We Know How to Make it Worse.

EconTalk Extra
by Amy Willis
Michael Matheson Miller on Pov... Robert Aronowitz on Risky Medi...

(So why don't we stop?)

If the poor aren't poor because they lack stuff, then why are they? And more importantly, what can we do about it? Michael Matheson Miller, director of the award-winning documentary Poverty, Inc., sat down with EconTalk host Russ Roberts to explore just that. He argues that we've been asking the wrong questions all along.

What did you think? Let's continue our conversation about these ideas.

1. Has this conversation changed the way you think about any particular poverty alleviation programs (TOMS shoes, NGOs, etc.)? Which one(s), and why? What might you do differently going forward, and why?


2. To what extent are celebrity endorsements of charitable endeavors akin to social engineering, as Miller suggests? While we would all love a Russ Roberts-Bono rap video, what sort of efforts do you think celebrities could positively impact? (Russ mentioned Paul Romer's charter city idea, for example.) Explain.

3. Toward the end of the interview, Roberts says, "If you want to trade with somebody, you have to figure out what they want." Why does he call this the "cultural virtue behind free markets," and how does this inform the "poverty industry," as Miller has dubbed it?

COMMENTS (5 to date)
Oldunshavenone writes:

OK we know that present antipoverty nonprofits aren't really helping.
What I'd like to know is which charities to support that might help reduce poverty. I need to change my will!

Michael Field writes:

I have been working in development for 20 years and have been fighting this battle for a long time. I would say most practitioners know the current model is, in the best case, slowing progress already underway within the local systems. In the worst case, development programs are actively making the situation worse by coopting local civil society and crowding out local private sector. There are networks of development practitioners that are trying to test new ways of intervening based on institutional/behavioral economics, systems/complexity, etc., but they are often run over by the industry of development. A particular frustration is the limited interaction between academics that conceptually understand the systemic changes that are needed and practitioners that are trying to apply their concepts. This gap between theory and practice has evolved to be systemic/institutionalized as poverty inc’s funding streams favor projects that promote false narratives related to charity and social business and with very little funding going to science/evidence based approaches. I would be interested to hear if there are foundations/charities that are interested in thinking through and talking with practitioners that are trying more academically grounded/informed approaches.

Amy Willis writes:

@Oldunshavenone...Well, we certainly aren't and can;t be in the business of making specific recommendations...BUT...Will McAskill, in this recent episode, had some suggestions for how to think about this just this question, and how to evaluate various development/charitable efforts.

Arash writes:

Great episode, gives you hope for the future. But at the same time change wont come quick, or even at all. Capitalism needs poor people to function. And the people in power has to much interest in this.

SaveyourSelf writes:

3a. “If you want to trade with somebody, you have to figure out what they want.”

I used to agree with that statement, but since Morten Jerven’s econtalk episode I’ve started to think that businesses and charities and even governments are solutions to problems more than satisfiers of want. Given this new point-of-view, I would correct the above sentence to read: “if you want to trade with somebody, you have to understand what he considers problems, then offer solutions.”

One of the basic assumptions of economics is that ‘wants are unlimited’—meaning that it is possible to design a business which succeeds in its goal to satisfy a ‘want’ yet fails to increase standard of living. Consider the following little example: I want 24 hour television. I want a lifetime supply of Snickers candy bars. I want a Dodge Viper. I want the water I drink to stop poisoning me.

Only one of those ‘wants’ counts as a problem. A successful charity (or business) that could sift through my unlimited wants and offer me an affordable solution to the one that is also a problem will increase my standard of living, increase my life expectancy, increase my productivity, etc. The rest are likely to do just the opposite.

I think this is more than just a semantic correction. It is a fundamental rethinking of the basic nature of business and trade.

3b. I think ‘culture’ is the solution—or solutions—that a group of people have devised to answer the question, ‘how do we ration scarce resources in the setting of unlimited wants.’ Whatever the solution a society has chosen for itself is likely to be the same one it offers to other societies whose solutions have proven less effective. That is how ‘culture informs the poverty industry.”

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