Freeman

ARTICLE

Trickle Up: A Solution to Third World Poverty

APRIL 01, 1990 by BARBARA SALL

Barbara Sall is vice president of The International Alliance for Freedom and Peace, based in Boise, Idaho.

Acouple of years ago I was in Haiti for the first time. I was quite anxious about the trip, anticipating masses of starving people begging for handouts of food and money. I was also expecting to see little work or activity amidst these incredibly poor people.

The reality of Haiti was something quite different. The level of human activity was tremendous. People were up at 5:30 A.M. walking to their favorite market spot, setting up lines of old Salvation Army clothing to sell, picking bananas to take to market, and bringing in small catches of fish from the beautiful capes and bays. Troy charcoal fires smoked up the towns and cities, children were off on errands, and women bartered and sold their produce.

In the midst of all this were the lines of children, all dressed in identifiable private school uniforms, walking to open air one-room school houses.

At 10:30 in the evening they were all still at it; Port-au-Prince abuzz with soft Haitian dialects and singing, and Cape Haitien resounding with the squawking of chickens and the undeniable rhythm of drums signifying a voodoo ceremony going on somewhere in the bush.

I tried to analyze why my preconceived notion of a dramatically poor country differed so much from the reality of Haiti. It must be, I realized, that my idea of what poverty looks like had been based entirely on what I had seen in the United States.

Here in the U.S., and especially in the big cities, poor people are crammed together in government housing projects and ghetto neighborhoods, isolated from the rest of society by freeways and railroad tracks. The inhabitants are given welfare checks, food stamps, and sporadic, confusing “special programs” designed to raise them out of poverty. Subsistence is provided, but opportunities for self-employment are very scarce. There’s little productive activity in U.S. slums.

But in Haiti there are no welfare checks. To survive, people must work very hard. They gather what little they can of value and spend the long hours of the day trying to find a market for it.

In my wanderings in the markets, I asked people how they managed to sell their Bic pens, bars of soap, record albums, and used clothing. One man replied that the price of rice had recently fallen 50 percent, which allowed some people the luxury of buying small consumer goods. I watched as a child sold Chiclets to a well-dressed matron in a brand-new Cherokee wagon. And there was constant bartering among the inhabitants that allowed soap, food, and basic supplies to change hands.

All this activity exists in what Hernando de Soto, Peruvian author of The Other Path, calls the “informal economy.” Participants pay no taxes, pass no regulatory guidelines for sanitation or market-stall location, and exist by their own efforts. In this way Haitians have been able to overcome Baby Doc Duvalier’s monopolistic policies that strangled the middle class, to feed most (but tragically not all) of their children, and survive.

Poor Haitians aren’t the only families in Third World countries working hard to keep body and soul together. People in Indonesia, Pakistan, Kenya, and Bolivia, among others, participate in free-wheeling “informal” market economies requiring tireless efforts to maintain extremely low levels of existence.

The Trickle       Up Program

Marching into this wide-open system of the “informal economy” is a private program for assistance that truly recognizes the ability of the poor to work hard and lead productive lives. It’s called the Trickle Up Program and is directed out of New York by Glen Leet and Mildred Robbins Leer. During the past ten years of its existence, the Trickle Up Program, or TUP, has achieved some remarkable successes in Africa, South America, Asia, and the Caribbean largely by recognizing that element of self-help and entrepreneurism so rampant in undeveloped countries like Haiti.

Grants are made by TUP to selected groups of five or more people after a business plan is reviewed for them by unpaid TUP project coordinators. The maximum grant is $100, and recipients must pledge to reinvest at least 20 percent of their profits in their businesses.

In the past ten years, more than 90,000 individuals have participated, 15,000 businesses have been started in 86 countries, and over $7.5 million in profits have been generated from TUP-funded businesses. All of this has been achieved without the involvement of governments, large staffs, or social researchers.

By now, you probably see why it’s called the “Trickle Up Program.” Funds aren’t lavished upon government entities in poor countries with the hope that a small portion will somehow “trickle down” to the very poor. The grants go directly to the cagey entrepreneurs of the streets, including those in Port-au-Prince, Haiti.

Here’s how the program works in the clearest presentation I could find—t e words of a project coordinator in Jakarta, Indonesia:

Of the 81 women [in the project], Salima was definitely the worst off in all aspects of life. She and her husband Tukiman and three children lived in the smallest packing crate in the slum. Every week . . . Salima would greet us by begging for money . . . .

Finally I said, there is a program where you can get money if you get five people together and produce something and sell it. Well, Tukiman was already making some money by finding old sandals and repairing them to sell. They found six other people who could either make or sell sandals and, with my help, they filled out the TUP business plan form and decided how they would spend the TUP $50 conditional grant . . . .

The Tup business report showed that eight people worked . . . . A total of 19 people benefited from the business. They produced 180 pairs of shoes and sandals. Their income from sales in 15 months was $176. They saved and reinvested 65 percent of their profit in their business . . . .

They were very enthusiastic when we met to fill out the final report. When I asked them if the business would continue they said, “It will continue until we die.”

The joy of this program is the concrete proof it provides of the success of free market processes among the poorest people in the poorest countries of the world. It also confirms the fact that self-worth and a decent life earned by an individual’s own labor are far more precious than billions in relief funds.

Why Are Results Ignored?

The tragedy of this program is that its results are ignored by the dispensers of billions of dollars to the Third World nations. This is summed up by the Leets in their September 1989 newsletter:

The World Development Report of 1988 published by the World Bank concluded: “Poverty in the developing countries is on the rise. Between 1970 and 1980 the number of people without adequate diets in developing countries increased from 650 million to 750 million people. Since 1980, matters have turned from bad to worse: economic growth rates have slowed, real wages have dropped and growth in employment has faltered in most developing countries.”

If an amount equal to 10% of the $320 billion [development aid spent by the 19 donor countries that are members of the Organization for Economic Cooperation and Development(OECD)] was used with the Trickle Up process it would give the opportunity for 1.5 billion of the poorest of the poor to start 206.5 million businesses in which they would invest 770.5 billion hours of their underemployed time. This would end involuntary unemployment, which is the major cause of poverty on this globe.

The Leets then ponder the reasons their successful program has been ignored for so long by the major players in the Third World assistance game. They question their own efforts at getting out the word of their success and point out that direct assistance to the poor runs counter to “conventional wisdom.”

Unfortunately, they make one wrong assumption about inter-governmental development agencies. The Leers state, “They do care about poverty.” Although it’s true they care about poverty, I’m afraid it’s more in the manner described by Kimi Gray, welfare mother/housing advocate from Washington, D.C. “Poverty,” Ms. Gray said on an October 1989 National Public Radio broadcast, “has been very profitable for everyone but poor people.”

Tapping the energy of poor people around the world and directing it toward free market pursuits could result in an enormous increase in world wealth. Continuing to subsidize inefficient, centralized, and crippling governments will only keep those people and families on the edge of survival.

After personally witnessing the strength, beauty, and dignity in which the poor work for their own survival in Haiti, I became convinced of the ability of people to care for themselves and their families, if only they can be released from the economic restrictions imposed by governments. By recognizing this fact, the Trickle Up Program is definitely part of the solution to world poverty. On the other hand, massive infusions of money and capital to Third World governments is definitely part of the problem. []


Readers may contact TUP, 54 Riverside Drive, New York, NY 10024-6509, for further information.Barbara Sall is vice president of The International Alliance for Freedom and Peace, based in Boise, Idaho.

Acouple of years ago I was in Haiti for the first time. I was quite anxious about the trip, anticipating masses of starving people begging for handouts of food and money. I was also expecting to see little work or activity amidst these incredibly poor people.

The reality of Haiti was something quite different. The level of human activity was tremendous. People were up at 5:30 A.M. walking to their favorite market spot, setting up lines of old Salvation Army clothing to sell, picking bananas to take to market, and bringing in small catches of fish from the beautiful capes and bays. Troy charcoal fires smoked up the towns and cities, children were off on errands, and women bartered and sold their produce.

In the midst of all this were the lines of children, all dressed in identifiable private school uniforms, walking to open air one-room school houses.

At 10:30 in the evening they were all still at it; Port-au-Prince abuzz with soft Haitian dialects and singing, and Cape Haitien resounding with the squawking of chickens and the undeniable rhythm of drums signifying a voodoo ceremony going on somewhere in the bush.

I tried to analyze why my preconceived notion of a dramatically poor country differed so much from the reality of Haiti. It must be, I realized, that my idea of what poverty looks like had been based entirely on what I had seen in the United States.

Here in the U.S., and especially in the big cities, poor people are crammed together in government housing projects and ghetto neighborhoods, isolated from the rest of society by freeways and railroad tracks. The inhabitants are given welfare checks, food stamps, and sporadic, confusing “special programs” designed to raise them out of poverty. Subsistence is provided, but opportunities for self-employment are very scarce. There’s little productive activity in U.S. slums.

But in Haiti there are no welfare checks. To survive, people must work very hard. They gather what little they can of value and spend the long hours of the day trying to find a market for it.

In my wanderings in the markets, I asked people how they managed to sell their Bic pens, bars of soap, record albums, and used clothing. One man replied that the price of rice had recently fallen 50 percent, which allowed some people the luxury of buying small consumer goods. I watched as a child sold Chiclets to a well-dressed matron in a brand-new Cherokee wagon. And there was constant bartering among the inhabitants that allowed soap, food, and basic supplies to change hands.

All this activity exists in what Hernando de Soto, Peruvian author of The Other Path, calls the “informal economy.” Participants pay no taxes, pass no regulatory guidelines for sanitation or market-stall location, and exist by their own efforts. In this way Haitians have been able to overcome Baby Doc Duvalier’s monopolistic policies that strangled the middle class, to feed most (but tragically not all) of their children, and survive.

Poor Haitians aren’t the only families in Third World countries working hard to keep body and soul together. People in Indonesia, Pakistan, Kenya, and Bolivia, among others, participate in free-wheeling “informal” market economies requiring tireless efforts to maintain extremely low levels of existence.

The Trickle       Up Program

Marching into this wide-open system of the “informal economy” is a private program for assistance that truly recognizes the ability of the poor to work hard and lead productive lives. It’s called the Trickle Up Program and is directed out of New York by Glen Leet and Mildred Robbins Leer. During the past ten years of its existence, the Trickle Up Program, or TUP, has achieved some remarkable successes in Africa, South America, Asia, and the Caribbean largely by recognizing that element of self-help and entrepreneurism so rampant in undeveloped countries like Haiti.

Grants are made by TUP to selected groups of five or more people after a business plan is reviewed for them by unpaid TUP project coordinators. The maximum grant is $100, and recipients must pledge to reinvest at least 20 percent of their profits in their businesses.

In the past ten years, more than 90,000 individuals have participated, 15,000 businesses have been started in 86 countries, and over $7.5 million in profits have been generated from TUP-funded businesses. All of this has been achieved without the involvement of governments, large staffs, or social researchers.

By now, you probably see why it’s called the “Trickle Up Program.” Funds aren’t lavished upon government entities in poor countries with the hope that a small portion will somehow “trickle down” to the very poor. The grants go directly to the cagey entrepreneurs of the streets, including those in Port-au-Prince, Haiti.

Here’s how the program works in the clearest presentation I could find—t e words of a project coordinator in Jakarta, Indonesia:

Of the 81 women [in the project], Salima was definitely the worst off in all aspects of life. She and her husband Tukiman and three children lived in the smallest packing crate in the slum. Every week . . . Salima would greet us by begging for money . . . .

Finally I said, there is a program where you can get money if you get five people together and produce something and sell it. Well, Tukiman was already making some money by finding old sandals and repairing them to sell. They found six other people who could either make or sell sandals and, with my help, they filled out the TUP business plan form and decided how they would spend the TUP $50 conditional grant . . . .

The Tup business report showed that eight people worked . . . . A total of 19 people benefited from the business. They produced 180 pairs of shoes and sandals. Their income from sales in 15 months was $176. They saved and reinvested 65 percent of their profit in their business . . . .

They were very enthusiastic when we met to fill out the final report. When I asked them if the business would continue they said, “It will continue until we die.”

The joy of this program is the concrete proof it provides of the success of free market processes among the poorest people in the poorest countries of the world. It also confirms the fact that self-worth and a decent life earned by an individual’s own labor are far more precious than billions in relief funds.

Why Are Results Ignored?

The tragedy of this program is that its results are ignored by the dispensers of billions of dollars to the Third World nations. This is summed up by the Leets in their September 1989 newsletter:

The World Development Report of 1988 published by the World Bank concluded: “Poverty in the developing countries is on the rise. Between 1970 and 1980 the number of people without adequate diets in developing countries increased from 650 million to 750 million people. Since 1980, matters have turned from bad to worse: economic growth rates have slowed, real wages have dropped and growth in employment has faltered in most developing countries.”

If an amount equal to 10% of the $320 billion [development aid spent by the 19 donor countries that are members of the Organization for Economic Cooperation and Development(OECD)] was used with the Trickle Up process it would give the opportunity for 1.5 billion of the poorest of the poor to start 206.5 million businesses in which they would invest 770.5 billion hours of their underemployed time. This would end involuntary unemployment, which is the major cause of poverty on this globe.

The Leets then ponder the reasons their successful program has been ignored for so long by the major players in the Third World assistance game. They question their own efforts at getting out the word of their success and point out that direct assistance to the poor runs counter to “conventional wisdom.”

Unfortunately, they make one wrong assumption about inter-governmental development agencies. The Leers state, “They do care about poverty.” Although it’s true they care about poverty, I’m afraid it’s more in the manner described by Kimi Gray, welfare mother/housing advocate from Washington, D.C. “Poverty,” Ms. Gray said on an October 1989 National Public Radio broadcast, “has been very profitable for everyone but poor people.”

Tapping the energy of poor people around the world and directing it toward free market pursuits could result in an enormous increase in world wealth. Continuing to subsidize inefficient, centralized, and crippling governments will only keep those people and families on the edge of survival.

After personally witnessing the strength, beauty, and dignity in which the poor work for their own survival in Haiti, I became convinced of the ability of people to care for themselves and their families, if only they can be released from the economic restrictions imposed by governments. By recognizing this fact, the Trickle Up Program is definitely part of the solution to world poverty. On the other hand, massive infusions of money and capital to Third World governments is definitely part of the problem.

Readers may contact TUP, 54 Riverside Drive, New York, NY 10024-6509, for further information.

ASSOCIATED ISSUE

April 1990

comments powered by Disqus

EMAIL UPDATES

* indicates required
Sign me up for...

CURRENT ISSUE

July/August 2014

The United States' corporate tax burden is the highest in the world, but innovators will always find a way to duck away from Uncle Sam's reach. Doug Bandow explains how those with the means are renouncing their citizenship in increasing numbers, while J. Dayne Girard describes the innovative use of freeports to shield wealth from the myriad taxes and duties imposed on it as it moves around the world. Of course the politicians brand all of these people unpatriotic, hoping you won't think too hard about the difference between the usual crony-capitalist suspects and the global creative elite that have done so much to improve our lives. In a special tech section, Joseph Diedrich, Thomas Bogle, and Matthew McCaffrey look at various ways these innovators add value to our lives--even in ways they probably never expected.
Download Free PDF

PAST ISSUES

SUBSCRIBE

RENEW YOUR SUBSCRIPTION