II Effective Strategies
Part I of this book presented the reasons the libertarian approach to reducing poverty is not effective. The second part of the book explores strategies for poverty reduction that are effective and outlines the appropriate roles for business, government, and civil society.
To reduce poverty it is necessary to focus on increasing the income of the poor by viewing them as producers. The primary emphasis in poverty reduction must be on creating employment opportunities for the poor. The private sector is clearly the best engine for job creation. Business needs to create jobs suited to the poor in labour intensive, low-skill sectors of the economy. The government should facilitate job creation by fostering an environment conducive for business to grow and thrive. The government also needs to increase the employability of the poor by improving their skills and capabilities, and by reducing friction in labour markets.
As noted in Chapter 1, another role of the government is to provide basic public services, such as education, public health, sanitation, and infrastructure, and it is the poor who bear a disproportionate share of the burden when the government fails in this responsibility. While having access to these services probably leads to increasing the productivity of the poor, it is important in and of itself. Although there is no fortune to be made by marketing to the poor, it is possible, on a limited scale, for companies to make profits by selling to the poor, and we need to ensure that the products and services targeted to the poor really benefit them. Markets often fail, and it is another role of the government to enact appropriate regulations that will protect the vulnerable consumers, especially the poor.
Civil society plays a critical supporting role, which is to be a catalyst for action, advocate, and watchdog, ensuring that both business and government fulfill their responsibilities. Figure II.1 summarizes the roles of the three actors.
Figure II.1 Framework for fighting poverty