries to become trapped:
- Civil war. Nearly three-quarters of the bottom billion have been through or are currently experiencing civil war. Civil wars usually occur where there are large numbers of unemployed and uneducated young men and ethnic imbalances.
- Natural resources curse. Almost 30% of these countries rely on exporting some raw materials, such as oil or minerals. Countries with large amounts of natural resources tend not to develop the skill sets of their people, and they tend not to hold democratic elections. Corrupt governments and impoverished and violent masses often result.
- Landlocked countries. About 30% of the countries with desperate poor are landlocked or surrounded by bad neighbors. This leaves them economically disadvantaged.
- Bad governance. About 75% of the countries suffer from bad governance or autocratic leaders who exploit their people.
Each condition requires a different type of solution. Collier favors legitimate military interventions in areas being torn apart by civil war. Countries with large amounts of natural resources should develop skills that raise the value of their exports and should not simply export raw materials at world market prices. Landlocked countries must learn to work with neighboring port-based countries to build roads that will give them access to ports. Bad governance is the hardest problem to solve. Robert Mugabe ran Zimbabwe into the ground, and the rest of the world stood helplessly by.
Collier’s chief recommendation to fight poverty is to “narrow the target and broaden the instruments.” Narrowing the target means focusing on the one billion of the world’s people (70% of whom are in Africa) who are in countries that are failing. Broadening the instruments means shifting focus from aid to an array of policy instruments: better delivery of aid, occasional military intervention, international charters, and smarter trade policy.
What about foreign aid as a partial solution to the problems of the poor? Two experts have sharply different views of the value of foreign aid. Jeffrey Sachs, author of The End of Poverty, wants the West to be more generous and to give substantially more foreign aid to poor countries.5 On the other hand, William Easterly, in The White Man’s Burden, advances strong arguments against foreign aid.6 He describes Jeffrey Sachs as one of those big “top-down planners” who is never embarrassed about the many failures of foreign aid. Some estimate that as little as 15% of foreign aid reaches the deserving poor as a result of high administrative expenses and corruption. Foreign-aid relief agencies’ tendency to do “top-down planning” fails to provide information on variations in local needs for medicines and foods. Foreign aid also creates a dependency that keeps countries from reaching for their own solutions. Foreign aid hurts a country’s private businesses that produce or sell the same foreign-aid items. Easterly sees the work of large foreign-aid bureaucracies and their vast past expenditures and interventions as largely a failure. At the same time, Easterly acknowledges some good deeds of these large aid agencies, especially when they concentrate on particular needs. These include drilling and maintaining local wells, building and maintaining local roads or sewage systems, or distributing medicine or food in particular places where they are needed.
The major problem of top-down planning is that huge agencies at the international and national levels have to decide how to allocate money to the different poverty-alleviation tools. They do this by setting priorities that reflect the country’s modal conditions. But the priorities may vary from village to village and city to city. This means that some communities receive more to spend on causes that are not important, and other communities receive less than they need.
This makes it desirable to add a “bottom-up planning approach” that engages all the communities to develop their own proposals and programs of need, which are then passed upward. These programs must meet certain criteria, such as taking a long view of what would develop the community, and explaining the program’s logic. The need is to “Take the mountain into the valley.” C. K. Prahalad, in his book The Fortune at the Bottom of the Pyramid: Eradicating Poverty Through Profits, eloquently describes how local innovation and financial assistance to the poor can give the poor an incentive to help themselves escape from poverty.
Given these different approaches to understanding and reducing poverty, we are ready to state the main features of this book:
- This book doesn’t believe that one major solution (such as foreign aid or population control) provides a full answer to the poverty-alleviation problem.
- We believe that the best solutions will involve more than government solutions and nongovernment organization (NGO) solutions. The solutions will involve the private sector as well, working closely with government agencies and civil organizations.
- We believe that much of the work of helping the poor lies in using tools to understand, influence, and assist the poor in participating in developing their own solutions.
- We link the big national picture of the problem with the specific conditions found in each local situation.
- We describe and illustrate with actual cases the major steps in the social marketing planning, implementation, monitoring, and control program. We believe that this level of analysis has been missing in all the previous work on helping the poor.
In essence, our book aims to describe what to do and how to do it in helping the poor escape poverty.
We have written this book so that those working to help reduce poverty will understand and use the powerful tool of social marketing. We believe that social marketing can help people move up and out of poverty, ensure that they don’t slip backwards, and even keep them from entering this situation in the first place. We think it has been missing as a major player in the poverty solution mix.
Part I summarizes the various definitions used to measure the number of people living in poverty, major factors that cause or reflect poverty, and ways in which the nonpoor are also impacted by poverty. We then examine the barrel of current poverty solutions and describe how the social marketing solution differs.
Part II is more practical, outlining various theories, principles, and techniques that have been used to create behavior-change campaigns. These are illustrated with successful poverty-reducing cases from around the world.
Part III focuses on the unique role that the three major sectors (public, nonprofit, and private) play in poverty reduction. The final chapter stresses the critical need for these three sectors to work together, ensuring an integrated approach.
We believe you’ll find the marketing concept easy to grasp. We adopt a customer-oriented mind-set. We define who our customers are and what they need and want in order to adopt the desired behaviors we have in mind—ones that will help them move up and out of poverty.
- Thomas Malthus, Principles of Political Economy (London: William Pickering, 1836).
- Donella H. Meadows (and others), The Limits to Growth: A Report for the Club of Rome’s Project on the Predicament of Mankind (New York: Universe Books, 1972).
- Hernando de Soto, The Mystery of Capital: Why Capitalism Triumphs in the West and Fails Everywhere Else (New York: Basic Books, 2000).
- Paul Collier, The Bottom Billion: Why the Poorest Countries Are Failing and What Can Be Done About It (Oxford, New York: Oxford University Press, 2007).
- Jeffrey Sachs, The End of Poverty: Economic Possibilities for Our Time (New York: Penguin Press, 2005).
- William Easterly, The White Man’s Burden: Why the West’s Efforts to Aid the Rest Have Done So Much Ill and So Little Good (New York: Penguin Press, 2006). The same skepticism about foreign aid is articulated in Clark C. Gibson, Krister Andersson, Elinor Ostrom, and Sujai Shivakumar, The Samaritan’s Dilemma: The Political Economy of Development Aid (Oxford, U.K.: Oxford Press, 2005).
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