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| Issue 06 | October 2005 | ||||
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The Fortune at the Bottom of the
Pyramid: Eradicating Poverty Through Profits sample available at http://www.whartonsp.com/title/0131467506 Book Review by Dr
Christopher Lingle
I looked over the web site and read through the sample chapter…alas, some of the things that he said are interesting, but the premises of his argument are quite simply wrong…. One implicit premise is that consumption is the driver of growth…this is one of the most pernicious errors of Keynesian economic logic…investments are the driver of economic growth…these require that there be adequate incentives for entrepreneurs to use the funds that savers put aside for their future…. The primary goal of poverty reduction is neither to convert the poor into consumers nor can that be based upon market developments…the primary step is to induce governments to provide "institutional infrastructure" that encourages capital formation and the creation of new businesses…. Providing small unit packages that are affordable does not resolve the persistence of poverty nor does it encourage wealth creation that is necessary to increase job growth…. By itself, the capacity to consume could be conjured up by printing money or through deficit spending or by income redistribution…but all of these are corrosive to long-term growth and tend to perpetuate poverty…!!! In the end, there is no grand theory here…never mind the glowing statements by the high-and-mighty that are listed as endorsements…this book only offers a bit of rather obvious advice on how to market products when people are poor…there is nothing of substance that offers to remove them from that condition…. It seems that the reviewers that made glowing remarks thought the author had discovered a new method to channel actions of the private sector to improve the lot of the poor…they are right…. Only the private sector can help bring about less poverty…but they can do this by creating new jobs…this requires that governments stop obstructing capital accumulation and the opening of new businesses with the myriads of regulations and licensing requirements and bureaucratic obstacles….
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Centre
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