Sorry for the gratuitous and misleading photo. The model I’m interested in today is a model to actually reduce poverty in Perú, or anywhere else, long term.
A Couple of Quotes First
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"I am for doing good to the poor, but I differ in opinion of the means. I think the best way of doing good to the poor, is not making them easy in poverty, but leading or driving them out of it. In my youth I traveled much, and I observed in different countries, that the more public provisions were made for the poor, the less they provided for themselves, and of course became poorer. And, on the contrary, the less was done for them, the more they did for themselves, and became richer.”Benjamin Franklin
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"You know, if you were a slave in the old South, what did you get as a slave? You got free room and board, you got free money, and you got rewarded for having children because that was just, you know, tomorrow's slave ...
Can I ask a question? How's that different from welfare? You get a free house, you get free food, and you get rewarded for having children. Oh, wait a minute, hold on a second. There is a difference: The slave had to work for it."
Jim Quinn
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This article, “Brazil reduces poverty but industry feels the strain” (posted by jorcaryvan at Peru-N-English Discussion Group) is a good example of how government redistribution always has negative economic consequences that defeat the whole purpose of the program. When governments give money and receive little or no productive activity in return they unbalance the economic system needed to genuinely and permanently lift people out of poverty. Not to mention the debilitating effect it has on the poor by creating a sense of entitlement and ingrained poverty. When in history did the lives of poor people improved, when business was bad?
As long as poverty is politicized it will not be alleviated. The answer, in my estimation, is results and performance based, career or job focused, privatization of anti-poverty programs. With government playing only an oversight role in these organizations. There are private groups now that play this role, but most are highly atrophied due to the lack of proper funding.
What I propose is incentive based tax credits to businesses who become directly involved in establishing or funding anti-poverty and poverty to jobs programs. With two distinct obligations.
1. The names of these participating businesses and the anti-poverty programs they are associated with would have to be made public information.
2. The anti-poverty organizations would have to address both rural and urban poverty to qualify for a charter. And, independently audited results would have to be published semi-annually.
Government needs to step aside by giving direct rewards to businesses, large and small, for participation in or the creation of these programs. For example: For every $1 a business puts toward funding or organizing poverty eradication programs they would receive (for illustration purposes only) $1.05 in refundable tax credits up to 100% of their total annual tax obligation. I have no idea what the differential should be per country, but in looking at the USA chart below (because it is the only one I could find), I would tend to believe that it could be much larger than $1.05. When you consider the productivity that this tax credit program could produce, the change in costly criminal and social behaviors and the balancing of a country’s economic metrics, the overall savings to society, in general and in lifestyle improvement, would be unmeasurably positive.
Why would this work?
1. This is removing the social agendas of various political factions. Who like to use these poverty programs for social engineering and self-interested political gain. And, even in some cases, self-enrichment.
2. This is creating competition between the providers of the anti-poverty programs and would deliver performance based results. The best programs would rise to the top by natural selection. Businesses who create or support a private antipoverty program would have skin in the game. The results would be a direct reflection on their company. Thereby, holding their feet (and reputation) to the performance fire.
3. Businesses have the ability to offer job or career paths in the productive private sector to those who earn it. This type of program would give them access to lots of otherwise undiscovered talent. Governments can only offer government jobs and careers that produce nothing and feed increasingly off the taxpayers.
4. Competing programs have a way of sorting out the good from the bad. The producers from the non-producers. Whereas government programs, once set in place, tend to become entrenched, inflexible and frozen by the infighting between political ideologies.
Could it happen? As long as you have politicians with egos that outweigh their benevolence, it is highly unlikely. Taxes and government run programs are power and control to politicians and bureaucrats. They won't give that up easily. Thanks to politicians everywhere, the odds on favorite is that, poverty will continue to thrive. After all, when in history has a government anti-poverty program successfully reduced poverty while maintaining low taxes and a competitive growth rate? To solve the poverty problem, government needs to stop vilifying business and commerce, as the evil rich (for the political purpose of raising taxes on them), and start creating direct management anti-poverty and impoverished community economic growth programs, that utilize and solicit the knowledge and expertise of the business community.
ADDITIONAL FOOD FOR THOUGHT
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