Extreme poverty is, well, an extreme issue – and it requires extreme commitment and creativity to address it. I’m always reading other people’s works, visiting developing countries, and basically trying to soak up and synthesise as much knowledge and experience as I can.
In continuing my reading of Creative Capitalism, edited by Michael Kinsley, I’ve just encountered a fresh idea I hadn’t considered before and I believe it warrants serious consideration – particularly by Government, who would need to get behind this to enact it:
“…domestic tax deductions to generate incentives for new investments in the world’s poorest countries.”
I’m not sure the scope that Eric envisaged, and I know that risk-averse parliamentarians will immediately raise concerns about how this would be so difficult to monitor and therefore open to abuse, but I believe it’s the type of idea which warrants further efforts to devise an implementation plan that could allay most fears whilst maximising the anticipated benefit.
In fact, if I could push my version of this idea through the ranks of Government, it would extend not just to corporations but also to individuals who chose to volunteer or engage in grassroots level poverty-relief activities in developing countries. There is nothing more powerful than the passion, blood, sweat and tears of individuals dedicated to bettering people’s lives – it will never be matched by the bureaucracy of Government, or dare I say it, even by corporate capitalism – at least, in terms of the ‘output per head’!
Essentially, wouldn’t it create more opportunities for an individual or their organisation to get engaged in ‘sacrificial’ poverty relief related activities if they were completely tax exempt?
The arguments that would immediately be presented against such a scheme would no doubt be:
- loss of revenue – but realistically, even if with such a tax break, the number of people who would give up their typical Western lifestyles to throw themselves into this type of extreme poverty relief-oriented work would be a tiny percentage of our overall population, so that’s really a red herring argument
- abuse of the system – a valid concern, and I do feel that this system needs to be relatively easy to access, rather than being all tied up in red tape, but with a few sensible checks and measures surely the risk could be kept at such a level as to pale in comparison to the potential benefits
My view has long been that poverty is only going to be addressed by tapping into the everyday purchasing power of the general public, rather than endlessly depending on charitable donations which never seem to fund more than a fraction of the necessary works – this approach releases the resources and passion of individuals who have a heart-felt commitment to assisting humanity with minimal impact on the Government’s bottom line, and in a way which I believe will be highly efficient.
What do you think? I’d love to hear a lot more discussion on this topic! Please do share, either via the comments on this post or by emailing me privately.
Okay, it might be almost 3am but I’ve just read an article reporting on Bill Gates’ newly-coined term of “Creative Capitalism” that I finally felt is starting to ‘get it’, so I just HAVE to throw in my 2 cents!
I suspect that Bill Gates and I are still a fair way apart in our thinking on this, but if you put us in a room with 10 other individuals to debate how to “Make Poverty History”, I reckon we might be the two most likely to team up against the rest.
The point that Bill’s starting to articulate is that there’s a crucial role for commercial enterprise to play in turning around the fortunes of the 2 billion poorest people on the planet. We might approach the question of business involvement, or “creative capitalism”, differently but we both recognise that companies play an important role.
Up until recently, I’ve accepted unquestioningly the repeatedly reinforced message that I’ve heard throughout my entire life, that less fortunate people in developing countries need our generous donations (channelled through some fantastic aid and development programs) to help lift them out of their poverty – “a hand up, not a handout”. For many years my thoughts never progressed beyond that, because the work that is done by these awesome aid and development agencies is truly inspirational, effective and worthwhile.
But it’s not enough.
The single biggest shortcoming of this model is that it relies almost entirely on ongoing benevolence from richer countries, and the “average” citizen is so far removed from the realities of extreme poverty that they are very reluctant to be parted from their money – “after all, how much difference could my $20 really make??”
Whether we like it or not, money is what lifts people out of poverty, and therefore to have a truly successful long-term strategy, we need a “money machine” – business.
That might sound simplistic, and people will give me examples of how either (i) locally-owned businesses from developing countries are hugely profitable and yet don’t seem to make a tangible improvement to the local economy, or (ii) NGO development organisations are involved in micro-enterprise and other similiar business initiatives and yet, once again, the country as a whole seems to be permanently bogged down in their poverty. But I believe there’s a key missing element even in these situations.
It’s not enough just to establish enterprise if the profits are pocketed by one wealthy businessman. An increase in employment is helpful, but not enough.
It’s also not enough to just train people with better vocational skills, increased literacy, and greater business skills.
In my opinion, the key is to channel (a portion of) the generous donations from developed countries into establishing viable and competitive export businesses in these poverty-stricken regions, owned and operated by passionate “capitalist” business owners who love running their business – and then to have these owners reinvest from their profits into training, skills development, R&D, and other aspects of their local community.
A commercially-sound model of business which generates revenues from the richer societies to feed into the poorer ones, along with a true heart for the local society, education, training, and eradicating poverty is a sustainable model which creates an ever-increasing stream of earned income (rather than donations) AND betters the community in numerous ways.
It’s my dream (with plans already starting to emerge) to establish a commercially viable business in a developing country (my personal passion is for the Philippines, hence I’d start there) that has as it’s goals to:
(i) establish a strong export trade to developed countries
(ii) reinvest profits into training and employment opportunities, community programs, and growth of the enterprise
This conscious focus on prioritising the needs of the people above my own personal wealth is, in my opinion, the most important factor to rebuild a devastated economy and to present the poorest populations with really opportunity and hope for their futures.