Salutary Neglect

Introduction

Nearly every country in the world has people living in what the world bank calls “absolute poverty.” According to ThinkQuest, 2.7 billion people were living on less than $2 per day and 1.1 billion people were living on less than $1 per day as of 2001.
This is regarded by many as a problem, especially considering that there are other very wealthy and industrialized countries, creating an income disparity. Even those considered to be poor in wealthy countries are living at a standard well above those in true poverty elsewhere across the globe.

When trying to solve this problem, many look to ethical models, Peter Singer, for example, believes that utilitarianism compels us to evenly distribute our wealth amongst all global citizens until we reach the point of marginal utility, where giving more wealth away would leave the giver worse off than the receiver.
In his article, Romanticizing the Poor, Aneel Karnani justifies a lower key approach by upending a premise of Kantian ethics, that all humans are rational and capable of making good choices. Karnani’s argument can be extrapolated within the framework of Kantian Ethics to say that, because the poorest amongst us aren’t rational, Kantian Ethics don’t apply to them. As a result, government can be used to make choices for them until they become capable of being rational economic actors.
These approaches both have very large problems and implications that lead to outcomes that many would deem immoral. In fact, the two most popular ethical models, Kantian Ethics and Utilitarianism and others, are wholly deficient when trying to deal with this problem, and a more balanced and practical approach must be sought.

Utilitarianism

Peter Singer argues that utilitarianism compels all of humanity to give away resources until they are reduced to the level where giving away any more would make the giver worse off than the receiver. Singer is correct in saying this, but he was generally vague when dictating where that money should go. To make the bottom of the pyramid best off in the long run, this money should go to infrastructure, education and investment that will foster future economic growth. Not only will this create more wealth for the bottom of the pyramid, but it will eventually put them in a position where they can create their own wealth and sustain an economy that doesn’t need intervention from wealthier countries.
Yet these investments might not be fully taken advantage of unless we, in wealthier countries, step in and make sure that those at the bottom of the pyramid actually capitalize on the resources we’re giving them. As Karnani points out, those at the bottom of the pyramid often don’t direct their resources in the best way and cannot be considered rational economic actors capable of making constructive decisions.
This leads us to the conclusion that, in order to create the best long term outcome for those at the bottom of the pyramid, wealthier countries with more knowledge and experience in creating economies that generate wealth consistently in the long term should take over the economies of these poorer countries, direct the labor and resources of their citizens to produce the maximum amount of prosperity. Though this will decrease short term utility, in the long run it’ll create a sustainable, wealthy economy capable of eradicating poverty without assistance form other countries, clearly maximizing long term utility.
This conclusion is rather alarming for several reasons. First, it tends to not sit right with many because it’s a flagrant violation of what have come to be accepted as inviolable individual rights. Second, one can justify the exact timeline of slavery in the US with this logic. People were forced to do work and the product of their labor was taken from them. This built up the wealthiest economy in the world and eventually the slaves were freed. The descendants of these freed slaves are now inarguably better off than they would’ve been had their ancestors stayed in Africa.
Slavery is widely accepted by humanity today as a terrible crime, and even with positive intentions, we regard the usurpation of human autonomy as largely immoral. In this way, utilitarianism is entirely deficient when attempting to tackle global poverty because there is nothing to moderate it from becoming de facto slavery until third world economies reach the point where they can generate as much wealth as any industrialized country.

Kantian Ethics

Aneel Karnani argues that those at the bottom of the pyramid don’t have the education necessary to be considered rational economic actors. He uses as evidence the fact that nearly all of the poorest people eat bad food and spend more money than they should on things like weddings, funerals and other traditions. He uses this point to eventually say that the solution for poverty is to limit the autonomy of those at the bottom of the pyramid by increasing the influence of government in their daily lives. This argument is similar to the utilitarian argument above, but justified on Kantian grounds by rejecting the Kantian premise that those at the bottom of the pyramid are rational.
This also has very disturbing consequences. First, it’s unclear as to who can determine if another is irrational or incapable of making rational decisions. Giving someone the ability to simply say that another is irrational and that therefore ethics don’t apply is very dangerous. This is an easily usurped power.
Additionally, if we are to believe that some are considered irrational, like newborn children or those with a mental illness, it creates a lot of grey areas. For instance, a baby couldn’t be considered to be rational the day it leaves the womb. It’s in the baby’s best interest, in fact, to have others make decisions for it. This brings to light the question of where Kantian Ethics starts to apply. At 5 days old, the child isn’t much more rational than at birth, but at 30 years, the child has definitely grown into rationality.
On a similar note, we currently institutionalize the criminally insane. This is definitely disrespecting their rationality and autonomy, but is acceptable because we decide that they’re irrational, as they hurt people in ways that, if universalized, would result in contradiction. Additionally, we restrict the autonomy of those with other mental illnesses that are less harmful to others under the same principal, that they aren’t capable of making rational decisions. Though this seems fine, again we are forced to draw a difficult line. Asperger’s doesn’t deprive someone of rationality, but is a mental disorder. Giving someone the authority to decide that someone is incapable of rationality in any case is very, very dangerous, as those who actually are rational may be mistreated because they are deemed to be irrational.
Yet despite the lack of a clear way to draw these difficult lines, there do seem to be people who are not capable of rational decisions and whether those at the bottom of the pyramid are amongst them is certainly an issue of contention with good points on either side. The mere presence of those incapable of rationality blows a massive hole in Kantian Ethics because Kant doesn’t have a clear system set up for dealing with those who aren’t rational altogether or are semi-rational. If there exist irrational people, then Kant’s entire system becomes too complicated to be practical. Unanswerable questions will arise. Are people rational or irrational with no room in between? If there is room in between, do we restrict certain people’s rights more or less depending on how rational they are? Who decides who’s rational and who isn’t? What if someone is mis-diagnosed? The list is endless and brings up tons of potential flaws in a system of different rationalities. This couldn’t possibly help those at the bottom of the pyramid, and would at worst result in the utilitarian scheme described above if the bottom of the pyramid was deemed completely irrational and as a result, lost all of their rights.
If this system is too complicated, and we decide instead that all people are rational, then Kant’s system doesn’t obligate us to do anything for those at the bottom of the pyramid and we can’t direct their labor or resources at all, even if it’s in their ultimate best interest. In fact, all we can do is increase their purchasing power by throwing resources at them, and that’s permissible but not obligatory under Kant’s system and, if those at the bottom of the pyramid don’t actually use the resources constructively, as Karnani suggests, then it won’t produce any long term prosperity.
Kant’s ethical system is deficient when dealing with the bottom of the pyramid because if it’s possible that some people are irrational then the system for deciding rationality would be immoral, corrupt and inefficient in addition to resulting in inconsistencies and a lot of contradiction. If Kant’s system holds up and all are rational, then the best we can do is keep inefficiently directing resources at the bottom of the pyramid which only produces short run prosperity at best and isn’t even obligatory.

Other Models

If both Kantian Ethics and Utilitarianism completely fail us when attempting to help those at the top of the pyramid, other models may provide the solutions we seek.
Virtue ethics would compel us all to act as virtuous agents and live a prosperous and fulfilled life consistent with our fellow humans flourishing. This may include some donation or thought about helping those at the bottom of the pyramid but again, doesn’t seem to provide a clear obligation to help those less fortunate than we are, and also doesn’t provide a framework for actually helping those at the bottom of the pyramid achieve long-term prosperity on their own so that they can be autonomous and prosperous. This arrives at the same problem as a Kantian scheme where all are considered rational. Help is nice, but not obligatory and can’t be directed efficiently.
Libertarianism runs into the same problem. People aren’t obligated to help others, but are just obligated to respect others’ rational decision making abilities and not harm others in their day to day actions. Again, this can result in at will donations that help a bit in the short term but don’t really invest in a future for the bottom of the pyramid.
Rawls’ theory of Justice provides a framework capable of solving this problem, but is entirely impractical. If those at the bottom and top of the pyramid could come together without knowing which group they belong to and devise a scheme in which those at the top help those at the bottom by restricting their autonomy a bit and guiding their resources to constructive and renewable outlets like investment and education without being entirely oppressive and preventing locals from doing what they enjoy, a moral framework can be developed that respects individual rights and creates long-term prosperity. This system allows both parties to agree on something that’s in everyone’s long-term best interest. Additionally, rights aren’t violated, because both groups will have agreed on this system beforehand from an impartial point of view.
Unfortunately, it’s entirely impractical to deprive people of the knowledge of where in the world they fit. World leaders can get together and often do, but they largely don’t come up with any long-term solutions because they’re coming from such different backgrounds and don’t fully understand the other’s needs. This makes Rawls’ theory impractical, even though, on the surface, it creates the perfect framework for dealing with the bottom of the pyramid.

A Solution: Charter Cities

A solution that fits inside of the Virtue Ethics, Libertarian, and Kantian Models while staying true to some of the best principles of Rawls’ Model and Utilitarianism, is Paul Romer’s idea of charter cities. A charter city can happen on any uninhabited land in a third world country. The government of that country, seeking a better life for its inhabitants, can team up with a developed country to create a charter for a new city that’s going to be built on the uninhabited land previously chosen. This land must be uninhabited so that nobody is coerced into living in this new city and so that the city and truly start fresh. These two governments will then create a charter, or a fresh set of laws that will govern this new city. People can then opt to move there, or not and businesses will be attracted to a new set of hopefully favorable laws and can develop the initial infrastructure necessary to get this city off the ground.
The process of the two governments teaming up to create laws is very similar to Rawls’ Theory of Justice. Though there isn’t a veil of ignorance, these two parties are motivated by a similar desire to create a new place of prosperity, unburdened by bad rules and regulations. This desire can act as a veil of ignorance because both parties stand to benefit by setting up a thriving metropolis with a good system of rules. Additionally, the presence of an industrialized country makes the promises of a third world country more reliable and therefore makes the city more attractive to investors and companies that will create the city’s initial infrastructure.
The creation of rules that are beneficial to the bottom of the pyramid and help direct resources to investment and education is similar to the utilitarian framework that would be created, but without any of the negative and coercive aspects that come with a usurpation of individual rights, as people can opt to move into this system or not.
Finally, because living in a charter city is optional, it complies with Kantian Ethics, Virtue Ethics and Libertarianism. Nobody’s rights are being violated if people are voluntarily coming together out of a genuine desire to produce better outcomes for those who are less well off.
Though the creation of charter cities isn’t mandatory, and the system is far from faultless, it’s a very good happy medium between the forceful takeover of utilitarianism and the respect for individual rights that’s essential to Kantian Ethics. Finding this golden mean is another thing that’s stressed in Virtue Ethics, making this system all the more compatible with some of the best parts of each ethical model.
Charter Cities have a long way to go to become reality, but there are already examples of similar schemes working, such as Hong Kong. Though Hong Kong was borne out of conflict, it represented a region within a less well off country that was set up by a wealthy country with very specific sets of rules. These rules allowed prosperity for those in Hong Kong and eventually provided a model to follow when China wanted to adopt more free market policies.

Objections

One may object to the assertion that utilitarianism requires a forceful takeover of third world governments, but this indeed would be the case. Every model of economic growth cites investment and education as two of the main drivers of long-term prosperity. If those at the bottom of the pyramid are not doing this themselves, then they must be forced to do it for a brief while until a system of prosperity is set up. Because this period of coercion is a short, finite period, and the future is long and infinite, eventually, the short term loss in utility will be made up for and surpassed by long term gains in utility.
Additionally, an objection may arise to the notion that one time donations don’t create long-term prosperity. As Karnani points out, many of the poor don’t spend their money on things that are in their ultimate best interest. Because of this, even though these donations may increase purchasing power temporarily, these resources won’t be directed in a way that creates meaningful growth if left to those at the bottom of the pyramid to direct.
Finally, one may object to the notion that charter cities will work, or that wealthy countries will actually want to team up with poorer countries and create this charter. Though we’ll never know until we try, Hong Kong shows us a model that worked. Additionally, it showed us that it was in Britain’s best interest to have this city exist because it provided a market for British trade, which ultimately worked out in their best interest, as well as the best interest of the Chinese.
Conclusion
The problem of poverty at the bottom of the economic pyramid is significant. Charter cities provide the most ethical solution to this problem. They direct resources to maximize utility, don’t disrespect rights and contain a fresh start with new rules decided upon by both the top and bottom of the pyramid, consistent with Rawls’ theory of justice. Hopefully charter cities start to spring up in places of the world where they are most needed, and start slowly eradicating poverty in a sustainable manner.

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