Links on Economic Development

Collected from last week – thanks mostly to Michael Kruse for linking to them.

  1. Dave Richards reviews Smith and Thurman’s A Billion Bootstraps – best book introducing microcredit
  2. Richard’s succinct list of the ways the world is getting better.
  3. Kruse – The world is getting better, but we are feeling worse.
  4. Kruse’s own review of the book “Good Intentions.
  5. New Poverty model to empower poor farmers.
  6. The Gates, malaria and side effects. Too much of a good thing?
  7. The difference between donor ideas and market realities ($100 laptops) – a story from last year, but some good humor involved.

[Details and select texts below.]

1. Check out Defeat Global Poverty where Dave Richards review of A Billion Bootstraps: Microcredit, Barefoot Banking, and the Business Solution for Ending Poverty
by Phil Smith and Eric Thurman.

I think this the best book that I’ve read so far which provides an introduction to microcredit which is designed for a non-industry expert and, more specifically, for someone who is looking to get involved in microfinance.

Eric Thurman is the industry expert having previously led two leading multi-country microfinance organizations, Opportunity International and HOPE International plus Geneva Global, an interesting group which advises/supports philanthropists in international giving strategies. Phil Smith is a successful oil industry entrepreneur who tells his story about learning about microfinance and how and why he is now such a passionate investor.

Their rule of thumb is the capital required to help a family out of poverty through microcredit is approximately the level of average annual income per capita of the borrower’s country (GNI per capita).

2. Richards also provides a handy list of ways the world is getting better from the economist article I mentioned earlier.

3. Michael Kruse caps his series on social indicators in America to show that that life is getting better; but people are feeling worse.

“these indicators tell me that there is a significant disconnect between what is happening and what the general populace perceives is happening.”

Actually 1981 seems to be the worst year in recent American history.

This pessimism preceeded 9/11 and the “war on terrorism”, and while the negative sensationalism of the media may play a role, Kruse believes the reasons lie more particularly in two other factors. First, is the combination of rising expectations with diminishing returns. The more progress you make the higher the expectations grow. At the same time, “each succeeding level of improvement tends to get exponentially more difficult and costly while rendering more modest levels of change.” The result is increasing impatience and frustration. Kruse believes that the second factor for the pessimism is “cultural divide about what a healthy culture looks like and what creates it.” Citing Adam Smith from 230 years ago, Kruse concludes, “maybe it is just human nature to be pessimistic; to see disaster around every corner.”

4. Later Kruse reviews the book Good Intentions:

Is greed ever good? Is Bono right? Is Wal-Mart evil? Does globalization exploit the poor? Are immigrants taking our jobs? Is capitalism ruining the environment? Charles North and Bob Smietana take on these and other questions in their book Good Intentions: Nine Hot-Button Issues Viewed Through the Lens of Faith. North is an associate professor of economics at Baylor University and Smietana is a correspondent for Religion News Service.

Why aren’t good intentions enough? Because we live in a world of scarcity, a world where we can’t get everything we want for free. (16)

North and Smietana believe all material goods, including food, are Gods provision for all humankind. The goal of Christian economics is to figure out how to get goods into the hands of as many people as possible. That isn’t easy but they see this as a guiding biblical principle that is joined by other principles.

  • Everyone deserves a fair shake.
  • Everyone works.
  • God wants people to prosper – to able to make a living.
  • Some people, for a number of reasons, will fall behind and lose the means to make a living.
  • God wants those people to be restored so they have access to the means to make a living. (20-21)

Good intentions do not assure good results, and they can at times lead to policies with perverse unintended consequences. As in the rest of life, the road to economic hell is often paved with good intentions.

In his book, The Screwtape Letters, C. S. Lewis’s imaginary senior devil gives his nephew advice on how to confuse human beings and lead them to making poor choices.

“The Enemy loves platitudes,” Screwtape writes. “Of a proposed course of action He wants men, so far as I can see to ask very simple questions; is it righteous? is it prudent? is it possible? Now if we can keep men asking ‘Is it in accordance with the general movement of our time? Is it progressive or reactionary? Is this the way that History is going?’ they will neglect the relevant questions.” (24)

5. New Poverty Model to Empower Poor Farmers in Africa

February 21, 2008: For a long time, models for ending extreme poverty in Africa have been laden with hand-outs. Development activists however have strongly opposed giving free money, goods or services to the poor because the cycle of poverty starts as soon as the free part of the bargain ends.

Development financiers are now starting to see the reality of this problem and have shifted to models that will empower the poor.

A new concept agreed upon at the World Economic Forum in 2007 to end poverty and hunger by enabling farmers to increase yields and add value to the harvest has been rolled out in Kenya.

6. Gates Foundation help to malaria and side effects: too much of a good thing?

The audacity of the Gates Foundation may have unintended consequences, but things would be worse if UN bureaucracies still dominated the field

IS IT possible—even in theory—for an organisation to work too hard for the benefit of humanity, or to devote too much money to the eradication of a deadly disease? To judge by some of the recent bickering between leading players in the field of global health, there are serious people who in answer to those questions would say, “paradoxically enough, yes.”

After describing all the bickering (mostly quoting a WHO official who used to monopolize the field), the economist concludes:

A big new non-government organisation, crashing into the jungle like a young elephant, is bound to cause resentment, and perhaps bound to have unintended ripple effects. But without this elephant’s input of new money and ideas, the battle-front against malaria and other deadly diseases might present an even worse picture, especially if the field were left to governments and inter-governmental bodies.

7. Donor Ideas and Market Realities: laptop/river road/USA for Africa/textese/forgotten vegetables/NGOs

This is an article from last year, but I just came across it thanks to Kruse and Ker article about rich guilt trying to help out the poor. The context this time is $100 laptops. I can picture it all – some good humor.

If you walk into any African market, you see chaos. Things tend not to cross over from the formal side of an African city to the informal side. The two speak very different languages. Often, the formal side, out of its good nature or its panicked guilt, out of a feeling that the giant world of the urban poor is too pathetic to tolerate, pins its hopes and dreams on some revolutionary product. Biogas. A windup radio. A magic laptop. These pure products are meant to solve everything.

They almost always fail, but they satisfy the giver. To the recipients, the things have no context, no relationship to their ideas of themselves or their possibilities. A great salesman can spark a dialogue with you; in a matter of minutes, you come to make your own sense of his product, fitting it into your imagination, your life. You lead, the salesman follows. Whereas a pure product presents itself as a complete solution; a product built to serve the needs of the needy assumes the needy have measured themselves exactly as the product has measured them

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