Home Business & Finance Fighting Poverty Together: Rethinking Strategies for Business, Governments, and Civil Society to Reduce Poverty
It has been argued, especially by political leaders, that eliminating poverty is essential for reducing war, civil conflict, and terrorism. For example, German chancellor Gerhard Schroder stated, in 2001, “Extreme poverty, growing inequality between countries, but also within countries themselves, are great challenges of our times, because they are a breeding ground for instability and conflict.” The UN Millennium Project notes that “poor and hungry societies are much more likely than high-income societies to fall into conflict over scarce vital resources, such as watering holes and arable land . . . Poverty increases the risks of conflict through multiple paths.” Laura D’Andrea Tyson, former chairperson of the Council of Economic Advisors during the Clinton administration, wrote that “we live in a world of unprecedented opulence and remarkable deprivation, a world so interconnected that poverty and despair in a remote region can harbor a network of terrorism dedicated to our destruction.”6 After the terrorist attacks of September 11, 2001, politicians and policy experts were quick to draw an intuitive line connecting poverty and terrorism. From this perspective, poverty is seen primarily as a political challenge.
While this argument is plausible, it is also debatable. There are many other causes of violent conflict, including religious fanaticism, sectarian or ethnic strife, alienation, and perceived humiliation. Empirical research by economist Alberto Abadie explores the connection between poverty and terrorism in depth and finds that the risk of terrorism is not significantly higher for poorer countries once other country-specific characteristics are considered.7 Some of the world’s best-known terrorist groups, such as the Irish Republican Army, the ETA in Spain, the Baader-Meinhof Gang in Germany, Hamas in Israel, Hezbollah in Lebanon, the FARC in Colombia, and the Tamil Tigers in Sri Lanka have neither been rooted in poverty nor had poverty reduction as a goal. Moreover, while global poverty has remained constant or in some cases declined in recent years, terrorist attacks have increased. It is possible that the causality between poverty and conflict runs in both directions. In the end, it is unclear whether poverty directly causes violent conflict.
A different reason to reduce poverty is that it will result in greater global prosperity. Market-based approaches, which are much in vogue these days, emphasize the tremendous “opportunities” for business to serve the needs of the poor. The thinking is that billions of poor people, with an aggregate purchasing power of trillions of dollars, can be the engine for the next round of global trade and prosperity. Serving the world’s poor can “generate strong revenues, lead to greater operating efficiencies, and uncover new sources of innovation . . . building businesses aimed at the bottom of the pyramid promises to provide important competitive advantages as the twenty-first century unfolds.”8 While this is a seductively appealing proposition, it is riddled with fallacies. For, in reality, there is no significant potential for profits in selling to the poor.
The strongest argument for reducing poverty is not that it is a political threat or an economic opportunity, but rather, that it is a moral imperative. Poverty is a violation of absolute standards of social justice. Social justice requires that poor people should receive assistance when they lack the means to live lives that affirm their human dignity. In his Message for the World Day of Prayer for Peace in 1993, Pope John Paul II said that poverty “is a problem which the conscience of humanity cannot ignore, since the conditions in which a great number of people are living are an insult to their innate dignity, and as a result are a threat to the authentic and harmonious progress of the world community.” In a world of affluence, even opulence, it is ethically and morally unacceptable that poverty claims the lives of 24,000 children each day, that 28 percent of all children in developing countries are malnourished, and that 1.2 billion people suffer from hunger. It is enraging that there are many more similar depressing statistics.
Moreover, poverty is a trap that cuts across generations. Children born to poor parents tend to grow up to be poor adults, making poverty a vicious intergenerational cycle. The undernourished child whose mother did not get proper prenatal care will grow up to be an adult with stunted mental and physical capabilities. The child who did not go to school will not grow up to be a productive member of the labor force or an entrepreneur. The child who dies of diarrhea will not grow up at all. In 2010, Eppig, Fincher, and Thornhill reported a significant negative relationship between a country’s disease burden and the average intelligence of its people, which supports the concept of a “poverty trap.”9 This relationship persists even after controlling for other factors such as income, education, industrialization, and climate. A plausible explanation for the underlying cause of this observed relationship is that the brains of newly born children require 87 percent of children’s metabolic energy; in five-year-olds, the figure is still 44 percent; even in adults, the brain consumes 25 percent of the body’s energy. Disease saps a person’s energy, and the body cannot both fight the disease and develop the brain, especially in early childhood. There is also evidence that certain infections and parasites directly affect cognition. A study of children in Kenya who had survived a cerebral version of malaria suggests that an eighth of them suffered long-term cognitive damage. Eppig, Fincher, and Thornhill believe that the biggest threat is diarrhea, which prevents the absorption of food at a time when the brain is developing rapidly, and is linked to lack of access to clean drinking water.
“The greatest of evils and the worst of crimes is poverty,” said George Bernard Shaw. Eradicating poverty is not a means to some other end; it is an end in itself. It is the moral responsibility of all people to fight poverty. The world has the economic capacity to ensure that every human being is lifted out of poverty. Here is a simple, rough calculation to illustrate the magnitude of the response required: Among the 2.56 billion people living on less than $2/day, the average consumption per day is $1.21, according to World Bank data. Raising all poor people to the $2/day standard would require $738 billion at PPP per year—compare this to the size of the global economy: $55 trillion at PPP. This is not an extravagant goal when all it would take is a 1.3 percent shift in global income distribution. There is no excuse for persistent global poverty. As Mahatma Gandhi often said, poverty is the worst form of violence.
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