The Bottom of the Economic Development Ladder

Here is my Saipan Tribune column from Friday.

***

How do we, who are having such bad economic times here, stack up compared to the rest of the world? Where are we on the world's economic development ladder? I don’t know much about economics, but these questions were recently asked of me, so I thought I’d find out. Economic development, as it turns out has a fascinating history. Economist, Jeffrey Sachs, describes a four step ladder, as a way of viewing the world in terms of economic development. The first step, which I’ll describe today, is not really a “step” because it’s not even on the ladder. It is “extreme poverty.”

Today one billion people – one sixth of the earth’s population – live in extreme poverty. This "bottom billion" is so economically destitute, that their very survival is at risk on a daily basis. Their lives are fragile. They live with drought, famine, starvation. Any small change can make the difference between life and death – a storm that wipes out meager crops, being struck with a simple disease, but having no access to medicine to treat it, late delivery of food – all of theses sorts of threats are very real, and can mean death to entire populations living in extreme poverty. If there is any income that comes into the hands of those in extreme poverty, it is counted in pennies per day.

For much of human history, the vast majority of the world’s population has lived in extreme poverty. Our ancestors struggled for their very survival, in a harsh world, with a fragile existence. Wealth, above extreme poverty, did not become accessible to common people until the mid 1700’s. It is only since about 1750 that humanity has climbed onto the first rungs of the economic development ladder.

Extreme poverty does not exist in developed countries. It is a condition that afflicts swaths of the developing world. Seventy percent of the extreme poor live in Africa. Ten to fifteen thousand of them die of preventable causes, like hunger, malaria, and dysentery every single day, day after day, year after year.

The tragedy of our times is that such dire circumstances affect one billion of our fellow men, women and children, in a world with such vast resources.

One of the goals of the United Nations is to wipe out extreme poverty by the year 2025, and to cut it in half by 2015. It requires commitment from wealthy nations, but I think it also requires awareness by the rest of humanity that such conditions exist and that solutions are available. The bottom billion require assistance to get on the economic ladder, to move from extreme poverty to just regular poverty. It is a small step, but the most important one in terms of the survival.

Saipan's Flirts with Third World Status

In his book, and The End of Poverty: Economic Possibilities for Our Time, economist Jeffrey Sachs points out,

When the preconditions of basic infrastructure (roads, power, and ports) and human capital (health and education) are in place, markets are powerful engines of development. Without those preconditions, markets can cruelly bypass large parts of the world, leaving them impoverished and suffering without respite.

Let’s take a closer look at this dense statement, that gives a very simple formula for economic success of a people. Development requires the combination of human capital (which consists of two parts – health and education) and basic infrastructure (which consists of three parts – roads, ports and power). Here on Saipan we lack reliable power, and therefore, we simply lack one of the key elements required for development. The lack of power is not just an inconvenience. It changes our status as a developed jurisdiction

Yesterday, at our home we had over five hours of unannounced power outages spread throughout the day. One came during mealtime, another just as we were getting children to bed. We were unable to cook, and our children cried as they tried to fall asleep in the sweltering heat. This is not a scene that you expect in a developed place, especially when it happens daily, as it is now. Power is part of basic infrastructure, and without it, there is limited opportunity for our markets to develop. I hate to say it, but our protracted power problems now bring us into the company of most third world countries. Our power situation puts us in a particular category of underdeveloped nations, and market opportunities cruelly bypass us.

How to Change the World

Further to my post about being a selfish son-of-a-bitch, the books I ordered arrived, and I've been getting quite an education. I ordered four books. The first, The White Man's Burden: Why the West's Efforts to Aid the Rest Have Done So Much Ill and So Little Good by William Easterly, helps us understand what kind of aid doesn't work, and presumably, what kind does work.

Easterly's perspective is balanced by The End of Poverty: Economic Possibilities for Our Time by Jeffrey Sachs. This book extols the power of aid, and is written by the architect of the UN's Millenial Plan to end poverty by 2025.

I knew these books were at opposite ends of the ideological spectrum, and thus thought they both deserved my attention. Both are by well-respected experts/economists, experienced in aid and poverty issues.

Not wanting to get bogged down by too may graphs (which both books have), and also not wanting to get overwhelmed by the massive scope of problems that these two books are sure to address, I also ordered a couple of very practical books.

Creating a World Without Poverty: Social Business and the Future of Capitalism is by Muhammad Yunus, who won the Nobel Peace Prize for his work in "micro-finance." He has shown that the world's poorest people are outstanding credit risks, and that loans as small as $10-20 can break the cycle of poverty by allowing poor families to start their own businesses.

The one I'm reading now, How to Change the World: Social Entrepreneurs and the Power of New Ideas, Updated Edition by David Bornstein, is a collection of accounts of social innovators who through their persistence and dedication to an idea, have changed the world. I'm finding it a fascinating read. I love learning about things I know nothing about. So far, that's included rural electrification in Brazil, child protection in India, and the development of the EPA's "bubble" policies in the 1970's upon which concepts like carbon exchanges have been built. The first few chapters explore the qualities of the people who bring about these sort of social changes. I'll write more about that later.

Human Potential as Development

As I've been delving into the area of sustainable development and poverty reduction over the past couple of weeks, a few themes have emerged.

1. Development projects work best when individuals at the grassroots set out to identify and solve their own problems, not when outside agencies and individuals come in to identify and solve their problems.

2. The most meaningful forms of development projects are those that unlock the capacity of the individual at the grassroots to do exactly that -- to believe in their own potential to address their own problems, and to develop the moral capacity to do so in a just and honest way.

3. Lack of money is usually not the biggest problem. There is lots of money and international aid available. The challenge is spending it in a meaningful way, and again, it goes back to having individuals within communities identify the meaningful ways to address their social and economic problems.

On Poverty

I'm a selfish son-of-a-bitch.

On Wednesday, I watched the movie, Born into Brothels. If you haven't seen this movie, watch it. For those on Saipan, there is a copy available at the Public Library. A few years ago, it won the Academy Award, and a bunch of other major film festival awards, for best documentary. I usually hate documentaries, and rarely watch them. I can't say I really enjoyed the movie, but it really stayed with me, which is probably more important.

Born into Brothels is the story of the film-maker, who wanted to photograph women's issues in India, and ended up moving into a brothel in Calcutta in order to get to know the women and be trusted by them. In the process, she got to know the children whose mothers populated the red light district of Calcutta, and set out to teach them photography. It's a moving story of the children's experience of creativity, individuality, and for some, freedom from their surroundings and a chance for a better life. Watch the special features, which include the film-maker's visit to the children three years later, and a segment of them watching film and their reactions.

I had tears in my eyes during much of the movie. Man, these are children subjected to such horrible situations, and walking a predetermined path. And here, one woman changes the path for them, shows them that destiny has options.

Lately, I've been thinking about life. Some might characterize it as "mid-life crisis." For me, it's been mid-life evaluation. I've reached the pinnacle of accomplishments in my profession, and though it's satisfying, oddly enough, it's not automatically fulfilling. Sure, it's fulfilling looking back, but that doesn't necessarily carry me forward. There is a nagging feeling that there is more to be done. My friends tell me I'll go insane thinking like this, and that I should relax and just enjoy myself. I should. But movies like this get under my skin, because it's such a self-centered existence to think that once I've got everything I need, the rest is not my concern. We all spend so much of our lives thinking of our narrow self-interests -- our careers, our families, our children, our retirement, and we might even placate our hunger to feel good about our humanitarian souls by contributing to the worthy cause du jour. In the end, it's all pretty hollow.

All of this rumbling around in my head for the past few days has gotten me thinking about poverty, and the misery it brings. But also realizing that poverty doesn't come purely from lack of material goods, but from lack of morality. Aid gets pilfered or misappropriated (fancy words for "stolen") by people who line the trail from donor to recipient. And the aid often subjugates the recipient to a mentality of dependency. Aid is needed, but it has to be linked with education, transformation, a change of mind and heart for all parties. Long-term solutions require systemic changes.

I often think of the tragedy of many of the people who work here on Saipan. Because of the inequality of wealth among nations, our housekeeper left her boys in the Philippines when the children were under four-years old. She came to a place where the wages for a housekeeper were $350 a month, managed to live on this, and send enough home each month to put her boys through college. But she saw them once every five years. A mother removed from her sons, because of that nation's poverty and our wealth.

I'm trying to go beyond these words and figure out how to do something meaningful about all of this. I'm reflecting on something I read a few days ago also, that talks about "right living" and being "undeterred by fear."

We must be like the fountain or spring that is continually emptying itself of all that it has and is continually being refilled from an invisible source. To be continually giving out for the good of our fellows undeterred by the fear of poverty and reliant on the unfailing bounty of the Source of all wealth and all good -- this is the secret of right living.

I also know that without ongoing stimulation, I'll get distracted by the concerns of my own life. It's just so easy, because they are so readily accessible to my brain, like the blood that bathes it. So, I'm trying to give my mind some regular access to great issues, great ideas, just to stay engaged with the needs of my fellow human beings that for some stupid reason didn't have access to the things I did. The problems are big and complex. I don't pretend to have any clue of how to solve any of them, and I doubt I'll figure it out. But it is becoming clearer and more urgent for me to put my energy toward them, rather than toward my own little troubles.

So, the first step? I'm reflecting. I'm going to learn about some of the problems with being a savior. And I'm going to stay inspired -- I ordered the film, Gandhi, from Netflix and it should be here by the weekend. Yeah, it might seem like a pretty lame effort. Edmund Burke said, "All that is necessary for evil to triumph is for good men to do nothing." And although I don't want to be one of those good men doing nothing, I do want to be doing a meaningful something, which requires some thought, understanding and preparation.

It's also going to require me to stop being a selfish son-of-a-bitch, which is probably the biggest global impediment to ending poverty.