Enlightened Capitalism

Essays about how to harness people's natural desire to create wealth and improve their quality of life to solve global problems such as war and poverty.

Wednesday, March 01, 2006

A Vaccine For Poverty Part 1

I have been working on a solution to global poverty for the past 10 years and I have come up with one that I think will work, and I am in the process of implementing it. I will describe it to you.

First of all, consider the problem of smallpox, before the invention of the microscope. People came up with all sorts of imaginary causes and (very expensive) solutions, but none of them worked because they didn't have a working model of the disease. Once they saw the little germs under the microscope, and the white blood cells, they started manipulating them with chemicals, etc.

Then someone invented the vaccine, and convinced the government that it worked, and then the government made everyone take it. Problem solved. All the other "solutions" went poof.

Poverty is like smallpox, or hiv. What we need is to invent an effective vaccine, and then for everyone to take it. I have invented a vaccine. The reason I say it like this is that to understand what I'm talking about it helps to realise that (nearly) all the noise out there about "poverty" is just that, noise. Just look at the results produced, and then you will know how effective all the solutions that have been tried are.

Now I will describe my "microscope" which allows us to see the actual cause of poverty and address it.

Imagine we were to sort all the people in the world at this moment, by how affluent or economically successful they are. It would go from the wealthiest most successful person alive, all the way down to the person who when I finish this sentence will immediately die of starvation or thirst or suffocation or bleeding.

Somewhere in the middle of that sorted list is the Poverty Line. That is, the people to the right of that line are "OK" by our standard. Just barely, but we look at their lives and think, they may have lots of serious problems, but overall, they are doing ok, we can pretty much leave them to take care of themselves, they are going to be alright.

But the people just to the left of the line, we think, just barely, are not ok. Some (tiny) essential thing is missing from their lives. We want to help them, and get them over to the right side of the line, so we can sleep better. That's the definition of the line, it separates the cases we feel a desire to act on from the ones we feel (healthy) apathy about.

Of course, as we go farther left toward the more extreme cases, we start to feel more like Mother Teresa, like oh my god these people are in dire situations. We see those kids with distended bellies and flies on their faces and we are strongly moved to do something. People whip out their checkbooks and send $30 to FeedTheWorld and then do their best to forget about the fact that they have no idea where that $30 is going or what the ultimate effect of this action is. In the back of their mind, they are in a panic because they are worried if they spend too much time thinking about those kids they will end up going to Africa or India and giving up their lives like Mother Teresa did.

Mother Teresa was an amazing person and thousands of other amazing people followed her and did whatever she told them. Millions of people sent millions of dollars to her. And yet Calcutta still has dire poverty but no smallpox. Her work, while noble and admirable and directly beneficial to thousands, was not a vaccine for poverty.

So we have the list of people sorted by wealth. If we take the 0.0001% who are just left of the line, we are looking at the 6500 very easiest cases, requiring the least effort to get them over the line. If it were just about money, and we had $6500, each these people would require only $1, so we could redeem all of them. Wow, that'd be a big bang for the buck. Compared with the most desperate cases all the way left, which perhaps require $10,000 each to save from imminent torture and death, and another $10,000 each week thereafter in medical attention and care. We couldn't even save a single one with our $6500. That's depressing.

However, it isn't just about money. Everyone is in a different situation. A few of these people do just need a little money, others need advice, others need a workout partner, others need some encouragement to take a risk and go for an opportunity they otherwise are going to pass up.

This is why giving $6500 isn't the vaccine for poverty. Extra money only helps a few people, and just confuses the issue with all the rest. So only $10 of that $6500 was used efficiently to help someone, and people get tired of spending $6500 to get $10 worth of benefit. This is how welfare works, except that there are other disincentivising side effects so along with the $10 of benefit we also get $500 of extra problems.

And neither are job placement programs the vaccine for poverty, because they help a few people and everyone else is not in the position to really take advantage of them. Same with soup kitchens, homeless shelters, rent control, affordable housing, section 8 housing assistance, food stamps, habitat for humanity, literacy programs, etc. Each one of these strategies provides something specific for people in need. The problem is what they are providing is only useful to a few people, and it is actually harmful to many others, and they aren't careful about picking out which is which. So they do some good, but not enough, and it tends to get cancelled out. Ultimately people get frustrated because the dream isn't materialising and they go back to their day jobs.

This is how all the cures for smallpox looked, before the vaccine. Some people got the disease and survived, because they got plenty of rest. Others survived because they ate lots of food. Other survived because they kept a positive attitude. But each of these techniques worked on only a small percentage of the people, and it's depressing to keep trying "cures" and having 95 out of 100 of your patients die.

To be continued...


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