What originated largely as a generational dispute over disciplinary rules in schools ended in a state-versus-markets and economic development debate. This, however, tells us very interesting things about the Benelovent Agenda.
Now, what do I mean by this?
What I'd like to call the Benevolent Agenda, is the notion that if there exists a problem, the solution is the immediate alleviation of that problem. If people are starving - send them food. If we have poor people - give them money. If these poor people lack education - tax others to provide education-free-of-charge for them.
If rich people have "too much money" - tax the hell out of them. And so on.
This all has a superficial appeal to it. I mean, if people are starving, they obviously need food - let's just give it to them! Problem here is the lack of an adequate answer to the question why? (This critique can be applied to a lot of things, from financial crisis 2008 to the Welfare State).
This brings me to the case study of Kenya. My mother recently visited Kenya and among other things were witness to the immense poverty of Kibera, a big slum area of Nairobi. This, she gently pointed out, was reason enough to introduce a welfare state, state-funded education and jobs for these poor people so that they can advance from their poverty. Again, superficial appeal to such arguments.
After a deeper scrutiny, however, it falls apart. I'm gonna show three things that hinder these poor from advancing, improving their lives and making enough money to sustain themselves and their family. And more importantly how these three things are State-generated. State Failures as opposed to market failures.
#1) Inflation
Inflation, contrary to common knowledge, is created by state interventions in the market place by artificially increasing the amount of money in the economy. Secondly, the poor are the peple most harmed by this. Why? Because in an inflationary environment, the purchasing power (=what you can actually buy for that £10 note) of your salary is steadily reduced. So, if there's inflation, you'd rather spend your money today than save some of it for tomorrow (because tomorrow it'll buy me less stuff). Conclusion: you can't save.
(Note on this: wealthier people, however, can save in such environments because they have access to financial products or investments that gives them above-inflation-rate returns. This opportunity is generally not there for the poor. Inflation rates in Kenya over the last decade have bounced between 5%-35%).
#2) Property rights to their dwellings or things
Hernando de Soto vividly explained to us how large parts of the world's poorest people live their lives predominantly in the Informal Economy. That is, they have houses and property and businesses (he calls them 'Dead Capital') but these items are not registered or accepted as Valid Claims to property largely because of #3 below. This has the effect that expanding your business, taking out loans on your house or having sufficient safety to plan over larger periods of time become essentially impossible. Conclusion: you can't raise funds to expand business, plan ahead or take advantage of the property you actually own.
Just a quick note here. Notice how the two BIGGEST ways to acquire funds (#1 + #2) so that you can expand your cloth-weaving or production of recycled glass (as are the examples from Kenya my mother brings to the table), are closed off for these poor people. They can't take out mortgages and invest in new, bigger machines for your weaving and they can't save money on their own to buy such machines later on.
#3) Red Tape
Red tape is usually explained as bureacracy, regulations, riddiculous and difficult rules that make life hard for people. This is generally pointed out as a growing ground for corruption. It inclused restrictions on what you can lawfully do, processes to get property rights to housing, creating a business, legal protection and so on. Starting a business in Kenya takes around 32 days (not that bad, actually), but carries a charge equal to 38% of income/capita (even harder, because poor people earn even less than average income/capita). Conclusion: regulation, bureaucracy creates obstacles for everyone, but especially the poor. It's expensive, and creates a third obstacle to the poor's prosperity.
The Benevolent Agenda
What my friends and family around the table claims is that such problems as Kenyan poverty needs to be alliviated by State Interventions; education so the poor can get better-payed jobs, Health Care so that they'll live better, and redistribution so that they won't be poor. Their intentions are good (=help the poor), but their solutions to do this are horrifically unsuited for alleviation of such problems.
As I pointed out above, the REASON these people are poor have nothing to do with these measures my family would like to include. They are addressing symptoms rather than causes. The reason they remain poor are largely covered by what I've stated above. But all that gets lost within the solutions provided by The Benevolent Agenda.
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