Understanding the day-to-day reality of global poverty

A review of Portfolios of the Poor: How the World’s Poor Live on $2 a Day, by Daryl Collins, Jonathan Morduch, Stuart Rutherford, Orlanda Ruthven

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This book makes a major contribution to our understanding of global poverty.

Portfolios of the Poor reports the findings of a series of detailed, year-long studies of the day-to-day financial practices of some 250 families in India, Bangladesh, and South Africa, including both city-dwellers and villagers. The authors conducted monthly, face-to-face interviews with each family, focusing on money management and recording every penny spent, earned, or borrowed in “diaries” that formed the principal source for their observations. In the process, they made discoveries that will surely be surprising to some readers:

• The poor rarely live from hand to mouth. “[N]o matter where we looked, we found that most of the households, even those living on less than one dollar a day per person, rarely consume every penny of income as soon as it is earned. They seek, instead, to ‘manage’ their money by saving when they can and borrowing when they need to.”
• Lack of money is just one of the financial characteristics of poverty. It’s equally important that poor people’s income is both unpredictable and irregular. Crops come in two or three times a year, yielding whatever the weather may permit and the market may bear; between-times a family may have no cash income at all. A son might get a job for a day but not again for a week or a month. Illness or injury may interrupt a family’s income. And so forth.
• Rather than helpless victims of their poverty, the authors found, the poor are remarkably sophisticated about the financial circumstances of their lives. “We came to see that money management is, for the poor, a fundamental and well-understood part of everyday life.”
• Microlending is just one of the financial services needed by the poor to lift themselves out of poverty. “[W]e saw that at almost every turn poor households are frustrated by the poor quality — above all the low reliability — of the instruments that they use to manage their meager incomes. This made us realize that if poor households enjoyed assured access to a handful of better financial tools, their chances of improving their lives would surely be much higher.”
• Most observers regard money-lenders as simply a scourge of the poor, as they are so very often. However, given the dearth of mainstream money-management alternatives, there are many circumstances in which it’s logical for poor people to turn to money-lenders for short-term cash loans. “One of the lessons from the diaries is that interest paid on very short-duration loans is more sensibly understood as a fee than as annualized interest.”

Scholars, activists, and policymakers alike have quarreled over the question of global poverty and what to do about it for more than half a century. More often than not, the disputes they air in official policy debates, in the news media, and in scholarly journals are grounded in statistics developed by the United Nations and the World Bank — figures that usually represent worldwide averages. Therein lies much of the trouble.

The most widely accepted benchmark for world poverty today is $2 a day per person, as determined by the World Bank. However, you have to dig deeply before you can understand what the World Bank and the United Nations actually mean by “$2 a day.” They’re not referring to those two one-dollar bills you may have crumpled up in your pocket or purse. To correct for economic differences from one country to another, they use the concept of Purchasing Power Parity (PPP).

In theory, PPP takes into consideration the sharp differences in how much $2 will buy in any given country as compared to the global norm. But in practice the experts have widely differing views on what method should be used to calculate PPP and, in effect, what is the global norm. As if that isn’t bad enough, the most commonly used techniques to calculate PPP are based on each country’s economy-wide standard of living. In other words, the definition of poverty might depend in part on the price of big-screen TV sets and BMWs or their equivalent. In hopes of correcting that problem, scholars have been writing papers for several years about “poverty-based PPP,” excluding anything but goods and services commonly demanded by people living at subsistence level, but none of the approaches they’ve proposed has yet been officially adopted.

The whole question of PPP, then, is so confusing — and so confused — that the authors of Portfolios of the Poor have rejected the concept. They base all their calculations simply on the prevailing exchange rates between local currencies and the U. S. dollar. To which I say, amen.

The four co-authors of this book are an intriguing bunch. Two are men and two women. (Daryl Collins, the lead author, is female.) All four are products of elite universities: Oxford, Cambridge, Harvard, and the London School of Economics, though only one, Jonathan Morduch, is currently an academic. Morduch teaches development economics at NYU’s Wagner School of Public Policy in New York; he is an expert in microfinance. Daryl Collins, Stuart Rutherford, and Orlanda Ruthven are all development practitioners with practical field experience — Collins with a Boston-based global consultancy, Rutherford with a microfinance institution he founded in Bangladesh, and Ruthven with DFID, the UK equivalent of USAID.

Mass media, genocide, and the fate of the world

A review of Kill the Messenger: The Media’s Role in the Fate of the World, by Maria Armoudian

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The emergence of mass society was one of the defining characteristics of the 20th Century. Enabled by population growth, industrialization, urbanization, rising rates of literacy, and advances in transportation and communications, mass society became a reality for growing numbers of people in more and more far-flung regions of the planet as the century unfolded. In turn, mass society facilitated the growth of Communism, Fascism, and other varieties of authoritarianism. Among the less extreme effects of this new phenomenon in human affairs were the advent of “public opinion,” the globalization of fashion, and the rapid development of important new industries such as advertising, public relations, and broadcast journalism. The “mass communications” we have taken for granted for so many years now were, properly speaking, an artifact of the 20th Century.

In Kill the Messenger, political scientist and radio broadcaster Maria Armoudian ably examines the central role of mass media in human affairs over the course of the century. Through brief case studies of events in Nazi Germany, Rwanda, and the former states of Yugoslavia, she explores the influential — and perhaps essential — function of the media as an enabler of genocide. Armoudian shows how authoritarian regimes in South Africa, Chile, Taiwan, and Burundi made similar efforts to harness the media to help promote the murder, torture, and imprisonment of their own citizens but with much more mixed results. In South Africa, for example, she reveals how new attitudes in the news media helped bring about a largely peaceful conclusion to the era of apartheid. However, Kill the Messenger is about mass media’s place in society, not just its relationship with governments. Armoudian’s examination of public opinion about climate change demonstrates the huge impact of relatively minor investments in media by Exxon Mobil, the Koch Brothers, and other naysayers.

Armoudian puts to work the linguistic concept of “framing” throughout the book, showing, for example, how climate change deniers managed to persuade the mass media to present the issue as open to debate. This frame (“debate”) has dominated coverage not just on Fox News but on most other television and radio networks as well.  Similarly, frames (“blaming” and “heroes-versus-villains”) dominated news coverage in countries where genocide became generally accepted.

Kill the Messenger is an important book because it squeezes between two covers a collection of observations and insights about many of the seminal events of the 20th Century, rendering the history of mass society understandable through the lens of mass media. However, it remains to be seen how much longer Armoudian’s analysis will help illuminate events in the future. The emergence of new communications technologies revolving about the Internet may have thrown a monkey wrench into the phenomenon of mass media. It’s far too early to tell.

This fascinating book would have benefitted from a better publisher than Prometheus Books. The text is rife with glaring typos that even a cursory proofreading would have caught. The cover art is uninviting, an unfortunate sign that Prometheus Books either doesn’t know or doesn’t care how to market a book of this significance.