Global Poverty and the Cell Phone

A magazine article in the New York Times of April 13th has the rather mistaken and misleading title “Can the Cell Phone End Global Poverty?” (Hat tip: Abhishek Sarda). The article title is misleading because it doesn’t even remotely attempt to answer that question. It is instead about what is called a “human-behavior researcher” or “user anthropologist,” in this case someone who works for Nokia and essentially tries to figure out how people actually use their phones and thus how phone companies should design phones for greater usability.

In any article where the words “poor,” “cell phone,” and “development” appear, it is mandatory to mention the usual suspects: Grameen, Kerala fishermen, and microfinance. All this is news only if one has been living in a cave for the last decade without an internet connection. What bugs me was the implicit promise in the title. Can something — any single thing at all — end global poverty?

Poverty is a big word. It is multi-dimensional. It is complex in its causes, it is hugely complex in its implications, and it is perhaps the most intractable of all social challenges that humanity faces. Poverty has been the characteristic condition of humanity since its birth. It is not the existence of poverty that should surprise us but rather that some significant portion of humanity in the relatively recent history (about 100 years or so) are not living in poverty. Though it is not as inescapable as death, poverty has been much of human history’s most common condition. Ending poverty on a global scale will require a combination of technical ingenuity, enlightened political leadership, compassionate societies, and such on a global scale. Just technology alone cannot solve any problem as enduring and non-technical as the complex problem of global poverty.

You know that Monty Python skit involving a dead parrot. The character that John Cleese plays comes to the pet shop to return a parrot which he had “purchased not half an hour from this very boutique.” The problem was that the parrot was dead. The shopkeeper insists that the parrot — a Norwegian blue — is not dead. It is, he variously claims, merely resting; pining for the fjords; that it prefers to kick back. John’s character is frustrated and finally explodes:

“It’s not pining, it’s passed on. This parrot is no more. It has ceased to be. It’s expired and gone to meet its maker. This is a late parrot. It’s a stiff. Bereft of life, it rests in peace. If you hadn’t nailed it to the perch, it would be pushing up the daisies. It’s rung down the curtain and joined the bleedin’ choir invisible.

Viz-a-viz the metabolic processes, he’s had his lot. All statements to the effect that this parrot is still a going concern are from now on inoperative. This is an ex-parrot.”

I feel a bit like that guy. I repeatedly keep insisting that technology is not the answer to all of the world’s problems. Technology helps only on those aspects of a problem that are technical in nature. So here’s yet another of my attempts at explaining why I think technology cannot solve the problem of global poverty.

In its most general formulation, problems involve constraints and their solutions involve choices within those constraints. If there were no constraints in a system, there would be no problems. To the extent that any particular problem has a solution at all, the solution involves making choices. Good solutions are the consequence of correct choices. Technology often relaxes some constraints to some degree, and thus expands the choices available. This expansion of choices is good but it is not costlessly so: greater choice implies a greater burden in making the correct choices. In other words, when the choice set expands, the chances of making the wrong choices also goes up.

Specifically in the case of mobile phones, we can immediately note the constraints that it relaxes. It essentially makes long distance communication of information possible. But then so do carrier pigeons, smoke signals, semaphores, the telegraph, the pony express, and land line phones. Mobile phones have an advantage over those earlier technologies because it is better, cheaper, faster, more accessible. So the second constraint the mobile phone pushes back is financial. For a given amount of money, you get more capacity. Third, the technology is transferable and is easily adopted. You don’t need to be literate, and you don’t need expensive terminal equipment.

What economic function does the mobile phone serve? It reduces transaction costs, to put it in economics terms. When you use the phone to ask for directions perhaps, you save time that you would have otherwise wasted in going round in circles. When you call ahead to fix up a meeting, you avoid a wasted trip if the person is not available. Telecommunications is a substitute for transportation in many instances.

By reducing transaction costs, the efficiency of the process goes up. That is, increased productivity and therefore more production for the same effort. More production, in turn, means more stuff. More stuff for a given population means more stuff per person. Stuff, as you all know, is what it is all about. If a person has too little stuff, he is poor. To the extent that global poverty can be helped through increased production of stuff, and to the extent that more efficient communications helps in production, only to that limited extent can cell phones affect global poverty.

Technology is an amplifying mechanism. Another way of saying that is that technology enters the production function multiplicatively. You have to have something to amplify to be able to use an amplifier. If there is no signal, no matter how powerful the amplifier, there will be no output. The productive capacity is multiplied by technology but where there is any production going on and what is being produced is a consequence of choices that were made outside of technology. That is the bigger challenge because the ability to make the correct choices is something that cannot be as easily imported as the importing of technology.

In the end, affluence — which I define here as the absence of poverty — is a consequence of correct choices made deliberately and consciously over the long term. Affluence is the result of economic policies made by thoughtful and wise policymakers. The existence and the necessity of such people is independent of the level and sophistication of the available technology. To solve our problem of poverty, technology is definitely necessary but it is far from sufficient.

Related links:

(1) Stuff and Ideas.

(2) The Importance of Producing Stuff.

(3) The Tathagata’s Sermon on Economics.