I enjoyed the opportunity this week to attend a discussion with former US Secretary of State Madeleine Albright, who came to McGill University to discuss the role that business can play in helping reduce global poverty. The room was packed, largely I suspect because Albright has been a staunch and trenchant critic of recent US foreign policy and plenty of people were there expecting more well-aimed jabs at the Bush administration’s current imbroglio in Iraq. However, despite a few judicious barbs, Albright mostly stayed focused on her theme – the issue of how to help the world’s poor.
Generally, when the well-heeled gather together to consider the great problems of the day, the potential for attitudinizing and, worse, foggy platitudinizing (to coin a phrase) is considerable indeed. This is simply unavoidable, since such events are always slightly uncomfortable. Not only is it largely ineffectual to engage such massive and insuperable problems from the dais; worse, there’s an inevitable sense of cultural encroachment. How would we feel if Bantu Tribesmen regularly held symposia on the developed world’s over-reliance on energy and material consumption and then flew in to our capital cities with the results of their well-intentioned discussion? Well, actually, that might do us some good.
Anyway, amidst the usual clichés (empowerment, engagement, reform, renewal, commitment – the usual pastry-puff terms), Albright reiterated the key insight of Hernando de Soto: above all the rule of law counts in bringing about meaningful change. That is not surprising since both are members of a Commission to eradicate poverty built around his work.
De Soto’s El Otro Sendero will likely endure as one of the most important works of its era. Despite having been published almost 20 years ago, there is still a lamentable lack of action in managing the transition from an informal to a formal economy. The key remains to develop and foster mechanisms which can transform potential wealth into real wealth. That means supporting a legal environment stable enough to enforce contractual obligations, particularly land-based rights. Additionally, however, it means bringing the credit revolution that has transformed Western economies and societies into developing nations to a local, individual level. This will help create the necessary conditions for wealth and prosperity to flourish locally.
Our own history teaches us that it is exceedingly arduous to scuttle entrenched interests from above and that attempts to do so, no matter how well-intentioned, usually result in war, violence and deprivation. Preaching democracy from afar as a cure-all for endemic poverty produces pretty-sounding phrases but does precious little else. Or I might say: the nitty-gritty of micro-economics as espoused by de Soto holds out greater promise for change than the high-minded rhetoric of macro-politics as espoused by politicians.
De Soto’s other path is about economics, but it is also (pace Eric Hobsbawm and the like) about politics and history as well. The struggle for expanded rights and freedoms in developed societies, particularly in the last century, was fought and won thanks largely to the potent ally of growing economic prosperity and the culture of rising expectations that such prosperity tends organically to induce. There is little reason to doubt that this trajectory will prove different anywhere else.
It would be nice to think that we could simply strike a bell and let freedom ring. The last 5 years have put paid to that notion, however. I think part of reaching de Soto’s other path is to face honestly our own failures to export prosperity. At this point, one could fill a small library with books dedicated to the topic of how Western Aid programs have largely failed to cure the cycle of poverty, famine, disease and violence in the world’s poorest nations. In the face of growing evidence that Western-sponsored programs often do more harm than good by promoting corruption and funneling money to dictators and sadists as the price of providing relief, the question of how to change our approach to poverty and violence in the developing world is a vital one. Yet these half-measures too often induce complacency; we sit back and watch events, such as those now in Zimbabwe and Sudan, and we do too little. And perhaps we should not be faulted overly for this since we don’t have an effective way to intervene. But this should remind us that we need to bolster our efforts to find that other path.
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