Romanticizing the Poor Harms the Poor

Abstract

A libertarian movement that emphasizes free markets to reduce poverty has grown strong in recent years. It views the poor as 'resilient and creative entrepreneurs and value-conscious consumers'. This romanticized view of the poor is far from the truth and harms the poor in two ways. First, it results in too little emphasis on legal, regulatory, and social mechanisms to protect the poor who are vulnerable consumers. Second, it results in overemphasis on microcredit and under-emphasis on fostering modern enterprises that would provide employment opportunities for the poor. More importantly, the libertarian proposition grossly under-emphasizes the critical role and responsibility of the state for poverty reduction.

Keywords: Poverty reduction, bottom of the pyramid

JEL Classification: M10, I30