Portfolios of the Poor: Seeing the Poor as Economic Actors

12:24 PM

Mature, public conversation about issues that matter is foundational for democratic society. I am delighted that Mark Zuckerberg's "A Year of Books" offers such an opportunity. To contribute to that dialog, I will offer commentary on each of the readings proposed by Zuckerberg.

I take it simply as truth that most people, rich and poor, spend most of their time earning money, spending money, and worried about money. Portfolios of the Poor: How the World's Poor Live on $2 a Day, authored by Daryl Collins, Jonathan Morduch, Stuart Rutherford, and Orlanda Ruthven, delves into the economic lives of the poor with the science of economists.

Portfolios of the Poor assesses more than 250 financial diaries of people who live on $2 a day from South Africa, India, and Bangladesh. Their methodology is sophisticated. Their investment of time with these families is significant. Their treatment of these poor, more importantly, is profoundly respectful. They capture the thrift, industry, and creativity within the financial management of the poor. This is an important book. It gives insight to important work from people like Nobel-laureate Muhammad Yunus and his Grameen Bank. It also shapes the sustainable development goals of the United Nations. The book also illustrates things that I saw regularly while I served as a priest.

When I served as a priest, I lived among the poor, and I was surprised by how much I had to learn about economics and to learn about how my parishioners managed their money. Meeting the bi-weekly payroll for parish and school and so many other pressing needs meant that the economics of the poor was the economics of my parish. As a person of trust within the community of the poor, parishioners and persons in need shared deeply about their circumstances. Advocating for their needs, I collaborated widely, with bankers, academics, and politicians. With bankers, I sought to open access to reliable, convenient services to improve financial well-being. To gain access, I lobbied local financial institutions to accept the Matrícula Consular. Those same institutions were already seeking to enter the immigrant market. Interviewed by Businessweek when I collaborated with Notre Dame Federal Credit Union to launch a bilingual branch, I remember observing to the reporter, Chi-an Chang, that the only "business" books that I read in college were Adam Smith and Karl Marx. From my position as a person of trust within the community of the poor, I also engaged with the academic community that sought to understand the poor. I was consulted by the team of Christian Smith and am anonymously quoted in his book Passing the Plate: Why American Christians Don't Give Away More Money. I collaborated in a study on the economic impact of immigration alongside professors from Notre Dame's Department of Economics: Coming to America: The Economic Impact of Undocumented Workers in South Bend. Collaborating with State Senator John Broden and State Representative David Niezgodski in 2007, Indiana now has a law that prohibits the unauthorized practice of law by a notario público. Learning of widespread abuse by I am also fortunate to have observed the economics of the poor in both North and South America.

My Chilean experience highlighted a number of elements characterized within Portfolios of the Poor. First, many poor in Chile do not regularly engage formal financial services, like banks. Personally, my experience with a local bank could be characterized by great frustration. The signatures on the account included two priests who had died several years previous. To be included as a signature on the account and to strike the deceased priests from the account was a laborious and time-consuming endeavor. In the U.S., the task likely would be accomplished in the same visit. In Chile, I submitted paperwork and waited more than two weeks for its completion. Small wonder that the poor prefer to render transactions in cash.

Secondly, the emerging, young lower middle class have new financial instruments available from stores to extend commercial credit. Sadly, a significant percentage of Chile is unduly burdened by consumer debt, a theme that I wrote about on the parish website. Burdensome interest payments mean that many will not escape this debt without government intervention.

Third, the Chilean church with its 1% campaign creatively engages along the lines described in Portfolios of the Poor with parish visitors, not unlike the work fo the Grameen Bank, but, as more Chileans engage new financial instruments, like ATMs, this older practice needs renewal to provide the necessary financial support for the church. Also, the church needs to better employ Christian stewardship to provide a vocabulary and framework for how the poor engage money, which consumes so much time in earning, spending, and worry.

Portfolios of the Poor is an important work with important consequences within many areas. The book likely generates more questions for scholars in economics as well as those who hope to incarnate, in the words of Pope Francis, a "poor church for the poor." 

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