Michael Matheson Miller on Poverty, Inc
Nov 2 2015
Michael Matheson Miller of the Acton Institute and the Director of the documentary Poverty, Inc., talks with EconTalk host Russ Roberts about his award-winning documentary on the barriers facing the poor around the world. Topics discussed include the incentives facing poverty-fighting NGOs and their staff, the importance of secure and well-defined property rights, and the costs and benefits of agricultural aid.
Angus Deaton on Health, Wealth, and Poverty
Angus Deaton of Princeton University and author of the Great Escape talks with EconTalk host Russ Roberts about the book--the vast improvements in health and standard of living in recent times. Deaton surveys the improvements in life expectancy and income...
Chris Blattman on Cash, Poverty, and Development
Chris Blattman of Columbia University talks to EconTalk host Russ Roberts about a radical approach to fighting poverty in desperately poor countries: giving cash to aid recipients and allowing them to spend it as they please. Blattman shares his research...
Explore audio transcript, further reading that will help you delve deeper into this week’s episode, and vigorous conversations in the form of our comments section below.


Steve Sc
Nov 2 2015 at 8:56am

Great episode. I went to Netflix, Hulu, Amazon and a couple torrent sites and couldn’t find the film.

How do I see this?



Jim Kee
Nov 2 2015 at 4:26pm

Two interesting points he makes are often associated with fallacies in Economics. In one case, I think he’s on the wrong side of the fallacy, and in the other, I think he’s found the exception that proves the rule.

First, he almost cites the opposite of the Broken Windows Fallacy. The fallacy is that breaking a window generates economic growth. The reality is that the loss of the asset means that money spent to replace it won’t be spent on other things. In the case of aid, the aid might displace some local economic transactions, but that money can then be spent on something else, like a second pair of shoes, or pants, or roof repair, etc. So, I’d like to ask the guest, Michael: “Isn’t this broken windows in reverse? An asset (in the form of aid) showed up, and that has to be a big net plus, right, even if the secondary effects are complicated?”

Second fallacy: predatory pricing. Often protectionists make predatory pricing arguments: foreigners dump product below cost until domestic producers are put out of business so prices can eventually be raised. It’s a fallacy because it’s so rare that it actually happens. (Some have argued that Russia and Saudi Arabia are doing that now with oil.) In this case, NGOs show up giving things away, which puts local producers out of business. This might be one of the few legitimate cases of predatory pricing, because NGOs do give the stuff away for nothing. Seems reasonable that in a fragile economy, producers could easily be ruined and never restart.

Neil Flask
Nov 2 2015 at 6:29pm

This episode exemplifies whats broken with free market proponents who continue to assume that “free markets” can actually exist.

1/ The example of NGOs dumping free goods or undercutting local markets and thereby destroying them is a terrible one. Isn’t this the same problem with globalization? Globalization has destroyed so many local markets and yet true free market proponents believe in globalization. So, why would you take a different stance with NGOs? Also, Haiti is probably the perfect straw man for what you are trying to prove. Do you have other such industries or markets that have been destroyed by decades of NGO only support?

2/ Local industries and free markets – Do you know what local entrepreneurs would do right after an earthquake? They would hide/”stock up” inventory and raise the prices of goods dramatically. Why? Thats what free market does. This has been done repeatedly in the developing world (India, Pakistan, Indonesia, etc.). It even happens in the US (during hurricanes, Katrina, etc.). Is that what we want to see and aspire to be as a human race? If the NGOs were not giving their goods which are basic social needs for free the poor in these places would be screwed in the short-term.

Nov 2 2015 at 10:29pm

One issue related to poverty that I think needs much more discussion is the morality of having children one can’t take care of. If you don’t have the means to take care of a child and you have a child anyway, that’s an immoral decision and an immoral action.

Ignore for the moment the edge case where someone has the means to care for a child and then due to bad luck they are no longer able to care for their children. And ignore for the moment the edge case of becoming pregnant from rape. And instead focus on the much more common case: people already in poverty in a bad situation implicitly or explicitly making the immoral choice to have children they can’t take care of.

People are quick to point out that starving children need food — and I agree. But shouldn’t we think more seriously about the primary moral agent that created the starving child? Shouldn’t we discuss seriously how to reduce the number of starving children that will exist tomorrow?

If a moral agent makes an immoral decision, in what way does it make sense for innocent 3rd parties to be penalized for that? Taking money by force from innocent people to fund the immoral decisions of others seems like a problem worth talking about.

Kenneth Gauck
Nov 3 2015 at 1:47am

This is really a two part episode with Peter Boettke’s recent EconTalk, is it not? You have two cases, a vibrant city or region, struck by disaster, aid is sent, recovery happens. And long term (the historic condition of all times and places being) poverty, aid is sent, and nothing happens. In the JS Mill case, total depopulation was required for recovery to not happen. But in the case of long term poverty, you get the same failure to launch, despite massive aid.

I think we end up applying the logic of the first case to the instances of the second case. Herbert Hoover, the great humanitarian as he was called, had over his life time organized against disasters time and time again. The Boxer Rebellion, the Philippine Insurrection, feeding Belgium in WWI, Feeding Russia during the Civil War, and the 1927 flood of the lower Mississippi. Its a track record of success, where one region suffers a disaster, natural or conflict related, and aid is sent, and recovery happens. Then Hoover is confronted with a problem where everyone is made poor, as President, with the 29 market crash. Without rich areas to come to the relief of poor areas, his system doesn’t work. There isn’t enough aid to fix the problem, as a Keynesian would see it, or we’re applying the wrong model.

Likewise, Marshal’s plan was first applied to China, post war. Then in the aftermath of the Soviet takeover of Eastern Europe, resisted in Greece and Turkey and then expanded to the rest of non-Communist, war ravaged Europe. China, never benefited from Marshal’s original plan. Europe, like New Orleans, or other disaster struck places, benefited from the aid. After a rough decade, Europe was clearly on the road to recovery, and after a second decade, was vibrant again. And like Hoover, applying the lessons of feeding Belgium in 1915, or the lessons of the 1927 flood, to the problem of the great depression, applying the Marshal Plan model which restored Europe to more endemic poverty doesn’t work.

What is true in all the cases where recovery happened is that all the pieces of a strong economy were in place, see the Boettke EconTalk, the culture, the institutions, the markets, and some capital was destroyed. Replacing the capital into that environment produces recovery. Where the culture and institutions were weaker, recovery was weaker.

Its the difference between insurance against loss and insurance bad practice. A good driver who experiences a traffic accident and has a car replaced by insurance, goes back to being a good driver, with a car. The bad driver, who gets a car replaces, remains a bad driver, and suffers more accidents.

There is a 3rd model, the Taiwan, Korea model, which was supposed to include Iraq as well. But this model involves a Cold War unity and focus on the ideological system you find yourself on, and 50 years in which to telescope the development process.

Given that repeating Taiwan and Korea is impossible short of that kind of Cold War intensity (just as wartime allows people to voluntarily produce and not consume) it does set a bar of what maximum development under ideal conditions looks like. At the very least it sets a time scale of a hundred to two hundred years for a good development scheme. Kind of like what happens when there is indigenous industrialization (see Britain, Germany, US).

This changes the logic of the problem. Instead of asking what material aid is required to spur development, we instead must understand we are asking what conditions, in culture, institutions, and finally in markets, must exist before development will occur.

I think listening to this episode as a partner with Boettke’s recent episode creates a powerful two volume approach to development.

Don Crawford
Nov 3 2015 at 11:21am

The discussion about the harmful effects of the free stuff given away by NGOs reminds me of advice about putting out bird feeders. If you do that you create dependency in the local bird population. Birds come to depend upon your food supply and may not learn where else to get food. So the advice is either don’t do it at all, or if you do start to feed the birds you must be prepared to keep it up all winter. There are baby birds born because of the extra food you have put out and therefore your feeders have increased the carrying capacity of the local environment. When you stop, some birds will starve to death.

Nov 3 2015 at 2:30pm

As long as donations don’t cause dependence, they should be welcomed. There’s so much need in these poor countries that donations cannot possibly satisfy all needs.

The argument about shoes seems unconvincing: if the market shoes are imported anyway, then there’s no harm. If manufactured locally, then donors should consider buying them locally instead of importing them. Shipments can be forecasted so as to not disrupt the market. Worst case, the market can adjust as shoes can we easily warehoused.

The institutions are lacking indeed, but donors can do little to resolve those issues. Thankfully, the black/gray market is usually the true markets in places where governments take one year to license a store. In these countries, no one follows the official bureaucratic trail (that’s why is so dusty) as people rely on workarounds. Small adjustments in line with the local culture might be faster and more immediately helpful.

Don Tillman
Nov 3 2015 at 3:26pm

Oh my goodness… near the end… the 7 minutes starting at 56:15 is one of the most powerful and succinct things I have ever heard.

Just stunning. Well done.

Nov 3 2015 at 3:51pm

It is hard for me to believe that giving stuff to poor people would produce a net bad. On the other hand, giving money would seem to work much, much better and fewer downsides than giving shoes or education, or medical care or any in kind benefit.

Nov 3 2015 at 3:51pm

re: Neil Flask
1) As pointed out in the interview, if there is a real free market situation to begin with (e.g. property rights, institutions of justice, etc) then markets are expected to be dynamic. Buying and selling goods via globalization in the context of dynamic markets is very different from NGOs dumping free stuff into a non-dynamic market. Any time businesses can’t compete with their competitors they go out of business — that is the nature and the benefit of free markets. This ensures people get the goods and services they want at the lowest prices. The alternative is stagnation, mercantilism, monopolies, high prices, etc. Allowing businesses to operate without competition means the vast majority of people lose out, and only the few business owners gain — at the expense of everyone else. There’s really nothing good about that. Even business owners lose out in the final analysis because their costs are higher and the general standard of living isn’t allowed to increase and thus there is less wealth that can be traded for goods and services. So two counter points: a) the kind of globalization free market people favor is not comparable to NGOs giving away free stuff. And b) free markets are better for everyone in the long run: protectionism is only good for business owners in the short term.

2) Prices should go up if there is a run on scarce resources. If bottles of water cost $1 in normal times, then during a disaster you would have to be a monster to not raise your prices to reduce demand. If the price stays at $1 the first person to come in will hoard all the cheap water and nobody else will get any. That means one person gets cheap water, and nobody else gets any water. Raising prices deters people from hoarding. Furthermore higher prices are often necessary during a disaster because shipping new supplies becomes much more expensive. If roads are destroyed you’ll need to pay helicopters to bring in goods, which costs a fortune. Higher prices can pay for this increased cost of providing goods. On both counts, higher prices is both necessary and desirable. To your point about people hiding or destroying resources to jack up prices, that’s clearly highly immoral and nobody favors that. If you think free market people favor that, you’re mistaken.

Neil Flask
Nov 3 2015 at 4:38pm


Thanks for the counter points and I agree with you if we believe that true free markets can exist. But, where do true free market exist in the world? As soon as you take advantage of free markets, companies want to become monopolies and the only way to do that is to “pay” the regulators/government in some way to get the advantage over your competitors.

I understand that in an ideal world your logic works but thats not how the world operates. America has protections in so many industries to fight globalization and protect its own labor and economy.

So, my point is that I understand the free market argument BUT I would like to hear an argument where we assume that protectionism, immoral behavior, crony capitalism exists and then we talk about case studies and solutions.

My biggest frustration with Russ and all these episodes is that he continues to bring guests who keep extolling the virtues of free markets but continues to forget that its a very rare phenomenon. Instead, I would love to see these discussions start with the assumption that crony capitalism exists and in spite of that how are we going to fix things/change the world?

Last, when an interest group buys off votes (election cycle, politicians, etc.) or changes regulation we in the West tend to blame the politicians/regulations in the US. It is time for us to put the blame on both sides – the politicians AND the companies that “free markets” created. If we dont do that then these podcasts basically have the same these – keep bashing big government, regulations and forget that there are two sides to the coin. Instead of repeatedly showcasing how the government screwed something up, its time to show the money trail. How did big corporations pay their way to influence and change the regulations/government decisions, etc.

Sorry for the rant. I am a liberal and I religiously listen to these podcasts as they are smart, thought provoking but it does get tiresome to repeatedly hear the same talking points and the same solution – FREE MARKETS. Its time for us to face the reality on the ground and come up with real & plausible responses.

Russ Roberts
Nov 3 2015 at 5:11pm

Neil Flask,

I find it fascinating that you think my arguments for free markets are an abstraction that I am imagining in the absence of protectionism, cronyism, and so on.

There was an interesting discussion in the Tim O’Reilly episode where I suggested that Uber had an incentive to make sure its drivers were happy with the compensation. His response was that that might work in the theoretical world of free markets but in the real world it was insufficient. We had a similar discussion about the effects of the minimum wage where he suggested that my arguments might be true in a textbook and so on. My response–and I would say the same thing to you–is that my observation about Uber or the effects of the minimum wage have nothing to do with a sterile textbook assumption of say perfect competition or perfectly free markets. They have to do with the underlying market forces that are at work even when markets are imperfect. So when Uber lowers the share of the fare that goes to its drivers, it will attract fewer drivers. That’s all I’m saying. It doesn’t mean that it’s a perfect world or that Uber drivers are gloriously happy. That would be silly. But I think it would be equally silly to argue that Uber can pay drivers “whatever they want” or can exploit them or more precisely, that Uber can pick a level of compensation that is independent of what similar companies using workers with similar skills, pay their workers–the alternative available to Uber drivers. That is what I mean when I say that market forces matter.

You suggest that protectionism is an important way that American companies protect their market power. In some industries protectionism is relevant. In may others, it is not relevant–tariffs and quotas are dramatically lower in the United States today than they were in say, 1950. I would argue that is a good thing. I want tariffs to be lower still. But the fact that the United States doesn’t have perfectly free trade isn’t relevant to my argument. I know that’s true.

I’m not in favor of unicorns. I know they don’t exist. I don’t want anarchy. I am happy to have regulations against fraud, for example and courts to adjudicate contractual disagreements. What I am often in favor of is markets that are more free than they are now. Perhaps I misunderstand you. Eager to hear more of why you think I am advocating something that cannot or does not exist.

Nov 3 2015 at 10:06pm

This was a great show but I am left wondering what I as an individual with resources can do to help people in extreme poverty? Nothing? That can’t be right.

Aid that could not be replicated locally has to be good. For example, improving health and fighting infectious diseases through medical procedures and preventative techniques does not have a downside. If governments do not provide clean drinking water, what choice is there but to bring in capabilities that make water safe to drink?

Nov 3 2015 at 10:36pm

I agree with the others who are skeptical that giving people goods and services, which they take voluntarily, somehow makes them worse off.

A different point entirely: I enjoy this podcast the most when the guest is an economist. Podcasts where the guest is an economist with a different ideology from that of the host are best of all. Unfortunately, this show seems to have moved away from having economist guests. I hope this changes in the near future. (Obviously, you don’t have your pick of whatever guest you want in a given week, but if this recent trend toward non-economist guests is intentional, well, please stop!)

Greg G
Nov 4 2015 at 7:35am

I have occasionally criticized Russ for pie-in-the-sky libertarian thinking but I think Neil’s criticism here about the absence of “true free markets” misses the mark by at least a little bit. Neil’s criticism is itself also too abstract. It’s a bit like pointing out in a discussion of geometry that there is no such thing as a perfectly straight line. The main argument here for most people is about whether relatively more or less government regulation is called for.

And I think even that framing is way too broad. Why would we assume that there aren’t errors on both sides? Maybe we need more regulation of non-transparent financial derivatives and less on professional licensing and ethanol production.

Adam Smith was very clear about the fact that individual capitalists do not want free markets; they want profits and special favors. The growth of capitalism and the growth of government have been very highly correlated throughout history.

Most libertarians assume that this correlation is evidence that government is parasitic on capitalist economies. I am more inclined to think that the relationship is symbiotic. Large investments are way more likely to happen when the rule of law is firmly established and investors think they have some competitive advantage. They don’t really care whether or not that competitive advantage comes from government or somewhere else.

China’s is moving toward freer markets but is still very far from having the freest markets we have seen and its growth has been way faster than any free market economist would have predicted with that level of government interference in markets.

Successful businesses or even business sectors of the economy often get unhealthy amounts of political power. But this tends to be counterbalanced by the interests of their consumers and competitors which which pull in the other direction.

Nov 4 2015 at 3:35pm

@Neil Flask

I agree with what Russ said to you completely. I don’t believe in unicorns either. In short: I agree reality is a mixed bag, and markets that are more free are better than markets that are less free. Like every free market person, I’m against protectionism and cronyism.

I also want to add emphasis to what Greg G said “Why would we assume that there aren’t errors on both sides?”

Imagine markets aren’t free. What happens — in the real world — when governments impose price controls? The governments’ intention is to make sure essential goods are cheap enough for anyone to buy. But what really happens? Venezuela is a perfect example: empty stores, mile-long lines, shortages of basic goods, and a vast black market. Price controls create shortages and black markets and waste vast amounts of peoples time hunting down basic goods. That’s the reality. In reality free markets in mixed economies work vastly better than economies controlled from the top down. Free markets in a mixed economy like ours aren’t perfect. But they are better than the alternatives. More free == better.

I also recognize that there are psychopaths in the world. People who, during a disaster, will let their neighbor starve in hopes they can make a buck. But surely we can all agree this is a tiny minority. In the real world when disasters strike people help one another. People risk their lives to save strangers. People share their precious supplies. Free markets aren’t a barrier to charity and kindness and heroism in the slightest.

When I was born the only mobile communication device people had heard of was from watching Star Trek. In the real world free markets and globalization have made it so today, nomadic tribes of cattle herders in Africa have mobile phones (yes, really). Yes it’s not perfect — there are cronies and whatnot. But some freedom is better than none. The opposite of free trade isn’t utopia, it’s non-free trade. Coercion. Force.

Neil Flask
Nov 4 2015 at 4:51pm

Greg G – thanks for the insightful response. Your response is way more lucid in summarizing what I feel.

“I am more inclined to think that the relationship is symbiotic.” This is the key point and I am in complete agreement. My sense is that economic conservatives/libertarians ONLY (?) believe that government is the problem and the only reason companies become bad actors is because the government makes them do it. In listening to podcasts here, I would love to see Russ push the “symbiotic” part as long as he believes thats the case.

Here is a specific example:

In India, if you get caught speeding and the cop is about to hand you a ticket. You stop the cop and give him a Rs.100 bill. The cop takes the note and you dont get a ticket. When I ask my conservative/libertarian friends, they blame the cop & government for not paying the cop enough that they have to resort to bribes. In my mind, we should accept that the problem is the entire system and all parties involved are to be blamed.

Russ – thanks for taking the time to respond. I dont have specific examples where you were advocating “utopian” solutions on the top of my mind. I will definitely mention it if I hear something like that in future podcasts.

Here are some examples where I am flummoxed by conservatives and libertarians’s positions:

1/ Government is bloated and big government is terrible. Then when I ask them about the military industrial complex, they say thats ok & the big spending doesnt apply to that.

2/ government regulation is terrible, they get it wrong most of the time, etc. Then I ask why 2008 happened, then the response is that there wasn’t good regulation. From there the conversation leads to being told what the right level of regulation should have been.

In your response you mentioned, “In some industries protectionism is relevant.” This drives me nuts. Who decides which industries its relevant, who decides the level of regulation? We are a democracy and kludgeocracy (as I learned from one of your episodes), so we will need to work within those constraints to find solutions and compromises.

The logic breaks for me if I keep hearing from one side that their notion of regulation, industries, etc. is always the right one. I apologize for the rant but my hope is that such conversations lead to a few things:

– acknowledging that both sides are to share the blame (government and the corporations)
– spending a little more time on figuring out whats broken on the “private” side too and not just with the government
– figuring out solutions to our tough problems knowing fully well that government and markets are imperfect

Neil Flask
Nov 4 2015 at 7:31pm

@ Bob

I agree with your quote “I agree reality is a mixed bag, and markets that are more free are better than markets that are less free. Like every free market person, I’m against protectionism and cronyism.”

I agree directionally with what Russ, Greg and you have said. I have never said that I like markets that are less free. I am an entrepreneur and love competition. I have been trying to steer the conversation towards looking at things with a more realistic lens than the only “big government is bad” lens.

Here is the reality according to me:

Government tries to free markets -> markets become more free -> competition ensues -> companies that seem to be winning start having monopolistic tendencies (refer to Peter Thiel’s talks) -> companies try to influence regulation, politicians -> companies are successful -> something bad happens (bubbles, inequality, middle class is massively hurt) -> government tries to step-in/over-regulate -> poor/reactionary regulation for a few years -> government tries to free markets

Rinse and repeat.

In most of the podcasts here I tend to hear the “broken” government hypothesis and solutions invariably are calls for the government to get out of the way. I am fine hearing whats broken with the government and litany of the asinine laws/regulations they imposed. But, the nuance thats repeatedly missed is that the government doesnt come up with these regulations/tariffs on its own. In fact, there is enough proof that a multitude of these laws have been “co-written” by corporations.

Therefore, I would like to see a more in-depth discussions around how do we get the guys who are trying to become monopolies to stop influencing “free markets”/reducing competition. Thats my ask :).

Nov 5 2015 at 2:32am

@Neil Flask

1) I personally think the US spends far too much on military. I’ve had pretty much the opposite experience as you when speaking to libertarian-leaning folks — they’ve almost universally agreed the US spends too much. They either want to spend less or the extreme ones want to eliminate it entirely and privatize military and everything else. 🙂 I’m not one of those extreme people. I would like my government to have a military, but one with a much smaller budget. So I want a smaller government across the board, which I find to be a reasonable position. I don’t carve out an exception for military. In my eyes the only legitimate function of government is protecting individual rights which means military, courts, police, and not too much more than that. I would prefer to reduce government involvement in everything else slowly over time.

2) I can think of two different answers. One is to say that I place the bulk of the blame on the government because of federal reserve policy creating cheap money which always creates bubbles and also the federal government for encouraging or even mandating loans to riskier customers. That’s not to deny that many banks did corrupt things — they did. But we already have laws against fraud — many bankers should have went to jail, and it’s scandalous that they didn’t. My second answer is that the economy should be entirely private. No federal reserve. No government bailouts. If banks do corrupt things they should go bankrupt and thus it’s a self-correcting system. Bailouts, QE, and massive government spending programs only delay necessary market corrections.

In my eyes the 2008 crisis happened because the government encourages bubbles, and meddles in the economy to create bubbles, and when they inevitably burst the government doesn’t allow market forces to operate and instead the government meddles even further, delaying necessary corrections. And furthermore the government failed to enforce the rule of law and put corrupt bankers in jail for fraud.

There absolutely are corrupt leaders in corporations, no question about it. They routinely seek special treatment in the form of regulation, taxes, subsidies, tariffs, etc. But these corporate actors have virtually no power without the collaboration of government. And in reality it’s the force of government that is the main problem. So even when talking about corporate corruption, I put most of the blame on the government for being willing partners and abusing citizens to further their own objectives. It’s also governments fault for failing to prosecute violations of the law.

So although corporations have problems too, the bulk of the harm they do is *through* government, and thus government is the main problem by a large margin. Only the government comes to your door if your disobey their rules. We never hear about bankers or oil executives sending people with guns to folks’ houses, or locking people up in their own prisons. Only governments do that.

Michael Byrnes
Nov 5 2015 at 7:06am

This was overall an excellent podcast, but I didn’t care for the discussion of giving money vs goods (admittedly not the guest’s area of expertise) and the dignity of work kind of went off track a bit. To me that slipped into an overly moralizing tone – and the “dignity of work” argument has always struck me as a self-serving argument coming from people who by and large have the opportunity to profit from work they love.

I guess the first question I have is… why assume that people in poverty who receive cash aid will stop working and live off the cash benefit? This seems to be to be the implicit assumption behind the “dignity of work” argument as applied to the poor. This argument should not be left unstated – it should be made explicit and the evidence supporting it and contradicting it should be weighed. Maybe there is a wealth of evidence the poor people who receive cash benefits will immediately give up any desire to improve themselves, but to me this has never really been proven.

People point to failures of welfare type programs in the US, but those programs have generally imposed an explicit disincentive on the recipient – begin to make something of yourself and your benefits phase out. I think it’s a mistake to assume that cash aid that doesn’t have those same strings attached will produce the same bad effects.

Mark Crankshw
Nov 5 2015 at 1:09pm

@ Michael Byrnes

why assume that people in poverty who receive cash aid will stop working and live off the cash benefit? This seems to be to be the implicit assumption behind the “dignity of work” argument as applied to the poor.

This is certainly not an implicit assumption I would make. I believe that the root of poverty is purely political. Politically powerful groups find it to their economic and political advantage to economically/politically marginalize economically/politically weaker groups by setting up political institutions (welfare, horrible public schools, economically depressed urban ghettos and rural backwaters) that systematically deny members of the weaker group economic opportunity.

Welfare programs in the US and foreign aid programs have been designed simply to make this marginalization politically feasible.

In the West, the poor are given incentives to drop out of the labor force (thus depressing labor supply and increasing the wages of everyone else). Their children are shunted into chronically poorly performing schools (thus effectively disabling the future generation from competing economically). In the US, drug laws are enacted that disproportionately prosecute the poor (and thus hinder the competitive ability of those convicted even further). The welfare payments are simply given to keep this scam going without results that might be politically disadvantageous to the majority.

My criticism of US welfare is not that the poor “will [choose to] stop working and live off the cash benefit”. My criticism is that the entire system was designed to ensure that the poor will stop working and live off the cash benefit because there are no better options intended for them. The people in charge prefer them to be poor, segregated and economically un-competitive.

The effect of not being able to derive status through work is very corrosive for the men in the victimized group. That’s the “dignity of work” angle I see. For most men, the inevitable question (from peers and women) of “what do you do?” would ideally answered with a position of high status derived from, in almost all cases, from ones vocation. Welfare does not and can not provide high status to anyone.

Women, likewise, typically seek to economically partner with high-status men. Being on welfare is a daily reminder, for those women, that they have failed miserably in that respect.

Foriegn aid works similarly. This type of aid is an “enabler”, enabling whatever political group that is in charge to remain in power without having to share “political spoils” with the mass at the bottom. The more aid given, the less incentive the political leadership has to change.

Nov 5 2015 at 1:35pm

Is this not somewhat analogous to the welfare state in the U.S.? The system that Bill Clinton was credited with reforming to some extent?

I find it ironic that the basic necessities that charities supply for free are the very goods and services that a country with an abundance of low-skilled labor may have a comparative advantage of supplying themselves. In an extreme, if developed countries supply food, water, clothing etc. for free what will this unskilled labor do? Manufacture semiconductors?

It seems the only solution to the problem is to increase the productivity of labor in impoverished countries. I fail to see how giving away basic necessities does that and may be counterproductive which was highlighted nicely in this podcast.

I am also skeptical of the importance of culture in explaining economic development. The U.S. is made up of immigrants from what were at the time of immigration were poor/dysfunctional countries. It appears that their culture did not follow them. I would be interested in learning about the contrasts between Mainland China and its more developed neighbors (territories) Hong Kong and Taiwan. Is their success due to culture?

P.S. – I enjoy the podcasts from non-economists too (countering a point made in a prior comment)

Neil Flask
Nov 5 2015 at 2:53pm

@bob – I finally understand where we differ and why I can’t see eye to eye with my libertarian friends. You solely put the blame on the government because if it were the fault of the corporations/immoral people then laws exist to take care of them.

Do you really believe it was ONLY the government that encouraged the bubble? How about the corporations and the financial system that encouraged removing strict regulations, creating exotic assets to fool the regulators and public, giving incentives to folks who couldn’t afford homes, etc.? How do you think regulators who are paid basic salaries can compete with companies where folks are paid millions of dollars to find loopholes? Do you know GE has a staff of 3000 tax accountants to figure out how to evade US taxes? Yes, its the government’s fault that it has such a convoluted, onerous tax plan but its also morally broken if the quintessential US company spends such resources to figure out how to not do the “right” thing.

What about all the engineers VW hired to get around EPA regulations? I am so confused – we scream we want the government out of the equation, yet we know man/corporations are greedy and will do whatever it takes to win and when they do that then we scream that there aren’t good enough regulations. At some point this circle of absurdity needs to stop.

@Mark – Wow, I didnt realize we had absolute data to prove your massively generalized statements. “My criticism is that the entire system was designed to ensure that the poor will stop working and live off the cash benefit because there are no better options intended for them.” In fact, in the US data continues to show that there is upward mobility from poor to middle class especially if you use wealth and not income for data.

Of course, welfare state definitely needs to be reformed and there continue to be laws that are passed that have negative unintended consequences. But, to say that the majority of the poor remain so in America because there is some political conspiracy to keep them “fat enough” with minimum wage and send them to incompetent schools is incredulous.

Specific podcast feedback:

Its interesting that the podcast was focused on how aid to these countries destroys local markets/entrepreneurs. What if we took another point of view, aid to these countries destroys the ability of the local government to function in these countries? This is where I would have liked Russ to push our thinking around how instead of giving aid NGOs can provide technology/tools to the local government, training, funding for entrepreneurs, etc. to help the country get out of poverty.

Nov 5 2015 at 3:18pm

Someday, I’d like a podcast on the internal operations of Econtalk. How do you go about picking guests like Mr. Miller?

I ask because although I am very familiar with the concepts presented in this week’s podcast (I have read Sowell’s classic “Conflict of Visions” and heard the earlier Jeffrey Sachs point/counterpoint podcasts and relish every new example of unintended consequences), I have rarely heard these concepts presented so eloquently – Bravo!

I have only a couple of minor criticisms. I remember the “Feed the World” concerts to send tons and tons of food to Africa. Geldorf’s heart was in the right place (see “CoV”), but he quickly found that not only was the food stolen, but the trucks that carried it were stolen as well. People have to be reminded that a great deal (most?) of government and private aid to countries without proper institutions is simply stolen. I know Mr. Miller specifically did not want to emphasize that, but it is a significant effect.

Secondly, his base assumption is that the charities themselves are not out to enrich themselves. These days, immoral people can make quite a good living running pseudo-charities (like the Clinton Foundation) and serving on multiple boards of charities. Again, I understand that this was not his main point, but it needs to be said.

Again, congratulations on another great podcast (and one can never get enough Aquinas, there is nothing new under the sun).

Nov 5 2015 at 3:53pm

@Neil F

To some of your comments:

1. You don’t have to look to Haiti. Government programs distort EVERY market in the US, from healthcare (Obamacare), food (sugar subsidies, milk, etc), energy (oil subsidies to green subsidies), and on and on, including money itself (QE).

2. As Mr. Miller covered, in the SHORT term after a disaster, free goods help tremendously (as does free market prices on all goods to promote greater supply).

Cronyism – Remember that unions and lawyers and even charities also lobby the government for special treatment. This is not the fault of free markets, but the fault of the institution itself to allow this to occur (and ultimately the voters). However, you are complaining that this cronyism which inevitably makes markets LESS free is a result of free markets (BTW, it has never been “crony capitalism”, this term was coined by a journalist in the 60’s with a flair for alliteration and has no economic foundation).

India – the fault is not with the pay structure, but the institution. If bribes are illegal, bribery should be prosecuted. If the government refuses to prosecute or selectively prosecutes based on politics, the country’s institutions crumble (sound familiar, Mr. Obama?)

1a. Defense is a (the?) primary role of government. The vast remainder of our budget is not. You can still argue totals, but the underlying principle remains.

2a. The banking industry of 2008 was extremely and heavily regulated (via tens of thousands of pages of regulations). However, rarely were those regs enforced, leading to moral hazard which worked out beautifully for the banks, if not for the consumer. Dodd Frank and the Fed and DOJ are merely extending and pretending the exact same moral hazard forward until an even greater catastrophe is triggered. Again, you are arguing that even more regs piled upon the existing regs will make a better market. Nonsense. More banks should have failed. Hundreds of fraudulent mortgage originators and bankers should have been jailed. The market did not allow the fraud to go unprosecuted, that was a political decision.

Mises, Hayek and Schumpeter will win out, I just can’t tell you when.

Nov 5 2015 at 4:23pm

@Neil Flask

“Do you really believe it was ONLY the government that encouraged the bubble?” No, and I didn’t say that. I said I put most of the blame on government. Not all. The actual people giving out bad loans were from private banks, so clearly banks had a role. But here’s the key point: without loan guarantees from the government which transfer risk from private business to the government, and without cheap money from the federal reserve, and without the possibility of bailouts from government, and so on, the banks would have engaged in less risky behavior. This is a textbook example of moral hazard created by government. Look up the definition: Moral hazard. I agree the banks did bad things — clearly. But we need to recognize that people respond to incentives. It’s a fact of human nature. We may not always like it, but if we want to live in the real world we need to acknowledge this reality. Given that people respond to incentives, we need to look very closely at what incentives are operative with moral hazard. We need to look at how various government actions create perverse incentives. Given that people will often follow incentives, we shouldn’t be surprised when banks often respond to government incentives. Yes, I wish more banks had held firm and not responded to bad incentives from government. And I do blame them for their part. But if we’re honest about human nature and reality, we need to put most of the blame on the people setting the perverse incentives: government.

Without government involvement there will still be corrupt businesses. But when they do stupid things they will fail and remove themselves from the market. And if their corruption involved fraud or theft or similar, we should put the bad actors in jail, like Enron.

“giving incentives to folks who couldn’t afford homes” I don’t mean for this to be insulting, but you don’t seem to know that these were actually government incentives. When the government via the FHA says it will guarantee loans with only 3% down, this is the government creating a moral hazard where the government takes on the risk of risky loans made by private banks. This is why I place most of the blame on the government. Do you know that Fannie Mae, Freddie Mac, and FHA are all government operations? Do you know that their “purpose is to expand the secondary mortgage market by securitizing mortgages in the form of mortgage-backed securities (MBS), allowing lenders to reinvest their assets into more lending” (i.e. incentivize lenders to making more loans)? And to provide “insurance of mortgage loans” based on their own government guidelines which operate to incentivize lenders to make riskier loans? I’m serious about this. This isn’t a conspiracy theory: read the wikipedia pages on what these government operations do and what their purpose is. These are very direct examples of government intervention to transfer risk from private banks to government, and incentivize behavior that is more risky. Yes it sucks that people aren’t always strong enough or smart enough to resist responding to such incentives. But in the real world this happens and so we need to look at the source of such bad incentives: government.

“How do you think regulators who are paid basic salaries can compete” I encourage you to zoom out from this level of analysis. Take a few steps back and look at the big picture. Even with zero regulation, if businesses do dumb things they will eventually fail, and thus be removed from the market. The free market is a self-correcting system. No matter how good one thinks the regulations and regulators are, some businesses will make decisions that cause problems. Not even necessarily because of corruption, but just from normal non-crazy risk taking (entrepreneurship) and/or rare events. It’s not a good goal to try and eliminate every bad decision, because just not possible. What we can do is let businesses fail that make bad decisions. We can also put people in jail if they commit fraud.

“Yes, its the government’s fault that it has such a convoluted, onerous tax plan” Correct.

“but its also morally broken if the quintessential US company spends such resources to figure out how to not do the “right” thing.” Incorrect. The tax code represents the governments decisions that are intended to incentivize certain behavior. For the tax code to achieve its goal of selectively incentivizing certain actions by business, the businesses must understand the tax code and act on it. As you previously hinted, the solution is to eliminate special taxation entirely. If there was a simple flat tax on earnings (or whatever) without any loopholes, this problem wouldn’t exist: government is responsible for creating the horrible tax code and stupid incentives, and we should blame them for it. I agree it sucks that some businesses respond to bad incentives. But in the real world this is how things are: people respond to incentives. So we need to look carefully at who creates the incentives and put most of the blame on them.

“when they do that then we scream that there aren’t good enough regulations.” I don’t. I think emissions are over-regulated. Many cars that pass emissions testing in Europe don’t pass here because our regulations are over-the-top. On the other hand, if a private business lies about their emissions, then they can be sued for vast sums of money. That’s how we disincentivize people from lying. Fraud is illegal.

You mention wanting to focus on the real world. I agree. In the real world incentives matter. From what you’ve written I think you may not fully appreciate the extent to which government is creating perverse incentives for lenders to make more loans, to make loans to riskier customers. I’m all for blaming bad actors in business too. But the source of our biggest issues is government.

Michael Byrnes
Nov 5 2015 at 8:19pm

Mark Crankshaw wrote:

In the West, the poor are given incentives to drop out of the labor force (thus depressing labor supply and increasing the wages of everyone else).

To the extent that is true, it is a different issue than the “dignity of work” argument that Roberts and Miller were making.

Much of the welfare state in the US contains disincentives to work. (John Cochrane has a very good post on this here). Even things like the EITC, which try to incentivize work, have negative incentives at the point where they start to phase out.

But I think small cash gifts to the poorest aren’t going to have all of these disincentive effects.

steve hardy
Nov 6 2015 at 11:44am

I am surprised that when discussing Hernando de Soto you failed to mention his main argument for formal real estate ownership and title which is the ability to borrow against it. He considers this unmortgaged property “dead capital” the value of which dwarfs foreign aid.

Neil Flask
Nov 6 2015 at 2:11pm

@bob – thanks for sharing your point of view.

While I see where you are coming from its hard not to see it as mostly a super pessimistic view of the government. If people start having such a pessimistic view of corporations then we will all be in trouble. So, I hope you give the government a little more benefit of doubt. In fact, if you read the literature/accounts of 2008 its pretty clear that the banks didn’t believe the government was going to bail them out until the 11th hour. Marc Andreessen (a guest here) mentioned it in his recent tweets Remembering 2008. So, its hard for me to believe the conspiracy theory that banks knew all along that they would be bailed out.

At the end of the day its an “endless dance” between government trying to intervene and markets trying to free itself from the government’s shackles.

Here is a picture that I wanted to share, it’s a talk by B Katsuyama that I came across today of the Endless dance

Nov 6 2015 at 3:38pm

@Neil Flask

It may surprise you to learn that I’m actually an optimist. 🙂 I’m not the kind of person that puts much stock in conspiracy theories. A few very local self-interested decisions made by just a few people in positions of power can explain much of what we saw at the peak. If we apply Occam’s razor (“Among competing hypotheses, the one with the fewest assumptions should be selected.”) and Hanlan’s razor (“Never attribute to malice that which is adequately explained by stupidity.”) I think that underlies most of the story for why things played out the way they did during the darkest hours.

What you’re calling a pessimistic view of government doesn’t seem pessimistic to me at all. I view it as just being honest about the openly stated function and effect of those particular government programs. The government programs did what they were designed to do, and in that sense they were very successful. Unfortunately their success meant creating a massive distortion of the free market (a bubble), which at some point will suffer a correction — bubbles always pop eventually.

Neil: this message board format may not be ideal. If you’d like to chat over email my address is: boba1l0s2k9 and the domain is outlook.com. Feel free to reach out and say hi. 🙂 Cheers!

Russ Roberts
Nov 6 2015 at 4:21pm

Neil Flask,

I think past government rescued certainly reduced the normal prudence of bankers to avoid going out of business and those rescues made it much easier to borrow other people’s money. My written take is here. The EconTalk episode on that essay is here. There is, of course, more to the story. But I think it’s an important part of the story.

Hope to write or talk more about your other points in response to my response. Thanks for contributing.

Neil Flask
Nov 6 2015 at 7:00pm

@russ – thanks. It feels great to know that you care about your audience and I have definitely learned a lot from you and these podcasts. This is the #1 podcast that I recommend to my friends.

Nov 6 2015 at 11:03pm

When I hear talks like this, or I read articles such as “The Logic of Effective Altruism, I always wonder: What do critics of charity propose that I do with my excess money? While I am alive I can certainly use my money to invest or create a business which produces wealth, but once I die I have to give my money to someone. What ought to be done with it if not giving it away to someone?

I know that in the talk Miller says he believes in charity and that he ought to give more to charity, but what sorts of charity does he believe are effective and not harmful?

Nov 7 2015 at 1:49am


Being critical of an inconsistent and impossible “morality” like altruism doesn’t mean being opposed to charity. People often praise altruism or selflessness when in reality they should be praising kindness, or heroism.

I would never presume to know what’s best for you to do with your money. You should do with it whatever you think it best. In general people are better judges of worthy causes nearest themselves. Your family, your friends, your local community. If there is nobody and nothing deserving of your surplus wealth near you, what use of your money could help further your values best? If you value education, maybe there is a kind of scholarship well-suited to your values. If you value the advancement of medicine, maybe there is a research program you could contribute to. If you value helping strangers in bad situations right now, maybe there is a shelter, or soup kitchen, etc.

I encourage you to consider not just who is needy, but who is deserving. Not just how your money can be spent, but how your money can be invested. Not just how it can be used, but how it can multiply and help make the world a better place for everyone. Should you spend your money to feed a single child right now, or help many potential mothers with birth control to avoid creating many more needy children? Should you concern yourself with the young, or the suffering elderly? With reducing disease, or with the maximization of human potential? With your neighborhood, your community, your county, your state, your country, or a foreign nation? Only you can answer such things.

Personally I think money is better spent curing disease and helping with family planning. I think it’s more productive to focus on the roots of suffering, as such gains can help many more people. But there’s no wrong answer. There’s much to be said for funding the likes of Doctors Without Borders to help those in need right now. If nothing else sways you, there are cute puppies and kittens in animal shelters everywhere that are underfunded.

Mark Crankshaw
Nov 7 2015 at 9:41am

@Neil Flask

In fact, in the US data continues to show that there is upward mobility from poor to middle class especially if you use wealth and not income for data.

Of course, welfare state definitely needs to be reformed and there continue to be laws that are passed that have negative unintended consequences.

As one who has progressed from poor to middle class, it is not my contention that the Welfare State model is an attempt to eliminate all social/economic mobility. I have argued here before that the statistics are quite clear that if one: 1) finishes high school 2) can hold a job for one year and 3) postpone childbearing until after marriage then the likelihood of one remaining in poverty for any length of time (barring physical/mental disability) are practically nil. That, in my view, is a separate issue from my point.

Where I disagree with you is that you believe that the negative consequences of the welfare state are unintentional while I believe that they are not. I believe that the disincentives (as illustrated in the John Cochrane post provided by Michael Byrnes above) erected against the poor are purely intentional, the welfare state as it is by design, rather than an oversight or an unintended consequence. Not to completely eliminate social upward mobility, but to retard that mobility for just enough of the population so that the social democratic political model can “work”.

This is, in my view, not the result of “political conspiracy” but rather the result of a myriad of uncoordinated political decisions made by many Western governments to combat the glaring short comings of the social democratic welfare state. The welfare state originated in Europe, first under Bismarck’s Prussia as a means to cement state control over the public. It grew as a result of the symbiotic relationship between the State and Big Business that was so lauded in previous posts.

This “symbiotic” relationship resulted in, among other things, in global warfare on an unprecedented scale, the Great Depression, global economic distortions of an unprecedented scale, and Industrial-scale genocide. The enormous amounts of debt, the sublimation of industrial capacity to meet political ends (also known as socialism) that the welfare state provides, was the enabler of this carnage and economic devastation.

The welfare state grew again, first in Europe and only later in the US, due to the chronic inability of European social democratic states to provide reasonable economic opportunities to all of its citizenry. A “generous” welfare state is, in my view, the symptom of an defective underlying economic and political problem rather than a manifestation of the “care” or “concern” its supporters disingenuously claim. I believe that the inefficient, unproductive socialist elements of the social democratic model act as a drag on the entire system, leading to sclerotic growth and a dearth of economic opportunity (Greece is an excellent example of a severe case, but all social democratic regimes suffer from the same disease although with varying severity).

The welfare state in the US, born during the Great Depression, grew precipitously in the late 60’s and 70’s at precisely the time the US economy began to stutter. US welfare policy was largely patterned on existing European welfare policies and was adopted, as it was in Europe, to depress labor supply in the face of higher than preferred unemployment. No conspiracy necessary. It seems clear to me that minority groups and the rural poor were the primary targets of the incentives to “drop out and stay out” of economic competition since they were the weakest politically and could resist the least.

What I find incredulous is the idea that the negative consequences, that persist for decades despite large public outcry, are unintentional. I find it incredulous to believe that the variation in the quality of our public schools is purely unintentional and that, what do you know, the politically weakest members of society are burdened with the worst schools while the politically strongest have the best.

I would turn Hanlon’s razor (as described above by Bob) “Never attribute to malice that which is adequately explained by stupidity” on its head. A lot of time and effort was put in by those who designed the welfare state (over decades and in dozens of countries), and most of these people are not stupid (on the contrary, far, far from it). Therefore, it might very well be possible that persistent flaws in the system are not the result of stupidity but rather of malice.

Nov 7 2015 at 11:17am


The thing I don’t understand about the arguments made by people like Miller is that if the logic in their overall argument is true, then any form of charity appears to be ruled out. I think that these arguments would be much better framed as a pragmatic critique of the methods used rather than as anything more than that.

For example, he says that the economic incentives facing charities aren’t set up in the best interest of those they are helping. This is true of any charity by definition! We have to assume that the people working for charities are motivated by things other than their own (narrowly-defined) self-interest, or else we cannot ever think that giving to a charity is worthwhile.

Nov 7 2015 at 4:57pm


You may be a more careful listener than I. My understanding from listening to the podcast was that both Michael and Russ thought “regular” charity was a good idea to help immediate needs. The challenge is that regular charity going to help immediate needs is only valuable in the short-term. To help in the long-term charity money would be better spent if it could transition to structural reform so people can become independent and take care of themselves.

Michael seemed to be bemoaning how the long-term make-the-broken-society-better approach gets neglected, and only immediate needs are funded. And that in the medium- to long-term, continuous funding of immediate needs alone isn’t just not ideal, it actually functions to make the situation worse via dependency relationships, forcing out local solutions, etc.

I don’t think the logic is inconsistent if one says providing immediate relief makes sense when vast amounts of infrastructure gets destroyed, though the goal should be to move from immediate relief to rebuilding infrastructure ASAP. In other words: we should teach men to fish so they can take care of themselves, not just give them free fish forever.

“We have to assume that the people working for charities are motivated by things other than their own (narrowly-defined) self-interest” In this case I don’t think motivation is really the key issue. People can be well-meaning, and yet their efforts can be counter-productive. As the saying goes, the road to hell is paved with good intentions. It seems quite plausible that many people work at charities giving out free shoes (or whatever) really are convinced they’re doing a wonderful thing. And yet it can also be true that giving out free shoes is not the best long-term solution. e.g. It would be better if local businesses were started that gainfully employed many people such that they could afford to buy their own shoes (or whatever).

Nov 8 2015 at 4:41am

~07:00 Mr. Miller says, “But I think there’s even a better question, and the better question is: What do people in poverty need to create prosperity for their own families and for their own communities? And then: How can I go alongside them to partner with them to help do that…We have tended to treat poor people like objects–objects of our charity, objects of our pity, objects of our compassion–instead of the subjects and protagonists of their own story of development.
~45:30 Mr. Miller stresses the importance of: property rights, justice in the courts, and the ability to register a business. He even goes so far as to claim these interventions would work better than current aid efforts.

I feel Mr. Miller has all the elements necessary to change the aid-paradigm but hasn’t quite put it together.

The functional question which he nearly arrived at in this podcast is not ‘what do people need to succeed?’ It has never been that. It is, “what is preventing people from succeeding?” Answer THAT question then do something about it.

Scarcity of resources is universal. Resources are scarce in poor countries and they are scarce in rich countries. No economy is ever free of the problem of scarcity. It is a universal phenomenon. Therefore, saying the problem in underdeveloped countries is a lack of resources and then trying to pour resources in those places is futile. Nothing we can do will change the reality of scarcity in the universe.

The fundamental difference between wealthy and not-wealthy countries is the rationing tools they select as their answer to the problem of scarcity. ‘Rationing’ is deciding ‘who gets what.’ Some rationing tools are better than others. Choose rationing at the individual level = relatively wealthy. Choose rationing at a group level = relatively poor. I think Miller threw a broad swing at this fact when he brought up ‘culture’ and ‘morality’ underlying economic systems.

He is so very close.

Nov 8 2015 at 7:35am

To take Miller’s concepts to the US, has the state suppressed charity?

Some churches encourage tithing. However, that concept was based on a time when the church aided the poor, elderly and disabled and was the main source of charity for the downtrodden. (ignoring for now the spiritual benefits of tithing).

Now that up to four tithes of income can go to the state, the vast majority of which is redistribution, and the definition of the downtrodden has expanded to include homeowners with two cars, 70″ TV’s, PC’s and cellphones for every 6 year old, has this soured the American people on individual charitable contributions?

Nov 9 2015 at 5:28pm

A very interesting episode (as usual) that I listened to twice.

I hadn’t considered the notion that charities/governments are always operating in “crisis mode” when trying to help the impoverished as opposed to a long-term/sustainable focus. As you discussed, that leads to myriad negative side effects. I think this is a very deep idea that has other applications in economics; hopefully this idea will come up in future EconTalk episodes.

Jesse C
Nov 10 2015 at 12:59pm

The Neil Flask thread reminds me of a frustrating episode. I was ranting about how I specifically dislike able-bodied young men with no dependents living on the government dime.

One friend, thought he had a “gotcha”: “How about corporate welfare? Would you be OK if we got rid of that, too?”

Again, I’ve known him for over 20 years. I lean libertarian, so I tend to rant from time to time, so I was aghast that he thought corporate welfare is compatible with free markets. He is intelligent, well read, and pays attention to politics, to boot. Talk about wanting to pull your hair out…

A lot of this is the fault of Republican corporate puppet pols self-labeling as pro-free market, but it’s still shocking.

John I
Nov 13 2015 at 11:00am

What a great interview!
I’ve become a big supporter of the Acton Institute over the past few years and am very familiar with the Poverty Cure program that inspired the Poverty Inc. documentary. And I’ve also become a big proponent of Econ Talk. So I was pumped to hear Michael M. Miller on Russ’s podcast.
Well done!
This topic needs urgent attention, leading to new approaches.
Acton’s tagline is “Combining good intentions with sound economics”. That is so apropos to the area of economic development.
To paraphrase one celebrity in the documentary, “Even if our project does not help the poor, it’s still good that we do something.” Don’t they feel a moral obligation to make sure that they create a positive outcome – as defined by the recipients – when they interject themselves into another community? Indeed, often the outcome is negative and counterproductive. “The road to perdition is paved with good intentions.” So let’s make sure that our efforts provide a positive result, by partnering with those we intend to help.
Russ, keep up the great work! I really enjoy Econ Talk.
Michael, to you and your colleagues at Poverty Cure and Acton, more power to you and God bless your efforts.

Nov 24 2015 at 12:00pm

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Nov 25 2015 at 12:54am

I found this to be one of the worst EconTalk podcasts I’ve listened to. It was largely bereft of evidence-based discussion, which would be OK if the host and the guest didn’t already agree on most issues.
Furthermore, the guest, who has made a documentary about poverty, lacked even basic knowledge about the cash transfer RCTs about which there are books for the lay public.
I speculate that a director of a left-leaning documentary with similarly few economic qualifications would not be invited to speak on this podcast.

Rob B
Dec 1 2015 at 2:26am

Great episode! It gets to the heart of the matter.

But I’m disappointed that neither the guest nor Russ (nor any “classic liberal/skeptic” commenters so far) have identified researchers, companies, or organizations using a SKEPTICAL approach to answer the “$64,000 question”: How can we create institutions of justice in struggling regions? Maybe there is someone who’s a skeptic and expert on Haiti? And someone else who is a skeptic and expert on Myanmar? And so on… I’d love to hear if anyone is doing this kind of work.

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Podcast Episode Highlights
0:33Intro. [Recording date: October 27, 2015.] Russ: So, Poverty, Inc., your documentary, argues that fighting poverty is big business, and that vested interests interfere with what we might hope would be better results. So, what's the big business part of the anti-poverty world? I don't really think of it as a business issue. Guest: Right. Well, I mean, the basic gist of the film is that poverty, despite really good intentions of most of the people who have become involved, has become an industry, and the fact that all the incentives--many of the incentives--of humanitarian charity--whether it's foreign aid or Non-Government Organizations (NGOs)--are--the incentives are in such a way that the people who actually benefit the most from it are not the people we're trying to help, but actually the people who work in the industry. Now, I will say that our critique is not really to go to the motivations of those people. We assume benevolent intentions. It's really to kind of critique the underlying assumptions, beliefs, and institutions of the kind of dominant model of development that has developed over the last, say, 50-70 years--let's say since the end of WWII. And so, since the end of WWII you have this kind of dominant idea, kind of humanitarianism--that if we could just transfer large sums of money or do projects in the developing world, we could jumpstart the process to industrialism and poverty. And it really hasn't worked; and sometimes has actually made things worse. And so that's what we say that's what happened is an industry. And I guess the last part of that is that, like any other industry, it has incentives to stay in business. And so it ends up doing things that actually perpetuate poverty instead of alleviating it, or better yet, instead of helping to create the conditions for people to create prosperity in their own families and their own communities--and then they don't really need the poverty industry. Russ: So, as listeners know, I'm sympathetic to that critique. People who would disagree with it would argue that either we haven't spent enough money, or we haven't done the right things with the money; and we, of course, need to try, because the alternative is to give up. And I think there is a temptation to use the reality that we've been very ineffective, at least for the most part, in helping people far away who are very poor, that that tends to lead to people saying, 'Well, I don't have to do anything, because it's a waste of time and money.' Do you agree with that conclusion. Guest: No, I don't think so. I think--you know, sometimes it's a waste of time and money. But just because it's sometimes a waste of time and money doesn't mean it always is. Or that we're not supposed to care. And one of the things that I think we're really clear about--I hope in the film but especially in questions afterwards--is like we're not suggesting in the film, 'Don't care; stop caring,' but to really rethink the deeper assumptions. So there's kind of two questions here. One is: We're not doing enough. This has been pretty much the argument for 70 years. So, you start out with the Marshall Plan, etc., [?] this idea that we need more money to solve the problem. And this is the kind of dominant social engineering approach at the time. But still you have, say, the ONE campaign, which was Bono and a lot of other celebrities saying, 'We need more money; we need to support the Millennium Development Goals'--now the New Sustainable Development Goals--'We need to increase foreign aid.' But really there hasn't been that much evidence that increased foreign aid helps. I mean, this goes back--you've had Angus Deaton on your show. He talked a little bit about this, I think, in his book, and really referring back to Peter Bauer, who is saying that one of the problems of foreign aid is no matter how much money we give them, if there's not the capacity to absorb that aid and use it right, it ends up really creating crony capitalism; it excludes poor people; etc. So, the money question is one. The other question I think is a [?] one, and it's really a question of kind of--especially difficult in contemporary life, and that's, okay, people, like, so we'll do this film, you know, or I'll talk about this and people say, okay, well you care about private property rights for people and everything, and justice, you talk about justice and the ability to register a business--which I hope we'll talk about. And that's great; but I care about helping people right now. And that's what we need to do. Russ: [?] suffering. Guest: Yeah. And I think in one sense, that's fair. The problem is that we've used the emergency model as the model for economic development for 50-plus years. And the second part of the problem is that not every moment in those 50 to 70 years in the developing world has been this tragic emergency need. And so, what's happening is--some[?]--it's a little bit of a sentimental argument that doesn't really go down to the deeper questions. And the deeper question, as I'll probably say more than once, is not 'What can I do to help?' Now, of course, I think we should absolutely be concerned with that. But I think there's even a better question, and the better question is: What do people in poverty need to create prosperity for their own families and for their own communities? And then: How can I go alongside them to partner with them to help do that? And I think there's a lot of people who are actually moving in that direction, so I think there's a lot of positive developments. But I think generally speaking, the way the dominant model of development--what we call in the film kind of the social fact of development: all these attitudes and assumptions and beliefs--have not really asked that question. The kind of underlying philosophical line of the film is that we have tended to treat poor people like objects--objects of our charity, objects of our pity, objects of our compassion--instead of as the subjects and protagonists of their own story of development. And this gets mixed up with this kind of social engineering idea. And so we really oftentimes use the developing world as an experiment for us to try out new policies and new theories. And I think we don't ask the deeper question. And again, this is a very complex question. I think your listeners know--I've heard different interviews with people: Poverty is very complex. There's no single solution. There's no silver bullet. But that what is it that poor people need? Well, we often are so focused on poverty alleviation we forget to ask, 'Well, what are these kind of institutions or conditions that help create wealth?' And once you have that, then you don't need foreign aid.
7:43Russ: Yeah. It goes back--that insight of yours go back to a point I saw Angus Deaton make. I don't think he made it on my program--I'm not sure, but I saw it elsewhere for sure--where he says, basically: 'Why are we always doing things to people, not with them or for them? And why don't they get a say?' Of course, one answer would be it's hard to find out what they want to say: they don't have a voice; they don't have a mechanism for making themselves heard. And I think one of the things your film does that's quite moving--and it's a fabulous film by the way; I encourage people to see it. At the end of this conversation we'll be talking about how that's possible, I hope. But there are many, many places where I was moved; and I confess that there were parts where I cried--which could have been just for the mood I was in that day. But it's very moving. Guest: Thank you. Russ: So, one of the things that comes through very clearly is the frustration of people on the ground, living--the actual people, not their spokespeople, not their leaders, not their politicians--talking about, 'We just want to try to get on with our lives, and would you get out of the way.' Guest: Right. Russ: And it's horrifying to think that sometimes our good intentions actually get in the way. So, let's turn to one of those--you open with-- Guest: Yeah; can I say something real quick, real fast? Russ: Yeah. Guest: I think two things--first of all, thanks for your kind words. That's encouraging. It was hard. Russ: I bet it was. Guest: So, I appreciate it. But, you know, that was--one of our goals was really to, in one sense--we've known this; this is not brand new. But the channels of communication aren't really dominated by entrepreneurs or small business people in the developing world, and so we really wanted to give a voice to that. And the other thing--and we can maybe talk about this later--is even in the way we filmed it--and you may have noticed this--we were really trying to re-present the way people think about poor people. So, I talked about that objectification: usually you save a poor person, they are really kind of far away, they're poor, they're dirty; you can't kind of relate to them. And even in the way that the cinematography is done, does that. And we try to actually change that and do that to re-present and give that voice. And the other thing I'd like to say maybe early on, in case I forget: we'll probably talk about foreign aid, because foreign aid is the biggest thing. Right? But really the film--and this goes to my colleagues and I, our deeper understanding--is that foreign aid is really not the problem as much as a symptom. It is the cornerstone, the biggest symptom of a broken model of development that goes back to what you were just saying--as Angus Deaton says, we're doing things to people instead of giving them a say. Russ: Yeah, for sure.
10:23Russ: So, let's turn to one of the examples that you talk about early in the film, which is food aid. Which seems like a great thing. Often the worst aspect of poverty is, one of them, is hunger--or worse, starvation. And so, what's wrong with giving people food? We've done, America and the West has done a lot of that. What's wrong with it? Guest: Well, there's a couple of things that we talk about in the film. So, the first thing is: When there's an emergency, when there's a crisis and people really need food, then it's a good thing to help. And we're very clear about that, and the people like [?] and other people in the film make this point. So, that's not what's really at stake. What's at stake is the larger way that it's done. We end up--there's a couple of things that happen with food aid. So, one is: We tend to subsidize our own agriculture in Europe and the United States. We then put tariffs on to protect our markets. We [?] on purpose: in the film there's an American farmer named Joel Salatin, who wrote a book called Everything I Want to Do is Illegal. And he actually makes the case that really a lot of these protections, so called protections of American farmers, aren't really protecting the average American farmer. They are protecting certain special interests. But anyway, so we do that. Then we ship the food over as foreign aid; and this is a good thing; we need to help people. Or, what we often do [?] that we talk about is we sell subsidized agriculture at low tariffs, and we dump it into the markets. And in doing that, we can actually undermine and destroy the local markets. So, what happens is, we protect our own agriculture and we destroy the development of other agriculture. And then if you look at what happens, it becomes connected to crony capitalism. So, The Guardian newspaper reported that out of $1 billion in American food aid, about 70% of that went to 3 companies. So, somebody is getting very wealthy on aid, but it's not the local farmers. And I think a better way of approaching that is: Okay, we've got an emergency; it's two weeks, a month, however; now can we start sourcing from local farmers? And what you actually ended up doing is driving people out of the agricultural business. Two of the commentators in our film mentioned that as Haitians were driven out of agriculture, they ended up moving from the country into the city, causing lots of congestion but also creating a lot of problems when the earthquake came, as well. So, it's not so much that food aid is bad in itself, but that the way it's been done--I think one of the men summarizes it in the film quite well. He says, 'The earthquake happened three years ago, and they are still giving away free rice.' It's not an emergency any more. Russ: Yeah. That's what's fascinating. I don't want to miss this quote, but I want to come back to the food issue. So the quote that I--I'm not going to get it verbatim from the film but the idea is the same--so, sort of a warning that, after the earthquake, one of the biggest threats is going to be from the NGOs--the nongovernmental organizations that are going to stick around. You'd think that would be a big plus. What's going on there? Why are they not good for the people on the ground? And you show--you have a great little montage where you show--typically we're looking at the sides of SUVs (sport utility vehicles) and cars and vehicles that are in place with the logos of these NGOs to show that they are there; and they all have nice names: Aren't they helping? Guest: Yes, that's a real interesting kind of problem in the developing world. So, Haiti is called oftentimes by Haitians 'The Republic of NGOs.' And they are making this point that it's not really run by the government or the people of Haiti. It's run by the NGOs. Now, obviously that's hyperbole. But still it addresses something. Some people say there's up to 10,000 NGOs in Haiti. Others say it's 3--and there's some debates with the numbers. But per capita, one of the highest places in the world. And as the guys in the film say, some NGOs do some good. But a lot of what happens is, NGOs end up--similar to foreign aid: they end up crowding out local businesses. And so one of the stories we tell in the film is of a solar panel company called Enersa. And these guys hire people from really some of the poorest places in the world. There's, one of the neighborhoods outside of Port-au-Prince, or within Port-au-Prince I should say--it's called Cité Soleil. And at one point it was ranked by the United Nations the most dangerous place on the planet. And these and the neighborhoods, these guys at Enersa, the solar panel company, are hiring these guys to come work. And so they were building up the company and doing a lot of interesting things. So, they give an example of an NGO who helped them. There are a couple of NGOs and finance companies, even one who has been microfinance who moved into this mid-level financing, who helped them. So there are definitely positive things with NGOs. But at the same time, so before the earthquake, they were selling about 50 streetlights a month. They make these solar-paneled street lights. And they have little plugs: you can charge your mobile device, whatever, right there. And they are really made--it's pretty interesting how they do it. They have to make the whole thing so that nothing can be stolen. Right? So, it's a very interesting system, they have. So, they are selling about 50 street lights a month. And after the earthquake, they sold I think 5 streetlights in 6 months. And even though the demand went up. So, here's basic economics, right? There's an earthquake; the demand goes high for solar panels because electricity is out. And the local solar panel company actually loses money. Well, why? Because NGOs came and many NGOs get government money--we can talk about. But NGOs came in and they started "giving the stuff away for free." And they actually crowd out local business. And I asked. I said, 'Well'--then one guy says, 'What do you expect businesses to do?' I said, 'Did you talk to those people?' He says, 'Yeah. We met them many times.' Right? And this is really part of the poverty industry, right? That NGOs oftentimes, and social entrepreneurs and foreign aid, we're--like we're thinking about how we're reporting, right? And this is a little complex so I don't want to go too much into it--it's complex in that it's too much for a radio or a conversation in an hour. But complex in that where we talk about social impact--so, let's say we're delivering shoes or blankets or whatever it might be. We only tell us [?] like well, how many blankets I delivered, how many shoes delivered, how many people got them, what was my cost, what was my return on investment if it's a social entrepreneurship, etc. But we don't really look at the social impact. Like, did we actually put other people out of business? Now, if we're in a free, kind of competitive business relationship where different firms are competing, I don't care if your business puts me out of business if you are providing a better service at a lower cost. That's great. But that's not what's actually happening. What's actually happening is, with the benevolent intention to go help poor people, we are actually destroying companies. And when we destroy companies we're not just destroying one or two entrepreneurs who could start another one. We're also disemploying--if that's a word--all those men, those fathers, in very poor areas, who don't really have that many other opportunities. And this is where--there's some hostility there, to the NGOs. And one other thing, I talked to--this is not in the film, but Herman Jinere Hesse[?], who is the Guineaian[?] entrepreneur who shows up in the film quite a bit, he explained it to me this way, too, is that the other problem with NGOs is that you'll have this kind of pressure from the United Nations, the World Bank, USAID, etc., and it's pressuring down[?] these policies or these kind of social changes. And then, at the bottom, you have "grass roots NGOs" who are pressuring from the bottom. So from the top to the bottom, these African governments are being pressured. But of course the money is being funded from the World Bank and the IMF (International Monetary Fund)--to these so-called grass roots organizations it's a lot more astroturf than it is grass roots. And so, there is a frustration with NGOs that, despite their benevolent language, if you look at what they do, they actually end up harming people more than helping them.
18:55Russ: So, there's two issues here, one of which is: Normally free stuff is good. If somebody says to me, here's something either cheap or free, I'm happy to take it, and take the money I would have spent elsewhere, spend it on something else. So that's usually a nice thing. And when we get rid of tariffs our prices go down, and we say that frees up resources to do things more effectively--to have expansion of opportunities. And I always argue that tariffs don't create or hurt jobs--they change the kind of jobs we have. So, that's in America. And I've talked about this--it's been a long time since we brought this issue up, so I'm glad to be talking about it again. Long time listeners with good memories will remember these conversations from a few years back. But normally, you say, 'Well, if you're going to be giving me rice, if you're going to give Haiti rice, then Haiti doesn't have to grow rice any more.' Just like when we import more cars from Japan, we don't have to make as many cars here, and that frees up people and resources to make other things. And similarly, if you are going to give me solar panels, those men you were talking about--I assume it's mostly men in those solar panel factories--they'll go make something else. I guess, it seems to me that, maybe in some situations, Haiti being one, there isn't something else. It's not a very dynamic labor market, not a very dynamic capital market. When you find something that actually works, you have to hold onto it very closely. Is that accurate? Guest: Well, I think that's really a good point to make. There's a couple of things that are somewhat paradoxical [?]. I agree with you on lower tariffs and the free stuff. I think you're right. So, here's a couple of problems. So, in one sense, what's the big deal? We're getting free stuff; can't we go do something else? And, you kind of hit the point here: We assume in a dynamic market economy that if something free comes in, then we can use that labor and move it somewhere else and start a new business. So, I'm going to jump ahead, and then I'll jump back. The thing is, we take for granted a certain, what we call 'institutions of justice' in the film. We take these things for granted that to us are normal--that is, like clear title for land, ability to register your business without undue burden, ability to engage in economic activity and free exchange, enforcement of contracts, and all these things. Well, these things actually don't really exist so much in lots of places in the developing world, or at least they are not very strong and effective. So, it's not so simple to just kind of start a business. That's one problem. The other problem is, is that it's erratic. Okay? So in the United States and Europe, if free food is going to come in to the city--I live in Grand Rapids, Michigan--it's going to be on, you know, on the Internet and on Twitter and we're going to know free food is coming in; and somebody's going to be complaining and other people are going to be happy. Etc., etc. We have a lot of information to be able to make decisions in markets. Not perfect information, obviously, but we have information to kind of make decisions and change and see what's happening. This is really a little different in the developing world. It's erratic. One of the guys we talked about--TOMS Shoes, one person explains, when the bus arrives-- Russ: Explain what TOMS Shoes does. Guest: Sure. So, TOMS Shoes is what's called a social entrepreneurial venture, and Blake Mycoskie is the founder of it. And the idea is that if you buy a shoe in the United States--if I go to a fancy store there's these kind of like--you've probably seen them around or your listeners have seen them around--there are these Argentine-style shoes. If you buy one of those shoes in the developed world--United States, Europe--a free shoe, an extra pair of shoes, I should say-- Russ: Two of them. Guest: Yeah. Russ: Not that cruel. Guest: Everybody has one shoe, yeah. No, it's not that bad. A pair of shoes gets sent down to the developing world for a child who needs shoes. Russ: Sounds great. Guest: And so, when the shoes come in, does that put out of business local cobblers? And the answer is--goes to this question--it's like, who cares? That's good. Then they can use those, reallocate those resources. Russ: And parents who couldn't afford a second pair or maybe even a first pair will have a pair for their kids. It's great. Guest: Yeah. So, there's a couple of problems with that. I don't know if you want to go into that now, Russ. Russ: No, go into it now. Guest: Okay. Well, there's a couple of problems. One is going back to this question: it's erratic. You don't know when the bus is coming. So, for the cobbler, he can't simply predict, 'Hey, guess what? I hear some shoes are coming in. Let's make sandals.' Or let's make iPhones, or whatever it might be we are going to make because we don't need to do this any more. It's just kind of coming in blind. And so that's the one problem that's erratic. The second problem is, as I already mentioned: it's not really so easy to do the shift. And the third problem is: Because it's not--and this is where I think it's very important to talk about--because it's not, say, a competitive market economy--so I'm repeating what I said earlier--the intention of the social entrepreneur, the intention of the NGO or aid is to actually help those communities. Now, there's no doubt that some people get a benefit. But this is exactly like what we were talking about--tariffs, or crony capitalism. Some people get benefits. But the overall--the economy doesn't grow. And so if the intention is to actually help the economy, then the measurement by which we look at--are you doing good?--has to be measure. So that's the big picture. On to TOMS Shoes: there's really two or three critiques of TOMS Shoes that we heard. One is the very similar to what we're talking about now: when you give shoes into a community, you are actually helping some people but you are hurting the local cobbler and the local economy, and some different people who then go out of business. So, and then those shoes maybe won't come to that community again for another year, etc. So, when you talk about sustainability, self-determination, a lot of those things get broken by free things. So that's the first. The second: Of course, some people complain about the quality of the shoes. But, I don't think that's super-important. I mean, I think it's a little important, but I don't think it's the main thing. But the third thing we heard that was kind of a surprising point in the film--and so, I asked this man named Daniel Jean-Louis[?] about TOMS. And he was very critical about how they come in and harm local businesses. He was also critical that, because they are NGOs, or social entrepreneurs, they are actually giving away free goods. Not only are they undermining businesses, but they are not paying taxes. And so, it's all part of what one of the guys explains, cutting the link between the government and the people. We can talk about that in more detail. But they are not paying taxes, so they are not contributing--this is the other. But the biggest critique he had, which I thought was really interesting, is: So, I gave him this iPad, and I said, 'Daniel, what do you think of this commercial?' And the commercial said, 'We want to be a for-profit business'--that's TOMS Shoes--'so that we could be sustainable and provide shoes for children for the rest of their lives.' I said, 'What do you think about this?' And now, I had spoken to Daniel; I knew what he--he's actually pretty much of a free market guy and he was going to be critical of, basically, distortion of the market, etc. But he said, 'There's no words to describe this.' He said, 'Saying that you want to provide children for shoes for the rest of their lives is implying that you don't want them to have shoes so that you can provide them.' He said, 'No one wants to be a beggar for life.' And this actually struck me really powerfully, because I was expecting kind of the economic response. But he gave a much more anthropological response. Like, 'Look, your short-term help is like a small band aid on a larger problem. But if it were just a band aid, that would be fine. But it actually creates to perpetuating a problem of joblessness, inability to build markets, etc., etc.' And it creates a poor [?]. So that was his reaction.
27:21Russ: I think it's more of a--his criticism I think is a sociological critique or a philosophical critique. Guest: Right. Russ: Makes sense in that the idea that somehow there will never be a child in the developing world who won't need our shoes is a tragic thought. And it does encourage us and them to think of a dependent relationship rather than a more cooperative relationship. So, that part I agree with. I think on the economic side, I have trouble with the argument, again because it's a little too much like the buy local argument, the idea that somehow they've got to buy their own local shoes. It would be great if they can get their shoes, if they can buy their shoes, outside; and really, if people dump free shoes for the rest of eternity into Haiti and the poorest countries of the world, I don't think that would be a tragedy per se. I think the erratic part--I think it's the erratic part, but not quite what you emphasize. You emphasize that it sort of comes out of the blue. Well, a lot of innovations come out of the blue and we expect entrepreneurs to deal with the creative destruction, and some of them can't. That's life. That follows inevitably. But it's more like: Here's a truckload now, and we don't know when the next one's coming, because they're not here to make a living. They are here to be helpful. And they're not going to be reliably helpful. Their stake is smaller. I think that, combined with the lack of dynamism of the market, has got to be where the damage comes. At least, that's my thought. Guest: I think that's basically right. It's kind of going back to the underlying assumptions--the dynamism of the market and this, when you have creative destruction and you have a new innovation that puts people out of business. That's great; like, oftentimes you'll hear people say, 'We need to defend business.' I think business is great; I've written about business as a moral enterprise and its value. I don't really care about business. I care about a free and competitive market economy. That gives people opportunity. If you go out of business, good--that means that you are not serving other people. I'm glad you went out of business. That doesn't mean that I don't have care or concern for the people who lose their jobs. Russ: [?] transitions. Guest: Yeah. It's difficult. Russ: You shouldn't get a voice to preserve your particular style of manufacturing or whatever it is. Guest: At the expense of others. Russ: Yeah, at the expense of others. Guest: So there is a lot of things going on here. And it's kind of interesting, because when I talk to people who are kind of [?] free economy, they always bring this point out: Isn't it good? And in one sense, yeah, it's good to get free things. But I think you've hit it--it's the erratic--because there is no market, there is no connection to living, it's not reliable. So you can't really make decisions there. And then, the other problem is this: It's that, if it were a free and competitive economy, if these poor people were not fundamentally excluded from what I call the institutions of justice--if they were actually able to have a dynamic economy--this wouldn't matter very much. Russ: That's a good point. Guest: And so, this is why actually I think, to maybe shift the discussion a bit: I think there's a problem with foreign aid, there's a problem with NGOs, there's a problem with charity of different types, and social entrepreneurship. But the biggest problem is we are not focusing on the core questions. And this is where the perpetuation-of-the-industry theme comes through. What are the core questions? What the people need to be able to create prosperity in their own families and their own communities. And this is complex. I'm not saying it's not. But there are certain key things. One of them is: Clear title to your land. And we talked about this in one of the sections called "Excluded." Clear title to your land. In some places, 50, 60% of the land has no title. If you don't know who owns the land, then you have no incentive to start a business, because it can be taken away from you. And it can be taken away from you especially if you are a widow or an orphan. So, if you are poor, you are in a dangerous spot. That's number one. Number two: Access to justice in the courts. I think it was the Center for Research of Justice--I forget the name--in India, did a study and they said on average it takes 20 years to get your court case heard. And it costs a lot of money. So, if you are poor, you are completely excluded. The second part of the justice, that we address in the film, is just the ability to register a business. And so, I think many of your listeners probably know the work of Hernando de Soto. But, de Soto decided to test: Okay, I can set up a business, because, you know, I can get a driver, get a lawyer to take me around. I lived in Nicaragua for 3 years, and you see this all the time. You see, if you are wealthy and connected, you can get a lot of things done. He said, 'But let's see what happens if you are poor.' So, de Soto set up a little sewing machine shop about 5 kilometers outside of Lima. And he got 4 student lawyers to go around and follow all the rules and regulations in order to start up a business. And they couldn't take, [?], air conditioned Toyota Land Cruisers. They had to take the busses and they had to go through all the things, get all the paperwork done. And it took them 289 days, 8 hours a day. Two hundred and eighty nine days to get their business registered. That's 289 days of not being able to work, right? Because they are spending their time doing this. And so, what he said is that the legal system is simply unfriendly to poor people. And this--so, if you don't have private property; if you don't have access to justice in the courts; if you don't have the ability to exchange--if you have to sell your goods to a government board instead of onto the market--and then you are going to compete in the global agricultural market against the United States and Europe, that have high tariffs, while they are tweaking tariffs and dumping free stuff, or more basically dumping subsidized stuff, it's a lot harder to respond to these erratic, big influxes of food. And so I think that the bigger question is not, 'Okay, does free stuff hurt?' but again, shifting the discussion to how these people--like, why do they need foreign aid in the first place?
33:32Russ: So, I totally agree with that, obviously; and I think--it's interesting to me. Hernando de Soto was an international phenomenon and got a lot of attention, and his work got a lot of attention. And you just gave a perfect example of the kind of insight. I mean, that's an incredible discovery, right, that the world works really poorly for poor people. And probably for some rich people, too, in those countries. And there's a lot of barriers to innovation and to small enterprise, small business. The question is: why isn't--I don't think we've made a lot of progress in--'we' is the wrong pronoun. I don't think countries that have those problems have done much about it. I don't hear anything about it. So I'm just going to raise a question: Celebrities take a beating in your film, which I can-- Guest: A gentle beating-- Russ: Correct. Which I enjoyed, I have to confess. But a thought experiment: What would happen--I'm thinking of Paul Romer's, perhaps Quixotic attempt to create a charter city, a city that has a certain set of governance rules that might be more conducive to enterprise and prospering and flourishing and human creativity? What if those celebrities said, 'We're going to pick one country and we're going to try to find a way to put pressure on the government--we're not going to put pressure on people to give money; we're not going to put pressure on governments to give more foreign aid. We're going to put pressure on a particular poor country's government to lighten the red tape burden.' Now, part of the challenge is it's hard to write a song about it. So it's a big-- Guest: I've tried. I have really tried. Russ: It's a big problem to get people emotionally attached to this idea. But you'd think if we could motivate people at the celebrity level to deal with this very small but perhaps crucial thing, we could create a little natural experiment, where a country could actually, perhaps, there would be some kind of difference that would be observable. Because right now, I think mostly--when you give the de Soto evidence, like 289 days, and we all nod, we shake our heads, we go, 'Oh, that's horrible'--it's like: Now what? Not much has happened from that. Do you--what do you think? Guest: Yeah. I mean, that's the big question, right? That's what happens. Okay, now what do we do? And I think some people are trying to do work on land titling, besides de Soto, in addition to de Soto, and working on justice questions like access to justice and things like that. You know, I mean, I don't know. I'm--it's a little weary of the kind of social engineering aspect of getting celebrities to kind of do that. Russ: For sure. [?] It's better than what they are doing now. Guest: Yeah. That's for sure. Exactly. I'm hoping Bono comes out with a song about private property soon. But, you know, that's a real question. So, there's a lot of things going on here that are difficult. So, first of all, the typical way we think about foreign aid--so let me, I'm just taking a second. So you would, sorry [?], we think about poverty, we kind of think there's maybe 6 or 7 solutions. Right? The first idea is if we could just give more stuff. And that's not just foreign aid as we've talked about it. You know--I've heard many religious leaders say things like, 'If North American Christians could just get together and be more generous, we could raise $84 billion and eradicate extreme poverty forever.' And the answer is: 'No we couldn't.' Because poor people are not poor because they lack stuff. Poor people are poor because they lack these institutions of justice we talk about. Right? The other thing you hear is: 'Oh, we need infrastructure and education and health care.' And all those things are very good. Right? But they actually are really--they are a result of wealth, before they become the cause of it. You don't see life expectancy shooting up really high until you get to a certain point. So, the other, so the real question is: How do you get the institution of justice? And I think--like you had Daron Acemoglu on your program a while back. And part of Acemoglu and Robinson, I think their critique of, like, policy as the solution. Like, the ignorant kind of predict they make, like if we just put the right policies in, it will work. I think they are right. I think this is one of the dangers to the thought experiment. When we say, 'Put pressure on governments,' we tend to say, 'Let's privatize,' or 'Let's create a market,' or 'Let's create this thing or that thing.' But if you don't have the underlying structures and institutions of justice--if there is not, say, fairness--and another, to your listeners out there, trust. You had this, I think this, Weingast--is that right?--talks about what law is. And this was really interesting as I listened to it: Wow, that's Thomas Aquinas, Summa Theologica. So, these aren't new-- Russ: I'm sure you were joined by thousands of listeners who had the same spontaneous thought. Guest: Twitter blew up. Russ: I noticed. What does Aquinas say, and why is it related? Guest: So, well, Aquinas just talks about, in law, that it needs to be promulgated. It needs to be--to use some of the language--it needs to be promulgated; it means you need to know what it is, beforehand. It can't be retroactive. It needs to be universal: It needs to apply to everyone. Right? And it has to be in a court with reason. Etc. So, it couldn't be some like radical--how could I possibly discern this? And then of course there's other philosophical and theological questions that he has, right? So, he says that positive law, human law, needs to be in line with the natural law. And the natural law is the cognitive access of the mind to the eternal law. And so, the natural law basically needs--some things are morally evil and some things are good. And that there is justice in the world, there's a certain kind of justice; and an unjust law is in fact no law at all. These are really complex. Volumes, hundreds of volumes were written on Question 94. Russ: If Aquinas were alive and we'd have him on, and we'd knock it out in an hour-- Guest: Yeah. Sure. So--Aquinas, kind of interestingly, because Aquinas talks about private property as well. He takes property very seriously. And following Aristotle and following Hebrew Bible. These ideas of the importance of property for social cohesion are not new. So, the question is: Why do they arise in some places and not arise in others? And then: Are there ways to create incentives for them? And here's like--so, I thought the book, Why Nations Fail, is really good. Talking about institutions and the work of Douglass North-- Russ: That's by Acemoglu and Robinson. Guest: Right. But one thing I thought was a little bit problematic: I thought they had kind of a limited view of culture. You know. And I would need to go back and read it again-- Russ: Well, they're economists. Guest: Yeah, there you go. Russ: Serious. Guest: I should have just-- Russ: I wish it were a joke. It's not. Guest: But they have this limited view of culture, as if somehow these political and economic institutions are disconnected: they don't emerge out of culture. But they do emerge out of culture. And, so really, the--whatever, $5 million, whatever $64,000 question is: How is it, if we know what are the certain political and economic institutions that enable prosperity, how do we create the incentives and the encouragement for those to be built? And I think that's a really complex answer. Russ: That is the $64,000 dollar question; we don't have an answer to it. If we did we'd be using it, or at least we'd be trying to use it. And as you point out, I think the problem here is partly that the interactions are too complicated and we don't have the levers that would incentivize people to do the right thing. Guest: Yeah.
41:30Russ: I talked about this a couple of weeks ago with Pete Boettke, talking about the aftermath of Katrina here in the United States, a developed country; and people have recently written about the 5-year aftermath of the Haitian earthquake, and it's mediocre. It's depressing; it wasn't very successful. And the aftermath of Katrina is not so successful. And I think those are two parts of the world that have something in common, which are that some of the glue that holds other places together for some reason isn't there. We don't know how to get it there. It's an interaction, as Pete describes it, a three-legged stool interaction: government, private enterprise, and culture. And we don't have a good model. There's x1, x2, and x3; and that doesn't get you very far. Guest: Yeah. I think there are two questions, one smaller and one more direct to this conversation in the film. The bigger question [?] is that when you look at the developing world, if you say, okay, we know what institutions are needed--and I think, so Acemoglu and Robinson make this point, like you can't just privatize; you need political economy. And I think that's right. But the question is, if you are in the top level, if you are one of the oligarchs, in Latin America, Africa, whatever somewhere, there's no economic incentive whatsoever for you to help create the institutions of justice. You don't need them. That's one. Number two, even if you are in the upper middle class, right, you don't--so I lived in Nicaragua. I taught there. But we had a driver and a maid. And Theodore Dalrymple says beautifully in the film, you know: 'Schumpeter says a maid is worth a household worth of appliances.' Russ: Right. It's lovely-- Guest: Driver, maid, it was fantastic. And I wish we had one now. It would be great. But think about it: in the United States and Europe where you have to develop dynamic economies, you have to be pretty wealthy to get a maid. So even in the upper middle class, they don't really have an incentive to create this inclusive economy of justice. So really in one sense-- Russ: I'd say they have a disincentive-- Guest: Right-- Russ: Because the system is working pretty well. It might be better. And you might have some compassion for your maid, who would maybe have a better, richer life if things changed. But then maybe you wouldn't have a maid. So it's kind of hard to be a big cheerleader for losing your maid. Guest: Exactly. I couldn't agree more. And the other thing is it gives you something to kind of lament about. Right? People like something to lament about: 'Oh, wouldn't it be great if things were better.' Well, you don't actually have to do anything. You just can kind of do a little bit here or there but it's not going to have any impact on your life. So you have this incentive problem. And I think that underlying--and this is very complex, but I think underlying the institutions of justice is a certain kind of cultural and moral framework. And this cultural and moral framework is ancient. It appeared over time, and developed, in a very complex and up and down manner--it wasn't linear--over time in certain places. And one of the problems with modern economics is that we've split moral philosophy and economics. And so like, Adam Smith, of course you have that lovely book on Smith--Smith didn't do this. He saw economics connected into moral philosophy. And this is a problem-- Russ: He kind of did. He did keep it separate as two books. But I take the point. Guest: Yeah. Exactly. For Smith, we can read your book and not talk to me. I'm not a Smith expert. So anyway--but generally speaking, it wasn't like somehow [?]. And I think that this makes economic development even more complex. So that's one thing; let's just put that aside for now. There is one thing, however, I think we can do; and that is, if celebrities--I don't know if they should do this thought experiment. I'd love to see celebrities talking about property and justice in the courts and ability to register a business. I think it would be great. Let's get Bono to start talking about these things, and I think it could have absolute impact. So, Russ, if you and I, we can get Bono together-- Russ: [?] Guest: You're a rapper, so we can do it. Russ: Definitely. I'll draw on my musical roots. Guest: But the other thing is to say that part of the problem is that the poverty industry as it is now operating creates the incentive for governments in the developing world precisely not to build these institutions of justice. Because we are doing all these things that end up--the governments don't need a vibrant tax base and a dynamic economy to be able to stay in place. And so what's happened is that we've used this kind of sentimental--this goes back to our earlier in our conversation--sentimental language, like, 'Oh, the poor, we have to help them.' And so we use emergency models for 70 years to create precisely the incentives that are needed for governments not to build inclusive institutions. And so we may not be able to solve the deeper problems, and they are not easy to solve, and they weren't solved in Europe and the United States very quickly. But we can at least change the direction of the poverty industry. And here's where celebrities also have a lot to say. Russ: Yeah. I think that's the most important point: we may not know how to fix it, but we certainly know how to make it worse, and we should stop doing those things that we are doing that make it worse.
47:15Russ: Now, you raise this issue of moral philosophy, and it let's me segue into something I want to talk about, which is: there's an increasing interest, and we had Chris Blattman on talking about it a while back, a year or so ago--an increasing interest in cash transfers. So, one of the critiques of the Aid movement is it's project oriented: we bring rice or we build a dam or we build some kind of infrastructure project like a dam. And that's not necessarily what they want, but that's what our contractors want to push for, and so there's this terrible Bootlegger and Baptist thing going on. And that's part of the problem. So what we need to do is just give people money. Because when you give them money, not a lot necessarily, but that helps them get through the worst of things. And there's some empirical evidence now that maybe that's an effective way to help. So, there's a lot of push for this. My thought is that--I'm open-minded about it. It might be a good thing. But I do think giving away money has challenges and some issues. So, I want to hear your thoughts on that. Guest: You know, that's really interesting to me. I don't know so much about it. I will look into it. I can't really comment intelligently on that, because I just haven't spent a lot of time thinking about it. But I think that, you know, they are--giving away things, period, there are some challenges to it, because depending how it's done it can be more positive or more negative. And so how it's done has to be really thought through. And maybe Chris Blattman, as you said, is doing this. When we look at, say, microfinance, for example where money is not being given away--it's actually being lent--microfinance can be very positive, or negative. And one of the ways it's positive is when the money is lent for economically productive activity, versus when the money is lent simply for consumption, because that creates consumer debt. However, this may not--I haven't thought this through. This may not apply to just pure cash transfers. What do you think? Russ: Well, what I was hoping you'd talk about, and you don't have to, is this idea that work is good. That--I think of-- Guest: Oh, yeah. Sure. Russ: I think of Gerard Manley Hopkins--he says, 'This is my work; for that I came.' And this ties in to a lot of our-- Guest: "As king fishers catch fire, dragonflies draw flame". Russ: Correct. Exactly. And I think, when we talk about this, either dystopian or utopian future where robots are going to do everything for us, which I think is silly--I don't think that world's going to be. But if you worry about it, one of the things we've talked about here is some of the meaning that people get from work is, maybe need to be more challenging. I don't know--it strikes me that there's something--the word that comes to mind is 'thin'. Something thin about thinking that what people need most is stuff. Now, of course they do if they are near starvation. Of course they do if--you know, money is incredibly important when you are near poverty or are desperately poor. So in that case, maybe it is the right thing. But at the same time, depending on other people as a solution, not as a stopgap, not as an emergency, strikes me as a bad model; and it seems to be the model that the United States is heading toward. In turn. For us. We have falling labor force participation; we have more and more people on disability. And we seem--a lot of people are okay with that. And I don't think that's a very healthy thing. I don't know. Maybe I'm old-fashioned. Guest: No, I actually think--I don't know about the economics so I'm a little bit reticent about that. But I do think, in the question you bring up in the dignity of work, this is very important. I think that work is not--work is clearly the utility, you are doing something, right? But a business, when people are engaged in work, it's a community of persons getting together to take care of their own needs, right? And then providing goods and services to meet the needs of others. And there's a whole--like, there's just layers of the importance of what work does, work does for the common good; what business does for the common good. And then what work does for the individual. You know--what do you see when you see a guy who is kind of drifting, he doesn't know what to do with himself, a 20-year old, not sure: you say, 'The guy needs to get a job.' Why do you say the guy needs to get a job? Right? Why is the 20-year old college student who is just wasting his time, why does he need a job? Because a job actually gives this kind of, empowers the person. It requires the person to do certain things to flourish as a human being. And so there's a whole concept of the dignity of work. We talked about Aquinas: if you want to look at what work does--so, in a Christian understanding, a Jewish understanding of work, work comes before the Fall. Right? Work is not a punishment for sin. Work comes before the Fall. And the person--Adam--is given the responsibility to take care of the Garden. And really to complete creation. There's this kind of deep dignity of work. And then further from that, you have what some philosophers talk about--the intransitive and the transitive dimension. So, the transitive dimension of work is that you are making something or producing something of value, or you are serving other people. But work also has an intransitive dimension--that it's actually shaping you. And this is, I think this underlying--part of the underlying problem with the humanitarian model, right, is that humanitarian is really a hollowed out type of love, of charity. Right? So if you look, and I won't go into the details of this, but humanitarianism is a type of kind of secular Christian love. Right? Medieval; we don't want that, let's not have all the religious attachments; let's just make it about caring for people. And so I think there's--I actually understand why. Let's actually go to look at it a little carefully. The word "charity" as you and your listeners know comes from the Latin word caritas. Caritas is love. And what is love? Love is to seek the good of the other. It is the intentio benevolencia--the intentional desire for the benevolence of the other person. Which means you want to help promote human flourishing. And that means you want to engage[?] in the person in a way that helps them flourish as a human being, not simply just be able to buy stuff and comfort themselves with entertainment and food. Because that's not a rich human life. And so, this I think is, really this kind of problem with humanitarianism, is that it doesn't think sufficiently about human flourishing, about treating a person like they are not simply an object. And so to use kind of a Nietzschean language, humanitarianism has this limited horizon--it stops before it reaches the spiritual capacity of the person. It trans-values, and it makes comfort, and maybe to basic needs, it makes that the highest value instead of recognizing that as something that is helpful and essential for a greater kind of human experience as a person. Russ: I think it comes back to what you said before. I don't think there's any doubt that a humanitarian urge to help a person who is drowning or starving--you should treat them like an object. Guest: Absolutely. Russ: You should grab their arm and pull them out of the water and you should throw food at him and let him figure out what to do. I think the biggest challenge of the longer term more extended model is, first it hits the knowledge problem, which is: I don't know what that person needs; and I think that's at the heart of your critique in this film and it's the heart of what Angus Deaton was trying to say in that comment--I think I already said it; I'll put a link up to it. And it also comes back to--if I can come back to Smith for a minute, it comes back to this idea that if you want to trade with somebody, you have to try to figure out what they want. You have to extend yourself. You can't just say, 'Here, this is good enough for you because I like it.' You can't say, 'I figured you'd like this.' You have to get them to choose what you've provided. So you have to put yourself in their shoes; you have to love them in some dimension. And I think that's the cultural virtue behind free markets, when it works right.
56:19Russ: We're low on time. I have a lot of things I want to ask you about--not that the last part wasn't interesting. Say two minutes on the Apparent Project, which was an incredible 20 minutes, 15 minutes or so in the middle of this film and the way that orphanages are run in poor parts of the world, which is just shocking. Guest: Right. So, the Apparent Project--we told the story in the film of a couple named Shelly and Corrigan Clay[?] who are Americans, Christian kind of missionary. And they went down to Haiti to adopt a child. And they had actually gone down to start an orphanage--Corrigan had about $30,000 from savings and some money he had inherited. They were going to go down and start an orphanage. So, they went down; they worked in an orphanage for about a year, and they were going to adopt this Haitian child. And the orphanage director said, 'Would you like to meet the mother?' And they were a little bit taken aback--[?] thought didn't have parents. But, okay. Is [?] she fine with that? And the director said, 'Oh, yeah, she's fine with that. She comes every couple of weeks and brings him things and talks to him.' So, they saw the mother coming to see the child. And then they met her. And they said it was very obvious that the mother loved this child. And they said, 'Why are you giving her up for adoption?' You could see that they [?] the mother. And she said, 'I just can't afford the child.' And Shelly said--it was this shock: Here I am spending $20,000 on an adoption for a child that the mother wants. Well, they began to look around, and they discovered that in their orphanage, I think it was like 22 out of 26 children actually had at least one living parent. And that, generally speaking--and this is conservative, and there have been some Haitian government reports, it's in the New York Times, 80% of orphans in Haiti have at least one living parent. And so, what happened is, is that these guys--they are Evangelical missionaries; and so, in the Letter of James in the New Testament, Christian Bible, it says, 'Pure religion is this: to care for the widow and the orphan in their distress. And to keep oneself unstained from the world.' That's what it says: pure religion is to care for the widow and the orphan. So, they are going out and kind of: We're going to care for the widow and the orphan--and what they discovered is that a lot of the care for the widow and the orphan, especially the orphan in this case, actually was creating incentives for parents to give their children away. So it was creating economic incentives. Now, I want to say something about the film, too. And you probably noticed this, Russ. But we did not take abuse of a good thing and tell the story of that in the film. So, like, 'Foreign aid was given for rice but actually it bought weapons that killed the population'--no, we didn't do that. We didn't take--in Haiti in different places sometimes children in orphanages are trafficked. Right? We didn't talk about that, on purpose, because what we were trying to show is not the corruption of a good thing, but actually-- Russ: Even at its highest level it's not very good-- Guest: Right, good people trying to do something, we actually were not paying attention to like, anthropology, philosophical anthropology, how human beings operate; and then incentives, economics, what we end up doing is we actually create incentives to actually create harm. And so 80% of the orphans do have parents. And they've given away as really economic relinquishments. Well, what they realized is, 'This is a disaster.' And they began to think: 'Why are we focused on children?' What if instead of focusing on children, we created jobs, to allow parents.' And so they were artsy types, and so they said, 'Let's do something that we can do.' And so instead of building an orphanage and raising money, they started a business doing like necklaces and things. And they now hire, have about 220 people who work for them. Shelly Clay estimates they are caring for about 720 children, plus; and not with any money but actually with only selling goods and services. And Corrigan said, 'We went down there with $30,000. We now make that much, plus, a month for our workers.' And so, what's actually happened is that people's lives are transformed. And you know we tell the story of this one woman, particularly, in the film--her name was Macalain[?]--and she was about to give her children away for adoption. And Shelly met her, and Shelly said, 'I'll take a risk: would you like a job?' And by the way--Shelly and Corrigan, they will fire you if you don't produce. It's a business. It's not a charity. Russ: But they do raise money. Guest: Yeah. Russ: It's a mix. It's a little bit more complicated. Guest: No, absolutely; it is more complicated. Because they have kind of an NGO part and they have kind of a--exactly. But their thinking was: If we can actually create jobs, then we don't have to worry about the orphan problem. Now, [?] raise money and some of this they've kind of developed because I know the thing is growing very much. It's always kind of interesting to me--I mean, I'm not opposed to raising money; I have to go look more deeply at what they are doing. Russ: I give a lot of money to charity; I think it's a good thing. I [?] critical about giving away your money or having people use money wisely. Guest: Right. I should give more to charity. I totally think charity is a good thing. It's very important. But I think what's happening is they realized, 'Look, the biggest problem is not that there are orphans. It's that there are parents who don't have the means to take care of those orphans.' And Corrigan says something really powerful. He said, 'If you had a child, if you had no job and you had children and you couldn't take care of your children, and someone said, "Hey, I've got an idea: I'll take your children, I'll take care of them; everything will be fine," what would you want?' And he said, 'No, I don't need that. I just need a job.' Russ: Yeah. Guest: And it's almost funny--like we go--I was going to say about the raising money--we go to these incredibly creative schemes to raise money to help poor people. It's like Americans--I go to Europe sometimes and I have a little fun with the Europeans, like, 'Don't worry. It's okay. I'm American. I'll solve your problem.' Like, 'We knew you guys thought like that.' Okay? It's like everything they expected, that. But in one sense Americans are problem solvers. We are entrepreneurs. We go out and do these things. Once we walk into the developing world we enter into this kind of boring box of humanitarianism. And we don't really apply all of our entrepreneurial skills to helping create jobs and solving the problems of institutions of justice. Instead, we apply our creativity to figure out how we can raise money to create another project. And it's not--it's not wrong. I'm not saying that. But I think it's deeply unfortunate.
1:03:24Russ: So we're almost out of time. We're a little bit over. Talk about, just a couple of quick things about the film itself. How long did you work on it? What kind of reaction is it getting? And how can people see it? Guest: Okay. So, the film--it's probably 3 years, I would say the whole thing took. We actually did some filming before that. We started doing some filming for another project I directed, a DVD (Digital Video Disc) series called Poverty Cure[?] DVD series[?]. So we have some--there's a little bit of an overlap in those two things. So, because we had done that--it's a little bit longer, but the film probably took 2 and a half years to make. So it's really complex. But we started showing it last year; we showed it at a couple of film festivals. We showed it at a libertarian film festival. And we were very delighted. We won, actually, 3 awards, including Best Film. But we were also a little disappointed because we did not want to make a political film; and I thought, 'Okay, we all of us work; it's going to be limited to the libertarian and conservative groups.' And about 10 days later we won Best Documentary at a very progressive film festival. So that was really encouraging. I texted our Director of Photography and both of us were very excited. We had hoped to make this film that way. We got some good feedback and talked to a lot of filmmakers and they said to us--it was 94 minutes--they said, 'You need to cut 3 minutes out.' About 3 or 4 minutes. 'Don't worry about 5 or 6. Just 3 minutes.' So, anyway, so then we went back to the--so that part extended; that part was a little over--we went back and we fixed it. We worked on it. We fixed the opening scenes. We got a lot of filmmakers who were generous with their time to give us feedback. And so, at this point, now it's all been color-corrected and everything. We've played in over 40 film festivals. Next month we got accepted to a film festival called IDFA (International Documentary Film Festival Amsterdam), which if you are kind of a documentary geek is the largest film festival in the world; it's very prestigious. In Amsterdam. We've won a good number of awards; we've been really delighted with the response. Again, all areas of the political spectrum. We are playing in universities as well. So, we are distributors--we have distributors called Robofilms[?] who is doing our educational distribution and international. And then we are partnering with a group called TUG[?] to do community screenings. We actually have, in the 10-day period that we're in the middle of, we're actually playing in 16 different cities. So, I was just in San Francisco and we played on Sunday. We were in Lancaster, Pennsylvania last night; we were in Washington, D.C. with Global Health Corp on Friday. So we are playing in a lot of different places. I think last week was our 6th screening at Harvard: we played at Harvard Law School. We had a sold-out show of over 350 people for the Harvard Business School. So, that's been really interesting as far as reception. And a lot of that is actually student-led. Especially in a place like Harvard and Cornell, where there is a lot of international development work going on. We've played numerous times at both of those places. Mostly led by students. And a lot of--by African business forums and African business groups. And it's been great. Some people don't like the film, of course. But generally speaking, the reaction, we've been delighted. And we've been very happy. And also it's very interesting to see the different reactions. Right? Like how an American group will react to Theodore Dalrymple when he says, 'I bought my first home on the proceeds of aid. Aid has been very good to me.' Everybody is kind of anxious in their seats when we show that to African groups. They're like, 'Oh, yeaah.' So that's been fun. Different things. So we've been really happy; we've, like I said, played in a lot of film festivals and a lot of universities. And we're really just kind of getting started for that. So, if people are interested in hosting a screening, they can go to PovertyInc.org, and there's a screening page. And we have educational licenses that can be bought for community screenings. They can be done through what is called a Crowd-sourcing model. Or community screenings where an organization can just buy a license and then invite people to come, either to a theater or to their offices or whatever it might be. Russ: Will there be a point in the future where you can just watch it on the web, or Netflix or TV? Guest: So, we also have another distributor called Brainstorm Media out of California, and they are doing our iTunes. And we may do a very small and theatric release in New York and Los Angeles. And it looks like we are going to iTunes, probably February or March. But would say, especially for those listeners who are professors or students: It's really great to watch the film with other people and have conversations. There are times when some of--I or some of the other filmmakers--can't make it. So if they are interested in hosting a screening it's definitely more fun to watch in a group of 100 and have a discussion afterwards. But it will be out on iTunes, early spring, early March; and if people are interested, they can go to povertyinc.org and sign up for occasional updates. We're not big enough to spam.

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