The risks of fighting poverty too well

Christian Science Monitor: The risks of fighting poverty too well

China's example raises tough questions about the real-world consequences of getting it right.

…Are the world's institutions actually ready for the massive shift entailed by lifting the last 1 billion people out of poverty? Do we fully understand the political and resource implications of being "too successful," as many believe and some fear China has been?

A closer look at China is important, because it's an extraordinary case. From 1981 to 2001, 400 million people there lifted themselves out of extreme poverty. Their numbers as a share of population fell from 53 to just 8 percent. Effectively, 80 percent of the world's progress in ending abject poverty has happened in China, independent of foreign aid. …

…But raising the floor raises new challenges. As absolute poverty in China declines, inequality is rising rapidly. If revolutions often grow in the shadow of rising expectations, the implications for China's remarkable progress are clear. An expanding and restive middle class may tolerate Beijing's restrictive governance only as long as the money flows. A significant slowdown could augur instability.

And for the rest of the world, China's breakthrough has brought serious if predictable environmental consequences, particularly an explosion in greenhouse gases. It's also triggered intense competition for resources, particularly oil, the pursuit of which has prompted China's lush sponsorship of the most savage and dysfunctional bottom-billion regimes in the world, from Angola to Sudan to Zimbabwe.

It's ironic, but for the last billion China has proved to be the most inspiring example and a direct brake on progress: First, by bringing in state investment that perpetuates many of the poorest nations' worst governance problems; and second, given China's seemingly endless supply of workers, by making it harder for poor nations to contribute labor and trade in world markets. Policymakers haven't learned how to mitigate these and many other unintended consequences of success. …

…The rich world's institutions need to fundamentally reconsider the incentives and rewards they apply, not simply to last-billion governments, but to their own organizations. For example, rather than link managers' seniority to the number of people and dollars under them, they should be rewarded for analytic assessment, experimentation, and country-based outcomes (not activities). That way, good people get recognized and rewarded for doing the right thing, rather than defending budgets. …

…Many activists, meanwhile, revere the purity of presumed commercial innocence in "simpler" societies and resist the idea of wealthy nations imposing their version of development on the rest of the world. But where people on the very edge of survival are concerned, romanticism over the "noble savage" fades to irrelevance. Generating the economic growth needed to lift people out of abject poverty means ushering corporations into putative paradise. Many humanitarian activists are deeply hostile toward business. But to help the worst-off, commerce must be enlisted, managed, and regulated, not resisted. …