This morning I watched on BBC a documentary with this title. A young Cambodian gets a helping hand from a Bangladeshi textile entrepreneur on her road to becoming a fashion designer. OK, so what?!? Nothing but a normal occurrence. In fact both are helping each other. Well…yes only five years ago the promising designer was scraping for food at the edges of the Phnom Penh garbage dump, unable to read or write. Scott Neeson was the one who gave her a helping hand and the whole story brought back to my mind an IMF study I’ve read recently: “Inequality and Unsustainable Growth: Two Sides of the Same Coin?” Inside are some interesting ideas about the dynamics between inequality and growth but, a lot more important and almost at the beginning, the reader stumbles upon the explanation for why the considerable efforts that have been spend towards this goal have brought so scarce results: “Over the long run, sustained growth is central to poverty reduction. The rapid growth seen in much of the world over the past few decades—notably, but not only, in China and India—has led to an unprecedented reduction in poverty. And, in general, increases in per capita income tend to translate into proportionate increases in income of the poor. As Dollar and Kraay (2002) memorably put it, ―Growth Is Good for the Poor.‖ All the more reason, then, to place sustainability of growth at the center of any poverty reduction strategy.” The point is that we’ve been chasing a ghost. What is ‘poverty reduction’? In order to do such thing one needs to define poverty, measure it and then come up with a grand strategy about how to solve a problem invented by ourselves. All of them arbitrary activities. Let me make myself perfectly clear. ‘Poverty’ is a problem indeed. Both for the poor themselves and for the society at large. Problems are to be solved but before starting doing so we should identify the real nature of the problem. Nowadays most of us agree that ‘poverty is a problem’ but when it comes to solving it we find ourselves divided into two camps. Some say this is an individual problem and those involved, the poor themselves, are the ones who should do something about it – work more that is. Some others consider that poverty is a social problem and should be solved by others but those directly involved, either by the government or by charitable organisations. In this camp we find quite a lot of people, from the ‘kind hearted’ who consider they have to help their fellow human beings to the ‘economically minded’ who say that by reducing poverty we’ll be able to increase consumption which, in turn, will induce economic growth. Both approaches are fundamentally flawed. How much help are we going to extend to the needy? What (long term) consequences is this all this help going to have? How much consumption is needed? What is the ‘optimum’ economic growth rate? I think we are missing the essential here. The real problem with the existence of poverty is the enormous waste it produces. Yes, waste, and the worst kind of waste. The waste of human potential. Poverty is, and always was, relative. Sreymom Ang, the promising fashion designer, was dirt poor when she lived on the fringes of the Phnom Penh’s garbage dump yet her chances for survival were far better then that of the most Europeans living three hundreds years ago. Her real problem was that she didn’t see any way out of a situation she (and those around her) saw as being desperate while for those Europeans it was ‘business as usual’. This very difference in attitude is crucial. Our forefathers did their best to improve their lot while most of today’s poor are feeling so depressed as to let things happen to them instead of having a more active approach. Right now I have a distinct feeling that the ‘let the poor fend for themselves’ people are polishing the ‘I told you so’ placards… Not so fast! As everybody who has been really depressed knows, it’s hard to ‘get out of it’ on your own and specially so when the deck of cards is set against you. So where I’m driving at? That we should treat this whole business as an efficiency problem instead of a poverty problem. A person with at least some (useful!!!) education is a lot more likely to be able to ‘fend for himself’ than a complete illiterate. Even more important he/she will be able to cooperate with others in order to produce and consume, efficiently, marketable goods and services. A person who knows that he/she will receive some help if in dire need will summon more easily the courage to start something, be it a new business, a new career or anything else. A person who has a reasonable expectation to be treated fairly by those around him/her is a lot more likely to come up into ‘the open’ than one who has a previous experience of being treated as a second (or third…) class citizen. As history teaches us, countries where the creative power of the people could find it easier to manifest itself and where a bigger proportion of the people were really free fared better than countries where the opposite situation prevailed. This is the only argument for which I am convinced that allowing for considerable human potential to go unused, because of crippling poverty but not exclusively, is more than an individual problem and that we’ll all be considerably better off by finding a way for a bigger and bigger proportion of the people living at one time on the face of the Earth to be able to do something meaningful. For them but also for the rest of us.