Table Of ContentWealth Creation
Approach to Reducing
Global Poverty
Scott Hipsher
Wealth Creation Approach to Reducing
Global Poverty
Scott Hipsher
Wealth Creation
Approach to Reducing
Global Poverty
Scott Hipsher
Bangkok, Thailand
ISBN 978-981-15-4115-5 ISBN 978-981-15-4116-2 (eBook)
https://doi.org/10.1007/978-981-15-4116-2
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Preface
The topics of poverty reduction, micro-entrepreneurship, and the impact
of international business on the people living in less developed countries
have been interests of mine for many years. I have previously written
books,bookchapters,academicjournalarticles,andconferencepresenta-
tionsonthetopicofpovertyreductionwithintheAsia-Pacificregionand
as connected with the tourism industry in Southeast Asia. In addition, I
haveconductedprimaryresearchintoavarietyoftopicssuchasjobsatis-
factionofworkersininternationalcompaniesandmicro-entrepreneurship
in the developing or less developed countries of Cambodia, Laos, Myan-
mar,Thailand,andVietnam.Theopinionofwishingtohavefewerchoices
orhavingeitherthegovernmentoranoutsideorganizationcontrolone’s
life has never been heard. Yet some poverty reduction programs and in-
dividuals interested in the issue often are based on or promote policies
which will reduce choices for individuals and dictate how the people in
poverty should live their lives.
Despite the overwhelming economic evidence showing the incredibly
strongrelationshipbetweeneconomicfreedomandintegrationintointer-
nationaltradingsystems,andthegeneralopinionsofpeopleindeveloping
and less developed countries to having more choices with prosperity and
reductions in poverty, there remains strong opposition to the principles
which I call the Wealth Creation Approach. In response to the multiple
opinionsexpressedinboththeacademicandpopularliteratureontheex-
ploitation of workers by foreign companies, the author did a comparison
v
vi PREFACE
study between workers in foreign-owned versus locally owned businesses
inthetourismindustryinThailandusingamatched-pairsapproachcom-
paring job satisfaction as concerning pay and benefits, working environ-
ment, and relationships with management (Hipsher 2019). It was found
workers, primarily in the lowest paid jobs such as room cleaner, secu-
rity guard, or restaurant staff, in foreign-owned businesses had slightly,
but statistically significant, higher levels of job satisfaction than workers
in domestically owned businesses. When I shared these results with some
workers in the industry, each person said, of course, everyone working in
the industry knows the best jobs are in the international hotels, restau-
rants, and coffee shops. Despite this common knowledge, many people
concerned with reducing poverty continue to express the opinion that
foreign-owned companies and international business are exploitative in
nature.
Andtheoppositiontoprinciplesandpracticeswhichhavebeenshown
to greatly reduce poverty is not limited to the general public or activists
withanagenda.Itisoftenseeninacademia,includingamongmanyofthe
most prominent scholars in the field. It is not at all uncommon for well-
knowneconomiststoacknowledge thebenefits fromtradeandeconomic
freedom in their academic work, while opposing the same practices when
expressing opposition to the policies of political parties these economists
havemadeitpublicknowledgetheydonotsupport.Ihavewrestledwith
thequestionofwhysomanypeoplewhoappeartosupportpovertyreduc-
tionignorethebalanceoftheevidenceandcontinuetoopposeprinciples
and practices which evidence indicates has in the past lifted hundreds of
millions of people out of extreme poverty. And these same principles and
practicesarelikelytobethefoundationforliftingthehundredsofmillions
ofpeoplestillinextremepovertyoutoftheirpresentconditions.Itwould
seem presenting the evidence, which is overwhelming, is not enough.
As the book looks at biases and mental framework on which people
view this issue, it is probably best to provide some background on the
author so the reader can determine his possible biases in the selection of
thefactsandopinionsexpressedinthebookandmentalframeworksused
in evaluating the information as it is acknowledged it is difficult to detect
one’s own biases and prejudices. Academically, I am not a specialist in
anyspecificfieldandhavedegreesingeneralmanagement,althoughIdo
have special interests in international business and economics and have
both taught and completed research in these areas. In addition to other
PREFACE vii
business topics, the author has an interest in psychology, history, Asian
studies, and languages.
I was born and raised in rural communities in the USA. Being from a
country, using Hofstede’s dimensions of culture (1980), which is known
for its individualism, moderately low power distance, fairly high level
of masculinity, and relatively low level of uncertainty avoidance has un-
doubtably shaped my worldview to some extent. Also growing up in
a family and community in a rural community which valued having a
strong work ethic and where the belief one should start working from
an early age was common has affected how some of my opinions have
been formed. My early adult life included doing quite a bit of manual la-
bor followed by a lengthy stay as an enlisted sailor in the US Navy. My
bachelor’s degree was earned while on shore duty in Japan.
After leaving the Navy, I moved to Southeast Asia and completed an
M.B.A.atauniversityinBangkokandlaterdidtheresearchformyPh.D.
in Cambodia. In addition to teaching in China, Thailand, Vietnam, and
Nepal, I have worked in an INGO (with refugees from Myanmar) and
as a manager in a private company in Northeast Thailand. I have lived,
worked, and studied in developing or less developed countries in Asia for
well over 20 years. For the most part, I have lived within the local com-
munities to a far greater extent than in the expatriate communities. This
includes living with a person for nearly 30 years who grew up living on
less than a dollar a day and having many interactions with people living
in relatively poor rural communities. I cannot claim to be a representa-
tive of any community of people living in developing or less developed
economies, but my experience probably gives me a different viewpoint
from individuals from large international organizations such as the World
Bank or individuals from elite universities who mostly visit the less devel-
opedregionsoftheworldasVIPs.Butontheotherhand,asanoutsider,
my viewpoint is also most likely quite different from the viewpoint of
people, especially those who grew up in poverty, from developing and
less developed economies.
Despite the faults and unintended biases brought into the discussion
of the topic maybe add within this book to the end of the sentence, it is
hoped the reader will keep an open mind and try to critically and objec-
tively evaluate the ideas presented. It is hoped to encourage discussions
viii PREFACE
over what might be the most important issue of this and every time for
mankind, poverty reduction, and increasing prosperity.
Bangkok, Thailand Scott Hipsher
References
Hipsher, S. (2019). Increased equality of opportunity through international
tourism. Journal of Global Responsibility, 10(4), 339–354.
Hofstede, G. (1980). Motivation, leadership, and organization: Do American
theories apply abroad? Organizational Dynamics, 9(1), 42–63.
Contents
1 The Wealth Creation Approach to Poverty Reduction 1
Introduction: Poverty and Wealth 1
Wealth, Poverty, and Happiness 3
Threats to Poverty Reduction 5
Wealth Creation Approach 7
Poverty Reduction Versus Wealth Creation 7
Wealth Creation and Politics 9
Wealth Creation and Economics 11
International Business Approach and Productivity 14
Wealth Creation: The Trade-Offs 16
Inequality 18
Inequality of Opportunity 19
Foreign Aid Versus Foreign Investment 20
Conclusion 22
References 22
2 Economic Theories of Poverty Reduction: Exploitation or
Opportunity? 33
Introduction: The Economic Foundations of the Wealth Creation
Approach 33
Exploitation Viewpoint: Centralized Control 34
Wealth Creation: Economic Freedom 38
Wealth Creation Approach: Individual Differences 39
ix
x CONTENTS
Wealth Creation Approach: Wealth as Choice 39
Economic Freedom and Economic Growth 41
Economic Nationalism and Mercantilism 44
Nationalism 44
Economic Nationalism 45
Mercantilism 46
Import Substitution 47
Wealth Creation Approach: Globalization and International
Trade 47
Exploitation Viewpoint: Redistribution 49
Wealth Creation Approach: Economic Opportunities 51
Conclusion 53
References 54
3 Mental Frameworks: Psychological, Religious,
Philosophical, and Political 65
Introduction: Mental Frameworks 65
Psychological Frameworks 66
Availability and Negativity Biases 67
Intention and Confirmation Biases 68
Planning and Overconfidence 69
Us and Them 70
Other Psychological Biases and Obstacles 71
Religion and Philosophy 73
Religion 73
Philosophy 77
Politics 78
Identity Politics 80
Culture 81
Conclusion 84
References 84
4 Regional Experiences: Africa, Asia, Latin America and
Others 97
Introduction: Regional Development 97
East and Southeast Asia 99
East Asia and China 100
Southeast Asia 101
