Why money is not always the solution it seems to be – Part I

Preface: I’m not an economist and I’m not pretending to be. These are just some things I’ve been thinking about lately.

It seems that whenever I have a conversation with people (not to mention most of what we hear and read) about poverty, the solutions are often simply put: get people more money. The suggested means to that end are quite diverse (government programs, markets, charity, microloans, etc.), but most of the times it seems that money is seen as a solution to the problem of poverty. I agree that money is part of the solution, but less a part than it might seem. In fact, many times money causes new problems as it solves old ones. Here are a couple examples:

1. A nation can increase its GDP considerably and yet have an increase in real poverty. Mexico has seen a substantial increase in GDP since the beginning of NAFTA 10 years ago, yet over 1.3 million farm workers have lost their livelihoods due to a flood of subsidized US food imports article here. Many of these farmers have been forced from their land to clogged cities like Mexico City or across the US border. No doubt this splits up families and ends traditional ways of life. While politicians and corporations sing the praises of NAFTA, the farmers, laborers, and small business owners, together with their families have a different opinion – one not based on numbers, but experience.

2. Families can increase income and yet remain poor. I listened to a BBC podcast in which men working abroad to support families in their home countries were interviewed. Skilled workers from India and the Philippines make exponentially more working in developed nations like the US and UK, yet are often separated from their families, and are faced with different, though no less daunting, struggles to make it, even with the extra cash flow. Wages increase, but so do living expenses. Cash sent home to their loved ones is siphoned by banks and middlemen. Families and communities suffer.

For migrant workers from Central America and Mexico in the “unskilled” (which I think is both an unfair and inaccurate label) job sector, living and working conditions are often considerably worse than where they came from even as they sometimes make in a day what they made in a week in their home countries. This article paints a grim picture.

Better solutions? Yes. They’re not easy, but they do exist. I think the best solutions are community-based, keep families intact, and involve interdependence. My two favorite examples at the moment:

1. Grameen banking and similar community based microeconomic initiatives

2.Worker owned co-ops. They’re all over the place. We’ve gotten t-shirts from a worker-owned co-op in Nicaragua. Their story is really encouraging. Video here.

These solutions involve people coming together in solidarity, working side-by-side to earn money, save money, and use money in ways that benefits not only the individual, but also families, villages and communities. So yes, money is a part of the solution, but not the solution itself.