Regular readers know I have a fascination with how lean manufacturing concepts, as well as the free market, can impact the basic human condition. A few weeks ago we discussed an excellent post by fellow blogger Karen Wilhelm on how lean can help alleviate poverty. Last Wednesday columnist Cal Thomas wrote an opinion piece on how people can rise from poverty - despite their governments. Obviously Mr. Thomas has a distinct political opinion, so I'll try to keep this as neutral as possible by not quoting parts of the article related to, uh, those that don't get it.
A more positive narrative comes from a new book, "Lessons from the Poor: Triumph of the Entrepreneurial Spirit," edited by Alvaro Vargas Llosa and published by the Independent Institute. The book is an optimistic triumph and a lesson about the unlimited capacity of the human spirit, properly inspired and unencumbered.
In the introduction, Llosa writes, "Entrepreneurial ability and energy are present almost everywhere. But in those countries that still languish in backwardness, the labyrinth intervention of the state and the absence of adequate institutions have kept that ability and energy from translating into full development." He writes of nations that used to be poor but are no longer, detailing how their people climbed out of poverty. He blames political, legal (and I would add in some cases, religious) systems for stifling prosperity.
Alvaro Vargas Llosa is the son of Mario Vargas Llosa, who is one of the preeminent Latin American writers. I had the pleasure of meeting him once in the late 70s while working at a summer job delivering messages for the U.S. Embassy in Peru. Mario himself has an interesting past.
Like many Latin American authors, [Mario] Vargas Llosa has been politically active throughout his career; over the course of his life, he has gradually moved from the political left towards the right. While he initially supported the Cuban revolutionary government of Fidel Castro, Vargas Llosa later became disenchanted. He ran for the Peruvian presidency in 1990 with the center-right Frente Democrático (FREDEMO) coalition, advocating neoliberal reforms. He has subsequently supported moderate conservative candidates.
Alvaro apparently learned from his early mistakes, and has become an advocate for the poverty-fighting power of the free market.
[Alvaro Vargas] Llosa is about creating wealth and his inspirational stories about real people and how they did it ought to be read in every school and in every home that has accepted inevitable failure.
"These entrepreneurs receive no government aid. In fact, through action or omission, the government has placed and continues to place many obstacles in their way. Yet they have been able to combat poverty much more effectively than foreign aid and official poverty-reduction programs." Please re-read that last sentence. Government aid impedes success and creates dependence, while entrepreneurs create success and independence.
In countries with far less capital and opportunity than America, people haven't sung songs about overcoming. They have overcome through tenacity, risk-taking and self-reliance.
Alvaro Vargas Llosa is in good company. One of his countrymen is another one of our favorites, Hernando de Soto.
Why are some countries rich and others poor? De Soto knew that Peruvians did not lack entrepreneurial energy. The bustling informal economy of Lima was testament to that. Nor did they lack assets, per se. From countryside to urban shantytown, ownership was governed by a system of informally evolved and acknowledged property rights.
But as de Soto explained in his 1986 book The Other Path, these de facto owners were locked out of the formal, legal economy—and that was the root of the problem. "They have houses but not titles; crops but not deeds; businesses but not statutes of incorporation."
With all of that intellect, it's no wonder that even the former hard-core leftist and current Peruvian president, Alan Garcia, is embracing market reforms.
Mr. García now speaks the language of a born-again economic liberal and defends markets as a way to reduce poverty. A clever and seasoned politician, legendary for his silver-tongued populism, he is now in the business of marketing his country to investors. And why not? With an average growth rate over the past six years of better than 6.2%, the story is a good one. And it is about much more than a boom in mining exports. Peru has blossomed because of competitiveness, something that could not have been imagined a decade ago.
Many countries around the world, including ours, could learn some lessons from these Peruvians.