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The Unglamorous Truth About Ending Poverty: A Response to Peter Buffett

Dear Peter Buffett,

My heart started pounding four sentences into your Saturday New York Times op-ed piece. You condemned "Philanthropic Colonialism," and told us about donor meetings where the people pledging crumbs to fight poverty are often the same people creating it. I used to go to meetings like those, though a few levels down the food chain. I had to stop because they just made me too angry.

You said what many other donors and recipients see but are afraid to admit: the anti-poverty philanthropy boom is not reducing poverty, and might actually be perpetuating it. I couldn't wait to finish the article, and shared it with everyone I could, because I was just so happy that someone in your position was saying these things.

Then I read the rest. You said, "My wife and I know we don't have the answers, but we do know how to listen. As we learn, we will continue to support conditions for systemic change. It's time for a new operating system. Not a 2.0 or a 3.0, but something built from the ground up. New code. What we have is a crisis of imagination."

But you do have the answers. We all do. A proven solution has already pulled billions out of poverty. For the past few decades it has been staring us impatiently in the face as we somehow look right past it. The problem is that it's plain, simple and nowhere near as glamorous as a whole new operating system for humanity.

You identified Philanthropic Colonialism. I would like to identify another problem: Philanthropic Adventurism. You said, "Is progress really Wi-Fi on every street corner? No. It's when no 13-year-old girl on the planet gets sold for sex." After three years as a non-profit person in Silicon Valley, surrounded by techno-utopianism every day, your words had me thumping my desk saying, "Yes! Yes!"

The answer is not Wi-Fi on every corner. But neither is it "new code" dreamed up by bored venture capitalists -- or by people they pay. Philanthropic Adventurism is replacing sound thinking about poverty with unproven, ineffective -- but really "new" and adventurous -- ideas. These "new" ideas, however, are as old as philanthropy itself -- and bring adventure only to the philanthropists and their staff.

For centuries, all different kinds of people and movements have attempted to solve crises of production and consumption as though they were "crises of imagination" -- sometimes with no effect, but sometimes leaving a trail of destruction. Before taking care of basic industry and infrastructure, communist dictator Mao Zedong urged China to build an entirely new kind of economy from the ground up based on the "spontaneous genius of the people." Talk about a new operating system! Millions died. More recently, Mike Davis, in Planet of Slums, tells of how the global development establishment fell for fashionable anarchist theories of "small" and "decentralized" public housing, unnecessarily leaving hundreds of millions languishing in squalid slums. (Fortunately, most philanthropists kill no one, and at least employ a handful of people!)

So what is this obvious solution to poverty that is staring us in the face?

There are at least a few dozen countries where virtually no citizen has been sold for sex (to stick with your benchmark) for many decades -- or sold for anything else, or gone hungry, without health care, housing or education. Most eliminated poverty in a rapid push lasting sometimes just a single generation. They are countries as diverse as Spain, Germany, Finland, Greece, Japan, Korea, Taiwan and Singapore. Not long ago -- 150, 100, 50 years -- all of those countries were even poorer than, say, Kenya is today. In the city (if there were cities), people lived in unimaginable slums. In the country, people frequently starved. Most families lost many of their children to illness, most were subject to extreme exploitation and violence from landlords, soldiers, criminals or all three.

How did they pull billions out of poverty so quickly? Unfortunately, the answer is totally unfashionable and will never, ever be discussed at hipster social venture forums. They all had one thing in common: the people in charge -- whether they were social democrats, conservative nationalists, communists or military dictators -- carried out programs of rapid economic development designed to give most people access to means of making a living.

But how did that do that? They built factories, railroads, universities and everything else required to make the things and do the things that go into a decent living (or were valuable enough to trade for them). Communists and dictatorships used various forms of force -- often brutal. Democrats and republicans (small d and small r) used the market and public-private partnerships. By hook or by crook, wherever eliminating poverty was one of the top few national priorities, it was eliminated.

Where backward elites were able to maintain Kleptocracy, those countries languished in extreme poverty and inequality. South Korea and the Philippines are often compared to show this. In 1945 the Philippines had a higher standard of living than Korea. But an old agrarian elite clung to power in the Philippines. In South Korea, on the other hand, the United States post-World War II occupation government carried out a radical land redistribution program that broke the back of the old agrarian landlord class and created a vibrant, broad middle class (the U.S. also tracked down and killed thousands of socialist leaders in a carrot-and-stick campaign to fend off communist revolution, which was all the rage at the time). With the aristocrats out of the way, capitalists, entrepreneurs and newly independent farmers charged ahead within a development plan enforced by a U.S.-installed military dictatorship. Soon, and after a transformation to democracy, South Korea was one of the richest countries in the world.

That story -- of a purely parasitic elite being replaced by one obsessed with national development, resulting in rapid reduction of extreme poverty and inequality -- has reoccurred over and over through democratic elections, democratic revolutions, communist revolutions, military coups and foreign occupations.

I am obviously not endorsing dictatorship by saying that sometimes dictatorships have eliminated poverty. My point is that a new political "operating system" has nothing to do with curing poverty. Poverty has already been eliminated under almost every kind of political system and local culture. It has also persisted, or gotten worse, under the same array of systems and cultures.

There is only one way to get rid of poverty on a large scale -- it's the only way that's ever worked in any country on Earth, at any time in history. It happens when political elites and peoples unite around the goal of economic development -- and manage to build the physical industry and infrastructure that people need to make a living.

You are worried about "more people getting to have more stuff." But there is a tendency for we who have too much to identify "too much" as the problem. How can scarcity of "stuff" be the problem, we ask, when Walmart shelves are bursting with junk everyone can afford and that nobody needs?

"Too much stuff," however, is an optical illusion, experienced only by relatively wealthy people. We are not living in a post-industrial "Internet age." Billions still lack access to the basics: food, housing, medicine and health care. What's true is there is no physical reason for this scarcity. The means of producing all those things could be expanded and spread around the globe easily -- if the people in charge really wanted to do it. That is exactly what happens in national development programs. In development pushes from South Korea to New Zealand to Finland, the consumer economy was aggressively suppressed for a generation or two in favor of building industry and infrastructure so that everyone could have the basics. This was a big part of the United States' own development story, and even one of the reasons we fought both the Revolution and Civil War.

Since most philanthropists, however, are living in their own Internet age (with computers and iPhones produced in sweat shops) they turn their nose up at boring solutions involving antiquated things like factories. "New thinking" is what made many of them rich -- why wouldn't it work for African villages?

Yes, industrialization has terrible side effects that are destroying the planet. Factories and machines that are spewing billions of tonnes of carbon every year must be physically rebuilt and replaced. This just adds one more urgent reason for going back to kind of intentional sweeping economic renewal that has already transformed much of the world.

The problem all this poses for philanthropists is clear: they cannot make sweeping national development happen by writing a check. No clique of billionaires has anywhere near the kind of money to pay for it. A recent proposal by Stanford civil engineers estimated it would cost 100 trillion dollars to completely replace the world's carbon economy. That's unthinkable for mere billionaires. But it's easily within reach by the governments of the world. Recently, for example, the United States alone effortlessly promised up to 15 trillion to bail out a handful of misbehaving banks.

National development plans happen when people take over their governments and demand national development. In America, with millions sliding back into poverty, and the second-worst polluting economy on Earth, we need to renew our economy fundamentally and on a massive scale. We also need to encourage, rather than punish, leaders in poor countries who want to do the same thing, even when that means striking a better deal for themselves (and a slightly more expensive one for us) in the global economy.

People in your position could do so much to make that happen.

Thank you for your courageous straight talk about the state of philanthropy. I hope none of this has sounded like criticism -- it isn't. All I'm saying is that if people like you, and other major philanthropic and business leaders took seriously these unglamorous truths about ending poverty, and spoke out about them, it would create the conditions for not just a new story, but a new political movement that would transform the world.

Anyone interested in delving deeper into some of these ideas? Here are a few recommendations for further reading:

Ha-Joon Chang, Bad Samaritans: The Myth of Free Trade and the Secret History of Capitalism
Erik Reinert, How Rich Countries Got Rich . . . and Why Poor Countries Stay Poor
E J Hobsbawm, The Age of Revolution: 1789-1848 / The Age of Capital: 1848-1875 / The Age of Empire: 1875-1914 / The Age of Extremes: A History of the World, 1914-1991
Arthur Herman, Freedom's Forge: How American Business Produced Victory in World War II
Chalmers A. Johnson, MITI and the Japanese Miracle: The Growth of Industrial Policy, 1925-1975
Bruce Cumings, Korea's Place in the Sun: A Modern History (Updated)
Mike Davis, Planet of Slums
Eric Janszen, The Postcatastrophe Economy: Rebuilding America and Avoiding the Next Bubble

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