"The consensus on raising people out of poverty is surprisingly recent"

I quote from an interesting article in The Economist:

The classical school believed that the real constraint on growth was aggregate savings. Given that the rich saved more than the poor, this implied that less poverty would mean lower growth. John Maynard Keynes disputed this view, arguing that it was aggregate consumption that mattered, in which case reducing poverty could actually aid growth. But it was not until the 1990s that a coherent theoretical framework emerged to show how high levels of poverty stifled investment and innovation. For example, several models showed how unequal access to credit meant that the poor were less able to invest in their own education or businesses than was optimal, leading to lower growth for the economy as a whole. Scholars buttressed the theory with empirical evidence that high initial levels of poverty reduced subsequent growth in developing countries. 

New theories of poverty were also overturning received notions of why the poor stayed poor. The fault had long been placed at their door: the poor were variously lazy, prone to alcoholism and incapable of disciplined work. Such tropes are still occasionally heard today, but the horrors of the Depression in the 1930s led many to re-evaluate the idea that poverty was mainly the result of people’s own actions. Advances in economic models meanwhile allowed policymakers to see how low levels of education, health and nutrition could keep people stuck in penury. Policies to subsidise education or health care were desirable not merely for their own sake but also because they would help people break out of poverty. 

The growth of “conditional cash transfers”, schemes like Brazil’s Bolsa Familia that give poor people money as long as they send their children to school or have them vaccinated, are logical developments of these ideas.

One of the themes of this blog is that the most important approach to development is to find ways for developing countries to work smarter -- to bring knowledge more effectively to bear on production (and consumption and investment). Capital accumulation is important because it allows people to bring knowledge embodied in plant, equipment and infrastructure to bear on economic activity. Investment in human capital is similarly important.

In poor countries, most people are poor. It seems fairly obvious that helping the poor in these countries to be more productive (by bringing knowledge to bear on their work and other activities) will be a very important route to not only growing the GDP, but also to the reduction of poverty as the poor appropriate a significant portion of their increased product.

Similarly, in richer countries in which the middle class is larger, helping the middle class to work productively by applying more and better knowledge more effectively will contribute significantly to economic progress, and to the welfare of the middle class.

There seems to be increasing evidence that pro-rich policies that help the rich to get even richer faster, thereby increasing income and wealth divergence, seem to lead to high levels of unemployment, more poverty, decreasing economic mobility, and economic decline of the middle class -- trickle down doesn't work.