Betrayed

Politics, Power, and Prosperity

S. Kaplan

• Publisher: Palgrave Macmillan
• Year: 2013
• ISBN:
  9781137341808
• Topic: Economics
• Subtopic: Labour Economics
• Index: Economics

Betrayed takes a new approach to the subject of global poverty, one that doesn't blame the West but also doesn't rely on the West for solutions. Betrayed puts the poor themselves at center stage, and shows how their entrepreneurial energies are shackled by political and social discrimination. When these shackles are removed, as is happening in places such as China and Vietnam, the poor are able to seize opportunities and drive wealth creation. Combining the latest research into poverty and state building with the author's personal observations drawn from years running businesses in the developing world, Betrayed explains how leaders in the developing world can build more inclusive societies and more equitable governments, thereby creating dynamic national economies and giving the poor the opportunity to accumulate the means and skills to control their own destinies. This refreshing new approach will appeal to business people who are fed up with reading critiques of global poverty that see capitalism as the problem, not the solution; people in both the global North and South who want to see attention focused not on Western aid but on what developing countries and their citizens can do to help themselves; scholars and practitioners in the development field who are looking for new, practicable ideas; and general readers who want accessible and engaging accounts of ordinary people struggling to overcome poverty.

Part I

An Old Problem

Chapter 1

The Same Species, the Same Dreams

Over the past twenty-five years, I have traveled in some of the world’s poorest countries, such as Somalia and Bolivia, and worked alongside some of the poorest citizens in developing countries, such as Nigeria and China. Working as an investor and manager in the developing world, I have had to deal with the rich and the powerful. But I have also had to recruit local employees and research what products local people need and desire. And I have had to confront at least a few of the same challenges—bureaucratic mazes that lead nowhere, officials who will do nothing without a bribe, shortages of everything from fresh water to electricity—that the locals endure in spades. I have also spent weeks and months as a guest in the homes of everyday families from Rada in Yemen to Coroico in Bolivia, from Multan in Pakistan to Mombasa in Kenya, in each place seeking to learn about the local culture and society.

Some of the poor people I have met had become resigned to their fate, had grown passive because of past failure, or had tired of trying to overcome resistance to change within their family or community. Others were fearful of losing the little they did possess by investing in business ventures, or they lacked the skills, savings, or contacts to believe they could get far. Yet the vast majority was brimming with energy and initiative.

During the seven years I lived in China, for instance, I witnessed millions of poor people help transform global supply chains and geopolitical relationships. Employees, colleagues, and friends rarely lacked for determination. Their grandparents and parents often had been illiterate and desperately poor, and the younger generation has been more than happy to take risks and work tirelessly to escape the same fate.

The Chinese have been able to build themselves a better future because they have been fortunate to have both of the two key ingredients for robust economic growth: First, they live in a country whose people are linked together through extensive social networks and who share a common identity. Thus, there are few societal barriers preventing the great majority of people from seeking their fortune on a relatively level playing field. Second, their government finally adopted a set of policies to capitalize on China’s enormous pool of human and social capital—an emphasis on inclusive, export-led growth and on investing in infrastructure and education.

This winning combination has helped China make great strides forward over the past three decades. It’s hardly perfect, of course. China still suffers from the widespread corruption and malfeasance typical of struggling states and still lacks the mechanisms to hold officials accountable, typical of democratic regimes. But it’s on the right track. A friend, Zou Qifang, like many across the country, struggled to acquire an education when he was young (before the government started its development drive) but has over the past decade built the country’s largest chain of dental clinics. Bit by bit, he learned the management skills he has needed to grow his business. Similar tales could be told of nearly all of the country’s most successful entrepreneurs.

What I have seen not only in East Asia but also in West Africa, the Middle East, South America, and other poorer or downright impoverished corners of the globe has dramatically changed my picture of the world’s poor. My unique perspective has fostered an appreciation for the talents and ambitions—and the obstacles—that are typically ignored or airbrushed out of the portraits of the poor to be found in media reports and aid appeals.

The poor are not a different species from us. Nor are they culturally unrecognizable. Like us, they have dreams for themselves and their families, and they are willing to take risks when they see something worth achieving. They display resourcefulness, sometimes getting ahead and sometimes suffering setbacks. And just like us, there are great differences among individuals in their attitudes, skills, and experiences.

If anything, the world’s poor must work harder and show more initiative than we do because the challenges they face are so great. Difficult circumstances beget resourcefulness and creativity beyond what we can imagine, because we have grown up in predictable environments. We know precisely what we need to do to graduate from high school, to get into college, to build a career. We know—or can easily discover—what we need to do to set up and run a business. We assume that if our legal rights are abused, we will get our day in court. We expect when we turn on a faucet, we will get water, when we flick a switch, we will see light. The poor in the developing world have no such luxuries. Their education is typically brief and irregular. To grow a business they have to pay bribes they cannot afford and jump dozens of bureaucratic hurdles they cannot see. The courts, perhaps the entire legal system, may be closed to them or weighted against them. If they have a faucet to turn or a switch to flick, it may work, but it may not—not today, and maybe not tomorrow, next week, or next month.

But what the poor lack most of all is opportunity.

* * *

The poor are poor because they are excluded, deliberately or not, from opportunity—from the opportunity to go to school, to get funding to grow their businesses, to get a fair hearing in a court of law. The elites who control corrupt governments and divided societies don’t just keep prosperity out of reach; they don’t let the poor even see the glimmer of a brighter future.

Instead of working to build inclusive societies with growing prosperity for all, most of those with power and money prefer to serve their own narrow self-interests—even if it means that many of their compatriots will go without proper schooling, remain stuck in shantytowns for life, or even starve. The Nigerian novelist Chinua Achebe points an accusing finger at his own country’s leaders, but what he says is true about the elites in many corners of the developing world:

The trouble with Nigeria is simply and squarely a failure of leadership. There is nothing basically wrong with the Nigerian character. There is nothing wrong with the Nigerian land or climate or water or air or anything else. The Nigerian problem is the unwillingness or inability of its leaders to rise to the responsibility, to the challenge of personal example which are the hallmarks of true leadership. . . . Does it ever worry us that history which neither personal wealth nor power can pre-empt will pass terrible judgment on us, pronounce anathema on our names when we have accomplished our betrayal and passed on? We have lost the twentieth century; are we bent on seeing that our children also lose the twenty-first? God forbid!¹

The anger palpable during the Arab Spring can be felt in slums, cities, and farms across the developing world, where hundreds of millions of people feel betrayed by those who control the levers of power and wealth in their countries and use that power for their own benefit. As Paulo Silva, who lives in a slum in Luanda, Angola’s capital, angrily states, “Angola is a rich country, but we don’t get any of it. The people in power are eating all the money.”² Or as one member of a discussion group in Kagera, Tanzania, explains, “When you have no power, stop dreaming; you will have no freedom, no equality, and democracy will remain a story to you.”³

If the poor are given opportunity—if they are allowed to see the chance of a brighter future and to reach for it—they can transform their own lives. Policies that offer a better chance of participating as equals in marketplaces and governments can unleash the power of hundreds of millions. Equal access to schooling, financial services, information, transportation, courts, and other drivers of empowerment will transform the lives not just of individuals and families but also of businesses, communities, and entire countries. But much has to change first.

A number of other books published in the past few years have focused on the world’s poor, but none has focused on the poor as the instruments of their own salvation. Authors such as William Easterly (The White Man’s Burden), Paul Collier (The Bottom Billion), and Jeffrey Sachs (The End of Poverty) have instead tended to concentrate on the role of outsiders, especially Western governments and aid agencies.⁴ Other writers, such as Dambisa Moyo (Dead Aid), have sought somewhat simplistic solutions in the better use of international financial markets.⁵ Hernando de Soto (The Other Path and The Mystery of Capital) looks for ways to empower the poor in his writing but then settles on a narrow set of prescriptions related to property rights and legal reform.⁶ Daron Acemoglu and James Robinson’s Why Nations Fail, published in 2012, emphasizes the importance of inclusive institutions to economic success but defines these narrowly, failing to take into account the diverse ways in which inclusiveness has been achieved in various places. As a consequence, Why Nations Fail has a hard time explaining why many countries, especially outside the West, have succeeded.⁷ Other authors, including Jared Diamond (Guns, Germs, and Steel), Max Weber (The Protestant Ethic and the Spirit of Capitalism), Niall Ferguson (Civilization), and David Landes (The Wealth and Poverty of Nations), have sought to explain the prosperity or poverty of countries by looking at things like the environment, culture, institutions, competition, rule of law, and religion.⁸

What Is an “Inclusive Society”?

This book lays great stress on the extent to which poverty is related to social and economic exclusion and on the critical role that inclusive societies play in tackling poverty. But what exactly is an “inclusive society”?

In inclusive societies, elites feel a sense of moral, psychological, or social obligation to other people in their countries, especially the poor. This sense is strong enough to inspire elites to introduce or support government policies that g...

Table of contents

• Cover
• Title
• Copyright
• Contents
• List of Tables and Figures
• Acknowledgments
• Part I: An Old Problem
• Part II: A New Agenda
• Part III: A Plan of Action
• Notes
• Index