Poor people are poor because they don't have money. It seems pretty basic, but according to Paul Polak's Out of Poverty: What Works When Traditional Approaches Fail, our theories on solving poverty have become so complex we need to get back to the basics to understand the problem and then to fix it.
In 232 pages, Polak hammers out his matter-of-fact, step-by-step approach to curing poverty in the world and he does it with little attention to the usual âe"isms and frameworks that can bog down the most eager of activists.
His solution is simple: understand that poverty comes from having no money, recognize that most who live in poverty are farmers on less than one-acre of land, teach the farmers that they can make much more money farming off-season fruits and vegetables, and then sell those farmers low-cost equipment to make farming those vegetables possible.
"Any one of you can learn all of the above by spending one day in a poor village in any developing country and asking ten or twenty farmers why they are poor and what they can do about it," Polak writes.
And he should know. Polak has spent 25 years in the field as owner of International Development Enterprises (IDE), a company that sells poor farmers cheap equipment like drip-irrigation systems for those out-of-season vegetables and treadle pumps for those who don't have money for a drilled well.
IDE has done well over the years, starting with three founders and now employing hundreds around the world. The sales his company has done is the basis for the book a model of how everyone can win when business models are applied to poverty.Using the story of one particularly successful dollar-a-day client (who is not the exception, we are assured) Krishna Bahadur Thapa of Nepal, Polak shows how a family who started out owning one acre of land pulled themselves out of poverty once the market provided them with the tools to do so.
"The solution is to create new markets that serve poor customers. Hundreds of markets, comparable in size and impact to the mass market for motorcars and computers, are waiting to be discovered," he writes.
"In the case of treadle pumps, we created a private-sector supply chain by energizing seventy-five small-scale manufacturers, two thousand or more village dealers, and three thousand well-drillers, all earning a living by making, selling and installing treadle pumps at an unsubsidized fair market prices of twenty-five dollars," he explains.
By the end of the book, the Thapa family owns livestock, acres and acres of farmland using Green Revolution rice seeds (another contentious topic that is never addressed in the book), sends their children to school and has no problem visiting the doctor.It is because the Thapas had the ability to buy an IDE drip-irrigation system that led them to prosperity.
And that, Polak repeats triumphantly, is how you solve world poverty.
It is hard not to be skeptical of a book like this. Written like a self-help book for poverty activists, complete with a 12-step program, a plain-talking narrator who has been through it all, and a solution so simple it's a stretch to spread it over the slim volume, it seems more like a businessman's pitch than a well-argued policy solution.
The solution that is given is backed up by statistics on the successes of the author's company, not that of independent researchers, and the reader must take Polak at his word that every family described has been helped by his products.
Polak argues that products like his cannot be given away because that opens the door to government and NGO corruption: that is exactly why the billions spent in international aid every year don't work. Those in power decide who gets the free stuff and much of the money disappears into the pockets of the few. If you sell the poor the things they need in the private market, that corruption is avoided altogether and the overwhelming demand for drip-irrigation systems, for example, will keep the products in production ensuring anyone (who can save enough for them) can get one.
Aside from being skeptical of the verifiability of his argument, there is also the very real concern about the cheap products he promotes flooding the market. Polak explains that the poor are more likely to purchase equipment with the least risk associated with them. So if they are presented with two choices: a long-lasting pump that is expensive or a cheap pump that will last two years, they will almost always choose the cheaper one. And that's what IDE produces a bunch of equipment made of cheap plastic that can be used for two years and then thrown away. Millions and millions of these products.
Suspending disbelief momentarily, Polak's solution to poverty seems common sense. He also has a pretty major backer to give him a bit more cred. IDE has just been granted $27 million by the Bill and Melinda Gates Foundation.
It is obvious that throwing aid money at poverty isn't working. Out of Poverty is riding the wave of innovation and creativity to address those issues, which is definitely worth investigating, but Polak does not make a convincing case that he has found the golden ticket.Jenn Watt