I’ll be honest. I’m a risk-taker. I like big crazy projects that seem to have global import. In that spirit, I decided to seek greater understanding of global poverty and international development through creative self-financing, a convenient change in US student loan policies for overseas institutions, a small grant through a private foundation, and a seemingly inane professional choice relative to completing my PhD. For me, helping engineers respond to global poverty required a deeper knowledge of why poverty persists in the world despite claims that the Industrial Revolution had potential to lead to progress for all. Yes, even Adam Smith pointed to the promises of industrialization when it comes to ending poverty. 250 years later, poverty seems more entrenched now than ever. Looking at places of “big promises” it doesn’t seem to matter where you start. The last big push to make poverty history came with the UN Millennial Declaration in 2000; but all forecasts say the goals are likely to remain unmet.
If I have learned anything about poverty in the last year, it is that poverty has more persistence than ever. Lots and lots (and lots and lots…) if people try to “do something” about poverty, but it seems that many blunders come from the well-intentioned. I never mean to fault the well-intentioned. But being well-intentioned still differs from being well-informed.
When an organization has been around a while, commentators can focus rather specifically on one stage of the project. Many people describing how the Grameen Bank works to alleviate poverty focus exclusively on Yunus’s model detailed in the first edition of Banker to the Poor. The Bank employs a very active learning cycle so various forms of financial services have been piloted and developed through Grameen Bank. Moreover, microfinance is a much wider category than the Grameen Bank. Microfinance could be regarded as “development’s silver bullet” in the 1990s with everyone pioneering different models simultaneously. Many people tried to replicate Yunus’s original Grameen model with some varying degrees of success; other more established corporate interests came in on the guise of “financial inclusion” for the poor and highly profitable banking services. The upside is that many mircofinance schemes have been explored and evaluated.
Today I came across a blog post advocating a collective investment model in microfinance. The idea would be to extend a loan to a group that had a business opportunity. Specifically, the following articulation of the plan in action caught my attention:
a person in the BOP forms a group of between ten to twenty people living below the poverty line. The group then goes through one week of training after applying for a loan from a microfinance institution or organization, starts a group investment and hopefully generates income.
It is truly a piece of innovative thinking. I cannot find any reference to the collective investment model in any of the journals I subscribe to. My collection is limited, so I turned to the library supporting my studies in development: collective investment appears nowhere. Google Scholar is temperamental with keywords so I started with “collective investment model” and found one reference in a law journal; scholastically “collective investment” blows up so I returned to a broader Google search to try to figure out where this idea comes from. While Wikipedia is surely not the best source, collective investment schemes have at least one clear history in developed countries where investors pool risk. I started digging around a bit because I cannot imagine how this model would be successful amongst the world’s poorest because the financial lives of the poor reflect incredibly dynamic and social arrangements. The idea of an financial institution enforcing a group repayment system without having some way of interacting at individual level just seems like an absolute nightmare.
Moreover, it is very easy to be looking for the Fortune at the Bottom of the Pyramid apart from some key observations by C.K. Prahalad. Prahalad notes that businesses can be profitably while trying to eradicate poverty, but he also notes that the poor consistently pay premiums on services higher than expected. The poor already use these services. If a business can improve access to the service and while making it cheaper than the existing ad hoc options, then a business likely as a viable shot.
So while I can appreciate the suggestion that a group of poor persons might benefit from some access to venture capital, I’m not sure it makes a lot of sense to start with a biogas facility. The Field Guide to Environmental Engineering for Development Workers has but one mention of biogas in a section on air quality:
Biogas emits less particulate matter and can be obtained from crop residues, manure, and even latrines. However, biogas systems are perceived as being more expensive to implement, and they require a level of coordination and technical experience that sometimes restricts them to larger projects (p 496).
Sustainable Wastewater Management in Developing Countries speaks reasonably highly of biogas systems while proposing that sanitation technologies get evaluated along 6 dimensions according to 10 guiding principles. The system articulated for wastewater processing of a hospital comes reasonably close to the population density of the slums, but this system does not use biogas generation.
Asking the poor to assume financial liability for a biogas facility just seems absurd, especially if the advocates for the Collective Investment Model want the poor to come up with the idea for a biogas facility. With considerable historic NGO practice, it might be a reasonable starting point to ask why the NGOs left the slum. I am not suggesting to leave the slum to its own devices, but it does make some reasonable sense to get the lay of the land.
To be completely clear, I think there is value in cooperative ownership and new models for technology. The poor often make their livelihoods, processing the waste in the rest of the world; expanding opportunities for scavengers might be completely fitting. As an engineer, I think considerable attention must be paid to the right design for the job. Within larger asset transfers to create new livelihoods for the poorest of the poor, I do not think people could go wrong in talking with BRAC. Acknowledging that there might be economic possibilities for a viable business does not mean that things unfold as planned.
International development creates funny and interesting policy spaces when you start to think about prevailing processes.
E.F. Schumacher is an author who has fallen out of fashion in development. In 1973, he wrote a book called Small is Beautiful which springboarded the appropriate technology movement. Largely I think people missed the big idea behind his thoughts and zoomed in on a particular (likely perceived to be easy) strand of his thinking. Appropriate technology became almost synonymous with non-governmental organisations trying to give away random agricultural implements. Yes, I am being deliberately uncharitable in my thoughts regarding the appropriate technology movement but I see Schumacher’s argument being picked up again by Yunus. Yunus argues for microcredit to spawn business enterprises, looking more at entrepreneurship as a route out of poverty.
But I have been watching the news to see what’s coming out of the United States as it relates to job creation, reading far too many books, and thinking big dissertation thoughts. One big idea contained in Small is Beautiful concerns the cost of job creation. It seems that capital level investment largely determines worker salaries… at least trying to read Schumacher’s analysis. I am not an economist nor do I play one on the internet… but this thought intrigues me.
Right now the main piece of “capital” at my disposal is my computer. Roughly, my computer costs $1200. The challenge for me is to leverage this capital to create some broader income earning strategy for myself. As a graduate student, I can roughly expect a salary around $12000, largely “earned” through putting my computer to work for me to make connections with knowledge spaces relevant to my field of study. But really, anyone with a computer could ostensibly put that computer “to work” in a way that generated a broader income.
The challenge then becomes creative positioning. If I try to save $1200 during one year, how could I reinvest that $1200 in a way that creates a broader stream of income? I could, for instance, broaden my life experiences by spending that $1200 on a perspective widening trip or an educational experience. Schumacher is rather big on honouring “the human substance” so spending that $1200 on personal wellbeing is in game. But this lump sum savings amount is 10% of my annual income.
Check it: when you look at Muhammed Yunus’s work, this regular small savings amount actually guides some of the principles behind microsavings. The idea behind microsavings seems to be that if the poor can save, then they can also invest in a business. Similarly, microcredit functions in a way to try to help people get towards microcapital.
My computer is a form of “microcapital” that actually seems to be doing rather well for me at the present moment. But I wonder if one of Schumacher’s critical observations was that this appropriately sized micro-capital (sized at 10% to 100% of a person’s income) really doesn’t exist very well among the world’s poor.
Paul Polak made a name for himself by mainly talking to farmers and identifying key capital gains that could improve their livelihoods at scale. His best known interventions are small-scale drip irrigation systems and treadle pumps. Many non-governmental organizations talk about the $25 treadle pump. WAIT. If someone is making less than a dollar a day, then that $25 treadle pump is right at that sweet spot of 10% of their annual income. The farmer who gets a pump (or a drip irrigation system) is in a prime place to actually utilise farming knowledge to make the technology work for her or him.
But there’s a question still about job creation. When I use my computer as a graduate student, I’m honestly not having a go related to my own entrepreneurial skill and talent. In a previous life, I had a gem of a boss who said, “Be careful with this machine. It is worth 5 graduate students.” Imagine Schumacher said that though. The capital investment from the machine gave 5 graduate students employment. When you put 5 of us in the mix at roughly $40,000 a year for related costs, then you have a machine investment of roughly $200,000. [I actually did try to cost a micro-CT scanner to see if that number has any bearing in reality, but I couldn’t easily find a website making the price of that particular technology visible. Whether that machine was fully utilised in employing 5 graduate students is an honest question.] The raw capital investment of an annual salary creates an opportunity to earn an annual salary.
What happens though when the technology cost needed to do a particular job far exceeds the available salaries in an area? Here I’m thinking of landless persons. What sorts of technology, scaled at roughly $300, have the potential to create an authentic fully realised job? Most of the landless generally rely on their body and skill set to create a job for themselves. But what if there were a way to transfer some sort of machine that would enable them to effectively stair-step to the next level?
As I have been working on my MA, it is hard for me not to think about asset transfers and social protection. I think the main “technology” at the annual income level is a cow. But what if there were more options? What if there were more options for the types of businesses that the poor tend to run that created opportunities for reinvestment at 10% of the annual income? Recognising that the body is the core asset of persons, what would it look like if the poor had options other than investing their 10% back into managing their medical expenses? What if non-governmental organisations (or a broader social movement or the private sector) thought about ways to improve access to durable material goods connected largely with a vision of a particular person?
As an academic who regularly conceptualises about poverty and vulnerability, I get into a lot of back and forth arguments with people about the nature of poverty and vulnerability. Everyone thinks they know something about both of these concepts. To some extent, everyone does know something about both concepts. But it’s tricky when we try to generalise from our own experiences. What follows is one of my more readable syntheses on the nature of vulnerability. Should you want full citations, I’m happy to provide. One core citation is Paul Farmer’s Pathologies of Power: Health, Human Rights and a New War on the Poor. Strongly recommended.
I want to ask the reader to think about vulnerability and deliberately invite the reader to think of an infant known personally by the reader at some point in the reader’s life. At the most basic level, what does an infant need?
When I did the exercise above, my one word answer was “care.” My friends welcome new babies into this world constantly. Almost everyone my age has direct, full-time responsibility for an infant. Conveniently, I do not have children of my own so I can stay out of the “fog of war” of the daily parental struggles associated with caring for children and notice some themes across the experience. In caring for infants, fears regularly collide with hopes. Parents want their kids to be healthy, happy, successful, and cultivate a broad sense of being able to have fun living life. Almost without fail, parents rejoice when these desires seem to be “on track” and mourn in seasons where these desires seem to be little more than pipedreams on a rainy day.
Measuring these conceptual insights against the literature, many people have written about analyzing failures to be healthy, be happy, and develop capabilities for life. Some physicians like Farmer recognize that “to be healthy” requires a lot more than simply bodily integrity. To Farmer(2004), “health” involves a holistic sense wellness that enables the poor people to realise their social and economic rights. To use Farmer’s criteria of discerning decisions that most prefer the poor, I demand evidence that the poor describe their poverty in terms of health and/or wellness. A major project conducted by the World Bank to ask people about their poverty indicates strongly that the poor view their principal challenges in life related to failures to achieve wellness. Building from the voices of the poor, advocates for the poor assert that wellness has dimensions of material wellbeing, bodily wellbeing, social wellbeing, and security while permitting freedom of choice and action (Narayan et al., 2001). Further, development scholars (Gough and McGregor, 2007) have begun the arduous task of synthesizing a vast volume of work across a range of scholarly disciplines to advance a more rough-and-ready wellbeing framework for use in development policies.
Thinking about caring for infants, I observe people differ. After all, no two infants are exactly the same. Even when infants live in the same family, their caregivers quickly realize that each infant represents a unique person and needs a different approach to care. When theorising about the nature of individual care, Sen identifies at least five categories that change the basket of the goods and services needed by individual persons for human flourishing: 1) personal heterogeneities like age, gender, or disability, 2) environmental diversities largely presented as climatic regimes, 3) social climate concerning the overall quality of common public goods, 4) relational perspectives as to how one navigates various norms and customs in communities, and 5) intra-household patterns of distribution related to providing care (Sen, 1999, 70-71). Using Sen’s analysis (1999) encourages thinking about people as individuals, acknowledging that certain decisions, such as allocating resources within a household (1983), may be nearly impossible for an outsider to see.
 The observation of no two infants having identically the same needs holds true even amongst the identical twins I have met.
 Sen’s framework can be misused, particularly when applied to the identification of vulnerable groups and in no way should be understood as the only framework to discuss wellbeing at an individual level. Sen’s conceptualisation around entitlement theory and development as freedom represent watershed moments in the intellectual history of analysing poverty and vulnerability.
After reading Small is Beautiful by E.F. Schumacher this week, I think the book gets roundly misunderstood and misappropriated by various concerns. I read the book for its discussion around intermediate technology as Schumacher’s book established rhetorically the “appropriate technology” movement.What I found in the book is a much broader discussion about human concerns around production. His book is a rather scathing critique to advance an unpopular thesis: we have not solved the problem of production. For the clearest articulation as to where we have failed relative to production, I quote Schumacher:
To use the language of the economist, [the modern industrial system] lives on irreplaceable capital which it cheerfully treats as income. I specified three categories of such capital: fossil fuels, the tolerance margins of nature, and the human substance.
Looking at Schumacher’s thesis positively, Small is Beautiful positions production within a broader metaphysical argument. Specifically, Schumacher longs to see an orientation towards technology that embodies both non-violence and permanence. He differentiates between mass production and production for the masses. The articulation of production for the masses is likely the predecessor to “Bottom of the Pyramid” style businesses. When you connect all three of Schumacher’s exhortations about tools and methods, the Bottom of the Pyramid connection becomes clear:
Cheap enough so that they are accessible to virtually everyone; suitable for small-scale application; and compatible with man’s need for creativity
Schumacher’s articulation that technology needs to be of a human-size is an important realisation. His discussion around long-term feasibility studies offers some value over forecasting documents. “Does this strategy have long-term feasibility given a range of conflicting demands on the resource base?” differs considerably from the forecasting question of “What will happen in 10 years?”
The book runs into some challenges around scale. Schumacher understands and appreciates that population density is something to celebrate in as far as it enables cultures to flourish. However, he also suggests that city size should not exceed 500,000 persons. He argues for a vision that makes rural life sustainable, simultaneously acknowledging that some communities might be suffering from too much migration to justify revitalisation. He discusses at length the necessary tension around a human need for order and a human need for freedom. Both needs establish a space for structured flexible thinking. Schumacher owns and embraces the paradox, but I am not surprised to see how Schumacher’s adherents have really focused on small-scale technologies in rural areas after reading the book.
Given that Schumacher wrote in 1973, I’m impressed to see a discussion of the human substance. Current frameworks about human well-being have some interesting things to learn. Arguably, Schumacher concludes that meaningful work represents a core component of the human substance.
The book is dated in a few places, but I think that many people citing from this particular volume do so at the expense of the overarching argument. Schumacher acknowledges that accepting the triad nature of his argument is not necessary. While each place of his argument stands firm on its own, I would like to see an increased pick up on the tolerance margins of nature apart from raw ecological takeback
This post still brings another instalment of the role of government in society. I’ve contended as a central argument that a government needs to follow the money. When a government follows the money, the government can see where the money does not seem to be flowing and address poverty.
Living in an increasingly globalised world, money flows in rather challenging patterns. Money flows when individuals or groups of individuals make a choice to invest somewhere. In searching for stable investments, many people have turned to investing in tracks of land. Major US universities have entered into a relationship with developing African land with the explicit intention of improving agricultural productivity.
The main issue at hand is land rights. Many times these agricultural lands support livelihoods of subsistence farmers. Additionally, land gets tied to natural resource management and exploitation. The government negotiates a deal to assign value to the land and create a contract. Some of these “contracts” fall far below any reasonable person standard of land wealth. Vidal and Provost outline one such deal in Sudan where “the 49-year lease of 400,000 hectares of central Equatoria for around $25,000 (£15,000) allows the company to exploit all natural resources including oil and timber.” Clearly, land should be worth more than $0.06/hectare. When you follow the money, you discover absurdity.
And these absurdities matter because the government who leases the land loses sovereignty. In economics terms, they lose the ability to capture the rents of their resource endowment. On Monday, I’ll post an accessible review of Paul Collier’s “The Plundered Planet” which provides a more detailed discussion about following the money around concerns of natural resources.
I found the article compelling on several points and thought it made sense to see how some of the observations I made on Tuesday might play out in a case study. I suggested that the first role of the government is to follow the money, starting at the national borders.
Leonhardt offers another starting point in stating the German government has been “more ruthless about the wasteful parts of government” while making the observation that German economic growth “has not been concentrated among a small slice of the affluent.”
Tellingly, the German government looked expressly at their unemployment benefits systems that discouraged work. Specifically, the story Leonhardt portrays includes, “The able and healthy were matched with potential employers.” I generally dislike passive voice constructions, and here I have the honest question: matched by whom? And how? From the looks of the article, I would hazard a guess the government followed and tracked people into the job market because provisions were made to allow people to take work below their current benefits level without penalty. The time to gain skills in the workplace likely created a step-up effect where the previously unemployed could take on more responsibilities.
Additionally, the German government coordinated educational reforms, particularly geared around math, reading and science. The skills gained in these disciplines have immediate utility in a technologically orientated economy. [Some historians of ideas recognise that the US conceptions of technology build on a strong foundation of German philosophy and thought.] With the proper training, educated Germans could move into the economy more effectively, reducing the overall need for a later step-up effect.
Yet, then the article goes into the place where I think most Americans would want to turn a blind eye. Leonhardt claims that in a market economy, the central role of government is regulation.
Regulation has a rather nasty image, but I would like to offer a different starting point for thinking about regulation: the regulator worn by SCUBA divers. The regulator worn by SCUBA divers directs and controls the flow of air so the diver can breathe. If the air can’t flow, then we have a problem. Similarly, if money doesn’t flow, we have a problem. If money doesn’t flow, then we call that problem “poverty.”
In Germany, it seems as though regulation concerned principally the people at the bottom creating spaces for them to participate more fully in commerce. Preserving labour unions represented a big part of the government’s regulation, but actually making sure that the labour unions are functioning requires continuing to follow the money. The German government observes that wages for the middle class have risen in parallel with the wages of the top earners.
I’d also like to posit this observation: if the government places meaningful efforts to help its citizenry develop professional skills, then it makes sense that the government might want to ensure that its workers are able to move those professional skills across the borders in a global economy. After all, that’s where I contend that we start following the money anyway.
An unfortunate truth, things in the middle (be they children, book chapters, schedule of the day) tend to get overlooked. We often concern ourselves with the extremes, modulating towards beginnings and endings. If things start out right, we assume that they are well on track for a good end. But we’re not very good at seeing the mundane, ho-hum aspects of daily life. After all, daily life happens in the middle of just about everything else.
This year marks 100 years since the birth of EF Schumacher. His main work is entitled, “Small is Beautiful: Economics as if People Mattered.” But as I read a piece in the Guardian today, I was struck by how easy it is to assume that small is simple.
Schumacher’s emphasis on what he called “intermediate technology” (neither basic nor large-scale) as the solution to many of the world’s problems led to the creation of the Intermediate Technology Development Group, now Practical Action, which recently hosted a celebration of his life. “A crank”, he said, “is a piece of simple technology that creates revolutions”. Nice.
“Intermediate technology” or really the technologies in the middle of the complexity scale. If we consider a crank, we’re not talking about installing a shelf, or bridging a small creek with a fallen log, or re-purposing a table as a chair. A crank, and other technologies like it, requires intentionality and consideration. The crank has a vocabulary of use that is slightly constrained by what the crank desires to achieve. When I think about my own experience with cranks, sometimes they are in challenging access points because of what motion they want to produce. When we start talking about cranks, we have to consider mechanisms.
I think that engineering and business complement each other nicely in this occasionally confusing middle space. After all, these technological challenges go just slightly beyond the materiality that everyone takes into their own hands. Someone might see problems of trying to ride a bicycle at night. Trying to rely on a massive infrastructural system where we install various sorts of beacons might not actually get at the core issue of riding a bicycle at night. A middle solution might be looking at how to attach and power a light on the bicycle itself.
The middle space requires deep knowledge of circumstantial particulars. Because the particulars constrain the available options, these middle spaces almost have the allure of compelling objective reality. The middle space creates choice because it zooms in on particular needs.