Nandy makes a strong point that the concept of poverty alleviation has primarily become a defense mechanism of the ego -- our methods of "helping" the situation are actually worsening the "problem" of poverty by pushing it into the category of destitution. When applied to the state, Nandy claims that the poor are marginalized because once the proportion of the population living in poverty diminishes enough, that population no longer has any political pull within the government, and so the problem is pushed aside.
I agree with Nandy that development as a state strategy is either ineffective or only effective to a point, but I don't think that in the case of the state, that it is a form of protection of the ego. I do not believe that the state always acts in an ethical way but that it puts up a superficial front that it is acting so, which is necessary for political survival. It is the people within the state that have these moral dilemmas, and in order to please the people and maintain votes, a government must only appear to be addressing the problem to a certain extent. State intentions are not ethical, and so end results are not very effective (as Nandy argues) and this may be due to the superficiality of state action. NGO's more so represent a body with ethical conflictions over poverty and so their intentions are more ethical. Nandy should next evaluate the effectiveness of NGO action -- can true ethical intentions lead to more effective results? If so, the general population should shift support towards NGO efforts; they would still be doing the same to protect their egos while maybe actually accomplishing something as a byproduct.
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Do you think his postcolonial commitments might have something to do with the way in which he characterizes the state?
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