I believe that the economic prosperity of individuals can be achieved through individual empowerment and entrepreneurship. Regardless of whether one discusses poverty, equity or the wealth gap, empowerment combined with entrepreneurship provides a solution that offers the most effective approach.
I began studying individual empowerment after I concluded that government economic development programs will never address poverty effectively. The simple reason is that government programs typically focus on government objectives and not individual solutions to problems. I saw this mistake by governments all over the world when I worked at One Laptop per Child.
For individual empowerment to succeed, there are three necessary conditions that must be met for the individual:
- Safety and self-esteem
- Social inclusion
To these conditions must be added access to information, which I explain in a TEDx talk--"The Poor Know How to Overcome Poverty".
If we look at the conditions for individual empowerment, we see that condition 1 frames a psychological requirement. Condition 2 dictates a minimum level of education (FA Hayek thought it should be through primary school). Condition 3 addresses the constraint or boundary that must be overcome.
Now if we think about applying this three-part framework to entrepreneurship for disadvantaged peoples, we might use the same types of conditions:
- Trust and sharing (psychological)
- Access to capital (constraint/boundary)
(We would also have to provide access to information.)
Condition 1, trust and sharing, would be required to address the worldwide problem of most entrepreneurs--finding good staff. Of course, most of the reason they cannot find the staff is that they have not learned how to trust people, which demotivates staff and prevents delegation. Education would be specialized training on identifying opportunities and execution. Condition 3 would address the limiting boundary--capital. Capital is also frequently cited by entrepreneurs around the world as one of their biggest problems.
I think that many programs fail to address the psychological issues and access to information. Much as the early Head Start programs succeeded when they realized they had to feed the children breakfast, any program to overcome poverty has to address the fundamental issues which include the participants psyche and their risk profile. And, of course, no economic program can succeed without access to information because therein lies the opportunity for the individual to help themself...which brings us back to individual empowerment.
(These conclusions are derived in part from teaching a national program for over 200 small and medium size businesses.)