The Picture of Poverty
What is poverty? Having less money, living on less than Rs.90 a day or not being able to afford basic human needs?. Look at it this way and money is the problem. Solution: financial inclusion, microfinance, guaranteed employment schemes. But is it? Really?
In India, distribution of income differs from the popular imagery of a pyramid. With only 4% citizens paying taxes and only 10% employed by the formal economy, the prospects of solving this problem through simple redistribution schemes are abysmal. But perhaps it is not about money at all!
The more I encounter poverty, the more I realize that it is actually about the lack of power to change one’s circumstance. If tomorrow I lose all material wealth, no one will call me poor because I am empowered to do something about it.
Generally, you draw your power from the knowledge you have been exposed to, language you speak, tools you have learned and the people you know. There is a reason why most people go on to career paths similar to those of their parents. It’s what people you know can best advice you on. Critical knowledge and connections aren’t easily bought. These are largely inherited and nurtured. Each of us is integrated by our parents and circumstances into social, knowledge and attitude networks that largely define the possibilities of our lives. Money is simply one consequence of the way we play out these possibilities.
The question really is: why are there such large swaths of humanity so limited in their aggregate power? What are the paradigms that have allowed for knowledge and wealth creation in some human systems but not others? All these “basic human rights” emerged in a couple hundred years. How did that pinnacle arise out of a once globally impoverished base? Compare the poor to the powerful and there are a few fundamental structural differences. Most of the world’s poor inhabit highly fragmented social and knowledge networks. They live in small self-similar communities that are relatively disconnected. Progress emerged out of aggregation of people into larger communities with greater diversity. It allowed sharing of diverse information and knowledge and, therefore, greater opportunities for innovation. It also creates larger markets and greater efficiencies. Progress emerged from fast, more effective communication. Long before the invention of phone or internet, the Greeks, the British and the Americans paid great heed to creating effective communication networks via town criers and fast riding message runners. The faster you hear, the faster you act.
The poor are also less likely to organize, instead acting individually or in small family units. Almost half the poor in rural India are self-employed—entrepreneurs of the most micro scale. Compare that to just 6-7% of people in western countries. Progress emerged from people organizing into larger groups, extending beyond family bloodlines—such organization brings together diverse skills and functional specializations that allow more ambitious undertakings and outcomes. So, if we want to tackle poverty, let’s not focus on money. Today, with technology, we can create more integrated knowledge and information networks in these communities. Organization can be taught. With fast flow of knowledge and information, coupled with organization, will come innovation and enterprise. This means more people engaged in value creation. Money will follow.