What should be done about the billion people trapped in poverty?
One of the most outstanding presentations at TED (Technology, Entertainment and Design), an annual forum of ideas I attended this year, was “4 Ways to Improve the Lives of The Bottom Billion”.
Paul Collier is an expert on development issues who has disproven many myths about poverty that are very convenient for politicians, but very bad for people. For example, Collier is cynical about certain rock stars who attempt to eradicate poverty without dealing with its profound causes. He is also critical of politicians who offer nothing more than gestures.
In his presentation, Collier shows the concern that we should all have for the one billion people who suffer from poverty in economies that have stagnated over the past 40 years. With his proposal, he attempts to find real, tangible hope for this group, basing himself on two concepts: compassion and enlightened self-interest. Compassion allows us to roll up our sleeves and get started, while self-interest helps us work seriously to eradicate poverty.
In an initial exploration to find future solutions, Collier goes back into the past. He uses data and figures from the Marshall Plan, which the United States implemented to help rebuild Europe after World War II. According to Collier, this was the last time that the rich countries took the issue of development seriously. On that occasion, four tools were brought into play: economic aid, a trade opening, a common security policy and a system of mutual support and collaboration among governments.
Today, the world needs a bigger effort to extricate one billion people from the poverty they are trapped in, although the tools may be very different. Collier makes very concrete proposals in his book“ The Bottom Billion: Why the Poorest Countries Are Failing and What Can Be Done About It, which I will discuss in a separate entry. In his presentation at TED, Collier talked about a specific topic: increasing transparency.
With the current rise in the price of basic products, developing countries have a magnificent opportunity to extricate millions of their citizens from poverty. However, according to Collier, history tells us the wealth generated from raw materials can be counterproductive.
How else can we explain why Nigeria is worse off today than before discovering vast reserves of oil, but countries like Norway, Australia and Canada have been able to considerably increase the wealth produced by their raw materials? The answer is precisely government transparency and the system of checks and balances.
What is his verdict about democracy? Unfortunately, it is ambiguous. Democracy has two main components: 1) electoral competition (which if not handled correctly can harm perspectives for development), and 2) a system of controls that contributes directly to improving prospects for economic growth.
According to Collier, in the 1990s, emerging economies experienced a democratic boom, or rather, more electoral competition but without adopting essential standards for control. Given this, many of the new democratic systems lack the simplest structure for guaranteeing the population’s economic development.
His proposal is very simple: establish voluntary global standards for improving transparency and government control. One example of these standards is governments’ obligation to publicly and transparently auction off the rights to extract raw materials.
There is another important factor. For Collier, politicians will not take important measures to ensure transparency, but only make empty gestures, unless they are forced to by an informed society. What the world needs is a critical mass of educated citizens to increase government transparency to help free millions of people from poverty.