The New York Times
http://www.nytimes.com
By DEEPA NARAYAN
Published: May 26, 2009
The world is agog with tales of the “nouveau poor.” The well-to-do are tightening their belts: Wealthy women are reappearing in the same designer dresses, shoppers are shyly pulling coupons from their pockets, and flying commercial is back in style.
But the rich and the middle class are not the only ones losing money. Millions of poor people around the world have been plunged even further into deep poverty. For them this means taking children out of school to help scavenge for food; praying instead of seeing a doctor; selling the last of the gold earrings so that the family can eat for a few more weeks. For the poor, there is nothing “nouveau” about tumbling deeper into poverty.
The common perception about poverty is that we are slowly pulling people out of it. The truth is otherwise: Though the world pulls many millions out of poverty each year, it counteracts those gains by sending millions who were not poor into poverty. We must understand this two-way highway if we genuinely aspire to end poverty. A study we conducted at the World Bank, “Moving Out of Poverty: Success from the Bottom Up,” sought to survey this two-way highway, investigating who escapes poverty, who falls in, and why. Among our diverse findings, two striking truths stood out.
The first is that poor people, contrary to their image in the developed world, are born capitalists in the Horatio Alger mold, more capitalist than the average New Yorker or Londoner. They believe in the power of their own effort — they try and try, and even if they are foiled or cheated, they try again. Though the poor are commonly believed to be fatalistic, our conversations with 60,000 poor people in 15 countries showed this to be patently untrue.
When the world meets the hopeful poor halfway, people rise out of poverty. They open shops, move to big cities to work as cooks or chauffeurs, send their children to learn new skills and languages. They ask little of their governments. They take matters into their own hands.
But as millions rise out of poverty, millions fall in — partly because “free markets” are not free enough, and partly because of the lack of healthcare.
In the recession-battered West, governments are moving to insulate citizens from excessive exposure to markets. But for the poor, being cut off from markets is the problem. In fishing communities in Cambodia, fishermen get lower prices for their fish and are forbidden from fishing where large trawlers go; in the coffee-growing region of Tanzania, cheating in the weighing of coffee beans is so institutionalized that it has a name, Masomba; in West Bengal traders without political connections have no hope.
Unable to access markets, poor people lurk on the fringes, work for low wages, sell in small quantities at low prices, unable to compete, accumulate assets or make tomorrow any different from today. And, because they hover so closely above the poverty line, a sudden shock — typically a death or illness — can wipe out years of modest progress.
The story of Jehangir, one of the thousands of people we interviewed, illustrates the tragic collision of dogged effort against a world of banks and laws that seems to plot against the poor.
He is a chronically poor man in Uttar Pradesh, in northern India. He worked for decades as a laborer on other people’s land, augmenting his earning by selling vegetables. His dream was to own a bicycle, land and a house without a leaking thatched roof.
He managed to get the bicycle. Then the sudden death of both of his parents threw his savings plan off track. He had to borrow for the funeral from a local money lender at an exorbitant interest rate, since banks do not cater to people like him. His wife started working to repay the money lender, as did his two young sons. Pulling a child out of school may be a good way to quickly help repay a loan, but it’s a dubious long-term investment decision in a country where education determines everything.
Jehangir at last saved enough to build a house. But the wall collapsed, breaking his hands and legs. Because there is no reliable system of public clinics, no system of medical or homeowners’ insurance for people like him, Jehangir had to take out another loan for his treatment and another to fix the roof and a third to build a temporary room for his family.
Though he went right back to work, he was paid less than the able-bodied workers. His conclusion after years of trying to make his own way? “Now I am losing my trust,” he said.
Jehangir’s story echoes around the world. Even after years of hard work, poor people have few permanent assets. A shock blows them under, as they borrow what they can from a local money lender who is also the landlord, who happens to run the local shop and who is in local politics as well.
Wealthy countries are clamping down on markets and centralizing government programs. The poor need something quite different: bigger, better access to free markets designed to work for them. They do not need centralized government, but active local government that provides basic services — particularly affordable healthcare — government that helps rather than hinders.
Deepa Narayan is director of the World Bank’s Moving out of Poverty project.
http://www.nytimes.com
By DEEPA NARAYAN
Published: May 26, 2009
The world is agog with tales of the “nouveau poor.” The well-to-do are tightening their belts: Wealthy women are reappearing in the same designer dresses, shoppers are shyly pulling coupons from their pockets, and flying commercial is back in style.
But the rich and the middle class are not the only ones losing money. Millions of poor people around the world have been plunged even further into deep poverty. For them this means taking children out of school to help scavenge for food; praying instead of seeing a doctor; selling the last of the gold earrings so that the family can eat for a few more weeks. For the poor, there is nothing “nouveau” about tumbling deeper into poverty.
The common perception about poverty is that we are slowly pulling people out of it. The truth is otherwise: Though the world pulls many millions out of poverty each year, it counteracts those gains by sending millions who were not poor into poverty. We must understand this two-way highway if we genuinely aspire to end poverty. A study we conducted at the World Bank, “Moving Out of Poverty: Success from the Bottom Up,” sought to survey this two-way highway, investigating who escapes poverty, who falls in, and why. Among our diverse findings, two striking truths stood out.
The first is that poor people, contrary to their image in the developed world, are born capitalists in the Horatio Alger mold, more capitalist than the average New Yorker or Londoner. They believe in the power of their own effort — they try and try, and even if they are foiled or cheated, they try again. Though the poor are commonly believed to be fatalistic, our conversations with 60,000 poor people in 15 countries showed this to be patently untrue.
When the world meets the hopeful poor halfway, people rise out of poverty. They open shops, move to big cities to work as cooks or chauffeurs, send their children to learn new skills and languages. They ask little of their governments. They take matters into their own hands.
But as millions rise out of poverty, millions fall in — partly because “free markets” are not free enough, and partly because of the lack of healthcare.
In the recession-battered West, governments are moving to insulate citizens from excessive exposure to markets. But for the poor, being cut off from markets is the problem. In fishing communities in Cambodia, fishermen get lower prices for their fish and are forbidden from fishing where large trawlers go; in the coffee-growing region of Tanzania, cheating in the weighing of coffee beans is so institutionalized that it has a name, Masomba; in West Bengal traders without political connections have no hope.
Unable to access markets, poor people lurk on the fringes, work for low wages, sell in small quantities at low prices, unable to compete, accumulate assets or make tomorrow any different from today. And, because they hover so closely above the poverty line, a sudden shock — typically a death or illness — can wipe out years of modest progress.
The story of Jehangir, one of the thousands of people we interviewed, illustrates the tragic collision of dogged effort against a world of banks and laws that seems to plot against the poor.
He is a chronically poor man in Uttar Pradesh, in northern India. He worked for decades as a laborer on other people’s land, augmenting his earning by selling vegetables. His dream was to own a bicycle, land and a house without a leaking thatched roof.
He managed to get the bicycle. Then the sudden death of both of his parents threw his savings plan off track. He had to borrow for the funeral from a local money lender at an exorbitant interest rate, since banks do not cater to people like him. His wife started working to repay the money lender, as did his two young sons. Pulling a child out of school may be a good way to quickly help repay a loan, but it’s a dubious long-term investment decision in a country where education determines everything.
Jehangir at last saved enough to build a house. But the wall collapsed, breaking his hands and legs. Because there is no reliable system of public clinics, no system of medical or homeowners’ insurance for people like him, Jehangir had to take out another loan for his treatment and another to fix the roof and a third to build a temporary room for his family.
Though he went right back to work, he was paid less than the able-bodied workers. His conclusion after years of trying to make his own way? “Now I am losing my trust,” he said.
Jehangir’s story echoes around the world. Even after years of hard work, poor people have few permanent assets. A shock blows them under, as they borrow what they can from a local money lender who is also the landlord, who happens to run the local shop and who is in local politics as well.
Wealthy countries are clamping down on markets and centralizing government programs. The poor need something quite different: bigger, better access to free markets designed to work for them. They do not need centralized government, but active local government that provides basic services — particularly affordable healthcare — government that helps rather than hinders.
Deepa Narayan is director of the World Bank’s Moving out of Poverty project.
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