Pondering Poverty

My wife had an interesting experience this past week. She was teaching yoga in the park in Grand Haven, Michigan and was approached by a man who identified himself as an international tourist from Ireland.

The man said, “Have you seen those enormous million dollar yachts in the harbor?”

“Yes,” my wife said.

“People here have a lot of expensive things, don’t’ they?”

“Yes,” my wife said.

“Have you been to the city twenty miles north of here?” the man asked.  “People there can’t afford to buy food.”

“Yes,” my wife said.

“Capitalism, eh?!” concluded the man with a slightly condescending tone.  “It’s not like this in Ireland.  We take care of each other.”

My wife said nothing.  Like many Americans, she is fully aware that there are systemic issues with capitalism in the United States that negatively impact our citizens.   It’s a major topic of conversation in our house.

Poverty in West Michigan

In January of 2010, the Grand Rapids Press reported “Grand Rapids and its metropolitan area share a grim economic distinction, as both lead the nation in the percentage growth of those in poverty from 2000 to 2008.”   The downturn in the global economy paired with the crisis in the automobile industry has been tough on West Michigan.  As the article states, West Michigan led the country in percentage growth of poverty during the beginning of the twenty-first century.  And while I’m sure we can all agree that is a problem, do we really understand what poverty means?

What is Poverty?

Most people believe they understand the concept of poverty.  When I ask people to describe poverty they usually explain it is a lack of money or access to fulfill basic human needs.  But when I ask them to explain further what those needs are, most people are unable to define poverty at a more concrete level. This is part of the reason I’ve been researching human suffering and why I’m proposing a new taxonomy of suffering and human needs.

Poverty is not a single concept. There are many definitions depending on the context of discussion. Consider these two definitions.

“Poverty is pronounced deprivation in well-being, and comprises many dimensions. It includes low incomes and the inability to acquire the basic goods and services necessary for survival with dignity. Poverty also encompasses low levels of health and education, poor access to clean water and sanitation, inadequate physical security, lack of voice, and insufficient capacity and opportunity to better one’s life.” ~World Bank

“Fundamentally, poverty is a denial of choices and opportunities, a violation of human dignity. It means lack of basic capacity to participate effectively in society. It means not having enough to feed and clothe a family, not having a school or clinic to go to, not having the land on which to grow one’s food or a job to earn one’s living, not having access to credit. It means insecurity, powerlessness and exclusion of individuals, households and communities. It means susceptibility to violence, and it often implies living in marginal or fragile environments, without access to clean water or sanitation.” ~United Nations

The World Bank and the United Nations are well known and respected institutions, but their definitions of poverty are vague, complicated and lack the ability to be easily measured.  Defining poverty is tricky which is why objective measurements of poverty are almost always reduced to monetary definitions like the “poverty line” or “poverty threshold”.

The World Bank defines the poverty line as “the minimum level of income deemed necessary to achieve an adequate standard of living in a given country.”  Poverty in a practical sense is not a measurement of suffering and wellbeing, it is an economic metric.  It is a financial metric. This inability to clearly define poverty in measurable terms, other than references to money, highlights a major flaw of capitalism.  We are measuring the wrong things.  We should not be measuring money; we should be measuring human experience in the form of suffering and wellbeing.

The Irishman talking to my wife was right, at least about American capitalism.  Our culture of capitalism has evolved into a culture where money, in the form of profit, is valued more than people’s life experience.  And while avarice and ego are certainly involved, a driving force is simply that counting coins is easier than objectively measuring human experience.

Doing Good vs. Doing Well

In Ireland, the top 10% earning households earn 25% of the disposal income says one study.  In the United States, the top 10% of earning households earn 48% of the disposal income. What does this data tell us?  Well, very little actually.  Without knowing what activities generate this income or how the earned income is spent or invested we are unable to judge the situation from the numbers alone.

Here’s a thought experiment.  Imagine that the top wage earners in the USA, the top 10%, earn all of their money from activities that are known to have a direct impact on the reduction of suffering and improvement of wellbeing.  Furthermore, imagine that all the income earned from these activities is invested or spent with companies that are focused on improving the human experience locally, nationally and globally.  If this was the case, what might be different? It is reasonable to expect that human suffering would be greatly reduced even though 48% of the disposable income is still earned by 10% of the population.

We should be looking at what people do to earn income, and how they invest and spend that income, as much or more than who makes what amount of money.  Just counting coins masks the underlying impact of commerce on the human experience.

Non-profit vs. For-Profit

Isn’t it ironic that most jobs associated with the meaningful work of reducing human suffering tend to fall into the non-profit realm?  These jobs are typically defined by their low salaries and lack of resources.  The organizations that offer these jobs are not allowed to have financially sustainable structures and are indentured to commercial ventures.  They must beg to fuel their work. Isn’t that odd?

Society has developed so that money managers on Wall Street, which produce virtually nothing and have no impact on the reduction of suffering and promotion of wellbeing, make enormous salaries, while non-profit jobs pay only meager wages.  To get a quick understanding of how non-profits and for-profits are unconsciously treated differently in American culture, watch this short video by Dan Pallotta, the author of one of my favorite books, Uncharitable: How the Constraints on Non-profits undermine their potential.

Counting Coins

Don’t make the mistake of thinking the money managers and yacht owners are the problem. The problem is systemic to capitalism and the current culture of business.

Every business is required to count its coins. The practice of coin counting is called accounting and it is deeply ingrained into our society at all levels. What do we call the standard practice of evaluating the efficacy of our businesses on quality of human life? It’s a trick question. There is no such practice…yet.

Money is necessary, but should not be the metric by which we measure the output of a business or a life or a society. American capitalism is built on practices that measure the wrong things and as such, it is fundamentally broken as a tool for creating wellbeing. It’s no surprise that suffering due to lack exists in America. It’s a natural result of our economic culture. We will never solve the problem of human suffering based on lack by talking about poverty. Poverty is a symptom of a different set of systemic problems.

The problem isn’t that the “poor” lack money; the problem is that capitalism focuses on money instead of human outcomes.

Poverty in American

Are people in your neighborhood, city, or state, suffering because their core and basic human needs are not being met?  Why?  It’s OK if you don’t have a good answer.  It’s a complicated question that is typically framed as a question of poverty.  Poverty is a simple word that we use to describe a complex set of issues that result in poor life conditions, including lack of financial resources.

Poverty can an environment, a situation, and/or a mindset.  Some people are born into a culture of poverty where they lack exposure to the techniques to improve their situation.  Other people are thrust into poverty by swift life or economic changes.  A lot of people are trapped in the doldrums of poverty by systemic cultural forces including racism. The experience of poverty can be temporary or a lifelong experience.

In 1964, the year I was born, President Lyndon B. Johnson, a fellow Texan, declared a “war on poverty” in his first State of the Union address.  It can be said that the USA lost that war.  Why is that?  That’s a question being asked in a lot of places including the National Poverty Center at the University of Michigan. With all the resources and brain power of the United States of America, why is that thing we call poverty is still so prevalent?

Cause of Poverty

I believe that the United States has been unable to drastically reduce poverty, not because of lack of desire, but because poverty is a natural symptom of traditional American capitalism.  Capitalism that measures money instead of suffering and human wellbeing is naturally at risk to disenfranchise or portion of the population. Capitalism that prefers increased profits over increased efficacy in quality of life will naturally concentrate wealth in the hands of those who are less interested in the human condition than acquiring money.

We have created a system that places self-centered money focused individuals in positions of leadership and power. The solution is to reinvent capitalism and the mechanisms of commerce so that our economic and social systems naturally promote effective humanitarians into leadership positions.

We will not be able to solve these problems using the current systems of business and government. We must make systemic changes to how society works, which means changing how business and the economy works.

Fish Ponds

Give a person a fish and you feed them for a day.

Teach a person to fish and you feed them for a lifetime.

Show a community how to build fish ponds and you empower their society.

Traditional American capitalism focuses on profit (doing well) instead of utilitarian efficacy (doing good). The perceived prime directive of most corporations is to create profit for their shareholders. The stock market is driven by potential financial returns and not by potential positive returns for society. The USA economy is driven by the potential of future financial returns and not the potential for human outcomes.

American Capitalism creates an environment that inspires some companies to seduce our attention as a means to sell us things that we don’t need.  There goal is collecting coins. If you don’t find this situation extremely bizarre and unhealthy you are still hypnotized by the siren’s song of modern culture.  The good news is that at the edges of our economy good people are doing good things to shift our economy from profit focused to people focused.

B Corporations

Social entrepreneurs see how capitalism has become perverted and are taking steps to right it.  Fred Keller is one of those social entrepreneurs and is based in West Michigan.    Read about Fred in Inc. magazine. His company, Cascade Engineering, is one of the largest B Corporation in the world.  A certified B Corporation is  new type of corporation which uses the power of business to solve social and environmental problems.   Inc. magazine did a nice write-up about B-corps here.

The L3C

Other social entrepreneurs are experimenting with the new L3C company formation.  An L3C is a Low-profit Limited Liability company.  It is a for-profit vehicle that can receive investment from foundations through something called PRI funds.  Michigan was the 2nd state to allow the L3C structure. Vermont was the first. You can start learning about L3C’s on Wikipedia.

Business is the Heart

Commerce is the flow by which we move resources between each other; it is the life giving blood of human society.  Business is the heart.  Healthy businesses do the work of moving resources to people so that suffering can be reduced and quality of life can improve.

When we give less attention to measuring money movement and bring our focus to measuring objective business outcomes relative to suffering and wellbeing, the lives of all Americans will naturally improve.  That will be the era of The Good Economy.  This is the work we must do together.  This is the work that will naturally reduce poverty.