Nonprofit Chronicles

POVERTY, INC. | Official Trailer from POVERTY, INC. | The Movie on Vimeo.

Near the beginning of the new film Poverty Inc. are excerpts from the music video of the song, Do They Know It’s Christmas?, which was recorded in 1984 in response to a terrible famine in Ethiopia by the supergroup Band Aid, featuring, Bono, Sting and Bob Geldof. The song is, to be honest, cringe-inducing, with its implications that Africans are helpless, dependent and out of touch. Do Africans know it’s Christmas? Uh, yes. millions of Christians live there. And, no, as the lyrics say, “there won’t be snow in Africa this Christmastime.” Probably not next Christmastime either.

But, hey, that was 30 years ago. We’ve learned our lessons, right? Well, maybe not. The song has been reprised every decade since, most recently by the cast of the television show Glee in 2011.

To that, Bono says:  “The Glee generation is taking songs like Do They Know It’s Christmas? and reimagining them, and rearranging them, and doing their thing to them, and that gives new life to that idea. It makes me very happy indeed.” Hmm.

“What makes Bono happy about this?” asks Magatte Wade, a straight-talking Senegalese entrepreneur featured in the movie. “By now, Bono should know better.”

Do we, in fact, know better? Poverty Inc. is unsparing in its criticism of efforts by rich countries to help the global poor, implying that they remain stuck in old, broken paradigms that not only don’t work, but often make matters worse. Daniel Jean-Louis, a Haitian investor interviewed in the film, sums up the case against foreign aid, religious charities, NGOs and social entrepreneurs:

The rich patronize the poor. The poor resent the rich. Every 10 or 20 years, we try something new and then 10 or 20 years later we look back. What we find is that we’re looking at the same broken system. The name of the system is paternalism.

This message needs to be heard, and Poverty Inc. deserves to be seen. At its best, it offers a series of cautionary tales about good intentions gone awry, about how giving away stuff for free has unintended but predictable consequences and about the misaligned incentives that shape anti-poverty organizations.

But, although I’m no expert on global development, I couldn’t help feeling that the film misses a big part of the story and, as a result, feels dated. There’s little acknowledgement in Poverty Inc. of the good work being done on global health and agriculture by the Gates Foundation, or about the growth of academic institutions like J-PAL and Innovations for Poverty Action, which measure the impact of development projects, or, for that matter, of the efforts by foundations, nonprofits and social entrepreneurs to use the power of markets to help people lift themselves out of poverty–an approach that the filmmaker, Michael Matheson Miller, evidently favors.

Miller is a research fellow at the Acton Institute, a think tank in Grand Rapids, Michigan, whose mission is “to promote a free and virtuous society characterized by individual liberty and sustained by religious principles.” He’s a political conservative, but, interestingly, his point of view dovetails with those on the left who argue that aid disrespects and disempowers the poor by treating them as helpless victims rather than as active protagonists in their own story of development.

“Often times we treat poor people as objects—objects of pity—instead of treating them as subjects,” Miller tells me, when we chat by phone about Poverty Inc. “The question is not ‘what can I do to help,’ but how can people create prosperity in their own families and their own communities.”

One of the few NGOS praised in Poverty Inc. is Partners Worldwide, which aims “to form a powerful Christian network that uses business as the way to create flourishing economic environments in all parts of the world.” Fair enough, but what about Landesa (which promotes land rights) or Acumen (which invests in companies that serve the poor) or GiveDirectly (direct cash transfers to the extreme poor, who decide for themselves how to spend or invest them). There’s nothing paternalistic about any of that.

Setting aside those caveats, Poverty Inc. paints a devastating picture of how aid can misfire. A Rwandan egg farmer is just getting his business going when an American church decides to send free eggs (!!!) to Rwanda, undermining his efforts. A Haitian solar power company is doing well until US NGOs raise money to give away solar panels after the 2010 earthquake. “It’s hard to compete with free,” says Alex Georges, co-founder of Enersa, the solar power firm. “When you have companies sending thousands of solar panels to Haiti, how are you going to sell?” No less an authority than Bill Clinton apologized for the US policy of selling subsidized rice to Haiti, which had the unintended effect of hurting local farmers. “It was a mistake,” Clinton says. Second-hand clothing shipped to Kenya, the film tells us, all but destroys the local clothing industry; you might want to think before depositing your old  T-shirts in clothing bins, which can be the first stop on a long journey to overseas markets.

In theory, getting free stuff could be a boost for poor countries if it arrived predictably. Governments and consumers could simply spend their money elsewhere, and all would be better off. But donations–of rice, eggs, solar power, T-shirts–are unpredictable, the film argues, so they damage local farmers or manufacturers without providing reliably for poor people.

The oft-told tale of Tom’s Shoes and its “buy one and we’ll give one away” model is a perfect example. How do people know when shoes are coming? And in what sizes? And who decided that what people want is shoes?

Blake Mycoskie, the founder of Tom’s, has, to his credit, listened to critics and shifted manufacturing to developing countries. But the company’s messaging is disempowering. “As long as I keep selling shoes,” Mycoskie says, “these kids will have shoes for the rest of their life.” The response from one of his detractors: “No one…wants to be a beggar for life. It just doesn’t make any sense.”

So what is to be done? Poverty Inc. doesn’t prescribe solutions, other than to say that they are likely to come from inside of poor countries and not from the west. “I don’t know know of any country that got so much aid that it became a first-world country,” says Herman Chinery-Hesse, a Ghanaian software entrepreneur.“Only Africans can develop Africa.”

The film has been well-received. Last month, it won the $100,000 Templeton Freedom Award from the Washington-based Atlas Network. It’s been shown at film festivals and on college campuses; a list of upcoming screenings can be found here. Miller tells me that the film will be available on iTunes early next year.

A note of gratitude

I learned about Poverty Inc. by listening to EconTalk, the excellent weekly podcast hosted by Russ Roberts, who interviewed Michael Matheson Miller. Russ recently celebrated the 500th episode of EconTalk. All are online and available for free. Over the years, Russ has interviewed a range of experts on global development including Nobel Prize winner Angus Deaton, Jeffrey Sachs (and Nina Munk, the author of a critical book about him), William Easterly and Chris Blattman. I’ve learned a lot from Russ and his guests, for which I’m grateful.