What is in sight
We budget with what is in sight and available to allocate. Individuals budget. Families budget. Farms budget. Firms budget. Entrepreneurs, investors, governments, and organizations budget. Even when we do not write them down, we budget. This we all do.
A budget shows the limit within which what is available can be allocated among competing uses. Households allocate across consumption, saving, and continuing to earn. Firms allocate to production. Workers allocate time. Farm households allocate across life and production because both stand together. This we know.
Every day, we decide what to do with what is in sight. We decide whether one use matters more than another, whether to spend now or later, whether to consume a little more or save a little more today, whether to work more, produce more, or hold back. We choose among competing possibilities with what is available to us. This we all do.
Tradeoffs within a budget
All of us live by tradeoffs within a budget. We weigh one possibility against another and accept that having more of one thing usually means having less of something else. When we think of a budget, we first think of spending, saving, or borrowing for consumption now or later. Economists show this consumption side through the indifference curve and the budget line. Income determines how much can be afforded, prices determine the tradeoffs among what can be bought, and preferences determine what is chosen within those possibilities. We live it without the names. This we do.
Beneath the budget line
The budget does not stop at consumption. Spending, saving, and borrowing also reach production, putting income into use alongside the land, labor, knowledge, skill, and other factors allocated on the PPF. The budget therefore reaches production as well as consumption, between using income and making more income. This we know.
Income positions the budget line. Its position moves with the income available to allocate, while preferences shape what the household chooses within it. For a farm household near sustenance, current consumption comes first, and where income remains beyond it, some can be carried toward future consumption through saving, investment, or production. The income that positions that budget line is itself tied to what the household can realize through its PPF and other sources of income. This we know.
The smallholder’s starting point
The smallholder also allocates what she has across life and production because both stand together. Where income at hand is little, her budget line sits low. Her land, labor, knowledge, and skill remain on her PPF, while income ahead remains out of sight. Within what she has is a level of current consumption she seeks to protect for herself and her household. Where income barely reaches that level, stability takes precedence and little remains to give up today for consumption expected tomorrow. This we see.
Where income rises beyond what current consumption requires and remains visible across PPF cycles, room opens within the budget for future consumption. Income can be saved, invested, borrowed against, used for production, or insured, because some of what is available today can be given up for what is expected tomorrow. More becomes available for future consumption as income rises and remains in sight. This we see.
Where income remains little and income ahead remains out of sight, what is available stays close to what the household seeks to protect for current consumption. The smallholder still allocates what she has, but giving up consumption today for a return tomorrow carries a different tradeoff when little separates the household from losing stability. Little income remains to allocate toward future consumption, setting sustenance as the objective on the PPF. This we see.
Offers before income
Yet we in Development start our support of the smallholder with offers as though there is already income at hand or expected ahead to allocate beyond current consumption. Inputs arrive as though there is income to spend on them. Credit arrives as though there is income to repay. Credit can only bring forward income the producer expects to realize from the PPF, and where income ahead is out of sight, there is nothing to bring forward. Information arrives without requiring income to receive it, yet acting on what it makes possible still takes income at hand or expected ahead. Insurance arrives as though there is income to protect production through it. Savings products arrive as though there is income left to save. This we Question.
The language around what we offer the smallholder to allocate has grown. Financial inclusion. Banking the unbanked. Self-help groups. Digital financial services. Mobile savings. Credit access. Liquidity constraints. Repayment schedules. De-risking. Insurance bundling. Bundled services. Living income gaps. Financeable farmers. The words gather around the smallholder’s allocation. They do not name whether income is there at hand or seen ahead, or whether what little appears is already held to current consumption. This we do.
The offer arrives as if the smallholder begins with income already at hand or expected to allocate on her PPF. The offers we carry come from where income is already visible and the budget line can support those choices. We bring them to smallholders where that income condition does not hold. This we Question.
From income to the PPF
Poverty persists where income remains at or near sustenance across the PPFs of the many, leaving little or none to put to use on those PPFs. Prosperity emerges as income rises beyond sustenance and remains in sight, allowing more to be put to use on PPF after PPF. This we Question.
We readily discuss spending, saving, borrowing, insurance, investing, production, consumption, and budgeting. Much of what we ask the smallholder to do through them depends on income being at hand or expected. Where little income is there to put to use on the PPF, at hand or expected ahead, the choices we readily discuss remain out of reach. This we Question.
So here is the Unquestion:
If inputs, credit, information, insurance, and savings arrive before there is income at hand or expected ahead to put to use on the PPF, what are they arriving into?
And if income remains little or out of sight on the PPF, what does it tell us about what must become visible first?
The more we Unquestion, the more clarity we gain. The more we Unquestion now, the less future generations will have to.
We are not lost.
We simply avoid the turn.
Once we Unquestion, the direction is already clear.
Thank you for seeing.