Empowering Poor Populations: How Business Can Transform Poverty Relief

Explore Dr. Martin Burt’s insights on empowering the poor through business and capitalism. Discover how innovative strategies and the Poverty Stoplight model can transform poverty relief, emphasising the role of businesses in fostering economic growth and self-sufficiency. Learn how a shift in perspective can help eradicate poverty.

There has been a consensus that capitalism and the free market are not designed to overcome poverty. We need to overcome this belief. We celebrate the capitalist economic framework for its ability to improve the lives of the majority who live under its invisible mantle, adopting new ideas, new combinations, and new leaders who innovate to generate economic growth. This dynamic, and often turbulent, system is based on a single doctrinal truth: we believe in private ownership of the means of production of wealth. However, there is a paradox between capitalism and the free market, that freedom is not trusted when it comes to the poor population.

In the United States and throughout the Western world, business leaders have as much bargaining power as political leaders. We see examples of this throughout policy and headlines, including the way Amazon actively lobbies the U.S. government on issues, including taxes, trade, and even immigration and defense. While we have seen record-breaking profits for businesses since the pandemic and employment rate increases, the truth is that the United States and the global North are continuing to face growing poverty levels. The official poverty rate in the U.S. in 2022 was 11.5 percent (37.9M) and 20% of Britons were in poverty in 2021 (13.4M). According to the CATO Institute, The U.S. government at all levels spends around $1.8TN per year to fight poverty. While well-intentioned government bodies have failed to alleviate poverty. I believe the key to eliminating poverty is capitalism. Businesses and corporations have the power to eliminate poverty in ways that the government has been unable to achieve. More so, I believe that the benefit that will be seen amongst the 4.7M+ business leaders and their workers in America is worth the work.

We currently have a top-down statist system of poverty relief without considering that individuals and families need to be empowered in order to become the owners of their own lives. I learned this after years of research and founding Fundación Paraguaya in 1985, which began as a microfinance lending institution. I found that no one wanted to own poverty, which meant that no one wanted to solve it. “Poverty alleviation” was the main driver of NGOs and governments, but no one thought it could be eliminated. More than that, no one was measuring it in the same way which meant that success metrics weren’t accurate. This was just published by Stanford in February in their recent study on poverty measurement.

I discovered that listening to people about their own experiences is the key first step to both accurate measurement and transformational social change. No one knows more about poverty than those experiencing it, and external solutions can only concentrate on the appearance of poverty rather than its essence. Poverty is not only about insufficient income but also about deprivations across multiple dimensions. It found that there are profound structural and systemic causes that are intertwined with individual behavior and culture. In order to overcome multidimensional poverty, families need to become aware and take stock of their situations. At the same time, basic government services and economic opportunities must be available.

I wrote about this in “Who Owns Poverty?” and created the Poverty Stoplight, a new poverty metric and a coaching methodology for families to quantify their level of poverty and identify customized strategies to address specific deprivations. I defined what non-poverty means across six dimensions – income and employment, health and environment, housing and infrastructure, education and culture, organization and participation, and interiority and motivation. These dimensions were operationalized into 50 indicators, each with three simple definitions: what it means in the local context to be extremely poor (red), poor (yellow) and non-poor (green). Thanks to a visual survey developed with Hewlett-Packard, the categories are visualized through pictures, so that people who take the survey can diagnose their level of poverty by selecting the picture that best represents their situation. The colors red, yellow and green are used to illustrate the family´s “heat map”. It is now used in 59 countries, by 850 organizations, and over 355k families.

The Poverty Stoplight model has been used by businesses across the world to help their employees pull themselves out of poverty through Companies Without Poverty. There have been 200 companies, from healthcare providers to construction companies to production factories who have implemented the stoplight successfully. They are killing two birds with one stone: eliminating social tensions and increasing the productivity of their human resources, increasing their profits. Win-win. In 2019, Oxford University’s Saïd Business School, in collaboration with British multinational telecoms firm BT, found links between happiness and productivity, citing that workers are 13% more productive when they are happy. MetLife’s 21st annual U.S. Employee Benefit Trends Study (EBTS), recently published that employees who feel cared for are 92% more likely to feel engaged at work, 65% more likely to be loyal and 56% more likely to be productive. We’re seeing similar feedback in the businesses that have taken on the Spotlight for their workers.

If we decide to fulfill the commitment our country made with the United Nations to “end poverty in all its forms” based on a democratic framework, we need to look at the principles that thrive here. This perspective does not neglect the structural responsibility of other actors but seeks to highlight the lead role of the people living in poverty and the business leaders who are key decision-makers. It is about changing current paradigms and motivating families and businesses to play a key role in poverty elimination. As psychologist Albert Bandura once said, it is about activating and respecting people’s agency and self-efficacy so that they feel free to do what they want and achieve the goals they consider important. This is what capitalism is all about, right?

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