How to Fix Poverty
25/11/16: New proposals on the causes and fixes of poverty
I had an unsettling experience a few years ago. An elderly lady drove into our driveway. She was visiting our next door neighbour and had driven into the wrong house. She realised her mistake just as she had put her foot out of the door. She pulled her leg back in and gently scraped it against the door frame. By complete chance, I happened to look at the window just then.
She looked in distress, so I went out to ask her if she needed any help. Age had not dimmed her mind, but it had taken its toll on her physically. Her skin had become wafer thin and brittle. As she had drawn her leg back, the gentle scrape had peeled away a three-inch layer of skin, which was now oozing with blood. She was in shock, not in a medical sense but in an emotional one. I gently helped pull the flap of skin back in place, and brought out a bandage. The bleeding stopped, and she quickly calmed down. She insisted on driving to our neighbours before she would go to see a doctor.
This poor lady’s misfortune gives us some insight into the way poverty works.
STEMMING THE FLOW OF POVERTY
Blood is to the body what money is to life. If there is not enough to meet our needs, we suffer both physically and mentally. Much invaluable effort has been targeted on solving poverty. Lack of social mobility, lack of aspiration, lack of education, lack of opportunity, unaffordable housing, abusive or neglected upbringing. These are all areas of initiatives in recent decades to stem the incidence of poverty. Part of the motivation is compassion, part of the huge cost of monetary redistribution. As with blood transfusions, poverty is profoundly expensive when there are enough people in need of help. Monetary redistribution accounts for around one-third of all taxes raised by the UK government. Many compassionate, creative and effective ideas have been implemented to try to slow the blood losses of poverty. They have successfully alleviated much suffering. But despite trillions of pounds having been spent on social policy and redistribution, poverty persists. Millions of people in the UK, getting on for 10% of the population, are so poor they can not afford to eat properly.
The reason I believe poverty seems immune to these initiatives is that they have focused on identifying where the system is leaky, where the blood escapes, the routes through which poverty enters the system in order to seal them closed. The initiatives plaster over the sores — which partly stems the flows, partly hides them. They do not address the cause of the problem. Why is the skin so brittle?
It would be nice to find a new approach to answer the question. It could provide an alternative, far less expensive approach that shifts focus from reducing the impact of poverty towards reducing its incidence. Can we identify why the social cuts and sores in society appear so casually? Can we find a way in which the social body heals itself, without the need for profoundly expensive redistribution? Can we create a society in which social mobility is self-seeding? Can we find natural ways to relieve the pressure to reduce the need for the compassionate, creative, effective but expensive solutions we devise to stem the flow?
I think the answer is yes. Here is the outline of a proposal. Other articles (at inclusivity.world) explain in more detail some of the concepts outlined below.
IDENTIFYING THE CAUSE OF POVERTY
We achieve enormous gains by working together compared to going it alone. As much as 60,000 times by some measures. Gains of this magnitude have little to do with any individual. Rather, they come from developing a society that allows people to specialise, that steers their activities and combines their specialisations in ways that are more productive. In a very simple analogy, the power of 50 people tugging on a rope will pull down a tree whereas none will have enough strength if they take it in turns to pull. In almost all cases, this outcome is true no matter how strong any individual on the team is.
It is impossible to isolate each individual’s contribution to the team. The overwhelming nature of the power does not come from anyone individually, but from everyone together. Conversely, it is possible to identify how much control each person on the team has over the others. If someone is far more powerful than the others, they are less easy to replace. The powerhouses in the team can command greater influence because the overall power of the team will be less without them, even though the overwhelming power of the remainders would continue without them.
Billions of people around the world pulling together in a common direction — towards human wellbeing. The coordinated contribution is what generates the productive power of society. It is astounding how much wealth is created by this combined effort. Which begs the question: why do some people on the team receive so much wealth that they can never spend it in a dozen generations, whilst others receive so little that they can hardly afford to live? This is the question at the heart of poverty. In my view, the answer to the question of poverty is this. Distribution of wealth is based on control, not on contribution.
Control is a many-limbed creature. Each causes a new cut in the skin of society through which blood flows from the poor to the rich. An example is the means to invest in outside ventures. Once someone is financially secure enough, they can choose who they work with, how they live and how they invest their surplus money. Investments generate yet more wealth without their having to make a further contribution. Their ability to buy and invest empowers them to influence others to accept their attitudes and to support their accumulation of control. By contrast, someone who is born into poverty has no surplus funds to invest. They start life in debt, with monthly outgoings that leave them on or close to the breadline. They can not afford to be out of work or to invest in their future. They become susceptible to exploitation by employers. They have no financial influence. The more barriers that are created to limit their employment, the less they are able to acquire control. Our existing, adolescent, model of capitalism provides short-term rewards for organisations who charge as much as they can and who pay as little as they can get away with to people who contribute to the output.
There are many examples of artificial barriers to employment. Each one makes people living in poverty ever more dependent on the behaviour of their employer or customer. In the UK, a changing face of Class still thrives. There is prejudice against many groups of people in the workplace. Some prejudice is more significant than others. Targets include women, ethnic minorities, people from poor backgrounds, people without university degrees, people with poor academic attainment, people with the wrong accent or look, people without professional qualifications, people with certain beliefs, people who have been criminalised, people with disabilities. An effective jobs market should match people’s personal skills with the requirement of a business. This is not the way jobs are allocated. In most cases, there are no reliable measures of people’s personal skills. Most people do not even know which skills they possess, because there is such little opportunity for individuals to explore, develop and have recognised the full extent of their personal skills within the politically micro-managed world of education.
As many studies have identified, in today’s world, once a person starts with a disadvantage, it is difficult to break out of the cycle of disadvantage. Poverty is demoralising. People in poverty are made to feel demeaned, worthless and isolated. They are physically disadvantaged and psychologically undermined. People in poverty are criminalised too readily. According to the American Civil Liberties Union, in 2011, 1 in every 15 men with dark skin was incarcerated, compared with 1 in 106 men with light skin. In the US, people with dark skin receive 20% longer prison sentences than people with light skin for the same crime, according to the Borgen Project. It leaves people in poverty with far fewer opportunities to find better-paid work, or new skills. It leaves them unable to shake off their social disadvantages. A person’s capability of contributing to society is impaired once they have been disadvantaged, crushing their potential.
How control is allocated is the primary influence over how we allocate wealth, resources and the structure of production. It is a poor basis on which to maximise our output. Too much of the decision making is taken remotely by too few people. They are often not personally experienced or invested in the outcomes or consequences. Too many skills remain undiscovered, too many innovations are suppressed, supply is skewed towards the desires of the relatively few people in control in priority to the desires of the larger population. The productive power of an economy has two sides, the push and the pull. The push is the productive capabilities. The pull is the demand for production. Where the pull is skewed or out of sync with the push, productive capacity becomes under-utilised.
THREE PROPOSALS TO REDUCE POVERTY
If poverty is the result of our rewarding control instead of contribution, does this help find a solution to poverty?
Yes, in three ways. We can look for ways to align control more closely with contribution, and we can encourage a change in the way people exercise and hold on to control. Anyone who instantly dismisses these possibilities may want to ponder the Koch brothers spending so much of their vast fortune on amassing control, whilst Bill Gates and Mark Zukerberg have been giving away 90% and 99% of their wealth respectively to charity.
Here are examples of ways we can move in this direction: two ways that combine to blur the distinction between control and contribution, and one influences the way control is exercised.
1. Review the measure of economic success
Tilt the balance of evaluating economic success from exclusively monetary GDP to a combination of monetary GDP and Quality Years.
The predominant measure of economic success is currently monetary GDP. It has some merit, and many failings. It encourages a focus on short-term wealth creation, a model with self-destructive elements that reward creation and retention of personal control over others.
An additional perspective comes from evaluating economic success in terms of Quality Years. This is a measure of everyone’s quality of life on a scale of 0–1. Here, 0.8 (ie 80%) is a fairly good Quality of Life, and 0.1 (ie 10%) is a fairly poor quality of life. A measure of 1 (100%) is a quality of life everyone would want. For each year of someone’s life, their Quality of Life is measured and added together. As an approximation, we can measure everyone’s Quality of Life in a single year, and multiply it by the average life expectancy. With life expectancy approaching 80 years, a measure of 50 Quality Years means that the person can expect the equivalent of 50 good years out of 80 during their lifetime. This is an easy number for people to relate to. It puts a focus beyond raw wealth creation.
And it has an interesting side-effect. I was lucky enough to eat a while ago at Tom Kerrige’s Michelin star pub, the Hand and Flowers. I was blown away by the quality. For the immensely pleasurable three hours I spent there with people I most enjoy being with, my quality of life was complete. If I had gone back that night, I am not sure I would have been able to eat anything more. My quality of life would not have increased. More to the point, there are only so many Michelin star meals one can eat. Once saturation has been reached, more is no longer better. Once someone experiences an almost perfect Quality of Life, no amount of extra wealth or other components of Quality of Life will improve their overall Quality of Life. So if a nation is being judged by the average Quality of Life it can provide for its people, it will not be rated highly if too much wealth goes to the already most wealthy. Conversely, the Quality of Life of someone in the deep despair of abject poverty can be increased by initiatives as simple as making them feel a more valued member of society.
A focus on Quality Years rewards economic policies that deliver a fairer distribution of the gains of society. Governments will be elected less for their ability to deliver absolute wealth, and more for their ability to create a fairer share of the benefits of participating in society.
2. Recognise Organisations’ Contribution to Social Cohesion
Organisations live or die by their monetary accounting. With almost instant access to accounting, the market value of a corporation is set with a very firm eye on short-term profits. Twenty four hour news means business analysts are looking for the slightest variation in expected results to foretell boom or bust. Leaked news has an instant impact on the organisation’s market value. Management is richly rewarded for increases in short-term market value, or sometimes sacked when it decreases. The rewards bear almost no relation to the individual manager’s contribution to social wellbeing. In fact, if an organisation can eliminate its competition and carve out for itself a monopolistic position in the market, consumers pay the price for the organisation’s managers to receive sometimes obscene levels of reward.
There is an interesting statistic. Organisations that focus on social wellbeing over short-term profits achieve a three times greater profit growth over a ten year period than organisations that focus on short-term profits. It should not come as any surprise that an organisation that cares about its employees, customers, suppliers and community will be trusted and respected. Good for business, as it turns out.
It will never be possible to introduce a measure of an organisation’s contribution to the nation’s Quality-Years, because Quality of Life comes from too many places. But it is possible to measure an organisation’s contribution to social cohesion. This is a measure of how well it improves the wellbeing of everyone within its sphere of influence, both materially and socially. Organisations have a unique position in society of setting the tone of relationships. The way they interact with people, such as staff and the community, influences how people behave towards each other.
When organisations start to measure on their contribution to social cohesion, and the measure is audited independently, it will provide a new measure for investors to assess the longer-term prospects of the business, which directly influences the organisation’s market values. This, in turn, will influence its behaviour, and the behaviour of most people within its sphere of influence, for the good of society.
3. Retune Social Awareness
Over 98% of us are born with effective social instinct. Our ability to live and work together for mutual benefit is what has underpinned our journey from the top of the trees to the top of the food chain. At the heart of everything we have ever achieved are our relationships with each other. We are social animals. We know how to connect with each other.
But we have developed a society whose members have spent too much time competing against each other, and not enough time competing with each other. Destructive competition leaves one person richer at the expense of someone else. Mutual competition shares the gains of competition in a way that both people are left richer than when they started. The flavour of our competitive culture has developed layers of experience that inform us to be wary of the motivations of others. The underlying distrust is corrosive to the framework of society.
Yet deep in our core, the overwhelming majority of people want the same things — such as peace, justice, kindness, happiness, love. Our experience of destructive competition dissuades us from engaging with our socially cohesive human nature. We fear what will happen if we come out second best. This creates attitudes of intolerance, distrust and fear of strangers, greed, jealousy, anger. These behaviours are mirrored in the people we come across, because humans are programmed to mirror the behaviour of others. The mirrored behaviour reaffirms the fear of being second best. The negative pattern of behaviour becomes re-energised. The psychological consequences are substantial. It creates anxiety, stress and insecurity. It helps to explain the substantial outburst of related mental health dis-ease and physiological illness over the last few decades.
This destructive competition, setting one person’s interests against another, underpins poverty. For as long as someone outside poverty fears their interests will be prejudiced if the interests of someone in poverty is helped, the legal, cultural and sociological barriers to breaking out of poverty will remain. Even if we do crack the problem of, say, unbalanced education, something will emerge to take its place — racism, prejudice and legal barriers are examples. People in poverty are made to feel ashamed. It is not they who should feel ashamed, it is everyone else who conspires consciously or unconsciously to prevent them from breaking out of poverty.
To break the cycle of poverty, we need to work out how to change attitudes. We need to work out how to change the balance of our ideas in favour of mutual competition, where the gains to one person are achieved without losses to another. I am aware this seems like a tall order, and to some will seem little more than fantasy. But to anyone with those views, I would ask you to look around with an open mind and to where this is already a reality in growing pockets of our world. The challenge is not whether we can make it can happen, but how we can support its growth. Significant examples of reality include open source software, Values-based Education and socially aware corporations, such as Old Mutual in the UK and Whole Foods in the US. These are demonstrations that changed attitudes can transform culture and social outcomes, without prejudicing conventional outcomes in the process.
FINAL THOUGHTS
One final comment on changing attitudes. Our current culture of destructive competition is supported by a much false narrative. An example is the presumption that the physically or mentally strongest always dominate the weakest. This has never been the case in human development. Where this dominance takes place, it slows progress. As in the simplistic example of the rope tuggers, the real progress of humanity is achieved when people cooperate with each other in teams. In neurobiological terms, our emotional core is what drives our anger, temper and desire for dominance. If we had not been able to channel and control our emotions, we would still be swinging in trees. The emergence of a super-developed pre-frontal cortex is what allowed our rational brain to calm and override the emotional brain, to inform us to act in ways that are in our best interests in place of ways we are driven to by emotional impulse. It is this very human competence that drives progress, and has allowed us to evolve with such astounding know-how and technical capability. It is our rational brain that allows us to curtail our impulsive emotional outbursts, to allow our natural social competences to shine through. That is what makes us human. That is what can help us break the cycle of poverty. But only if we attune to our inner desires, to embrace our aspiration to be active members of our various communities and to allow our social competences to drive our behaviour in the way that makes us feel most fulfilled.
There are plenty of ways to achieve this. The start point is to recognise the link between getting in touch with our social competence, with the drivers of progress and with the social and legal barriers we erect that prevent people from escaping poverty.
ADDENDUM
There is an underlying belief behind these suggestions that control is exercised more effectively when it is diffused than when it is centralised. A society in anarchy is not controlled. An autocratic society is an improvement because it achieves order through central control. Most aspects of society are micro-managed centrally. Creativity, productivity and freedoms are suppressed in order to retain central control. It results in a society that is more productive than one where anarchy is unchallenged, but generates a relatively weak productive capacity. Democracy is not an absolute state. It is an increasingly diffused exercise of control by increasingly large numbers of people. Subject only to the necessity to centralise maintaining order, the more diffused and decentralised the control, the deeper the state of democracy. There are many flavours of autocracy and democracy. Each has their place in the world.
The suggestions above are aimed at democracies. They are based on the belief that measures to alleviate poverty will be inefficient where they are influenced by personal and vested interest. So the thrust of the ideas is based around our developing a more mature version of capitalism, one which advances beyond the state of adolescence of today’s capitalism. If people are left to make more of their own decisions, it is essential that they are equipped to make the decisions wisely. So the suggestions envisage developing a guiding compass for attitudes and actions that are outside the realms of politics. Otherwise, the benefits of decentralisation will float away in a puff of smoke. The three suggestions above combine into a northern star for a democratic society.
