Sunday, January 20, 2008

Poverty alleviation may remain a fantasy

On one hand, reducing poverty has become such an important priority for the developed nations. It has been a major issue in all of the recent World Economic Forum meetings. Global poverty is seen as a big threat to the economical, social and political stability of the wealthier nations. A staggering 4 billion out of total world population of 6 billion are below the poverty line. Poor are defined as those who do not have access to basic essentials of life - food, clothing, housing, clean drinking water, electricity etc.

On the other hand, the whole world is already experiencing a big environmental crisis and facing a question of survival, caused by the affluence of only 2 billion people (600 million rich defined as those earning more than US$20,000 and 1.4 billion medium rich defined as those earning between US$3,000 to US$20,000). Imagine what will happen when 4 billion people will come out of poverty as well?

One wonders if this world will ever be 100% free of poverty though. There are many people doing a lot of good work to achieve this goal. Millennium Development Goals (MDG) is the most important initiative of the UN and poverty alleviation is on topmost priority in that (http://www.un.org/millenniumgoals). Corporates such as Cisco and Google have teamed up with UNDP to monitor the progress of MDG (http://www.mdgmonitor.org/). Bono from U2 is throwing his weight around to make rich countries give more to the poor African countries. Management gurus such as C K Prahalad are advocating market based approach that will focus on poor people as consumers and producers and on solutions that can make the Bottom Of the Pyramid (BOP) market more efficient, competitive and inclusive - so that people in BOP segment can benefit from them and move above the poverty line (http://www.nextbillion.net/).

There are many reasons though to believe that we may never arrive at that goal, unless we change our approach drastically. Natural resources are getting depleted much faster than ever before. One wonders if there are enough left to sustain poverty alleviation of 4 billion people. The price of bringing people out of poverty is going to increase with every billion. Naturally one wonders if the commitment of rich nations is going to remain the same. Will the commitment shake up in dire situations such as recession, low or no growth in their own countries, high inflation, and record high unemployment? The impending recession in US and gloomy forecast for global economy is driving prices up, further making commodities dearer and hence putting basic necessities out of reach of poor people. Will MDG sustain such testing times? Only time will tell.

To me, it seems like poverty alleviation will need a multi-pronged approach. Just generating employment or building innovative products for poor people or donating billions of dollars of charity may not be enough. A major part of the strategy will have to be reduction in consumption of non-essentials by the 2 billion people at the top. That’s what will help slow down the depletion of natural resources and keep enough for the remaining 4 billion people. Top 2 billion will have to go back to practices of their grandparents or great grandparents, when people knew how to lead life with just enough resources. People didn't have aluminum foils, plastic bags, packaged foods, big wardrobes, dozens of shoes, electronic gadgets. Excess will have to stop. In Singapore, some buildings are brought down in 20 years and rebuild to increase property gains. That seems like a lot of wastage in bringing down something that is in good condition and building from scratch a new one that is even bigger. Such wastage and excess will have to cease to exist.



Will this population that has been materialistically pampered over the last 50 years be ready to lower its standard of living, learn to accept that "less is ok" and sustain such testing times? It sounds impossible and hence makes achieving poverty alleviation of 4 billion people look like a fantasy. Only time will tell.