Entrepreneurial spirit not aid will benefit developing nations

November 20, 2011
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Seeding the “entrepreneurial spirit” in developing nations, not continued U.S. foreign aid, is what will enable them to dig themselves out of their economic hardships, said the spokesman of Grand Rapids-based Acton Institute’s latest initiative, PovertyCure, an international network of about 130 organizations that espouses creating prosperity through education and integrating networks of exchange and agricultural productivity.

While funneling subsidies to countries that have suffered natural catastrophes is vital, the trillions of dollars of U.S. support over the last 60 years hasn’t put a dent in lifting the poorest countries out of extreme poverty because little is done to educate those nations’ leaders on how to develop inter-dependent networks of productivity and exchange of commodities between countries, said Michael Miller, the Acton Institute’s research fellow and director of media.

“We want to change the terms of debate from aid to enterprise,” said Miller.

“We want to change the terms of the debate from what causes poverty to what causes wealth. The way to get out of poverty is not by aid or charity; it’s when they have the ability to create wealth and prosperity for themselves. Sometimes we look at poor people as burdens, but they’re consumers created in the image of God who have the capacity to create wealth and prosperity for themselves.”

Miller makes the distinction between managerial capitalism, which is administered by decision-making executives rather than by owners, and what he said is the more preferred counterpart: free and fair competition.

“The poorest of the poor need competition,” said Miller. “We oftentimes think the poor need to be protected from competition, but they need competition the most because they lack the political and economic and social conditions to navigate a system dominated by special interests.”

That concept squares with Doug Seebeck, president of Partners Worldwide in Grand Rapids, a global network of businesses and professionals who, in turn, develop businesses such as farm enterprises and generate sustainable jobs in 22 developing nations of the world. Partners Worldwide is a member of PovertyCure’s coalition.

“A lot of good intentions can do a lot of harm because I’m not sure we see the poor as equals,” said Seebeck. “We want to work with the poor as equals and build their economies, just like our grandparents 50 to 60 years ago in what they did and went through to develop this country.”

But moving from “Western paternalism” to partnerships requires money-making criteria to be set in place so poor countries can pull themselves up by their own economic bootstraps, said Miller. To do this, he said, the poor must have property rights, must enjoy the rule of law — meaning arbitrary exercise of power is restricted — must have the freedom to start a business, and must be connected to global markets.

Miller said he realizes the entrenched belief in agricultural subsidies and nongovernmental organizations funneling charity to developing nations remains the best strategy in many people’s minds, but the end result is it “distorts” local businesses in developing nations that cannot compete with “free charity.”

“That means the (local) business is out because it can’t compete with free money and delays the development of indigenous businesses in the developing world,” said Miller.

All the same, understanding how U.S. subsidies to Asia, Africa and Latin America help and hinder requires a nuanced grasp of how the world operates, said Seebeck.

“What people tend to do is fall into two camps, and the world is a lot more complex,” said Seebeck. “It’s either no government or no taxes, or it’s big government and big taxes. And a similar thing happens to the aid discussion: Aid is the solution for everything, and others say not at all.

“Aid, in certain instances, is appropriate, but mostly in disaster relief,” continued Seebeck. “What’s tricky is how just outright aid has been harmful. It’s like a sedative. We often don’t work in genuine partnership and don't let the locals lead, and what it does is it reinforces the power of me, the donor, and internalizes that they (developing nations) can’t do it. What happens with a lot of aid programs and big dollars is it actually disrupts those social networks and fabrics of society in what they can do for themselves.”

And while “celebrity campaigns” do much to raise awareness of some of the world’s dire conditions, too often their charity programs remain lodged in a model that does little to eliminate poverty and create sustainable businesses, said Miller.

“Aid does more harm than good,” said Miller. “It politicizes development. It can subsidize bad, corrupt regimes. I’m not saying there’s not a place for charity, but I’m saying it’s not the way to get out of poverty.”

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