Ending Poverty: Some Ideas


The following ideas about ending poverty are limited, but useful. I am not presenting a coherent theory at all, but just some suggestions that come from Muhammad Yunus. He is the founder of Grameen Bank, and a pioneer in micro-credit who has single-handedly helped millions of the people of Bangladesh leave behind extreme poverty by way of entrepreneurialism.

In his book, Creating a World Without Poverty, Yunus suggests that we need to clearly define poverty and the measures that will indicate it has been overcome. He also thinks these should be different for each area of the world, depending on many factors. They should be based on specific living conditions more than just income level. Here is the list of ten signs that his Grameen Bank looks for to determine that a family is out of poverty.

1. The bank member and her family live in a tin-roofed house or a house worth at least 25,000 taka (roughly equivalent to $370). The family members sleep on cots or a bedstead rather than on the floor.

2. The member and her family drink pure water from tube wells, boiled water, or arsenic-free water purified by the use of alum, purifying tablets, or pitcher filters.

3. All of the member's children who are physically and mentally fit and above the age of six either attend or have finished primary school.

4. The members minimum weekly loan repayment installment is 200 taka (around $3).

5. All family members use a hygienic and sanitary latrine.

6. All family members have sufficient clothing to meet daily needs, including winter clothes, blankets, and mosquito netting.

7. The family has additional sources of income, such as a vegetable garden or fruit-bearing trees, to fall back on in times of need.

8. The member maintains an average annual balance of 5,000 taka (around $75) in her savings account.

9. The member has the ability to feed her family three square meals a day throughout the year.

10. All family members are conscious about their health, can take immediate action for proper treatment, and can pay medical expenses in the event of an illness.

Yunus explains that poverty cannot be defined in one way for all people. A list like the one above, if created for a rural area of the United States, for example, might need to include having a car, since this tends to be a necessity in those areas for getting to work and even buying food. And certainly more than $75 in a bank account is needed.

One thing that would help in ending poverty in the poor countries of the world, is social businesses. These are businesses which have not profit as their goal--although they may need that to sustain themselves--but the meeting of a social need. I explain this in my review of Yunus' book, which you can read here:

Creating a World Without Poverty - My Review

Another thing that can help is ending the unfair treatment of poor countries.Yunus calls for free access to U.S. markets for products from Bangladesh. Currently there are high tariffs for Bangladeshi products. In 2006 500 million dollars was paid in duties on just $3.3 billion in goods exported to the U.S. This represents an overall rate of 15% in tariff duties. Meanwhile, the same year, the United Kingdom paid about the same 500 million in duties, but on exports of $54 billion. That means Bangladesh is taxed at a rate sixteen times as high.

Why should a poor country, where 40 percent of the children have stunted growth due to malnutrition, be treated in this way? In part it is a matter of which products are exported to the United States, since some good have higher duties. Another reason is a very simple if unpleasant one. It is that poor countries don't have the same bargaining power versus rich countries, and so end up paying more.

Yunus thinks that if Bangladesh is allowed duty-free access to U.S. markets that exports would double within five years, and wages would rise, and the economy as a whole would do much better. He also points out that this would allow more exports of cotton and other goods from the U.S. to Bangladesh, helping the United States economy as well.

The Millennium Development Goals of 2000, agreed to by the countries of the world, including the United States, called for duty-free access to world markets for all of the least-developed countries. So far, this and other parts of the agreement that aimed to alleviate poverty, have been mostly ignored by the wealthy nations.

Implementing these two ideas alone--building more social businesses and eliminating tariffs on goods from poor countries--could start the process of ending poverty in the word.

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