"It is a shameful day, indeed, when we discover that by our own, or our government's behavior, we have contributed to keeping people in the bondage of poverty."
Poverty is a tragically slippery word. It can be massaged and bent around to validate almost any point you would like to make, e.g. “If we would just stop practicing poverty we would not have any poor people,” or Martin Fisher’s ill-advised comment, “The great doctors all got their education off dirt pavements and poverty – not marble floors and foundations,” or H. Rapp
Brown’s famous quote, “You see, the poverty programs for the last 5 years have been buy-off programs.”
The English word poverty came from the Anglo-Norman povert, and originally from the Latin pauper, meaning "poor." It does have something to do with the lack of certain possessions to meet basic human needs. Groups like United Nations and The World Bank try to delineate further with categories of Absolute Poverty and Relative Poverty and varying degrees of standards of living. Book shelves and web-site pages are packed full of theories and opinions as to the origins, descriptions, causes of perpetuation, results, and proposed cures for the phenomenon of poverty.
This essay can’t tackle in 600 or fewer words the entire subjects of wealth and poverty. But I do want to take the space here to report what I have personally seen and experienced over the past thirty-five years since my first involvement in international travel and economic consulting. Specifically, I want to pass on the differences I have observed between the countries that experience relative wealth vs. the countries that experience relative poverty. I have traveled in more than 150 countries, and a large number of the countries I revisited many times. I have had the opportunity to become personal friends with Ministers of Finance, Ministers of Health, Presidents, Prime Ministers and Kings, and have had the privilege to speak at many of the Universities in the developing countries. The topic of economics is a hot subject and evokes instant questions and discussion wherever given a chance.
It has become evident to me that the countries that pursue the following practices are wealthy or are becoming wealthy, while those countries that do not pursue these practices are poor or are becoming poor:
- Government is willing to allow the people to break the cycle of poverty. As Ronald Reagan once said, “Poverty is a career for lots of well-paid people.” The inevitable consequence of poverty is dependence. As in the case of subsistence farming, it is a great temptation to the leaders of developing countries to allow the people to remain poor and dependent. Ease of governance comes with poor people who spend all their energy and time on daily survival. They are not problematic to the government, but the country remains poor.
- The people are given the right to hold and freely exchange private property. Private ownership of resources includes the rights of exclusive use and rights of transfer.
- Individuals are free to agree, free to enter into voluntary agreements and contracts with each other.
- The Rule of Law is established and applied equally to all involved. Making agreements and contracts assumes there will be a third party objective resource to enforce the fulfillment of the contracts. Contracts are meaningless if they aren’t enforced.
- Individuals are free to fail. Everyone in the transaction must be better off or the deal will fail. If the deal is successful, wealth is created. If the deal fails, the individuals must learn why it failed and discover what will make it successful.
- An understanding that the pursuit of an individual’s best interest is not necessarily greed, i.e., pursuit of self-interest is different than selfishness.
- Rejection of the zero sum mentality. When one person gets a piece of pie it is not at the expense of another person’s not getting a piece. Successful transactions create wealth. People create successful business transactions. Just because someone creates new wealth does not mean that someone else ends up with less. Wealth creation springs from people who are allowed to freely participate in business transactions.
In order to break the cycle of poverty in a developing country, income must be produced. Income can only be created when resources are used to produce goods and services needed by the people. Countries like Vietnam, Cambodia, and China, who now understand and encourage that concept, are increasing their wealth. Those countries that do not allow such practices, like Zimbabwe, Mauritania, and Cuba, remain in poverty.