I just read a great article by Michael Chu about the relationship of profit and poverty. In the article, he specifies four criteria that any poverty-intervention-method must fulfill.
Firstly, he mentions scale. This means that a method must work on a global scale. We obviously cannot use methods that can only work on small scales to end poverty. I think, when small, local groups try to think up new ways and systems for fighting poverty, they need to consider the scalability of the method. In other words, they need to ask themselves if the method would work as effectively on larger scales.
Secondly, Chu mentions the need for permanence in any attempts at poverty relief. As I often say on this blog, we need to not only provide temporary relief for the symptoms of poverty, but we also need to help poor people permanently escape poverty, and we need to counter the causes of poverty.
Thirdly, Chu says that poverty relief methods need continuous efficacy, meaning that they must get better and better as time goes on. While that would obviously help, I do not think of it as necessary, since a fully effective method needs no more improvement.
Finally, Chu points out the need for continuous efficiency in poverty relief methods. This means that the method will continually become cheaper and cheaper in terms of money and/or labor. Chu also seems to point out that a profitable method will lead to more and more organizations joining the industry to compete for the profit. That competition and variety will lead to more efficiency.
In my mind, efficiency works hand-in-hand with scalability. As the anti-poverty method becomes cheaper, we can get more done with the same amount of money and labor. The more profitable the method becomes, the more money we can reinvest in the method. Thus, by making an efficient and profitable method of relieving poverty, we can continue to increase the scale of the method.
I think many anti-poverty organizations make the mistake of not utilizing profitable ways to relieve poverty. As a result, their funding limits how much they can help. However, by using a profitable method, they would not run out of funds, and they would actually gain more funding both from their profits and from profit-seeking investors.
Loans have greatly worked to help people escape and avoid poverty. Microfinance loans have helped millions of poor people in the third-world escape poverty. In developed nations, I personally think student loans can work the best because they enable people to obtain quality education and job training, which those people can then use to get a quality job that pays them enough to pay off the student loans while also supporting themselves.
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