We make it waaaay too easy for economic development gurus and market fundamentalists to naively hype the marketplace as a cure-all for poverty. Surely, after 10,000 years of mixed market behavior, we know better.
After all, even after the Industrial Revolution, economic globalization, the Information Age, and on and on, the public and private sectors combined(!) are still batting only 50% at ending poverty. About half the world earns $2.00 per day or below.
Renowned author E.B. White (for children, Charlotte's Web; for college students, Elements of Style) captured the point: "The trouble with the profit system has always been that it was highly unprofitable to most people."
Of course, the profit motive does drive profits (duh), but not necessarily progress. Profits are an ingredient, even the main ingredient, but not the whole recipe.
Citigroup, one of the largest financial services companies known to Humankind, is the penultimate "scaled" enterprise. It has 200 million customer accounts in more than 140 countries, 260,000 employees, $1.5 trillion in assets and $11 billion in profits. Citigroup is also a constructive heavy-hitter in the microfinance sector, providing foreign currency risk hedging, securitization of microfinance loans, bond issues, private placements, direct financing and cash management.
But no sane person, in or out of Citigroup, expects Citigroup to behave with the public interest foremost in mind. That is not its mission.
A bank loan does not ensure human rights. For that, the world needs visionary statesmen and -women. A bank loan does not educate a young girl or hug an emotionally scarred child soldier. For that, you need empathetic school teachers paid with public sector salaries. A bank loan cannot create fair, open markets. For that, you need wise governmental policy and just laws.
A reproach from 20th century political theorist Hannah Arendt reverberates: "Economic growth... under no conditions can it either lead into freedom or constitute a proof for its existence." Can anyone say, "banks too big to fail"?
Some say only a job-creating private sector can address society's economic and social problems. If you buy that puffery, then you are required to discount the public roads on which employees drive to work, the government law courts that enforce commercial contracts, the public schools which educate the workforce and the air pollution police who keep the skies healthy for workers (and their children).
"Capitalism is, among other things, the revitalization of the world thanks to the opportunity to be lucky. Luck is the grand equalizer because almost everyone can benefit from it," notes Nassim Nicholas Taleb in The Black Swan. In an otherwise useful book, this statement may rank as the most detached and unintentionally cynical.
Are poor kids unlucky to have uneducated parents, or no parents at all? Unlucky to be born in badly-governed countries? Unlucky to live in regions devoid of good schools, or electricity, or drinkable water?
If the poor are unlucky, then without a renewed social compact based on economic and social justice, they will stay unlucky.
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