I am for doing good to the poor, but I differ in opinion about the means. I think the best way of doing good to the poor is not making them easy in poverty, but leading or driving them out of it. – Benjamin Franklin
I watched a TED talk called The “bottom billion” by Paul Collier where he summarised a number of big ideas well.
The problem he talks about is that a billion people in poverty around the world live in failing states. Why is this, and what can be done about it?
Something has been done already. He praised a country for taking the lead on designing how to pull a region out of poverty. The country was America and the region was Europe after the second world war. Four tools were used: aid, trade, security and governance. Money to rebuild, access to markets, security agreements and international institutions. The approach worked and has resulted in the world we see now.
So what stops this from happening in other parts of the world? There is plenty of aid, there is even plenty of money. So what is stopping all these countries from getting better?
The thing that’s stopping them is called the “resource curse”. Countries that have resources, like oil and gas, do well in the short term. In the long term they often fail. Why is it that their riches don’t result in better living standards for all their people? Many of these places are democracies after all.
The answer has to do with governance. Not all democracies are equal and those that live in functioning democracies often don’t know why their countries actually function. There are two parts to democracy. The first is the one everyone knows about – the vote. But the second is as important – the existence of institutions that provide checks and balances on the untrammelled use of power. If you think about democracies blessed with natural resources that have the vote but not governance you can quickly see which ones work and which ones don’t. Norway and Russia both have gas reserves. Which one’s people are getting the benefits?
Collier’s argument is that those who have must do something for those who don’t – for two reasons. The first is compassion – because it’s the right thing to do. The second is in enlightened self-interest. What one has can be taken away. Billions of people who have nothing, whose lives are changed by war and climate change will not stay where they are – they will move looking for safety and opportunity and walls will not keep them out. America’s instinctive view is perhaps a memory of the words of Benjamin Franklin that the best thing that can be done for those in poverty is to help and guide them out of it.
This is easier said than done, of course, but one way to start is to insist that good governance is a condition of aid, trade and security. This applies to countries and to companies. Firms should not be allowed to invest and operate in countries with poor governance, or at least have restrictions on what they can do that are lifted as governance improves. You can see this happening in corporations already and those with good governance should help others, trade with them and offer long-term contracts as long as they show how they are, or trying to achieve better governance.
This may seem like a thing that doesn’t matter to individuals like you or me but it does. In our neighbourhoods we need good governance. The pandemic has led to an increase in poverty, which leads to a lack of opportunity, which leads to crime, which happens on your street. Poor governance affects us all – and we have to do something about it at every level, before it’s too late.