Poverty is of two kinds – relative and absolute. Relative poverty is if the of people have less money than most in the society. This condition will exist always as it is impossible for everybody to have equal wealth. This poverty is unsolvable. Absolute poverty refers to lack of food, clothing, shelter, and medical assistance. A society can be considered a success if absolute poverty is eliminated. Many mistakenly measure absolute poverty in terms of money. There are many in the middle financial strata of societies with negative wealth, like meJ; but cannot be classified poor. The poor have no flow of money; not no money. The difference is crucial when considering solutions. Here I examine the various choices of an individual with limited resources and a goal to reduce poverty.
Choice 1 – Say we have 100000. We can donate to charity organizations for “upliftment” of the poor. At ten units a meal, it feeds 10000 times. The poor remain poor. They need more after the 10000 times are done, and hopefully we won’t join the poor after donating.
Choice 2 – We can start a business. If we employ even 2 persons, within 5 years we fed more than 10000 times. If the business grows at say 20%, you can employ 24 in 15 years. Your employees can no longer be considered poor and his self respect is preserved. In fact, your act may have saved generations of your employee’s family from poverty. Equivalent Goal – Expand my wealth through owning a business.
Choice 3 – Say we are too lazy to work a business. We can invest in a company growing at 12%. If your 100000 paid 2 persons this year, at the rate of 12% compounding growth, it will pay 4 persons in 7 years and 10 persons in 15 years. And these people become rich after your act. If you can find a company that grows at 50%, you will be supporting 600 persons in 15 years. Equivalent goal – Expand my wealth through owning stocks/bonds.
Choice 4 – Assume we are too lazy for even searching a good company; we can put our money in a bank account. If they offer 6%, it means they think your money’s worth will increase faster than that. But even assuming only 6%, your 100000 will pay 4 in 15 years. This is a very conservative calculation. As we know banks help individuals for studies or business loans. Equivalent Goal – Expand my wealth through savings and fixed deposits.
The goal of personal ambition doesn’t alter the fact that one has done more for poor than by charity. It is easily demonstrated that if we really want to do good for others we must choose personal ambition. Good for self and others are not exclusive. One cannot spread laughter while weeping. How (do we know)/(does it matter) Gates’ goal is not poverty alleviation? Do any of us comprehend the stresses of a CEO? Businesses are the conduits for riches to reach poor; not altruists. Even most physically challenged possess ability for many simple jobs. Charity maybe needed rarely; present levels are redundant. Trying to eradicate poverty by charity is like farming 100 acres using a pulley well; the water will dry before the next bucket comes; buy a motor. Simply, charity preserves recipient’s poverty and is hailed as great as need is continued; if business is chosen, recipients will probably not praise. They escape poverty and pride in self for success through hardships. Whether one wants to be hailed as great or help eradicate poverty is individual’s choice.
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For clarity, assume that I quoted inflation adjusted growth rates above. This post is my response to the helplessness we feel, specifically expressed to me by Nandita, when facing poverty; here I tell what I think we can/should do. I also wish to acknowledge Ice Candy's poverty for setting up steps to think.
