The Poverty Industry: Self-Serving and Self-Perpetuating?

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Helping the poor is an industry in itself. The last century has seen a dramatic rise in global fiscal aid and NGOs (non-governmental organizations). But who is this industry really serving: the poor, or themselves?

A new documentary-film entitled Poverty Inc. explores this question with on-the-ground knowledge of the way the poverty industry is affecting those whom it seeks to help. Example after example shows how aid has harmed local economies and businesses, even forms of aid that might surprise you.

Subsidized food to Haiti is a strong example. They used to eat rice 3x a week as a treat, but US farmers were subsidized to ship tons of rice to Haiti for cheap. As a result, rice growers gave up their fields and moved to the city, which hurt their local economy and increased overcrowding in slums and multiplied poverty. After the Haitian earthquake, NGOs came to help. While some aid was helpful, some was not, since they brought in free goods that local businesses could have supplied. The NGOs never left.

One businessman whose company builds streetlights employs several workers. When NGOs bring in free streetlights, his sales drop from 50 a month to only 5 in half a year. He met with NGOs to ask them to stop bringing the free streetlights, but they would not.

The film traces this philosophy of aid back to the Marshall Plan, which sought to build up Europe’s economy after WWI. Some believed that the fiscal aid to Europe worked to jumpstart their economy. On this belief was build the modern notion that global aid can still do the same for pre-industrialized countries to help them make the jump to industrialization.

The problem? It just doesn’t work. 

But there is another reason the poverty industry hasn’t called it quits. They are self-interested. NGOs are numerous and employ many workers. These workers get tax-free incomes, often get servants in developing countries, plush cars and a comfortable life. They are essentially “new colonialists.” NGOs live the good life.

Although it may be an overgeneralization, some of the local businessmen/women interviewed in the film believe NGOs don’t want local businesses to flourish because it would put the NGOs in that region out of business. They are self-interested because they have plush jobs with lots of benefits, plus they get the emotional satisfaction of feeling that they are helping the poor.

But the rest of this hour and a half film is clear, with example after example: global aid in the form of NGOs, t-shirt bombing, subsidized food, free streetlamps, etc. etc. simply hurts local economies and keeps developing nations from growing themselves. The message from Africa is clear: “get out of our way.” To suggest that we want to give resources “free forever,” as many social entrepreneurs do, is to suggest that they want developing nations to stay poor forever and in need of their aid. Rather, get out of their way, let them develop from within by building up local business and by innovating.

There are even surprising forms of aid that hurt economies and societies. One couple was adopting a child from Haiti when they discovered that the child actually had a mother. In that culture, parents often gave up their children to orphanages to be taken care of financially and to get an education. Around 80% of children in orphanages in Haiti have at least one parent. This couple was about to spend $20,000 to adopt a child who had a mother that wanted to raise the child. So even this form of aid hurt the society, family structure, and economy (because of the resultant weak family structure).

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How Can We Help?

You should watch the film to get all the nuance. But to summarize and show that it does put forth solutions, we must work to let developing nations flourish from within and promote that with our efforts. The couple just mentioned chose instead to start a local business and employed men and women who were then able to afford to care for their children. We can stop subsidizing goods that kill local businesses.

And most importantly, we must work for just conditions that allow the poor to flourish. These include the Rule of Law, property laws that are enforced, increased accessibility to local and global markets, and the promotion and growth of Small-Medium Enterprises (SME’s).

Poverty Inc. is related to Poverty Cure, which as of today has a global network of 388 organizations in 188 countries working to bring these conditions to fruition.

Preview or buy Poverty Inc. here on Amazon.

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About Todd Scacewater

Todd is a Teaching Fellow in New Testament and PhD candidate at Westminster Seminary in Hermeneutics. He holds a Th.M. in New Testament and a B.A. in Political Science, and has served the church in music, college, youth, children, and discipleship ministries.