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Reducing Poverty

  • Introduction
  • Why is this inevitable?
  • Objectives, Methods, and Personal Interventions
  • US Foreign Aid: The 0% Solution
  • Links
  • History
  • Footnotes
  • Rev: 30 May 2008.


    A personal document outlining evidence-based interventions that are likely to reduce world poverty. It is provided here as a guide to those who would like to influence US policy.

    Why is this inevitable?

    010420_millenium.png (94741 bytes) This graph was printed in the special Millenial edition of the Economist. The 220K PDF version is more readable, but the basic concept is that since the late 19th century the GDP/person in Western Europe (surrogate for the industrialized west) has been on a steep exponential curve [3]. That's too much wealth not to eventually eliminate human poverty.

    The printed article attributes the data for this image to Angus Maddison of the IMF. I have not been able to find a web version of it anywhere. It is presented here without permission; I'll remove it upon request.

    Objectives, Methods, and Personal Interventions

    Note that many of these amount to Institutional Changes and social enginering. They can be very successful-- at a price. See unanticipated consequences

    Objecive Method Personal Arguments
          For Against
    leverage comparative advantage and globalization
    • tariff reduction
    • investor protection
    • support WTO
    • letters to representatives, newspapers
    • invest in well-run companies that invest abroad (multinationals)
    • teach a "world language" (English, ?)
    • Internet
    • support Internet Society
    • methods to teach reading English?
    governance and law
    • support journalism and the free flow of information
    • limit censorship
    • transparency and dissemination
    • separate government and industry
    • educate lawyers and judges
    • broad access to judicial systems
    • tie improvements to debt forgiveness?
    • bond market rating of governance?
    • support Freenet, Publius, anonymous publication, Internet Society
    • Internet
    Angers rulers.
    property rights for the poor     Angers ruling class.
    enhance status of women
    • female education
    • legislative protection
    • freely available methods for personal fertility control
    • an economy using half its human resources is like a 6 cylinder engine running on 3 cylinders [1]
    Angers the patriarchy
    reduce disease burden
    • immunization
    • vector control
    • public health infrastructure
    • financial donations [2]
    If development does not occur, can promote Malthusian stresses
    distribute wealth
    • limit monopoly, encourage internal competition
    • reduce barriers of entry to industry
    • separate government and industry
    • good governance
    • working women
    • state funded education (not local funding)
    • inheritance taxes
    • support these same measures in the USA.
    • reduce social tension
    • facilitate full utilization of all available human resources
    • grow an internal economy
    Prone to corruption and misuse by authoritarians, socialist governments have not always done well.

    US Foreign Aid: The 0% Solution

    What percentage of its GDP should the US provide in foreign aid? The current percentage is quite small relative to most wealthy nations, and it's primarily used to influence foreign policy. This has been a cause of some outrage, but I think the outrage is misguided. Direct foreign aid does have its uses, and the US should provide more than it does, but there are much more valuable things the US should do to reduce poverty. They would also boost the US economy.

    US foreign aid should consist of tariff reductions and enhanced access to the US marketplace and to US investment [5]. Tariff reductions should be available to all who comply with very basic worker protections [4], but US investment support would be contingent on national bond ratings -- which means contingent upon decent government, accounting transparency, and investor protections.

    This aid will directly reduce poverty abroad and increase US overall economic growth, but it will increase poverty among some US workers and devastate some US industries (textiles, steel, etc.) and the communities that rely upon them. So, it cannot occur without a substantial effort to support US workers in those industries and to support the communities that will lose those industries. These are jobs that are going to go away, but this program makes them go away faster. We have to think very well about how to give these workers and communities a better present and future than they will have. Remember Pittsburgh.

    The best way to reduce poverty abroad is to aid to US workers and industries. Not to sustain them, but to bury the industries and give the workers (yes, including the executives!) and communities better futures than they face now.




    [1] I think this has been a significant handicap for Japan.
    [2] Whatever my personal feelings about the need to break-up Microsoft, the work of the Gates Foundation on immunization alone may earn his place in history.
    [3] Where does this lead ultimately? Well ...
    [4] The emphasis is on basic, otherwise the losses in terms of economic revenue exceed the benefits of protection -- even to the individual workers.
    [5] I think it's fair to say that everything in this section is well understood by people who've spent their professional lives studying poverty and its alleviation. I know that when I lived in Bangladesh in 1982 that this was extremely obvious and well understood. They know this is true, but they also know it's politically dangerous to speak it out loud. I must give strong credit to Jack Beatty for actually writing about this in the February 2002 Atlantic; it's nothing new to the professionals, but Beatty dared to speak it aloud.

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    Author: John G. Faughnan.  The views and opinions expressed in this page are strictly those of the page author. Pages are updated on an irregular schedule; suggestions/fixes are welcome but they may take weeks to years to be incorporated. Anyone may freely link to anything on this site and print any page; no permission is needed for citing, linking,  printing, or distributing printed copies.