Poor Economics: A book review by Bob Morris

Poor Economics: A Radical Rethinking of the Way to Fight Global Poverty
Abhijit V. Banerjee and Esther Duflo
PublicAffairs/The Perseus Group (2011)

 How and why ideology, ignorance, and inertia have so effectively undermined efforts to reduce/eliminate global poverty

I read this book when it was first published and recently re-read it because I was curious to know (a) what I had missed the first time and (b) to what extent (if any) the book has since lost relevance since it was written more than two years ago. My conclusions? I missed several key points, and, the book’s more relevant now than it was then.

As Abhijit Banerjee and Esther Duflo explain, they focus on “the very rich economics that emerges from understanding the economic lives of the poor. It is a book about the kinds of theories that help us make sense of both what the poor are able to achieve, and where and for what reason they need a push.” Frankly, the first time around, I did not pay sufficient attention to the material that focuses on the details of poor families’ daily lives: their dreams, their fears, their frustrations, and (yes) their noble qualities.

Banerjee and Duflo are correct to suggest that their book “is ultimately about what the lives and choices of the poor tell us about how to fight global poverty…And it reveals why so many magic bullets of yesterday have ended up as today’s failed ideas…Above all, it makes clear why hope is vital and knowledge is critical, why we have to keep on trying when the challenge looks overwhelming. Success isn’t always as far away as it looks.” I agree. But it is also true that success isn’t always as near as it looks.

They provide an abundance of information, insights, and counsel that can help their reader to do some “radical thinking of the way to fight global poverty.” Here are some of the several dozen passages that caught my eye:

o  The nature and extent of poverty’s impact on eating habits (Pages 22-28)
o  A “nutrition-based poverty trap” (38-40)
o  The “health trap” (43-48)
o  “Supply-Demand Wars” (72-76)
o  “The Curse of Expectations” (86-93)
o  “Why Schools [in Developing Countries] Fail” (93-97)
o  “Reengineering Education” (97-100)
o  “What Is Wrong with Large Families” (106-111)
o  “Children as Financial Instruments” (119-123)

Rather than add to the number of demonstrably ineffective “magic bullets,” Banerjee and Duflo suggest a few points to keep in mind when thinking about how to improve the lives of the poor: “First, the poor often lack c ritical pieces of information and believe things that are not true…Second, the poor bear responsibility for too many aspects of their lives…Third, there are good reasons that some markets are missing for the poor, or that the poor face unfavorable priccees in them…Fourth, poor countries are not doomed to failure because they are poor, or because they have had an unfortunate history…Finally, expectations about what people are able or unable to do all too often end up turning into self-fulfilling prophecies…Despite these five lessons, we are very far from knowing everything we can and need to know.” Be that as it may, Banerjee and Duflo are to be commended for how far, how deep, and how well thy have increased our understanding. Thank you.

According to a Chinese proverb, the best time to plant a tree was 100 years ago; the next best time is now. As Ashijit Banerjee and Esther Duflo explain so compelling in this book, the same can be said for reducing – if not eliminating – poverty in the world.

Coming for the August 3 First Friday Book Synopsis – Platform, & Goldratt’s The Goal

Here are two important business success issues:

#1 — how do I successfully get people to listen to my message?
and
#2 — how do I find, and get rid of, whatever is slowing us down in our company?

Solve these 2 issues, and your path to business success becomes a little clearer.

At the August 3 First Friday Book Synopsis, Karl Krayer will present his synopsis of the book Platform: Get Noticed in a Noisy World  by Michael Hyatt.  (Thomas Nelson.  2012).  This book is designed to help you develop specific steps to clarify your message, refine your message, and get your message heard.

I am going to present the business classic The Goal: A Process of Ongoing Improvement by Eliyahu M. Goldratt and Jeff Cox.  (North River Pr. — 3rd Revised edition:  July 2004).  We normally only present “new” books at the First Friday Book Synopsis, but we have occasionally presented books that fit in the category of “business book classics.”  A few years ago, I presented my synopsis of Servant Leadership by Robert Greenleaf.  Greenleaf coined the phrase “servant leadership,” a concept that has stood the test of time.   I believe his work should be discovered and rediscovered by every generation of business leadership.

The Goal is apparently that kind of book.

I was prompted to make this selection by an article in Slate.com by Seth Stevenson.  His article started with this:

When I began to gather information for this Slate series on operations management, I asked a few business-school professors to recommend books I might read on the topic. I expected I’d be pointed toward textbooks and manuals—perhaps written by the professors themselves, or by celebrity CEOs. Instead, I was urged to read a novel by a dead Israeli physicist.

And I blogged about the book in this post:  “The Fat Kid Is The Bottleneck!” – (Eli Goldratt’s The Goal, And A Thought About Expertise).

This will be a valuable session as you try to find out just what it is that is slowing you down now, and then how to develop the kind of powers of observation to always be on the lookout for what will slow you down once this current “bottleneck” is unclogged.

If you are in the DFW area, please join us for the August 3 First Friday Book Synopsis.  (You will be able to register soon from our home page).  Great networking; a terrific, full-service omelet bar/full buffet breakfast; and good challenging content.  It is a great way to spend an early Friday morning. (By the way, we have presented two books a month, every month, since April, 1998 — over 14 years!).

Come join us.

Click on image for full view

Joel Babbit (Mother Nature Network) in “The Corner Office”

Adam Bryant conducts interviews of senior-level executives that appear in his “Corner Office” column each week in the SundayBusiness section of The New York Times. Here are a few insights provided during an interview of Joel Babbit, C.E.O. of Mother Nature Network, an environmental news and information Web site he founded with Chuck Leavell of the Rolling Stones.He says James Bond films taught him to enjoy himself while doing serious work.

To read the complete interview as well as Bryant’s interviews of other executives, please click here.

Photo Credit: Earl Wilson/The New York Times

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Bryant: You’ve started three companies. What have you learned from the experiences?

Babbit: I’m not as focused on superficial things, which I was when I started out. Back then, the number of employees I had was a big deal. The more, the better. Clients? The more, the better. Now I realize how unimportant those things are in the scheme of things. I want fewer people, less management and process, and more actual work. That leads to greater profit, by the way.

Bryant: What do you consider the most important leadership lessons you’ve learned?

Babbit: As absurd as it may sound, a lot of things I read and saw in my childhood really affected me in some way — including How to Succeed in Business Without Really Trying, which I thought was just an incredibly great movie and play, and James Bond movies.

Bryant: What did you learn from the Bond movies?

Babbit: I must have seen Goldfinger 100 times. And what I learned from that was, while he was working on very serious stuff like saving the world, he always enjoyed himself. He would have a drink every night and go out on a date and would make witty remarks to people in the midst of crises. I think that’s a very good business lesson.

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Adam Bryant, deputy national editor of The New York Times, oversees coverage of education issues, military affairs, law, and works with reporters in many of the Times‘ domestic bureaus. He also conducts interviews with CEOs and other leaders for Corner Office, a weekly feature in the SundayBusiness section and on nytimes.com that he started in March 2009. In his book, The Corner Office: Indispensable and Unexpected Lessons from CEOs on How to Lead and Succeed, (Times Books), he analyzes the broader lessons that emerge from his interviews with more than 70 leaders. To read an excerpt, please click her. To contact him, please click here.