I wanted to tie up all my blogs in the social sector context into one common thread underlying in all of them: poverty and its alleviation. The magnitude of the problem (about 1.7 billion people are estimated to live in absolute poverty) makes it possibly the biggest issue that we as a race face today.
Poverty is about access to potable water, healthcare, education, financial services and housing among many other things. Anyone that is unable to afford any of these is deemed to be in poverty. Also these effects are at the same time the very causes themselves making the cycle a vicious one. Economic growth/increased levels in industrialization & subsequently productivity/modernizing in agriculture are all considered to be at the core of poverty alleviation solutions. Agriculture especially is very important given that the largest block of those in poverty belong to this sector.
Here is a brief snapshot on the more recent history of poverty. Most people in Western Europe were living in poverty until even the 18th century. Then the Industrial revolution happened. Living standards were of course still abysmal (due to low wages) during this period but soon wealth creation and economic progress made items more accessible to many who were otherwise too poor to have afforded them. The story in the USA is similar as well. Rapid progresses in the early 20th century made the US the world’s leading industrial power.
Higher productivity may not be the solution applicable to all scenarios. There might be sudden rises in the costs of living and supply side problems. This is especially true in the case of food prices where a drought or a water crisis negates the positive effect of higher wages. We have seen food riots in demonstrations in the recent years in countries such as Mexico, Yemen and even Italy. Agricultural land is also degrading very quickly and this is adding to food scarcity.
The poor have little or no access to proper healthcare. It is also a well established fact that overpopulation and poverty go hand in hand. The poor have low education levels and therefore have little understanding on birth control planning. Poor nutrition levels in childhood are a big reason to brain development. Statistics here are very dismal (1.02 billion go to bed hungry every night) and I will not cite anymore in this area and make it any depressing than it already is. Education and healthcare are also much related. Those with access to low healthcare tend to suffer many absences at school. The poor therefore are at higher risk of completing their education and consequently this segment faces a higher dropout ratio.
There are other obstacles to development and one of the often cited reasons is the availability of land rights to the poor. While agricultural land may rightfully be the asset of the farmer tilling it, there is no documentation that supports this claim. Therefore this becomes completely dead capital in the hand of the farmer and consequently she/he cannot treat this as an asset as other business might have been able to do. Wars and drugs are another reason. Conflicts in Africa are a prime example, where investors have little confidence in investing their resources. Corruption is another issue. India before liberalization had its infamous license-raj regime where businesses had to bribe the government before it could obtain a license on starting a business. Corruption often affects the small and medium enterprises, which create the most jobs, more than the large corporations.
Economic liberalization is therefore a good thing. It increases the surplus of trading nations. In fact, African nations have often been asking for the lowering of import trade duties in lieu of complete aid withdrawal to their countries. Also free markets with lesser government intervention have seen to be an effective mechanism to treat corruption.
Improvements in healthcare, education and the providing of financial services do not require massive investing. Technology here can play the part of a major disrupter. Telemedicine, cheap water filters and effective mass campaign targeting on health and hygiene are not as expensive to do. Mobile banking and innovating microfinance models can help with enabling the providing of financial services. Good infrastructure though needs substantial investment and private parties here are more than willing to build roads and information networks thereby enabling market reforms.
Income grants and financial aid is one of the most common forms of aid. Debt relief is another. However aid needs to audited carefully and the impact measured. The Gates Foundation spend about 10% of their allocation is measuring impact alone. Another criticism of aid is that the donor influences behavior resulting in undesirable side-effects and consequences.
To summarize, I think that a mix of economic liberalization, usage of technology, investing in infrastructure and continuing use of income grants and financial aid with focus on impact measurement are some of the most effective ways of poverty alleviation. I have not spoken of social entrepreneurship really here as a solution as I think that it won’t do enough to help the situation and secondly, most successful models of social entrepreneurship are quite local and very difficult to replicate on a global or even a national scale.
