Episode 21: The Bottom Billion, Why the Poorest Countries Are Failing and What Can Be Done About It
A book ‘review’
In a previous post, I mentioned that even in my youth, the problem of how to alleviate poverty, both here in the US and globally, was a primary issue for me. Part of why I joined the Republican party is that on this issue and others, I felt that the most effective, efficient solutions would come from the political right. “The Bottom Billion” offers support for that view.
“The Bottom Billion” offers both a philosophical outlook and several practical suggestions that are consistent with constructive conservatism. If these suggestions were enacted, we could make a meaningful difference in the lives of hundreds of millions of the most impoverished people on earth. The trick is building the political will to bother doing so. There are two cases for doing so- a moral case and a business case. Let’s talk about those quickly, then we’ll dive into the book itself.
The moral case is straightforward: constructive conservatism is about building a culture that values human life and fosters human potential, but does so with minimal reliance on government and maximal reliance on markets and individuals. But if we as conservatives truly value human life and human potential, then we must lead in the fight to reduce poverty. That’s the implication. It really is that simple.
But if the moral case doesn’t move you, if you read my last paragraph and chuckled to yourself as you gently caressed your copy of “Atlas Shrugged”, don’t worry- I got you! Because there’s also a business case for fighting poverty. I don’t think enough people grasp how much money there is to be made in reducing poverty, both in the US and abroad. Invest $100 in a lower income household, and they will immediately spend it, because there is a huge amount of latent demand in lower income households: there’s so much they would buy, if they only had the income. When they spend that money, it creates new demand for products and services, which means companies grow, thereby creating middle-class jobs. And as companies grow and create those middle-class jobs, their stock prices increase. And who owns those stocks? Mostly the upper class. Money invested at the bottom of the pyramid inevitably flows up to the middle and upper classes. The investments pay off, if you give the money time to work its way through the system!
The trick, as a constructive conservative, is to figure out how to make the investments with minimal reliance on government and maximal reliance on markets and individuals. That’s especially true when you expand the view to global poverty, where the governments of low-income countries are often terrible, but where graduating their countries to middle-income status would mean vastly bigger markets for our American companies.
Which brings me, at last, to “The Bottom Billion”. First, the grades:
Readability: A
Ideas: A
Conciseness: A+
Overall grade: A
The book is a very digestible 195 pages, the writing is very clear and accessible, and while statistics and charts are employed, they are employed sparingly and clearly. Perhaps the most fun is the author’s dry British humor, evident in such sentences as “[The Indonesians] sent a team to Angola to learn how to manage oil revenues, but they might as well have sent a team to a brothel to learn about sanctity.”
The summary is this: advanced countries are fine by definition, middle-income countries like China and India are now on growth trajectories that lead in the long run to near convergence with the advanced countries, but the bottom billion are in countries that are diverging from the rest of the world. Their economies are stagnant, or in many cases shrinking, due to one or more of four basic causes: conflict, the natural resource curse, being landlocked with terrible neighbors, and having bad governance.
So what can we do about it? The first tool people usually reach for is foreign aid. On the subject of foreign aid, a particularly choice bit reads:
“[Aid] seems to bring out the worst in both left and right. The left seems to want to regard aid as some sort of reparations for colonialism. In other words, it’s a statement about the guilt of Western society, not about development. In this view, the only role for the bottom billion is as victims: they all suffer for our sins. The right seems to want to equate aid with welfare scrounging. In other words, it is rewarding the feckless and so accentuating the problem.”
After some deeper analysis, the conclusion the author comes to, and which I think is correct, is that aid *can* be effective and helpful, but only in countries where the quality of governance is at least “not terrible”. In countries where the governance is terrible, virtually none of the aid will ever reach the poor, and it will serve largely as more money for the powerful, and as a jobs support mechanism for NGOs. So the first concrete action is to shift money away from the places where it isn’t going to help, and invest that money in the places where it can.
The deeper point, then, is to come up with strategies that can improve the level of governance in countries to the point where it becomes worthwhile to invest actual money in the form of aid. The author has a number of different proposals for this, mostly around creating charters. Some would codify how companies, NGOs, and foreign governments behave within failing countries, others would set standards for the citizens of the failing countries themselves. Two key recommendations are around budget transparency and decentralization of power, both recommendations that should set conservative hearts aflutter. (And both things we could use more of here in America, in my opinion.)
Finally, in many places the author points to progress that actually did happen in some of the most failing states, and over and over again, that progress occurred when the regular, everyday people in those societies were given simple, concrete ways to get engaged on highly specific issues. Engagement is one of my three campaign themes, and I chose it because I think that regardless of how well or how poorly developed your country is, the only way to drive large-scale change is to get regular people involved. Here in California, if we’re going to improve our schools, deal with housing and homelessness, or make meaningful progress on poverty, getting regular people engaged will be necessary. It’s really, really, really hard to do, and it remains to be seen if I can do it.
But I’m damn well gonna try.