1.Educating the farmer for quality production
2.Farmers should be paid more for their production rather than small amount

[...]

Aditya: “I think poverty can be removed by adopting a new lifestyle that works well with the existing environment OR by moving to an environment that supports the existing lifestyle.”

“I think it is important to devise an education system that is sensitive to the individual’s context of life. The fundamental premise of such an education is that the learner looks at the teaching from his own unique perspective.”

Aditya – I know the spirit with which you say this it may not look as good when in practice. In fact haven’t the civilizations and societies codified and adopted laws precisely in order to protect themselves from the runaway effects of such a society?

It is tempting to think that this way is better as it is a painting of a communally harmonious way of living. But sociologically speaking, lifestyles, individual contexts, “own unique perspectives” are all so subjective. It would not only be a futile exercise – though well-intentioned – to direct our energies in this direction, but I think also dangerous in the long run. It will not be long before our own little world would start to look like – I am not trying to twist your words – a bunch of disconnected enclaves: a fundamentalist Mormon, a Naxalite, a Taliban, a consensus-based Sati, or even a … I can’t think of anything worse. All these little enclaves would have education uniquely suited to their context, their perspective, their environment, worldview suited to their lifestyles etc. Where do we end up as a society, if we evolve like this?

Aditya’s and “little Ram”’s comments on poverty resonate with my own – somewhat muddled – thinking on this matter.

Though when comments going back and forth go too long I sort of throw up my hands, wanting to “go to the next step”, I’ll press on write them anyway. Some of you may have seen these words of mine elsewhere.

If we look at poverty-line as a weighted vector, then not only we can preserve the existing “a single number” view of poverty (the norm of the vector), we can, additionally, start to track the direction of each weight and see how they fare from one population segment to another.

Roughly cut, itemizing a few key factors that influence poverty status of an individual/community, shouldn’t be hard, right?:

aa) income,
bb) nourishment,
cc) health care,
dd) living long,
ee) education
ff) competitive economic activity
gg) access to justice/law
hh) and few others that are not on this list.

It seems to me that a comprehensive measure of poverty would work out to be some sort of a weighted average of each of the above factors.

So a person’s poverty-rating = weighted vector of (income, nourishment, access to health care, living long, education, access to justice/law, etc.)

Of these, the item (ff), the competitive economic activity is of special interest.

At a simplistic level, you all know that for free-market proponents (I am one of those), the key lies in the competitive economic activity.

The argument that I find myself making all the time is: this competitive economic activity factor alone is a primary force that eventually lifts the quality of all the other factors. The more people are drawn into the fold of the competitive economic activity, the better off for everyone, i.e., (I am totally geeking out here):

F(economic activity, competition) = betterment of overall poverty w.r.t. the above poverty-rating vector

Problem is, most of our experience with free-enterprise economies of the developed countries is positive because our experience is largely in situations where all the other factors are abundantly already present. It is only because the federal/state governments do their job in helping to sustain the above factors that the economic activity, privatization etc., is so vibrant and helpful.

Is it a stretch to say that when it comes to our India there is a big contrast?

Anyone who says that we have to start with economic activity/competition – such as at the BOP – is leaving a big question mark in the minds of the naysayers: how is this competitive economic activity going to help the poverty-rating vector?

The above functional relationship between competition and betterment of poverty-line, that is taken for granted and proven effective in the developed nations, is yet to be felt, yet to be realized in India.

This is also an economic literacy problem, but more important, I think it’s a…how should I say? While our poor folk are at the bottom of the pyramid, the folks who are in the governance are like mummies in the pyramid (MIP), inured to everything.

So, we have here a case that the barriers to empowering the BOP are the MIP, the Mummies in Pyramid.

While thinking of poverty-line vs. economic growth, in one of those simplistic analogies, I think of an exercise where we measure each individual’s poverty rating w.r.t. a normalized axis of a scalar number 1.0.

So a person’s poverty-rating = weighted average of (income, nourishment, access to health care, living long, education, access to justice/law, etc.) = equal to, or less than, or more than “1.0.”

Now, most “economic growth” is akin to an amplification effect. That is, a person with a poverty-rating of less than 1.0 (”below poverty line”) will become more poorer (squaring a less-than-one quantity) and a person with a poverty-rating of more than 1.0 (”above poverty line”) gradually becomes more richer (squaring a more-than-one quantity.)

It’s simple to interpret how the rest of analogy stretch goes: simply growing economic activity without improving the rest of the contributing factors is not going to help.

This is where the MIPs are supposed to come to do their duty. People should not be required to, nor should they be expected to, be innovative just to meet their basic livelihood needs. The competitive economic activity germinates only after you and I stop worrying about procuring our next meal.

That, I am afraid, won’t happen as long as we have MIPs.

Regards,
Crazyfinger

Following your link in subsequent post on this topic I read Pralhad’s reply. There it is mentioned that the rural Indian redit is estimated by ICICI to be 15,000 billion rupees of which only 40 billion is tapped by banks in India.

The very high interest rates could be draining a good share of rural income to moneylenders. Reduction of money sourced from moneylenders could leave enough money both with banks and borrowers and could create additional income in turn.

For someone who reads these nuggets, the impression one gets is that rural credit is a cakewalk and a market waiting to be tapped. (It is not clear why the market is opening up now instead of in previous decade if not earlier.) There is no analysis of crop and irrigation risks, need for high debts for customs such as expensive marriages (living far beyond income) etc. There may be greater need for insurance than that of credit.

It will help if you can shed some light on this rural/micro-credit market which is currently in the limelight.

Sharad

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Following up on the post “The False Bottom of the Pyramid” thanks to Raja Sekhar Malapati once aga [...]

I have for long been very sceptical of Prahalad’s BOP argument.

Poverty anywhere, has the following underlying causes-

1. Poor access to markets
2. Poor access to education to develop marketable skills
3. Inadequate healthcare sometimes leading to a regression to poverty through loss of the means for earning
4. Inadequate risk management mechanisms (against failure of rainfall, pests, loss of livestock to disease, etc.)
5. Restricted access to capital
6. Unstable/ violent societies

Societies and Governments everywhere have tried using measures like cooperatives, support pricing, microfinance, rural heath initiatives/ telemedicine, etc. Although I would agree that in the Indian context microfinance/ rural credit could be managed better, and education is sadly neglected. Mercifully, the last point has become less of an issue over time in India with still some way to go in UP/ Bihar/ NER.

Quite simply to claim that turning the poor into a market for goods will magically transform them and the world around them is an argument that ignores all of the causes of poverty listed above.

My view: A person is poor if he leads a life his environment does not support.

Such a condition of poverty may arise out of many factors. Some factors, not in any particular order, are “Birth effect” (what local and global circumstance the person is born into), social dynamics, education, disease, and financial situation et. al.

I think poverty can be removed by adopting a new lifestyle that works well with the existing environment OR by moving to an environment that supports the existing lifestyle.

One can estimate / extrapolate a money number to represent the poverty condition. A $ value thus becomes an overall-variable representative of poverty. IMHO, the trouble with using a single overall-variable indicator is this. A solution to the poverty problem tends to tackle it at the level of this single variable only. The solution does not necessarily scale to address the more fundamental lifestyle or environmental issues at the root of poverty. In fact it may be counterproductive when it feeds into bad lifestyle traits.

Education is an important tool to address the issue of poverty. Here it is to be noted that literacy is education’s most deceptive face. It is again akin to a single-variable measure of education. An educated person is, among other things, aware of the world around him, and is aware that there are ways and means to find solutions to problems s/he faces. Education suffers when literacy is thought of as a prerequisite.

I think it is important to devise an education system that is sensitive to the individual’s context of life. The fundamental premise of such an education is that the learner looks at the teaching from his own unique perspective.

Education that imparts Perspective is the key to addressing poverty in its various forms.

In light of this fact what is your opinion ? While it was CavinKare that broke into the sachet market (smaller but more expensive package per ml), it is HLL (the mnc, not a local SME) that is the volume leader. My own experience is that it is difficult to second guess ‘affordability’ of any demographic strata. People do strange things to acquire ’stuff’ which they covet. Bottom line is to have a functional product and great distribution. The bottom of the pyramid will buy if the product is sexy enough and available in the corner store. It is truly a magical market as volumes go.

Also I will point 1 thing out to mr prahlad that terrorism isnt related with poverty.
Percapita income is quite decent in saudi arabia and it is a major source of terrorism.
The MR sheikh (a british of pakistani ancestory) who was involved in indian airlines hijack from nepal and later with
daniel pearl issues WAS NEVER POOR.
He was upper middle class MUSLIM.

A very timely article. When you raise the question about BOP being a harmless illusion or a dangerous delusion – I agree it is obviously the latter. It is always about the opportunity cost !

Looking at the others’ comments, I believe it is time you posted your thoughts about “agricultural subsidies” – as you have promised me.

I think if an activity relies on subsidy to survive, it cannot be called productive. Subsidy artificially lowers cost of american agricultural produce below that of global substitutes. It masks the real cost of production which is otherwise high, therefore uncompetitive and is indicative of an inefficient system of production.