Sunday, November 2, 2008

Out of Poverty by Paul Polak

I just recently read Paul Polak’s book entitled Out of Poverty. First, upon reading Polak’s book and thinking about my last post “Toward what end?” I realized that I have been vastly over thinking poverty alleviation. The basic realization that Polak and others have helped me come to is that humans have radically material needs and an income of less than $1/ day is staggering and must not be treated like yet another neocolonial or materialistic paradigm.

Polak is a successful entrepreneur and change maker who comes from a strawberry farming background. His perspective on international development is wonderfully refreshing and simple. Through his organization, International Development Enterprises (IDE), he has effectively lifted 17 million people out of dollar-a-day poverty. IDE was founded and operates on the basis of four very simple observations:

1) The biggest reason people are poor is because they don’t have enough money.

2) The vast majority of people living on $1 per day earn their living from one-acre farms.

3) They can earn much more money by increasing productivity and finding ways to grow and sell high-value labor-intensive crops such as off-season fruits and vegetables.

4) To do that, they need access to very cheap small-farm irrigation, good seeds, fertilizer, and markets where they can sell their crops at a profit.

So Polak has invented and marketed affordable, efficient, and effective tools like treadle pumps and drip irrigation systems that can be afforded by the world’s poorest farmers. He doesn’t depend on donations or subsidies and is able to make a small profit by marketing low-profit tools to millions of small-acreage farmers around the world.

In Out of Poverty, Polak also identifies three great poverty eradication myths:

1) We can donate people out of poverty
This is a direct critique of Jeff Sachs, head of the UN Millennium Development Goals, who argues that poor people are too poor to invest their own money to move out of poverty. Sachs calls for rich countries to make gifts to poor countries to essentially continue the enormously ineffective trend that has gone on for over 50 years. William Easterly, in The Elusive Quest for Growth is right in that we have spent billions of dollars in foreign aid and have very little to show for it. Both myself and Polak see the Sachs plan as merely a continuation of this; big infrastructure, irrigation, and agriculture projects with big budgets that will be controlled by the governments of developing countries, the benefits of which will very rarely reach the poor rural farmers who really need it.

2) National economic growth will end poverty
India and China have both experienced incredibly impressive GDP growth over the years. However, 360 million people in India and over 200 million people in China continue to live on less than a dollar a day. Any scholar of India can notice a development of “two Indias,” one for those who reap the benefits of growth and those who continue to be entrenched in poverty. Yes, we need growth, but all too often that growth is aimed at urban industrial growth instead of empowering small-scale, dollar a day farmers to increase their production and profits.

3) Big business will end poverty
Polak sees very little reason to think that multinational corporations will seriously invest in lifting people out of poverty. Not because they are evil or selfish, but they are just not competent in designing affordable solutions for the poorest people in the world. Roughly 90% of innovation and design efforts are focused on catering to the richest 10% of the world’s populations. They don’t have the competence in understanding, reaching, and selling to customers who live on less than a dollar a day. Until the target market that they are designing and innovating for changes, we will not see a major breakthrough from corporations in solving poverty.

In sum, Polak bypasses donors, governments, and big business to directly empower the millions of people who need the most help. He sells them unsubsidized and high-quality tools and resources by which they can generate enough income to send their kids to school, see a doctor, be properly nourished, and partake in community activities. He is a grassroots visionary in a world where the IMF, World Bank, and UN Millennium Development Goal initiatives continue to dominate. I highly recommend this book for anyone thinking seriously about addressing poverty in our lifetime.


adam said...

What's up, Mr. Ellis? I agree that poverty is rampant and immoral, and it does seem to be one of those things which people could fix but don't seem to get around to it. However, I don't see where we draw the line. Where are we taking this? Obviously we can't export the American model to China and India, because America uses 25% of the worlds energy, and three countries using up all the energy leaves very little for the other 160 or so. Not to mention the other industrial nations (although I just did). So how do we decide? Do we insist on fewer births, or do we just let Malthus checks keep doing the work? I always wonder this when I think about how drastic is the divide between rich and poor in this world. Is there an answer?

AC said...

I agree with Adam, though I wonder if many of those of pro-developers recognize the faults in their precisely trying to export and apply American notions of capitalism and ruthless materialism to places like India and China, though as I am in India now, I cannot say this exportation is a completely uninvited sort of economic imperialism.

India, in response, seems more than happy and welcoming of American ideals and values, plastering white faces and white people on all its adverts and in its movies, as if subtly hinting of its implicit appreciation of who and what it believes represents America (or perhaps the West generally). This is a tangent, though I believe not a description of a phenomenon unique to India.

I suppose the relevant question then is what constitutes "fair" development; for we Americans to accept that the rest of the world cannot live our dream aka our gross consumption without completely obliterating world resources, while still trumpeting our political and economic values in front of it. Seems like some sick game -- let's educate and develop you, poor country, in our vein, but inhibit your ability to live like us once you reach our level of capability?

Clearly we must emphasize some balance in the distribution of global resources, America's included, as we strive towards a fair addressal of the inequalities endured by the poor and disenfranchised. Yet, when the major players of international economy and politics include those countries destined to lose from such reallocation, what exactly can the next step be?