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Insightful newsletter of Drishtikone: Issue #226 - Poverty as a Business Model

Author: Desh
Publication: Drishtikone.news
Date: January 19, 2021
URL:    https://drishtikone.news/p/insightful-newsletter-of-drishtikone-ccc

From the Communists to the Colonial Masters, everyone found poverty to be a great tool to gain power over masses. Feign altruism and throw some crumbs and people will sell their mother!

“I have sworn before a portrait of the late lamented comrade Stalin that I will not rest until I see these capitalist octopuses annihilated.” ― Ernesto Che Guevara

If a worm is floating by looking tempting and you don’t need to work hard to get your lunch - then the chances are that it has a hook attached to it.

And, the worm for the hungry fish is not an act of altruism for the one who is fishing. It is a stratagem to get the hungry fish for either a game or lunch.

The poor who are pompously given aid by the rich governments and organizations are just that - the hungry fish being hooked by the worm.

There is a reason why even after hundreds of billions of dollars given to African countries and others like India, no real development ever happened! What really does the trick is not aid or those elite NGOs which have nothing to really show for their money - but an ecosystem for start-ups and businesses.

The lies about aid and NGOs are sold by the unscrupulous to keep their web of colonial power tools in place.

Aid and Poverty - insights and current direction

In 2015, UK passed a law - the International Development Bill which made it legally binding to distribute 0.7% of gross national income for aid to other countries. This at a time when the UK’s own poverty was over 20%!
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In 2013-14, the absolute poverty rate in the UK was 21.6% (13.6 million individuals), measuring incomes after deducting housing costs (AHC). This was a fall of 0.5 percentage points (300,000 individuals) from 2012-13, but the change is not statistically significant. The UK relative poverty rate (again AHC) was 21.0% (13.2 million individuals), unchanged from 2012-13. There was also no significant change in absolute or relative poverty for any of the major demographic groups (children, pensioners and working-age adults without children). Overall, the data suggest that the incomes of low-income households rose slightly in 2013-14 and broadly kept pace with median income.
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Some of the overenthusiastic government backers claimed it was to further the liberal agenda of doing altruism. Anyone who knows the history of the UK in the last 200 years knows that the UK government has never been God’s own shit that they would like the world to believe. So is aid given for altruistic reasons? Even the famous $13 billion Marshall Plan that the US instituted for the development of Europe was for their own foreign policy aims!

Altruistic sentiment can be attributed to the creation of the programme. Still, the Marshall Plan worked best as a tool of US foreign policy during a time which aimed to contain the spread of pro-Communist sentiment by portraying capitalist countries as more prosperous than their Communist counterparts. (Source)

In February 2010, a group of farmers in a village in Mubende, Uganda heard loud gunfire. Armed men were there to burn their crops and houses. Their livestock was being gunned down as well. After that 20,000 farmers were taken at gunpoint and their lands were taken away from them!

Who was behind this?

World Bank!

World Bank had a forestry project for which it was giving money and it promoted forestry as better use of land as opposed to farming.

That incident made headlines and investigation was ordered by the World Bank regarding its role in perpetuating that crime against humanity. But nothing happened. William Easterly wrote about this in his book “The Economics of International Development: Foreign Aid versus Freedom for the World's Poor.”

That is the curse of NGOs and Foreign Aid.

Dambisa Moyo, a young Zambian-born economist educated at at Harvard and Oxford and worked at Goldman Sachs and the World Bank has been a strong critic of the foreign aid. She strongly argues against foreign aid to poor countries in her book “Dead Aid.” She writes in a Wall Street Journal article - “Why Foreign Aid is Hurting Africa.”

Giving alms to Africa remains one of the biggest ideas of our time -- millions march for it, governments are judged by it, celebrities proselytize the need for it. Calls for more aid to Africa are growing louder, with advocates pushing for doubling the roughly $50 billion of international assistance that already goes to Africa each year. Yet evidence overwhelmingly demonstrates that aid to Africa has made the poor poorer, and the growth slower. The insidious aid culture has left African countries more debt-laden, more inflation-prone, more vulnerable to the vagaries of the currency markets, and more unattractive to higher-quality investment. It's increased the risk of civil conflict and unrest (the fact that over 60% of sub-Saharan Africa's population is under the age of 24 with few economic prospects is a cause for worry). Aid is an unmitigated political, economic, and humanitarian disaster.

Moyo shares interesting insight into the relationship between aid and poverty.
“Between 1970 and 1998, when aid flows to Africa were at their peak, poverty in Africa rose from 11 percent to a staggering 66 percent.”

Even though she uses correlations between different factors without proving causation necessarily. But the strong sense of how these metrics tango is hard to miss!

After all, if the direct objective of aid is to reduce poverty, but it ends up going up 6 times, then one has to ask the right questions - Wast it really helping or worsening things?

The crux is that when free money is coming from those whose agenda is to wield power over another society - democracy is the last thing that will enable all that. Dictatorship is better aligned to that situation. For, someone who can beat out the rest will get in and loot all that free money and promise the fruits of vicarious power that the giver wanted in the first place. It is as simple as that!

When you look at the Indian experience, you see something very similar. This was until 1992.
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inastructive. India has recevied more foreign aid than any other developing nation since the end of World War II-- estimated at almost $55 billion since the beginning of its First Five-Year Plan in 1951[1] It has long been an article of faith among development economists and policymakers that foreign aid is a necessary and central component of economic development, yet the record of Indian economic development stare 1947 belies that view.

India has had one of the lowest rates of growth of all developing countries and remains one of the poorest countries In the world after almost 45 years of aid-financed, centrally planned development. Foreign aid has directly financed and sustained India's centralized planning and control framework and thereby financed the growth of one of the non-communist world's largest and most inefficient public sectors. In 1988-89, 101 of the country's 222 largest public sector companies recorded losses and contributed to a federal deficit five times as large, in relative terms, as the U.S. budget deficit[2]
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We all know how the public sector corporations registered losses and where all that money went.

Also, who wielded power while the nation itself was up for a fire sale! (The KGB papers - 'It seemed like the entire country was for sale')

Now, if you take the figures from the table below, which shows the grants and loans provided to India over the five-year plans and thereafter until 2000, you will see that the money that came to India was INR 169,379 crores.
https://cdn.substack.com/image/fetch/w_1456,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F5b4e8fd2-f31a-40c7-8428-f9951f64b84a_632x376.png
If you take the weighted average of the USD to INR rate over 1947 to 2000, you will find that we are looking at USD 155 billion.

That’s the scale that we are talking about!!

So did India’s economy really show the impact of that much money having been pumped into the country?

Or did it go to fatten the corrupt politicians, as most aid does?

We all know what the answer is.

Compare this to how one interesting competition helped Nigeria to change things around.

From 2012 to 2015,the government gave away over $100 million dollars to over 3,000 entrepreneurs as part of the YouWin competition. More than $50 million has already been disbursed. The winning entrepreneurs have received grants averaging $50,000 dollars to start or expand a business, and thus create jobs. Only people ages 40 and younger were allowed to apply.

In fact, economist and blogger Chris Blattman asks an interesting question regarding this competition.

“Is this the most effective development program in history?”

William Easterly is a developmental economist who comes out with hard-hitting yet difficult to argue insights. His main thrust has been that the NGOs and foreign aid interventions do not help any society. Local innovation does!

“Remember, aid cannot achieve the end of poverty. Only homegrown development base on the dynamism of individuals and firms in free markets can do that.” ― William Easterly, The White Man's Burden: Why the West's Efforts to Aid the Rest Have Done So Much Ill and So Little Good

Creating ways and bringing in funds and incentives for start-ups and new innovative businesses is the fastest way to grow a country and alleviate poverty. The poverty schemes, specifically the NGO and foreign aid, are the least effective.

That is why when PM Modi launched the start-up seed fund of INR 1000 crores, apart from other incentives, it was a step that people should have sat up and applauded.

The government will launch a Rs 1,000-crore seed fund for startups, called Startup India Seed Fund, which will help startups with the initial capital for growth and operations, Prime Minister Narendra Modi said on Saturday. “Going ahead, the government will provide guarantees to help startups raise debt-capital. We are trying to build a startup ecosystem which functions on the ‘of the youth, by the youth, for the youth’ mantra,” the Prime Minister said, speaking at the Prarambh Startup India International Summit in an online address.

Start-up India’s portal shows the benefits that a startup which has received the DPIIT recognition can get.

A lot of NGOs in the world are tied to religious work. They are not as much interested in poverty alleviation as they are pushing their own religious and ideological agenda. That comes with consequences. For example, many religious NGOs linked to evangelicals or Islamists push regressive ideologies with respect to gender equality and sexualities.

The mushrooming of these religious NGOs is a phenomenon evident across the globe. In 2010, out of the nearly 3,200 international NGOs that had a consultative status at the UN Economic and Social Council (ECOSOC), a little more than 300 were categorised as religious by one study, although this figure can vary between 7 per cent and 10 per cent depending on the parameters used. One important characteristic unique to these NGOs is that aside from their humanitarian work, they also indulge a fair bit in religious promotion, asserting that their religion (or at times, religion in general) and their god(s) offer the path to a meaningful life. While they can bring in a much-needed perspective on religious issues that other secular organisations may overlook, they are also known to be quite regressive when it comes to matters like gender equality and alternative sexualities.

A very insightful analysis on Opindia was published by Suren. You can read it here - Source. We will share only one illustration he shares in his article. It is a WordCloud of names of the NGOs. It brings out what these NGOs are really up to. The size of the word is linked to the number of times it appears in the list.

https://cdn.substack.com/image/fetch/w_1456,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Fc834aa0a-88c3-418b-80b3-c63bcf1a2854_606x457.png 
Most of these religious NGOs are doing illegal work in India as foreign contributions cannot be accepted for religious conversion activities.

Suren’s explanation of the NGO landscape in India is downright shocking.

First, aid is actually counter-productive to poverty-alleviation. What really works is funding entrepreneurial activity and facilitating an eco-system to scale those organizations and actors up.

Second, religious NGOs are known to push regressive and dogmatic practices in the society they go.

Third, using money for any other purpose than is brought into the country, however counterproductive it is to begin with, is illegal!

It is now time, therefore, to move to eliminate a culture of doles. The past governments, specifically dominated by the Congress Party were always harping on “Garibi Hatao” in every generation of their leadership. And yet, did not solve anything for the country. What ultimately helped was a better economy.

That is why it is quite interesting that they continue to push for “guaranteed MSP” for farmers - obviously just to push their agenda of hate and divisiveness.

The truth, however, is something totally different!

 

 
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