Policy focus: Prosperity creation or poverty alleviation?

By Martin Ike-Muonso

Albeit debatable, policy designers in Nigeria and many developing countries seem to favour poverty reduction more than propositions for the creation of more prosperity. The fact that the first two sustainable development goals focus on it may as well be a justification. Policy interest appears to be more inclined to wealth redistribution rather than its creation. A good case is the popularly used Gini coefficient which is not adopted fundamentally to track the number of persons to be pulled up to the ultra-net-worth income ladder but rather to show the crisis of income redistribution mainly through the so-called poverty reduction programmes.

The concerns for the poor and how to deal with poverty issues on a sustainable basis is misplaced and misunderstood by policymakers with attendant consequences of a further perpetuation of same (poverty) at elevated levels. In other to better understand this, we situate the premise for the supposed concerns for the poor. Four of such standout. The first is the perception of the poor as a social liability that must be managed since a “hungry man” is an “angry man”. That anger if unmanaged will harm the rest of society. The second is the economic rent opportunities created for ‘development agencies’ and the stream of consultants and charity groups who propagate the notion of redistribution to cater to the poor. The third is the opportunity it creates for politicians who use the Statecraft to legitimize the redistributive spending and the rent created for their use as a result. Finally, is the group of persons who genuinely care about the poor and are prepared to share what they have with them.

The popularity of poverty reduction in policy design as an option to prosperity activation is also a consequence of its promotion by the people of faith.  Religious morality promotes it more than it fosters prosperity creation. Unfortunately, religion has a tremendous influence on policy development. First, religions appear to be more associated and arguably protective of the poor. However, while it might be true that the church has an assembly of people from different shades of culture and socio-economic classes’ very little evidence still show that the poor dominate the population of religious people. Secondly, churches and mosques encourage their members to be kind to the poor more than they help them to pursue a life of wealth creation. Exceptions to this position appear to be with more recent prosperity gospellers who are still struggling to get the buy-in of dominant religious conservatives. It is not a debate theme that aggressive pursuit of wealth – even when it is within the bounds acceptable by law and morality – are sometimes, frowned at by people of faith.  Thirdly, many religions particularly Islam and Christianity consider lending with interest as condemnable or usury. However, loans and the taking of it should be voluntary activities contracted to expand economic activity.

In addition to the above, statistics naturally have more of the population at the socio-economic bottom of the ladder than other demographic categories. The reasons are obvious. First, fewer persons across history possess the skills, knowledge and stamina that are required to persistently create prosperity. Consequently, fewer persons bubble up to that point where they are genuinely prosperous. Accordingly, few persons dominate the prosperity scene leaving a lot more of the population between the lower middle class and poverty. Typically, and as expected, the dominant community of poor people draw more attention to their socio-economic challenges than the fewer more comfortable percentage of the population.

When policy focus tilts in the way of either poverty reduction or prosperity activation, the consequences and impacts also differ widely. It is substantially correct that focus on poverty reduction is perhaps, based on the two-barrelled feeling of compassion and consideration of the poor as a social liability. The underlying mindset is different when the focus is on prosperity creation. In the latter, it is synonymous with a feeling of going to battle to secure conquest. The poor beg for compassion. Poverty reduction policy consequently rides on the understanding that these people need help and are not able to help themselves. On another level, it rides on the notion that the poor constitute serious social liabilities that ought to be managed or else the prosperous will not enjoy their prosperity in peace. The wealthy operate in the atmosphere of adventure and wants to win more battles. He wants to dominate the environment by creating more prosperity continuously. Given these reasons; combined feelings of compassion and insecurity, the pressure of the religious communities, politicians give in to the pursuit of poverty reduction as policy position rather than prosperity activation.

When policy focus is substantially on poverty reduction, a few poor with strong survivalist tendencies may break out of that cycle. The eventual activity level consistently fails to take care of the ever-increasing population. More persons return to poverty. The cycle continues. It is essential to appreciate that policy agenda that focuses strongly on poverty reduction is indirectly strengthening and revving the engines of intensified poverty. First, the approaches to poverty reduction only try to manage the existing state of the poor. The phrase “poverty reduction” clearly shows that the interest is not to create more things of value to increase prosperity and destroy poverty. Marginal improvements in well-being are only anticipated so that the poor do not revolt. Thus, the poor remain primarily in their state. Secondly, redistribution focus of poverty reduction robs economic agents in the numbers of their collective wealth and passing the wealth to those known to have limited capacity to create new prosperity. Most of the economic agents so robbed are those possessing terrific entrepreneurial powers that could have put those resources in much better use for the creation of prosperity that puts poverty away. This, in no small extent negatively affects the energy of those keen on continuously prospering. Wealth redistribution is a tax on those bent on creating additional wealth. Some governments have claimed that their so-called economic empowerment and sometimes skill-acquisition programmes are designed to reduce poverty. However, this is false.

Skill acquisition is not synonymous with entrepreneurship and therefore rarely lifts the majority of those who have them out of poverty to the realm of continuous prosperity. Systems thinking, entrepreneurial alertness and entrepreneurial innovation are the three core ingredients to unlocking the world of well-being. So-called skill acquisition and empowerment to tame poverty lift a tiny percentage out of poverty. The rest is kept in a slightly improved state that still leaves them vulnerable. Again, the so-called economic empowerment projects most of the time are merely government tools of disempowerment so that the freedom of voice of the poor who are ‘so-empowered’ is taken away from them.

Without a doubt, prosperity creation banishes poverty over time. Consider equal amounts of money; one deployed for maximum poverty reduction and the other effectively utilized on prosperity creation. The differences in impact will be tremendously vast. This also explains the socio-economic prosperity gulf that exists between the developed and developing countries. Prosperity creation creates more prosperity and, in its wake, banishes poverty. More persons are employed and pulled out of poverty. As they spend their earned money, they create more prosperity. Poverty reduction focus may save only a few if it is predicated on redistribution of income. Because wealth is predicated on entrepreneurial knowledge, it improves the conditions of many through innovation as well as creates employment, output and income. These elements banish poverty. A focus on poverty reduction does not emphasize these three target elements with the same stridency.

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Professor Ike-Muonso is the Country Director of Baywood Foundation as well as the Chief Transformation Officer of GTI Capital Group