Sunday, October 28, 2012

An Entirely Complete Systems Analysis of Poverty

Hahahha I wish. When I'm able to provide a full systems analysis of poverty(wishful positive thinking - yay for grad school!), you'll know it before it would ever appear on a blog post...

In Dr. Norm Becker's post, The Cost Of Inequality, he recognizes Joe Stiglitz's perspectives presented in his book "The Price of Inequality".  

5 Important Myths - as presented by Stiglitz & interpreted by me:

1. America is a land of opportunity:

  • Upward mobility of people is heavily dependent on the income/wealth of their parents.This concept is best expressed at the merger of two metaphors. 
    • This land of opportunity, has unequal spaces between the rungs on the ladder of success. The amount required to go from step 1 to 2 is significantly larger than 9 to 10.
    • This difference might be illustrated in Maslow's Hierarchy of Needs

2. Trickle-down economics works.

3. The rich are the "job creators"
  • The rich take their money where the returns are highest - and right now that's in emerging markets - like China.
  • The engine of our economy is the middle class.
  • Forbes - The Real Job Creators: Consumers, this is sort of a hot topic, and really ties in to trickle-down economics, and it's important to understand the context of the flow of currency. It's really easy to get into partisan politics here, and end up with great information that might be biased(Like the unnecessarily controversial Nick Hanauer TED talk).

4. The cost of reducing inequality is too great - and would destroy our economy.
"It doesn't much matter how you get your greater equality, as long as you get there somehow". (Richard Wilkinson in comparing Sweden & Japan; big government & low regulation)

  • This is Richard Wilkinson's TED talk on "How Economic Inequality Harms Societies". I have a lot of thoughts on the myth of "reducing inequality will destroy our economy", and when it comes down to it, I feel that the cost of NOT reducing income inequality is too high. 

5. Markets are self-regulating and efficient, governmental interference is a mistake.

  • 2008. see NYTimes Series: The Reckoning
  • I'm reminded again of Jane Jacob's "Systems of Survival". When conflict arises between the two systems of Governance and Commerce, it typically appears as a two party system:
    • Liberals:
      • At their best: Propose controls and regulations on business that promote prosperity, ensuring true sustainability
      • At their worst: Attempt to unite governance with enterprise, producing marginal efficiency, and low innovation.
    • Conservatives:
      • At their best: True free market, human enterprise, creativity and innovation.
      • At their worst: Ignores the values of global health and habitat, primary interest only their own agenda, eventually leading to collapse. 
After writing this post, I'm reflecting on the importance of this issue. As mentioned in my previous post, "Profit/Prosperity" play a crucial role in the movement towards sustainability. Everything requires some sort of exchange for services. With help from my Education team, we've really started to look at the systems in play within our current educational models, and (no surprise) money is a huge issue. "Access to resources" affects home life, educational institutions, policy writing, etc. 

Relating back to the first myth, "America is a land of opportunity", is something that I want to see. I truly believe that as everyone is able to have their basic needs met, a tipping point of innovation & creation will propel us into the future. There is an obvious parallel at the top of Maslow's Hierarchy and the concept of sustainability.


  1. What a wealth of resources and thought here, Aric! I completely agree that once everyone has their basic needs met, we will see a giant leap in innovation and prosperity. I'm not sure it is always spelled out as such but I believe that is a big part of the definition of the "people" part of the 3 sustainability pillars. We need to make the business case for showing the cost of not reducing income inequality is too high. I'm curious to know more about Jane Jacobs "Systems of Survival" and what alternatives can we create to the two party fighting and lack of ability to really make any innovative change occur. In the election, we hear over and over again about the economy but nothing different or innovative is being brought forward. I believe that this is where the power of the business community needs to come in to cause disruption but if there is just as much polarity in the business community, how can we get at the root causes of big issues like poverty and inequality?

    1. Thanks Anna,

      I think a lot of the power in innovative change lies in Systems Thinking. As more of us(especially in this information age - where we are constantly in information overload - and it's hard to fact check efficiently) embrace the bigger picture and the context, I think the solutions will be right in front of us.

      Just like "Sustainability" seems so obvious to us, as it should be to business, the challenge is getting industry to get outside of their narrow viewpoint and recognize the value in moving towards sustainability.

  2. As a Social Worker, I have really come to value the significance of Maslow's triangle. It impacts so much of what we are and are not able to accomplish, based upon having our own basic needs met! Talk about economic constraints—— barely able to put food on the table, homeless, mentally ill, mentally isolated, don't have access to clean air, or fresh water......? Good Luck! I posted a link to the triangle below :)'s_Hierarchy_of_Needs.svg/450px-Maslow's_Hierarchy_of_Needs.svg.png

    More specifically, I would love to hear more about this part of your post: I feel that the cost of NOT reducing income inequality is too high. Say more, Aric! You are a wealth of information and knowledge and I'd love to hear more of your thoughts on that.....

    I also studied teacher education and sociology during undergrad, and we often touched upon what is referred to as "cultural capital"; the term cultural capital refers to non-financial social assets that promote social mobility beyond economic means. Examples can include education, intellect, style of speech, dress, and even physical appearance, et cetera. You hit the nail on the head with this one.

    It seems that we could make an analogy between two systems that often do not account for "issues" pertaining specifically to the outward system—— in the case of humans being able to meet their higher needs, the lower level needs are often not accounted for (mentioned above with Maslow's theory), in the case of structural factors keeping the invisible white knapsack in place, unspoken rules of entitlement are often blatantly, systematically or subconsciously ignored (read this awesome article if you have a chance —— Similarly, we can say that externalities within the larger economic system are not being factored into "business as usual"...... both systems gravely suffer from our inability to acknowledge these invisible forces....

    1. Hava,

      Thank you for such a thought provoking reply.

      Your reply hits on so many spots in my brain, it's outrageous. My academic background is in Psychology, Sociology, and Anthropology.

      I'm not even sure where to start a reply, outside of, "YES". I suppose my response will be similar in context as my response to Anna. Context. The capacity for understanding those structural factors that are keeping the invisible white knapsack in place, and the implication of our economic system as failing the globe racially and culturally... are all becoming a part of our known language now. Perhaps it's because we're going to school for an MBA in sustainable business, I can't help but feel optimistic.

      When my peers are referencing the power that these externalities hold, I know we are working towards changing business for good.

      My other academic passion: Education.

      Thanks Hava

  3. Aric, I'd like to amplify your take on the worst for liberals and conservatives:
    1. Liberals at their worst: Communist autocracy.
    2. Conservatives at their worst: Fascist autocracy.
    I like that you brought this up, though, and it makes me think of your previous blog post and your comment that the answer is somewhere in the middle. I think that there are aspects of both mindsets that can be merged to produce a better outcome for everyone - like anarcho-syndicalism. Of course, the political discourse in this country (I happen to agree with Norm here) is an extraordinarily narrow debate between the right and the far right, so we don't really get the liberal input.

    1. Daryl,

      Hahahha, thanks for that! I love it. You're right though, it's outrageously messy. I love that I can hear the outrageous-ness of it in your voice.

      So, as for solutions, do we work within this framework, or try to change it?

    2. Or somewhere in the middle of that...

    3. That's why I brought up the anarcho-syndicalist model. It takes the idea that the means of production should be in the hands of the the workers (thus eliminating remuneration) and eliminates the coordinating/management/financial class from the equation, but it still preserves the competition, innovation and reward-for-work of the free market - i.e. worker owned firms compete for market share and the workers themselves enjoy the success of their firms (or suffer the failure if they aren't competitive).

  4. Aric-
    Thank you again for such a resource-rich and insightful post. I have always liked Richard Wilkinson and his TED talk is one of my top 10. Based on the responses by fellow CXIs I imagine your future blog posts will continue enrich our collective knowledge and I for one look forward to it.
    The cost of inequality and its central role in the economic paradigm shift is especially interesting to me and I look forward to future discussions with you on this subject.


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