Economy

PhilanthroCapitalism – Why giving won't save the world

You’ll recall how, when George W Bush stood for re-election as US president back in 2004, outraged Europeans organised petitions and marches to demand that Americans vote for someone else.

And then, in 2009, when Mahmoud Ahmadinejad was trying to steal the Iranian presidential elections, millions of people around the world turned their web pages green and fired off thousands of Twitter posts to call for free elections.

Or how about when, in 2007, George Clooney went to Sudan to demand that the international community do something to stop the genocide taking place in Darfur.

As you’ll also remember, Bush lost to John Kerry, Ahmadinejad went into exile and Darfur is now peaceful and prosperous.

Oh, wait, no, none of that happened.

“The platforms of social media are built around weak ties. … Social networks are effective at increasing participation – by lessening the level of motivation that participation requires. … Facebook activism succeeds not by motivating people to make a real sacrifice but by motivating them to do the things that people do when they are not motivated enough to make a real sacrifice,” writes Malcolm Gladwell in a New Yorker column, Why the revolution will not be tweeted.

So, if lending your name and opinion don’t work, how about giving money? And, while we’re on the topic, how about giving a LOT of money?

In Philanthrocapitalism, authors Matthew Bishop and Michael Green proclaim that “giving may be the greatest force for societal change in our world.” Bill Gates has famously dedicated the bulk of his tremendous fortune towards supporting innovation in education, health and food production.

Let’s look at the top ten countries with the highest rates of under-5 infant mortality: 1 Sierra Leone, 2 Afghanistan, 3 Chad, 4 Equatorial Guinea, 5 Guinea-Bissau, 6 Mali, 7 Burkina Faso, 8 Nigeria, 9 Rwanda, 10 Burundi.

All but Afghanistan are from Africa. Not one of those countries is a proper democracy. It is certainly true that sick and unhealthy people are unable to produce or earn sufficient to care for themselves let alone hold a government to account. Would better healthcare lead to better governance? Or does poor governance lead to poor healthcare?

For the 37 countries in the world where more than 10 percent of children die before reaching the age of five would more donations from rich people in foreign countries help?

Welfare delivery tends to be extremely inefficient. If an NGO is offering to care for HIV-positive babies, how many babies should they be able to care for given a defined budget?

A study I did five years ago into the effectiveness of charitable organisations was revealing. Benchmarking indicated no consistent costs for equivalent services. Businesses, faced with known selling-price points and constant feedback from customer purchasing behaviour quickly learn – whether they want to or not – what an efficient process needs to be.

Charities face no such feedback.

The entry of the Bill Gates billionaires’ donor club has thrown this inefficient and cosy world into uproar. Executives are used to regular measurement and optimisation of processes.

Development organisations are starting to become more efficient. But there are still no examples of countries anywhere in the world that transitioned from poverty to wealth solely because of the benevolence of outsiders.

The Economist asks, in its review of The Crisis Caravan: What’s Wrong With Humanitarian Aid? by Linda Polman, “how we resolve the tyranny of the present and ensure the kind of help that will safeguard the future.”

I’d go so far as to argue that aid prevents change.

In Paris in 1789 the French monarch had all but bankrupted his country with wars, and food price inflation saw bread rise from 8 to 12 sous in a year. The people stormed the Bastille triggering the French Revolution, ushering in the age of republics and changing Europe forever.

If it happened today Bob Geldoff would arrange a concert, millions of peeps would tweet, and aid convoys would supply food. “Let them eat nutritious high-protein cake,” says Marie Antoinette. Descendents of King Louis XVI are still in charge.

5 replies »

  1. According to Ms. Polman (via the Economist): “Even supposedly saintly charities, such as Médecins sans Frontières and Oxfam, soil themselves, she believes, serving their own mostly financial interests above those of their victims.”

    So it’s not aid but how we go about giving aid that is the problem, and our aid organizations mostly mimic businesses…why is beyond me except that economics/business is treated like a religion in the “developed” world.

    I’m not sure how much common sense it takes to understand that charity only alleviates intense, present problems. It is not development. Apparently it requires more common sense (or reason if you will) than most “developed” world thinkers have. But this could arise from the fundamental problem of development: that policy makers, business leaders and charity executives have fallen under the spell of economic priests and assumed that “development” is synonymous with “growth.” (And of course that “growth” is defined in purely economic terms.)

    So it is rare to see “development” focused on giving people the tools to feed themselves, their community and their nation. Instead, “development” is establishing commodity-cash-crop agriculture for sale on the world market…after which the poor people will theoretically use their income to buy the food they need from somewhere else. Of course, the majority of the profits go to “developed” nation agricultural corporations and market traders. Or maybe sweat shops for manufacturing cheap goods to sell in the “developed” world.

    The problem isn’t in aid, charity or the desire to help people. The problem is in who we listen to in order to develop a context for aid. It is in who (and what) we emulate. It is in a “developed” world that structures itself around systems that are fundamentally and philosophically flawed insomuch as they’ve never bothered to prove the foundations on which they’re based.

    Finally, of course we’d send high-protein cakes to the French c. 1789. If we allowed them to resolve the issue for themselves they might go so far as to break windows of corporate headquarters or something. That kind of radical behavior is unacceptable, is it not?

  2. I read a lot of good things about microloans (correct term? not sure) Funding people to make their own informed decisions about pathways to self-sufficiency seems to make sense. I can choose to have a small-scale farm, livestock to provide food for my own household and maybe eventually extra produce to sell. Or I can choose to form a cooperative with my neighbors, or focus on traditional crafts for ethical resale… I like it when choices get made by the people they directly affect.

    And this may sound utterly heartless, but the endless cycle of food aid to populations who live in areas which cannot sustain life has bothered me for decades now. Feeding people just enough to subsist and have children (because they WILL have children; the basic drive of life is to create more life) only creates generation after generation of perpetually malnourished, uneducated and largely hopeless people, doesn’t it?

  3. Ann, the world is a ghetto. Charity for Africans came only after the way of life was eraticated through contact with powers stronger than what the tribe could defend against. We are animals. The aboriginal people around the world have been mis/ mal-placed into areas that were un-inhabitable, incongruent to life skills, or into the lordship of servitude. All of these situations require more energy to make it than thier preffered, natural situations.

    The fact that we as the developed world have time to stop and think about the needs of the worlds poor shows this to be true. We can support so many that we feel guilt in knowing how many are and have been affected in the creation of this system. Energy is niether created or destroyed, but if we feel we can transfer some to others via a donation, the guilt is held at bay. In thier poverty, knowledge of the reasons creating the situation has to corelate to the power keeping them in that state.

  4. Dan, for the record, I get colonialism. Nice summary, though.

    I should have been more explicit, I suppose, but I’m tired of lots of things lately – wordy exposition which presumes ignorance on the part of the reader is one of them. Obviously, I went too far in the other direction, because you felt the need to fill in and I can see why. It’s a tough balance to find.

    My point was that food aid in a vacuum (and that vacuum includes the willful ignoring of everything you discuss) is almost more cruel, long term, than none at all.

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