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R H
  • R H
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Why do we NOT invest effectively in the poor and marginalized so they can participate in the global economy?

Nearly half of the world's population cannot effectively participate or contribute to the global economy. Basic economic theory holds that each 'participant' in the economy is a 'unit of productivity' providing a return on investment. In other words, it's more profitable to have people working and consuming than not. Yet nations continue to allow and accept that the poor and marginalized are - to borrow from another popular phrase - 'too big to succeed'.

In my view, the (relatively) small investment in infrastructure, education, and basic healthcare in the poor and marginalized will be more than made up by their increased productivity and spending. The rich think they're rich now, just imagine the wealth created by having 3 billion more people buying their stuff? I know there are obvious problems with this: corruption, unified effort, immediate ROI, etc. - but why is this such a 'tough sell' to national leadership? They're always looking for ways to increase the tax base.

3+ billion people now contribute to the world gross productivity. What if that were doubled? To me, this is the next threshold of economic growth -bringing in those who have been left out. Yet, we don't even talk about it. What do you think?

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  • Jeff Mowatt

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    Oct 29 2012: Hi RH,

    We agree with you. here's an extract from our business plan:

    "Dealing with poverty is nothing new. The question became ‘how does poverty still exist in a world with sufficient resources for a decent quality of life for everyone?’ The answer was that we have yet to develop any economic system capable redistributing finite resources in a way that everyone has at minimum enough for a decent life: food, decent housing, transportation, clothing, health care, and education. The problem has not been lack of resources, but adequate distribution of resources. Capitalism is the most powerful economic engine ever devised, yet it came up short with its classical, inherent profit-motive as being presumed to be the driving force. Under that presumption, all is good in the name of profit became the prevailing winds of international economies — thereby giving carte blanche to the notion that greed is good because it is what has driven capitalism. The 1996 paper merely took exception with the assumption that personal profit, greed, and the desire to amass as much money and property on a personal level as possible are inherent and therefore necessary aspects of any capitalist endeavour. While it is in fact very normal for that to be the case, it simply does not follow that it must be the case.

    Profits can be set aside in part to address social needs, and often have been by way of small percentages of annual profits set aside for charitable and philanthropic causes by corporations. This need not necessarily be a small percentage. In fact, there is no reason why an enterprise cannot exist for the primary purpose of generating profit for social needs — i.e., a P-CED, or social, enterprise. This was seen to be the potential solution toward correcting the traditional model of capitalism, even if only in small-scale enterprises on an experimental basis."

    http://economics4humanity.wordpress.com/2012/05/28/capitalism-is-an-insufficient-economic-model/

    • Juniper Blue 10+

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      Oct 29 2012: This is an excellent contribution Jeff!

      RH mentioned "the ghost of racism" being a barrier to investment in the poor/humanity. I think that we can point also to its close relative, "the spirit of classism." Both are fed by greed and it's parent: fear.

      The interesting thing is that in the pursuit of wealth and power, many people find themselves tangled up in what becomes their own bondage of debt and in their grasping for more, even when it is clearly not more of what they need. Their hands become so full of material things that they can never reach out to find true happiness. And so it seems that their greed not only deprives others of "the basic minimum needed to live a decent life" but it , essentially, deprives themselves of this as well. Greedy people have little inner peace which is true wealth.

      On Ted, We talk a lot about technology and I feel that the issues of justice, equality require a development of peace technology which is involves new ideologies that look at ways to share (finite) resources so that all people may have a higher quality of life.

      Here at TED, we discuss so many amazing innovation in science and medicine. What you are talking about with economics4humanty is social science that could lead to innovations equal to these.

      When we have the ability to destroy the Earth many times over, might we need to look more closely at what barriers divide us, what walls we are fighting to tear down, what walls we are building and who is n the other side? It is time to seriously invest in solutions so that we may live more equitably and harmoniously.

      Some may cal this "communism" but look at what they call "freedom."

      This change ... this revolution begins within. It requires a personal shift in awareness and a peaceful surrender that brings freedom and empowerment to all.

      Sounds kind of crazy .. well, so did the idea of splitting the atom. But maybe this technology can bring us together instead of tear us apart.
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      R H 20+

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      Oct 30 2012: Thanks Jeff for your response and your reference. I read the paper and would like to clarify some fine points. I don't see capitalism creating greedy people. I see greedy people usurping capitalism. Incentive-based capitalism is, as you pointed out, the most effective wealth creating engine of all time. But because of its forthrightness, it's easily corrupted by the unscrupulous. I agree that our economic methods need to evolve, but I'm not a proponent of 're-distributing' the current wealth creation. What I'm seeking with this question is whether, by getting the half of the world that's not participating in the economic world productivity to participate, we can get so much wealth created that everybody gets more. Many of the responders have suggested that there are not enough resources to go around for such wealth creation. Many have suggested that such wealth can only be created if there are substantial losses borne by a significant portion of the participants. Others have suggested that megalopolies will never allow such a distribution. This is where, for me, the 'evolution' comes in. We have got to begin to see that we all benefit - substantially - if everybody is winning. I see it as a possible line grading scale. For example: If we consider, worldwide, the current poor and marginalized with a grade of FFF, the average wage earner as a C, and the uber-wealthy as an A; then by investing in the 3 billion poor and marginalized and increasing their participation in the world economy raises them up to a C, the average wage earner moves up to A because of the massive increase in wealth, and the uber's wildly explode to AAA. This is not on a curve. These are standards. We have created more for everybody. We do not have to re-distribute. I can hear all of the nay-sayers already. And they are right. It is why we are currently NOT investing in the poor and marginalized, because we know why it can't be done. We just don't know how is could be done - yet.

      • Jeff Mowatt

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        Oct 30 2012: RH, Yes it's really about making wealth creators of others rather than distributing the wealth already created. The initial project in Russia sourced a community micrifinance bank in the Tomsk region and led to creation of 10,000 micro enterprises. after which it was replicated by USAID in several other cities.

        In the 2004 business plan above we describe how the social business apporach can yield funds for community re-investment through local CDFIs and beging the process of onward re-investment in community economic development

        A year earlier, it had been a proposal to deploy this approach which brought US government to the table in plans to tackle poverty in the Tatar community of Crimea

        http://economics4humanity.wordpress.com/2012/09/22/creating-shared-value-mk1/

        A more comprehensive stratefy combining microfinance , childcare reforn, affordable broadband and social enterprise is set out in a later proposal for a natonal scale initiative with a nil overall cost approach:

        http://www.p-ced.com/1/projects/ukraine/national/
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          R H 20+

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          Oct 31 2012: Thanks Jeff for the excellent references and continuing to participate in this conversation. I think I'm understanding the question I proposed more fully. Since this issue was recognized as far back (at least) as 1947 and continuously re-affirmed by world leaders and other professionals and interested parties in a post-modern world, we then can say that 'this question' has been approached for better than 65 years - or 2/3's of a century. Yet we still have nearly half of the world living in abject poverty and not participating in the economy, and more in number than we did back then. I still ask the question why that is? The fine, dedicated, effective efforts of so many since that time to eradicate this issue have not been able to 'gain traction' for wide-spread investment and development. I would think that maybe we'd be down to only 1/4 in poverty by now by all of the efforts cited. Is it folly to consider it possible? Do the ultra-rich and powerful see no incentive to invest in such a market? Is it cultural bias? Is the problem too big to succeed? Do we just really not care that much because it doesn't effect us? Are we just short-sighted? etc. By the way, I will also add that I too often observe some of the ultra-rich seemingly unaffected by the plight of the poor, but I observe it from my nice warm home with great furnishings while on my computer drinking imported coffee wondering whether I'll drive my new car to the great school on the new highway or take the high-speed train - which is only available to me because of such incentives to become ultra-rich. Humanity, in my opinion, has unlimited capacity for self interest and expression. Maybe we can use that to our advantage in investing in the poor and marginalized somehow.

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