I am now convinced that I am addicted to buying books. I am still working through Cannibal Capitalism and True North, but I felt the need to buy two other books, The Poverty of Nations and The Design of Business by Roger Martin (not me the one from Canada). I have a voracious appetite for detail that explores the why behind business. Is this why just to line one’s own pocket with profit, or is there a higher cause, one of creating social and economic value?
The one thing I have discovered is that giving someone a bunch of money will not lead them to financial independence, and I know that nations who are dependent on foreign aid are countries that are not learning how to be self-dependent. James A. Robinson, an MIT economics professor, has studied data and concluded “that no poor nation in history has grown wealthy by depending on donations.” He also argues that many countries that have large amounts of poor people are dependent upon “extractive institutions.” These institutions take advance of people due to a “lack of property rights, law and order, or well-functioning legal systems.”
William Easterly, professor of economics at New York University, commented recently on “the tragedy in which the west spent $2.3 Trillion on foreign aid over the last five decades and still had not managed to get twelve-cent medicines to children to prevent half of all malaria deaths.”
Dambisa Moyo, an Oxford trained African economist, from Zambia argues that foreign aid is why Africa is still impoverished. “But has more than US $1 Trillion in developmental assistance over the last several decades made African people better off? No. In fact, across the globe recipients of this aid are worse off; much worse off.”
The UN has what it calls Millennium Development Goals. Goal number one is to eradicate extreme poverty and hunger in the world. Target 1A was to cut poverty in half by 2015. The UN announced that the one half goal was met on 2010. The question then is how was the goal met earlier than forecasted?
Most of the reduction has occurred in Asia via China and India via economic growth. It is an entrepreneurial spirit that is helping people improve their economic standing all over the world. Does this mean that all these folks have moved into a middle class standing? Not in the least, but through economic advancements people are improving their standard of living.
Micro-financing, western businesses investing in the developing world, and educators helping people learn how to start and run businesses are definitely part of the improvement. These are not programs creating dependency on the givers, but programs that teach people how to creatively engage in productive endeavors.
“Taking a long view of history, the dramatic fall in poverty witnessed over the preceding six years represents a precursor to a new era. Fundamentally it’s a story about billions of people around the world finally having a chance to build better lives for themselves and their children.” This is not occurring through handouts, but by systems designed to help them become economically active.
And that is my thought for the day!