What I’m Reading Now
Portfolios of the Poor: How the World’s Poor Live on $2 a Day People (even experts) commonly accept that the ultra-poverty can be defined as living on “a dollar a day,” but rarely question what that means exactly. This book attempts to expose the financial lives of the world’s poor, which are vastly more complex than one would assume. For one, life on a dollar a day does not imply that households receive a dollar on a daily basis. According to this book, if they did receive regular and reliable payments, their household finances and strategies to preserve them would be vastly different.
Like the poor everywhere, families in the slums of Bangladesh South Africa pull money from a variety of sources which pay irregularly and with varying amounts. Often lacking access to formal banking services, they cleverly participate in strategies to lend money to friends, consider investment in a number of service based businesses and will participate in local finance cooperatives protect their meager earnings. Small finance cooperatives will even act as lenders to extract profit from their savings, acting as small, functioning banks. Poor people will paradoxically borrow rather than save, preferring to pay a premium for access to lump sum payments and prefer being compelled to pay back a loan, rather than risk having to discipline themselves to not spend savings on daily needs. and will even take loans in lieu of saving, paying a premium for lump sum payments which relieve them from having to save.
Local moneylenders charge absurdly high interest rates when calculating them on an annualized basis, but the authors find that people rarely hold the loan more than a month, so that the “interest rate” can actually be viewed more correctly as a fee for service. Micro-lending (which really amounts to unsustainable charity) is seen as less preferable than micro-finance, as poor people need not only access to capital, but also safe places to park their savings and the possibility of earning interest on them. The people in the surveys were often found to have assets which exceeded liabilities and nearly all households were found to be saving and investing wherever possible.
The authors point out three major problems with the finances of the poor the first of which is that incomes and payments are small. Second, they note that it is important to recognize that cash flows are unpredictable and the timing of payments uncertain. If people can’t plan, if they don’t know when the money will come. The most important factor hobbling the finances of the impoverished, is that the financial insturments available to them are insufficient to address either of the first two problems. Better financial tools would go a long way to improving the lives of the poor, who are often proactive with their finances.
In short, the financial lives of the poor are vastly more complex than one would assume, and the savvy and rationale of impoverished households far deeper. A great read if you are interested in issues of poverty or finance. There are, of course, lessons here for how we view poverty domestically. BUY HERE
The Elusive Quest for Growth: Economists’ Adventures and Misadventures in the Tropics I like Easterly because he doesn’t coddle developing countries. Though he’s quick to criticize Western aid efforts in Sub-Saharan Africa without recognizing aid’s successes (and deep complexity), he has interesting insights into why developing countries often fail, the reasons for which are sometimes rooted in domestic problems. Too much of the development literature infantilizes developing countries and excuses stupid behavior in favor of blaming the “Evil Empire,” rather than taking a hard look at why some countries continue to fail and why others succeed. The worst disservice we can do to poor countries is to assume they are like the starving, helpless children presented in advertisements to raise money for charitable causes.
I also like Easterly because he recognizes that private sector development is absolutely essential to growth in developing countries and that the current model of development, which often relies on an assumption that the poor are happily poor and should remain as such, spare the occasional handout of antiquated technologies and inefficient top-down ideas. While I like Easterly’s perspective, I can’t say that I agree with much of the anti-aid literature that’s spring up around him, which is often myopic to the other extreme, and follows a typically tired narrative which paradoxically again denies developing countries of their own agency. BUY HERE
Brecht on Theatre: The Development of an Aesthetic I’m digging back into my past. For some odd reason, I have a German Literature degree, which means that I have a stack of famous works from the great Germanic writers and a few books on German theater. Brecht was always a favorite.
His confrontational ideas on the theater as a means for inspiring leftist political change may have gotten him exiled from Germany but they still resonate today. Were he alive, Brecht would have still found Hollywood in 2014 bankrupt and empty for it’s emphasis on the “magical” the presence of “hypnotic tensions.” Brecht sought to alienate his audience rather than involve them. To do this Brecht encouraged cigar smoking in theaters as a means of keeping it real. BUY HERE