Poor Economics, Rich Ideas

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Cropped cover page of 'Poor Economics: A Radical Rethinking of the Way to Fight Global Poverty'.Photo Credit: The Hindu.
Cropped cover page of 'Poor Economics: A Radical Rethinking of the Way to Fight Global Poverty'.Photo Credit: The Hindu.

–M. Farooque Azam

Every cloud has a silver lining and this lockdown has brought some positivity despite great hardship it has caused all over the world. I’ve been using this time to read more books and one such book that I finished was ‘Poor Economics: A Radical Rethinking About the Nature of Poverty’ authored by economists Abhijit Banerjee & Ester Duflo. They both were recently conferred with the prestigious Nobel Prize award in 2019.

Poor Economics is a 10 chaptered, 440 paged insightful book about the lives of the poor, and about what works in development. The authors, also scholars of MIT’s Abdul Latif Jameel Poverty Action Lab (J-PAL), review the results of numerous randomized control trials (RCTs) of development interventions around the world. The authors’ ability to weave together their results to formulate knowledge about the nature of poverty and development makes this book unique. I highly recommend my activist friends working to elevate people from poverty to read this book, especially those working among downtrodden section of the society and Muslims because 90% of them in India are below the poverty line.

The authors start to describe the situation of the poor in the world as, “Every year, million children die before their fifth birthday. A woman in sub-Saharan Africa has a one-in-thirty chance of dying while giving birth–in the developed world; the chance is one in 5,600. There are at least twenty-five countries, most of them in sub-Saharan Africa, where the average person is expected to live no more than fifty-five years. In India alone, more than 50 million school-going children cannot read a very simple text”.

The above problem seems too big and intractable to solve. However, Duflo & Banerjee summarize and recommend to work on four points to deal with this situation and these points are Education, Health, Old traditional belief and Microfinance.

This four point program is already running all over the world and yet it is not yielding the desired results. The authors describe remedies and reasons for the low success.

 In the case of education, the menace of absenteeism of teachers in government sponsored schools, discrimination by the parents towards their children to send them to school and at schools by the teachers is devastating. Parents do not want to invest in education for their girl child.

However, this is gradually improving as job opportunities increase in the IT sector for females. Teachers either skip going to schools or do not teach as expected. In our country itself, only 41% of the teachers attend classes and in some states it’s a meagre value of 20%. In one such report, it was reported that 60% of students from class 5 are unable to read books from class 2 in India! India also faces the utmost challenge of caste discrimination by teachers. If any teacher comes to know that the students they teach belong to the poor, scheduled caste or weaker sections of the society, they give discouraging marks to these students.

Despite governments’ efforts, the expected benefits do not reach properly to students. In Ghana, only 13% of the benefits aimed for the students are received and the rest are lost midway! The real essence of the role of education towards uplifting people from poverty can be met if the above problems and malpractices are eliminated.

When the authors talk about the second point – health, they talk about the same issue of absenteeism of doctors and nurses appointed for government health centers in India. This leads to poor people approach private health centers which is certainly much more costly. If a daily wage worker falls sick, his earning stops and the meagre amount of savings is also lost in treatments in these private health centers, resulting them to take debts at very heavy interest rates from Sahukars. In this way, the poor are always
 stuck in the vicious circle of poverty.

In India, Muslims are doing well in education but not in the health sector. This is an important message to be noted that Muslims should initiate health projects quite rigorously. Doctors should come forward to solve this menace.

In their third point, the authors explain about the useless expenditure by poor people towards entertaining traditional beliefs. They mention about weddings in India, Pakistan and Bangladesh and costly post death rituals in South Africa. We should run campaigns against these phenomenons.

The fourth and final point they discuss is Micro-finance. Some people are
natural entrepreneurs by the faculty of their minds, they give an interesting example from Mumbai – some women in Mumbai come early during morning at the seashore and collect wet sand from there. They throw the sand on the nearby roads and after the sand dries up, they collect the same and pack it into small packets using old newspapers.

They then sell it to mohallas and neighborhoods for various household usage. This is natural entrepreneurship! Microfinance can help these kinds of entrepreneurs emerge from poverty. The authors also cite the example of Padmaja Reddy, CEO of Spandana and a highly qualified woman from the Guntur district of Andhra Pradesh who successfully elevated millions of people via micro financing strategies by providing carts and rickshaws.

The authors describe how old colonial laws in our country and other under developed countries are affecting the poor. Power concentration lies within the hands of only few elected people.

In spite of various pro poor programs (immunization, cheap and good fertilizers etc.) conducted by the government, the participation from the poor people to undertake the same is low, owing to either missing information or because of their fundamental psychology to disregard these programs.

The authors conclude by describing about how women are the least corrupt at Panchayat levels and they are the most successful Pradhans in our country especially in West Bengal. These important stats and information can really be used by us.

There are much more elaborated steps and examples cited in this book from at least 50 countries of the world. It was an absolute delight to read this book and once again I would like to recommend to give this book a read!

(Farooque Azam is a Kolkata-based freelance writer.)

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