Entering my brush-up courses for graduate school in one week, I ponder the most pressing challenges for the future of a policy economist focused on development and more equitable economic opportunity for all. The (unsatisfactory) growth of human capital with relation to aggregate incomes and the distribution of personal incomes within and across societies plays an increasingly central role in political debates and the demands of citizens worldwide, as information improves global awareness of forces marginalizing the conditions of those with the lowest incomes.
I wrestle with what seems like an overlooked starting point to this issue. As a person born, raised, and educated in the developed world, isolated from extreme poverty, what is more critical – to focus on alleviation/elimination of extreme poverty that affects the developing world, or relative poverty that persists in the developed world alongside massive wealth? Will decimating relative poverty exacerbate the poverty plaguing the undeveloped world by contributing to a concentration of capital that creates a dichotomous world, similar to the growing inequality trends occurring within many of the world’s richest nations (in particular the U.S. case); or will a disproportionately large increase in the wealth and well-being of the relative poor create an economic climate of socially responsible globalism and development aid that fulfills the economic proverb preached by some since the dawn of the modern conservative economic era in the U.S., that “a rising tide lifts all boats”? Both ends have good intentions, but which produces the greatest net gain (measured in all indicators of quality of living)? In order to answer this question, both require carefully researched, coordinated, and executed policies to achieve the optimal effect. Both must holistically assess and measure costs and benefits, seen and unseen, such as:
- Number of lives positively affected
- The net effect on said lives
- The magnitude and direction of effects on differential aspects of life
- The marginal returns to improvement in factors contributing to quality of life stratified by the individuals’ and populations’ utility preferences
- Risks of failures and implementation
- Who is hurt in the short-run
- What is the “breakeven point”, or the point at which people have opportunity for growth, a “foot on the ladder” of development, and development is sustainable with no further need of planned aid because people have the tools they need to grow
- Might rich countries and multinational corporate powers perceive potential threats coming from new competition, and might this pose a political barrier to action
- Might controversy and class “warfare” regarding relative power and influence somehow emerge as a result of more equitable societies; or other negative unforeseen consequences
Secondarily, but necessarily, the costs and benefits to the financiers/rich for investing what’s necessary to fight poverty must be accounted for. Theory would support a long-run gain for those investing the capital – opening and expanding new markets and bolstering demand – via empowering growth.
These are complex issues, not to be oversimplified, and necessitating analysis by multiple disciplinary perspectives working together; not to mention political cooperation and united, competent implementation. Truthfully, I think some of these questions are beyond the capabilities of human understanding, and are much deeper and more significant. What is certain is that love is at the roots of the solution. What is also certain is we must not simply pontificate, but we must labor to understand and analyze in the most efficient way we know how. We must utilize and build upon the academic arsenal available to take on these challenges.
Laziness, selfishness, and apathy are the enemy of the fight against poverty and severe inequalities in capital. Unfortunately, these traits are part of human nature and a significant component of the inertia of the rich world today. How can one begin to tackle problems so complex and with innumerable interrelated drivers? Most importantly, we must act! Bring on the books, and bring it on, world!
Social distinctions can be based only on common utility.
– Declaration of the Rights of Man and the Citizen, article 1, 1789
(written 8/24/14; image © Benjamin Anderson 2014)