Poverty and Accommodation

John Kenneth Galbraith wrote The Nature of Mass Poverty is the late 1970s with the intention to describe… well, pretty much what the title says. The book analyzes the dynamics of the large-scale, pervasive, mostly rural poverty that has been the lot of most of humankind since agricultural civilization was first established. At the same time, it calls out the economic and policy elites of the modern industrialized countries for losing sight of these dynamics and prescribing useless or harmful remedies for poor countries in the post-World War II era.

Galbraith first distinguishes between two types of poverty: That which afflicts the few in otherwise affluent societies, and that which afflicts all but a few in generally poor societies. His focus is on the latter.

To start, he lists the most common explanations for mass poverty cited by people in rich countries and provides quick counterpoints:

  • Lack natural resources.
    • Counterpoints: Japan, Taiwan, Israel, Singapore, Hong Kong, and more. Plenty of successful societies have grown in resource-poor areas. It might even be the case that lack of resources spurs groups to struggle, trade, and innovate to acquire them and could lead to expansion, economic development, and wealth.
  • Inferior choice of economic system. In the case of socialism/communism, there’s too much bureaucracy and no free markets. For capitalism, too much exploitation by predatory elites.
    • Here, Galbraith is mostly addressing the Cold War capitalist vs. communist debate, which was obviously still a going concern in the 1970s. Clearly “inferior economic system” has larger implications, but this is the particular context of the above phrasing.
    • Counterpoints: There is merit to each side’s critique, but they are not identifying the primary factors. While predators can hamper development, there are plenty of countries where the masses have done well while being heavily exploited by predators—the industrialization of Europe mostly took place under such conditions. What the predators do with their spoils probably matters more. Likewise, communism in Eastern Europe did little to change the wealth distribution within that area. Whether a given region belonged to the Austro-Hungarian or German Empires or neither prior to 1914 is a better predictor of affluence than the presence of communist or capitalist systems in the present (1979). The choice of capitalist vs. communist is not a primary factor.
  • Lack capital for development.
    • Counterpoint: True, but these countries lack a surplus to enable savings and capital development in the first place. This argument is a causative loop. Poor countries lack capital, and they lack capital because they are poor countries.
  • Lack educated, trained, and talented people.
    • Counterpoint: Again, there is a problem with causation. Lack of industry and capital means there is little demand for educated, trained, and talented people, few are produced, and the low supply further hampers capital formation and industry growth.
  • Corrupt or bad government.
    • Counterpoint: Causation trap yet again. Lack of wealth is also a cause of poorly functioning government. Poor private sector opportunities lead to public sector predation and corruption. Good government requires administrative talent, a resource which is in short supply in poor countries.
  • Racial and ethnic essentialism.
    • i.e. “group X is naturally industrious, group Y is naturally lazy and stupid.”
    • Counterpoint: These categories shift dramatically over just a few generations and have more to do with the history of a given cultural group and how they are perceived by outsiders. E.g. Swedish immigrants to the US were initially thought to be inherently stupid and lazy, but are now regarded as among the most industrious and intelligent. Similar patterns elsewhere.
  • Warmer climates, especially tropical and subtropical, prevent development due to higher disease burden, more easily available food/resources.
    • Counterpoint: There is a correlation here, but this is unlikely to be a primary driver keeping tropical areas poor. There are tropical areas that have successfully developed (e.g. Singapore, Taiwan, and Hong Kong). This will be returned to later.
  • European colonialism enforced backwardness and dependency and has prevented subsequent development.
    • Counterpoint: Colonialism did immense damage to many, many places and people, but this view doesn’t account for the range of its effects. English speaking colonies in the British Empire have done quite well, even those that did not rebel and go independent like the United States. Africa and Latin America were absolutely devastated and only some regions have partially recovered. China was heavily damaged but has since recovered and is on the way to owning the 21st century (this is my observation, not Galbraith’s). Many of the regions that were at the center of colonial administration have since done better than those that were further out or functioned as supply areas. The criticism is correct, but there’s more going on here.
  • Poor countries have bad terms of trade, creating cheap, labor intensive commodities with cheap labor and little incentive to improve or diversify. Rich countries can make more diverse, expensive, and sophisticated commodities, plus have oligopolistic market strengths that poor countries do not.
    • Counterpoint: This is a good description, though again there may be more going on here.

What Causes Poverty?

Galbraith contends that poverty is a strong and stable equilibrium state that cannot be broken by just pushing on a couple of variables. Simple excursions away from this equilibrium trigger restorative forces that push a society back into it. For instance, in a poor country where most people are farming at a subsistence level, an increase in agricultural productivity per acre, in the absence of any other major changes, will result in a population increase that eats up the surplus and restores the equilibrium to subsistence poverty, though at a higher efficiency.

How can poverty be described as efficient? Efficiency is only a simple measure of the effectiveness of a given system’s operation. It says nothing about the system’s end results, the desirability of its methods, or its long term sustainability. It’s one thing to advocate for an efficient court system, another thing entirely to ask for a just legal system. Likewise, no one wants to live in an efficient police state.

Due to a long history of adapting and improvising in the face of hardship, the rural poor are often very efficient in their poverty. Resources and knowledge are used to their limits, but these limits are tight and the equilibrating forces of poverty respond to expanded limits by doing more of the same until society is pushing right up against them again, with virtually no long-term improvement in living conditions.

I call this an efficiency trap. Generation upon generation optimizes and innovates ways to increase yield, to open up new land, or to build better craft pieces. At each point, the newly generated slack in the system goes not toward capital surplus but into increased consumption and increased population, which then uses up all the slack. The society eventually gets to a state where population and land use are maximized. There is no way to go forward, and they cannot go back without famine and catastrophe. They have pushed to the environmental limits of their technology and are now extremely vulnerable to disaster. Once the inevitable disaster happens, the cycle is likely to begin again.

It will be suggested that in nearly all communities there are some people with some surplus for saving. This is so, but the meagerness of capital supply remains a ruling fact. It will also be urged that improvements in technology are possible that require no appreciable investment. These could be less available than is commonly imagined. In October 1953, a young Cornell anthropologist, W. David Hopper, took up residence in the village of Senapur in northern India and for the next fifteen months studied its agricultural economy in intelligent detail. He concluded that, given the absence of investment resources, agricultural technology in the village was at or near the optimum. ‘An observer in Senapur cannot help but be impressed with the way the village uses its physical resources. The age-old techniques have been refined and sharpened by countless years of experience, and each generation seems to have had its experimenters who added a bit here and changed a practice there, and thus improved the community lore.’ p. 53-54

Technical change and social reorganization are not impossible, but they become very difficult. In particular, failure in a poor community carries a much higher risk since there is little or nothing to fall back on. Starvation and death are much more likely results of failed ventures here than in rich countries. Additionally, consumption is a much more pressing need than investment. Since the standard of living is so low and people are consuming near or at subsistence, any new surplus has a tendency to be diverted entirely into consumption and, accordingly, there are no or weak institutional structures to enforce saving and capital accumulation. This leads to quickly decreasing returns from population growth, whereas in rich countries with high levels of capital accumulation and institutional mechanisms to enforce investment (typically corporations or strong government), we find increasing returns to additional population.

Even drastic social changes can often have little effect on the equilibrium. In poor regions with too many people farming too little land, eliminating the landlords will have almost no effect if the surplus they extract per tenant farmer is very small. As Galbraith notes, even if a landlord extracts half the income of a peasant farmer, if that income is already very small and the removal of said landlord will double it, the peasant now has twice a very small income, which remains very small. The marginal utility to the peasant may be high, but the overall effect is still tiny. And if these gains are spread out across a large number of tenants, then the potential surplus is dissipated into marginal consumption gains and restorative forces push toward a slightly higher yet still impoverished equilibrium.

Galbraith speculates that this dynamic is probably more significant than military power in explaining why landlords and predatory classes persist in impoverished rural areas.  Long term benefits from their removal are often minimal, new ones usually pop up and take their place, and its easier to just habituate to the predators as long as they aren’t too harsh.

And this finally brings us to the overriding point of the book: The role of accommodation.

What the rich fail to realize is that both circumstance and motivation are different in poor countries. In rich countries, people are accustomed to increases in income and standard of living and those who try to get more stand some not-negligible chance of actually doing so. There is a realistic expectation of benefits and rewards from effort and an established history of improvement. In poor countries, there is no such tendency and no such history, or at least very little. Struggle with no hope of success is painful, so on average people avoid it and accommodate to their circumstances.

This is another causal loop—poverty destroys hope, and lack of hope secures continued poverty. It is the accommodation and habituation to poverty that is the key factor behind the persistence of poverty. The rural poor have no viable alternative and thus make a very rational choice to resign themselves to their conditions. Breaking this resignation and providing means for escape is the only way to break the equilibrium.

Unfortunately for the more egalitarian-minded such as myself, the means by which this is accomplished require the enrichment of those who are already relatively rich and motivated. Galbraith notes that the risk aversion and hopelessness of the great impoverished masses is such that they are usually the last to try something new. It is a major economic myth that everyone seeks to improve their lot. This is only conditionally true based on circumstances and individual character (and character is very heavily conditional on circumstances anyway). However, a wealthier and progressive minority that does not live at subsistence, can afford to take risks, and is more optimistic about improvement is the most likely to lead the charge in escaping the poverty cycle.

This means that, for tactical purposes, surplus resources should be allocated to an already successful minority. They should not be the perpetual beneficiaries, but are instead used to open and expand an exit point through which more and more of the population may flow into a different, typically industrial, equilibrium. They and the institutions they develop to handle the surplus become the means by which investment is enforced, capital is accumulated, and new things are tried.

Returning to the last few bullets in the list of causes above and reinterpreting through the lens of accommodation:

  • Racial and ethnic essentialism.
    • A long time in unbroken poverty leads to very strong accommodation. Less time, especially broken up with episodes of wealth, weakens accommodation. The “poor and lazy” from an impoverished accommodating area suddenly become “wealthy and industrious” within a generation when moved into a non-accommodating culture, provided said culture does not hold them back. We attribute to ethnic character what is in fact due to history and circumstance.
  • Warmer climates, especially tropical and subtropical, prevent development due to higher disease burden, more readily available food.
    • Hot, tropical areas probably allow for accommodation to a poverty equilibrium at lower levels of income. There is less need to (e.g.) prepare for a long winter through food storage, clothes, and strong shelters. Resources needed for basic subsistence are typically easier to acquire. And yes, disease burden is higher.
  • European colonialism enforced backwardness and dependency, has prevented subsequent development.
    • This misses some details in that colonialism broke accommodation in some of the areas that it touched. It did so in a very violent and terrible fashion that should be condemned and never repeated, but the fact remains that it had highly variable long term effects, some of which could be described as beneficial.
  • Poor countries have bad terms of trade, creating cheap, labor intensive commodities with cheap labor with little incentive to improve. Rich countries can make more diverse, expensive commodities that can be technologically improved, plus have oligopolistic strengths that poor countries do not.
    • This remains a good description, but more food for thought: Markets don’t work well in places trapped in a poverty equilibrium. The poor cannot afford to withdraw production when prices are low because doing so would cause disaster—they have nothing else to sell and no surplus to fall back on. They must accept whatever prices are available to avoid starvation and death. Market supply is therefore highly inelastic to price in such situations. The poor must take what they can get, and that is typically whatever the rich deign to give them.
    • Improving the terms of trade by raising export prices from poor countries would actually only help the producers of those same goods in the rich countries. The real problem is that the poor have so little to trade in the first place and cannot take advantage of technical advances and oligopolistic concentration of market power like the rich.
    • I would note that there are multiple types of markets and that Galbraith’s observation seems only applicable to the modern, state-constructed, quasi-competitive national markets that have come to typify present day industrial civilization. Traditional village/town markets or long-distance trading markets can still function in poverty and have likely done so since our ancestors first exchanged sea shells for fresh fish. Properly functioning “free” markets require a prosperous and reasonably egalitarian society. They can operate in conditions of general poverty, but are inherently exploitative in such situations and lose the “free” aspect.

Finally, Galbraith notes that rich countries with large migrant populations often become prosperous because they are full of people who rejected accommodation to circumstances and moved. These countries have self-selected for the most motivated, risk taking migrants. I believe this is especially true in the case of dangerous migration, such as the US/Mexico border or crossing the Mediterranean from Africa to Europe. This is not to say that migration should be dangerous, only that our conception of immigrants who make those crossings is so completely wrong-headed.

And poverty may be alleviated through migration. Given an efficiently poor and crowded rural area and an opportunity for migration to a richer and affluent region, the most motivated and anti-accommodation will leave. This obviously benefits them and the richer region. At the same time, it opens up land and resources in the poor region and creates the opportunity to accumulate surplus and try something new. Or not, as there’s no guarantee the opportunity will be seized.

It’s likely that migration out from Europe in the 18th through 20th centuries not only benefited the US and other parts of the world, but was probably a major factor in breaking the poverty equilibrium in Europe itself.

The Poor Response of the Rich

Galbraith has an entire chapter devoted to the ways in which the rich countries, especially since the close of World War II, have forgotten what it was like to be poor and have either vilified impoverished peoples or attempted solutions that were destined to fail from the start, many of which have made things worse. In particular, he notes that the entire foreign aid structure that arose between 1950 and 1965, and which we still largely live with today, is intellectually bankrupt and focused on fitting problems into solutions rather than the other, saner way around.

This happened because action to reconstruct devastated areas and to combat global poverty was simply deemed necessary and urgent after World War II. It was partly motivated by the domestic success of the New Deal, the spectacular accomplishments of the wartime full-mobilization economy, and the general progressive industrial outlook of the US at the time, but also partly by fear that if the poor countries were not helped by capitalists they would fall prey to communists. These two factors brought both liberals and conservatives to a general consensus that action should be taken to alleviate poverty everywhere for both humanitarian and strategic military reasons, but there was no clear understanding of the causes of poverty. In the absence of understanding, the intellectual establishments of the developed world looked at what actions they could (and wanted to) take and made the causes fit them. Certain causes, regardless of merit, could not be entertained for ideological reasons.  Capitalist nations couldn’t advocate the removal of predatory landlords and capitalists, even in cases where it would make sense.  And admitting that climate could be an important factor was close to admitting that nothing could be done. Something had to be done, even if it meant shoving square pegs into round holes.

Below is a list of what Galbraith claims (accurately, in my view) are the points of major agreement by orthodox economists on how rich countries improve. The list relies on the assumption that people naturally strive for success and improvement, but, as discussed above, that assumption is contingent on circumstance and is wrong for the majority of people living in mass poverty societies. These “pieces” therefore do not operate as in rich countries.

  • Savings over current consumption to purchase capital.
  • A progressive technology to embody or make use of the capital.
  • A political and social system that allows and encourages the individual to seek his or her own betterment.
  • A regulation of the whole process, in the main by the market.
  • Government intervention to maintain a level of aggregate demand that would employ all or nearly all of the available labor force and maintain pressure for a continuing expansion of plant capacity.

The “traditional” causes that the nascent development industry settled on were insufficient capital and backward technology, because these were resources that the rich countries could most easily provide. Push on these two variables and things would change. Except that poverty is an equilibrium, so there was natural resistance and restorative motion when these variables were moved. Many careers were made, lots of money was spent, yet little was accomplished, much energy was wasted, and the whole endeavor has been characterized by frustration and failure.  And it continues to fail today.

Finally, Galbraith notes that another criticism from the rich is that poor countries have focused too much on industrial development and employment when their “strengths” lie in agriculture. Industrialization is regarded as less wholesome and healthy for them. I think Galbraith’s reply is an appropriate response:

In the prescription for human betterment, there is no greater constant than the belief that poor people are better off if they remain very poor but in fresh air. p.98

Better Policy Ideas

Galbraith advocates that to combat poverty we must both enlarge the pool of non-accommodating people and facilitate escape.

To enlarge the pool, there are typically two methods: Trauma and education. Trauma has historically taken the form of eviction, land closures, genocide, pogroms, and war. It is inhumane and no civilized society should consider it as policy. Education, especially universal and compulsory education, is much better. It should focus on general intellectual development and not on training for narrow technical uses. The idea is to motivate some fraction of the population and equip them with useful intellectual talents to act on their motives, not to train them in narrow disciplinary methods. Exposure to media and travel outside their home area can also help motivate people.

Escape can be either out to another culture (migration, either foreign or to a domestic city) or within by freeing up land and resources in the countryside. Sometimes this just shifts poverty from the countryside to the cities, but Galbraith notes that urban poverty is “a less stable and intractable form of deprivation.” Cities at least have more opportunities and a different mode of life that makes it easier to pull people out of poverty than dispersed rural farmers.

Industrialization is also vital in facilitating escape, for it provides a city-based alternative activity to agricultural life. I’d also add that many industrial processes tend to feature positive returns to scale whereas most agriculture does not, and this further facilitates and accelerates escape.

Galbraith cautions that most poor countries seeking to escape poverty should avoid starting out as socialist, for socialism is a system most suited for the already wealthy and affluent. Socialism makes a very large claim on a very scarce resource in poor countries—administrative talent. Affluent countries have large reserves of administrative talent that can be used to correct and displace market mechanisms. Poor countries simply do not. The exception that proves the rule is China, which went communist while still a very poor agrarian country. However, China has a long history of sophisticated government administration and organization that continues through the present day, providing it with a talent pool not normally present in other poor countries. This is a major factor for its success and recent phenomenal growth, whereas nearly every other poor country that adopted socialism/communism at the outset of its conversion to industrial affluence has done poorly.

Instead, poor countries should look to markets and entrepreneurs to start them on the path to growth, not because they are good solutions but because they are usually the only functional solutions. They inflict much pain, are erratic, and are often morally indefensible, but their one advantage is that they are able to economize on scarce talent. Governments still play an important role however, and Galbraith enumerates their responsibilities as:

(1) There must be adequate security for people against physical threat to their property, against expropriation or predacious taxation. (2) There must be a basic and reliable system of roads, ports, electric power supply, and communications. (3) There must be a supply of capital—in practice, much of it under public auspices from outside the country—for investment by private and public borrowers, and an intelligent and honest organization for receiving and passing on loans. (4) There probably need to be some publicly sponsored industries—pilot-fish industries that, much argument to the contrary, have the peculiar merit of bringing others in their wake. p.115

Once it has produced a certain minimum level of wealth and, as a consequence, a certain minimum level of talent and administrative ability in the general population, a country can begin shifting some of its operations to more stable oligopolistic markets and socialist programs.

Additional Thoughts

Increasing returns. Galbraith notes that there is a difference between rich and poor areas in their relationship to increased population. The rich seem to gain increasing returns to population growth through enforced savings, while the poor have decreasing returns due to surpluses flowing to consumption. This compliments quite nicely the position advocated by Erik Reinert and The Other Canon. They focus on increasing returns activities, such as manufacturing, as the basis for leaving poverty. Galbraith reminds us that we shouldn’t forget the need for organizations that force investment of surplus and defer consumption. I’m pretty sure this is included in analyses by The Other Canon, but it’s worth remembering that organization to divert investment into increasing returns activities is needed, and that this converts population growth from a drain into a benefit provided that we’re not running into environmental limits. Note that institutions to enforce savings are pretty likely to be anti-democratic, especially in the early stages when surpluses are small and the marginal benefits to individuals from increased consumption are large.

An example of accommodation in the US. Jane Jacobs had a great example in one of her books that was used to illustrate how dark ages and “forgetting” occur, but which also works with the accommodation framework. I’m going purely off memory here, but the overall picture should be accurate: A group of immigrants from England came to the US and settled somewhere in the foothills of Appalachia in the late 1700s, then quickly lost contact with most major markets in the colonies/US. Occasional traders came through, but that was about it. Over the generations they had to make do with less and less, and trades and skills were slowly lost. They were re-contacted by the US Federal government during the New Deal as part of one of its rural poverty assistance programs. The villagers were discovered to be within one generation of forgetting how to make even such simple artifacts as candles and baskets (only two elderly people in town retained this knowledge). The villagers wanted to build a new church and one of the government representatives on site suggested that they use some large stones in a nearby creek to build a beautiful entry archway. The villagers insisted that you couldn’t use stones that large for construction, and that it was impossible to even make stone archways as the representative suggested. This, Jacobs pointed out, was coming from the descendants of some of the world’s pre-eminent stone cathedral and castle builders who had made archways and stone structures out of much larger and heavier materials for many centuries. Not only had the skill to construct in this manner been lost, but knowledge that it was even possible had been lost.

This is accommodation, not in the sense that an individual makes a conscious decision to resign himself to a particular way of life, but in the sense of a community collectively, over generations, habituating itself to doing without. If there is no opportunity to do something, and you’re facing grinding poverty without relief, the training to do it is first ceased. Then the knowledge is forgotten, for it has been useless for too long. Approaching this from a systems perspective, this narrows the community’s knowledge base and thereby reduces the possible aspirations of its members, which is another way of reducing the possibility of hope and struggle in the face of relentless poverty.

Accommodation levels and environmental limits. Galbraith notes that accommodation is stronger at lower levels because the risk from failure increases as you fall closer to subsistence. But accommodation can happen at any level if people (or whole societies) stop dynamic, wealth generating processes. And I’d guess that stopping at a high level may be inadvisable due to much greater problems with environmental sustainability, but this is a concern at any level, from ancient Easter Island to our currently extant industrial civilization. Environmental limits seem to be encountered when a society optimizes their existing system without either changing in such a way that old limits no longer apply or so that old limits are expanded out further. Constraints can be designed around, but if this is not done they will hit hard. Impoverished civilizations can hit limits just as readily as our current global industrial civilization. It can happen at any level, so we must continue to change or risk collapse.

Laissez-faire myopia. The error of libertarians and other laissez-faire advocates is to mistake the initial “bootstraps and market pain” phase of affluence generation for the entire process, when in fact it is only the first step. I would guess that failure to move past this results in, at best, a country of both great wealth and great poverty. The US has waffled back and forth between this vision and a more socialist/distributive vision, so it has variously exhibited the features of both. Today, with libertarian-style beliefs ascendant along with a high level of corporate wealth concentration, we find an increasingly divided class structure and high concentrations of wealth in corporate organizations owned by the elite. To paraphrase a quote that I cannot properly remember, “The US is the first third world country.”

Accommodation whiplash in the poor pockets of rich countries. If motivating people to reject accommodation without providing a means for escape simply causes needless frustration and despair, then those who are poor or otherwise blocked from progress in “aspirational” rich societies will suffer great psychological anguish, even if their relative level of material affluence is higher than subsistence farmers in an impoverished society. Given the recent stagnation and wealth disparity in the US, could this be a cause of rising depression and mental illness? This would be especially acute in the US since our culture has such strong “rags to riches” and “land of opportunity” myths yet does less for its poor than just about any other developed country. The effect on poor minorities trapped within the larger society (e.g. African Americans stuck in ghettos) must be horrendous. It may also be possible that these effects could feed into myths that more primitive agricultural/village life would make us less miserable, when in fact the problem is that we are systemically trapping people in relative poverty while hammering them on all sides with propaganda that tells them that they’re lazy, stupid, freeloading leeches because there’s no other way they could still be poor when so many are rich.  Compared to that, living in a poor village sounds nice, but I’d prefer instead that we make everyone affluent and stop abusing people.

Risk minimization in the poor versus the destitute. I can’t help but wonder if it’s not the absolute poorest who are the last to seek help, but only the poorest who still have something left to lose—those who are strongly enmeshed in the economic and social system that perpetuates poverty but still have ties to land, family, church, and some minimum local status. These are then the people who are most trapped, those who still have something to lose but who are so poor that they cannot risk change. But the landless, the homeless, the vagrants and wanderers have nothing but their lives and the lives of their families to lose (if they even have families). It seems like they would have an entirely different appraisal of risk, where going to work in degrading factories, joining the army, or emigrating overseas would look appealing if these simply provided food and shelter.

This puts the land clearances and other such actions during the European Industrial Revolution into a different light, namely that state violence inflicted trauma that kicked stable yet poor peasants out of their individual minimal risk equilibria and led to such deprivation that they were willing to accept much changed circumstances to continue living.  This provided a ready and cheap labor pool for early industrialization.

Marxism from an accommodation perspective. There are two of the commonly cited problems with Marxism: Requiring a vanguard of intellectuals to awaken the proletariat, and being ineffective in most non-industrial states. In the former, a minority of more affluent and educated individuals rejects accommodation to the existing order and forms the vanguard. They are used as a lever to break the accommodation of the urban poor who, as noted above, are more readily pliable than the dispersed rural poor (so the job is easier in urbanized, industrialized areas). This entire dynamic fits neatly into Galbraith’s thoughts on how to pull the impoverished masses out of their situation.

In agricultural societies, not only are the peasant farmers harder to “awaken,” but the vanguard is likely to be smaller due to the generally lower education and administrative talents of the population. The typical remedy of removing the landlords only works if the resulting surplus is diverted from consumption to investment. The latter is a difficult maneuver for an ostensibly populist, egalitarian re-distribution movement and is susceptible to Animal Farm-style results. Finally, lack of sufficient industrial centers means that there is nowhere for internal migrants to go and engage in non-poverty equilibrium activities. More agriculture doesn’t break the cycle. If foreign migration is cut off or not of sufficient volume to free up domestic surplus, then strategies of forced internal relocation and redistribution of ownership (historically under the guise of collectivization, gulags, and forcing people into cities) may be able to break the equilibrium. Sufficiently bad famines, such as that caused by Mao’s Great Leap Forward, could potentially contribute to emptying enough of the countryside. But these are all terrible.

The US illegal immigration debate is incoherent. Migration naturally selects for those who are most willing to take risks and reject their current circumstances. These are probably the most beneficial people to accept as immigrants, since they are quite motivated to change and have a better life. This puts US illegal immigration politics into a rather absurd light (which isn’t that hard to do, I suppose). The Republicans oppose immigration, want tighter border controls, and many want to send immigrants back home. On the one hand, their myth of political economy says we need a country of self-starters, entrepreneurs and diligent, hard workers who are motivated to make life better. On the other hand, their immigration stance says that people who are motivated to cross an extremely dangerous desert and leave their homes, family, and friends behind for a better life in a country that is increasingly hostile to their very existence are in fact not the kind of people they just said they want to make the country strong.

Application at different scales. A great deal of the above discussion that contrasts rich versus poor countries and their different motivations and circumstances seems to be applicable to rich and poor regions within a country, and some can be translated into differences in outlook between rich and poor individuals as well.

Innovating right into a brick wall. The quote about the Indian village of Senapur, where agricultural technology was being used at or near maximum efficiency, also dispels a common myth in the rich countries—namely, that poor agricultural regions are completely stagnant. In any given population, there are always going to be those who tinker, who observe and work to improve the tools and methods at their disposal. The problem that poor rural populations face is that this tinkering, while helpful, is stuck within the equilibrium of poverty.  There aren’t resources for major changes and, after many generations of optimization, cumulative improvements are likely to bring an entire society right up against its environmental limits. There is an obvious parallel here with out current industrial civilization running up against environmental limits, but we are at least out of the poverty equilibrium and have the tools to solve our problems. It’s just not clear that we intend to solve them.

Accommodation, the Marshall Plan, and Germany. Finally, I leave you with an extended quote from Galbraith regarding the reconstruction of West Germany after World War II. I include it because, having been raised and educated in the US, I was taught that the Marshall Plan had magnanimously and almost single-handedly lifted Europe out of post-war chaos and set it back on its feet. This may have been true in some areas, but Galbraith had a rather different perspective—and he was there:

In the summer and autumn of 1950, a joint American-German commission was constituted to study the problems of refugees in West Germany and to recommend amelioration. The commission was headed by the late Hans Christian Sonne, a liberal businessman and banker of wide-ranging public interests. I was appointed a member. We began meetings in Germany in the autumn of 1950 in the rather tense months following the outbreak of the Korean War.

In the aftermath of World War II, mostly in 1945 and 1946, upwards of 8 million person came to, or were left stranded in, West Germany. Included were those who had come from or failed to return to East Germany, those expelled from the areas transferred to Poland and the Soviet Union, those expelled from the Sudetenland and the other Volksdeutschen communities in Eastern Europe. All seemed committed to a life of despair in their new and often inhospitable land, which also had more than its own share of economic problems. It was this seemingly mass consignment to poverty that had led to the forming of the commission.

For solving the problem of the refugees and other displaced persons, the commission could not have been more acutely timed. The problem was on the point of solving itself. Their previous accommodation shattered, the refugees had set about reestablishing themselves with energy and resourcefulness—and with a clear image in mind of the mode of life to which they had previously accommodated. The special problem of housing apart, most were well on their way. Workers from Silesia were at work in the mills and mines of the Ruhr. The small business craftsmen from Czechoslovakia were again in business in Bavaria and were again living in accustomed fashion, or would be when homes were built. Similarly, farm hands and white-collar workers, as also members of the professions. The only large group that had not achieved its former living standard or seemed unlikely to do so were those whose living had derived from traditional or feudal landholdings, an advantage which could not easily be duplicated in West Germany. And even here there was some restorative action. Those men who had lost land were more likely than the average to know or find a landed widow whose husband had been lost in the slaughter.

One day at a hearing in the Ruhr, a German official, having spoken at length on the burden of the refugees on the West German economy, was being questioned by members of the commission. He was asked (it was my query) if it would not be a greater misfortune for Germany were the refugees to be sent home. He reflected and eventually agreed that great as was the disaster of their arrival, this would be worse. In the next years and with no visible effect from the work of our commission, the refugee problem in Germany dwindled to a not negligible concern for the old and those isolated in rural areas of Schleswig-Holstein and Niedersachsen. In a few more years the word refugee ceased to be heard.

The German lesson affirmed that accommodation is a comprehensive thing. The new arrivals did not spare themselves until they had restored the living standards to which, previously, they had accommodated. Having reached that level, the great majority were, one may, I believe, assume, content.

The further lesson concerned their contribution to German recovery. The arrival, amidst its desolation, of millions of men and women determined to recover their previous way of life was a factor of unique power in German rehabilitation. What men of orthodox and sometimes simple mind attributed exclusively to currency reform, the Marshall Plan, the unique economic wisdom of Ludwig Erhard, must obviously be shared, in very generous measure, with this extraordinary human endowment, which so many at the time saw only as a burden. p.82 – 84

My take away from the above quote is that if we want people to be industrious and hard working, we must make them affluent, give them independence, and support their work. They will then work to maintain their standard of living. This posits that an upward ratcheting basic income with continual gains in material wealth, leisure time, and service provision is what will lead to bright, productive, and (hopefully) happier people. Our current societal plan is to “help” the poor by removing wealth, vilifying leisure, and reducing services to spur them toward self-improvement and independence. Instead, it accommodates the poor to lower and lower standards of living, which moves them further and further away from the ideal they are supposed to approach. If you want people to act and be affluent, you cannot do so by making them poor.


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