Here is a quote from Mr. Tooley (thanks EconTalk for the transcript) to start you off:
I was in Hyderabad in South Central India. I was there doing consultancy work for the International Finance Corporation, the private arm of the World Bank. I was looking at elite private education, private education for the middle classes and the rich, because I’d become an expert in private education–that was my area of research. I was dissatisfied with this because for whatever reason, I was drawn to serving the poor. That’s what I felt my life should be about. And here I was looking at private education for the rich.
So, on a day off from my consultancy, I wandered down into the slums of the Old City; and sure enough–I had a hunch about what I might find, and I found a private school. A school, charging in those days what would be the equivalent of $1 U.S. dollar per month, serving a hundred children. I met these people; and then I wandered down another alleyway and found another school. And soon I was in contact with a federation of 500 of these low-cost private schools in these poor, largely Muslim areas of the old city of Hyderabad.
It was an amazing finding for me, because suddenly the two parts of my life came together. I could work concerning the poor, low income families and I could be exploring private education, too. But more than that, this seemed very exciting. Poor people were using private schools. Why? Why has no one told me about this? What’s going on here. And so I began a really exciting time in my life.
I ran across this article today – don’t you love seeing people solving problems, creating new models and causing upheaval? Kiva.org,Indigogo, Grameen America… These are some of the ones that come to my mind. (And all of these are individual people, groups, getting together voluntarily, whether they are non-profits, for profits. Government solutions would take years and would be bureaucratic before they even started. It’s the voluntary sector, the ‘freer’ market that allow problems to be solved ultimately. More pressure to replace what no longer works!)
Here’s a quote from the Forbes piece:
“No banks want to give a company like mine a loan – we’ve got great growth rates but profitability’s not there yet,” he says. “They have a box and we don’t fit into it.”
In fact, big banks approved less than a fifth of all requests for small-business loans they received in January. Small banks approved about half of applicants, according to a survey by Biz2Credit, an online platform that matches businesses and lenders.
“The more you give the watchmen to do, the more tempting it becomes to corrupt them, and for them to let themselves be corrupted.” from recent Reason article by Tucille: What Do I Know About Corrupt Cops? My Family Owned a Few.”
And I think I’ll tune in for the upcoming Al Jazeera America piece on the militarization of our police in the US. When I was growing up (in a smaller, relatively peaceful town), I perceived the police as being there to ‘serve and protect.’ But now I’m very aware that they can pretty much find a reason to arrest whomever they want, and they treat every encounter with a ‘citizen’ as a threatening one. Either there’s been a shift in the past 30 years or I’m just older and more cynical and more aware…
Why not solve social problems with for profit businesses?
Better than government options – private organizations can adapt, change and improve much more easily. If your organization messes up or is wasteful, someone else can compete with you and do it better. for government organizations – if you are wasteful or mess up, odds are there will be an investigation and then you’ll get MORE money and influence (think FEMA, think HHS, think Education, list goes on and on).
Better than non profits, perhaps? A for profit model gives you a sustainable income stream (often better than doing grant proposals, competing for donors in tough times). The modern publicly listed company is an artificial construct and most folks have forgotten the free market is capable of infinite other models. The social enterprise movement is a fantastic new approach. The idea that ‘for profit’ companies means your somehow compromised and unable to change the world is antiquated and false. And the idea that maximizing shareholder value = money, well, why? Social Enterprises are voluntary associations – no one’s forcing people to buy shares, the profit goals are written into bylaws… More power to them.
Bye Mom, off to school!
Here’s one I like: Kunskapsskolan – a private school “social” enterprise – aim for 10% profit each year, give 90% of revenues to school principals to manage. They have only gone into blue collar areas because, as the CEO says, they’re not catering to the rich. They want to improve school for the average child since public schooling is failing. Sweden overall isn’t a perfect model for education, but this social enterprise looks very promising.
A kid hears about the shop. He comes to the shop because he’s been told he can learn how to fix bikes. As he learns how to fix bikes he also learns how to work hard along side other people while earning a bike of his own. Through the shop, he realizes that hard work pays off. This leads to him seeing opportunities in his neighborhood where he is able to leverage his skills to earn money. As his skills grow, he gains confidence and improves his ability to shape his future.
It started with one couple helping one neighbor child fix his bike, and grew from there. Isn’t this a fantastic story about two people over time building something that makes a lasting difference in the lives of kids nearby. Love the idea that the kids have to earn their bikes – so simple, but there is so much pride in earning something. Once you have that feeling that your actions led to something good, it sort of sticks with you
I ran across this column by Thomas Sowell today – pointing out that it isn’t true compassion to raise the minimum wage. Those who are lucky enough to keep their jobs will get paid more yes, but jobs will disappear overall. There will be a reduction in jobs available, increased unemployment as marginally valuable jobs are cut. It will put people out of work, and we should care about these people, too.
(A business owner, whether he runs a restaurant, a non-profit, a laundromat, an accountant’s office, a corporation has to respond if costs change. Increasing the hourly wage = increase in expenses. People responsible for their organization have to either bring in more money to keep the same people employed, but that’s not always possible. They’ll need to find a way to get expenses below income so they don’t go out of business. We know that many will cut out jobs to make up for the higher costs.) The biggest groups affected are of course the poorest and the youngest.
Unemployed young people lose not only the pay they could have earned but, at least equally important, the work experience that would enable them to earn higher rates of pay later on.
When I was growing up and in high school, you could get a job and earn pocket money with a paper route, part time service job, lawn mowing… I see very few options for my own children to earn money outside of us or their grandmother creating jobs for them to do around the house. I tell them there are 3 ways to earn money: 1. labor, 2. producing a product/service someone is willing to buy, or 3. selling/exchanging their assets (toys, bike, etc.)
New kind of role model: Nick D’Aloisio built an app when he was 15 and sold his startup to Yahoo at 17.
Since working for someone else (1.) is no longer an option and since (3.) is usually a dead end, my kids are looking at (2) and seeing examples of young people (like Nick D’Aloisio) who created an app or set up a YouTube channel and made their fortune or at least their future. We’re cultivating them as entrepreneurs. This is a good thing! Innovation can help counter the economic malaise, can challenge the crony capitalists…
I’m hoping that the lack of jobs and employment for our youth has a silver lining and will cause more folks to take charge of their own economic lives, and create new opportunities.
Aha. I ran across this interview with Penn Jillette (Penn & Teller) and loved what he said about Libertarians and compassion. He has some great points here, especially about no one, Liberal, Libertarian or Conservative, being evil, simply being groups that disagree about how to solve the same problems. I’ve written it out here, but watching it is really worth it.
Here is the Penn Jillette transcript starting at 3 minute 40 secs:
…But I think the biggest misconception I find about Libertarians is that there’s a lack of compassion. And I think that…there is as much compassion among libertarians as there is among liberals. It’s not what the problems are, it’s how to solve them.
EVERYBODY wants clean, safe energy. Some people think nuclear’s the way to go; some people think coal’s the way to go, some people think wind’s the way to go, and there’s always balances on that:
Libertarians tend to put freedom as a goal in itself and also a way to obtain other goals.
Liberals tend to put security as a goal in itself and a way to obtain other goals.
Ahhh I think the biggest misconception is that libertarians – I guess the cliché would be – don’t care about the crack babies. I just think you can deal with people in trouble using compassion.
One of the things that bothers me about statism is that they take away my compassion. When you take money from me by force, run it thru the government to help other people, I think there’s less compassion that me being able to do something.
What I say about Libertarians versus Liberals is:
I will gladly help you build the library. I will not use a gun to get someone else to join us in helping to build that library. I want credit, you know, I want credit for helping. I want to feel like I’m helping, and giving money to the government does not seem like the best way to help, and forcing other people to give money to the government seems immoral to me.
I think that if I want to cure cancer, I should work on curing cancer. You can’t force other people to give money to cure cancer – then you’re not really helping, or you’re helping in a way that I don’t think is right.
So the question on healthcare was not if you saw someone lying in the street who needed help, would you run over and bandage them. The question is really if you saw someone suffering in the street, would you run, get a policeman, have that policemen find a doctor, have that doctor forced by everybody around to take a vote and then come in and help.
But I think that it’s forgotten that what everybody’s trying to do is help the people that need it.
Everybody’s trying that. I will say that about every political group.
And I think that I would love to see the people using the word wrong more, and using the word evil less. Obama is a really good guy, a really smart guy, and every moment, every second of every day is spent trying to do what’s best. I disagree with him. But there’s no sense that he’s evil.
And this is something I’ll say that a lot of people will freak out at:
I think the same is true for George W Bush. I think every second he was trying as hard as he could to do what was best. I disagreed with him very, very intently….
To be able to say “you’re wrong and here are the reasons” is respect. To say “you’re evil” is antihuman. Cause the people that I‘ve met in my life who are truly bad and truly evil, is such a small number. I mean, if you take the 6 billion people on the planet and round off the numbers, about 6 billion are good.
Once you wade through all the ‘Obama this, Obama that, I blame Obama’ noise and B.S., I think David Limbaugh has a point. He basically says that Liberals are seen as compassionate, but when you look at the results of their policies, they are not helping the people they say they do. I agree.
David Limbaugh writes in his article:
At some point, Obama and his fellow liberals need to be judged for the effects of their policies, not the grandiosity of their self-congratulatory rhetoric.
I’d say ALL politicians ‘need to be judged for the effects of their policies, not the grandiosity of their self-congratulatory rhetoric,’ not just liberals and Obama.
Intent matters more than outcomes in politics…It’s unfortunate that they can all use rhetoric and dress up bad results and government failures in big words…and get away with it and not have any significant consequences.
Aside: Sort of the heart of the problem – reading this book LeaderShift which suggests the 3 branches of government only work if a fourth branch exists – informed, actively engaged citizens holding the branches of government to account!
Anyway, It seems clear to me that routing charity and efforts to help those less fortunate through the government is misguided and not the best solution. Once we bureaucratize helping others and create government entities to manage it, private and local charity and efforts are starved out.
Private alternatives are more efficient, more innovative, able to adapt to particular societal changes, able to address individual situations, able to look at whether poverty is caused by misfortune or through consistent bad choices (situations that require different solutions and aid)…Private alternatives require less money/resources and are more effective.
I suggest that we wake up and stop this craziness of thinking that government is a nobler alternative, somehow not prone to human conditions of self interest, greed, bad incentives. I vote for a patchwork of voluntary, private sector organizations who can innovate, require much less in terms of funds compared to government alternatives which invariably become inefficient (you can’t kill anything off, end any programs, so it becomes costlier and costlier, and they stick around even if they stop working well)
This is a topic I’m very interested in – the paradigm says government is good, liberals are compassionate. Private sector is brutal, conservatives are selfish. This leaves no room at all for real solutions to helping people get out of poverty traps and thrive. Calling them lazy and dumb and dependent won’t get you very far either, if you want to change the default mindset and implement alternatives. Right now, any reform or voluntary alternatives that don’t fit the paradigm are ignored/dismissed/overlooked.
Note to David Limbaugh: aren’t you tired of blaming Obama for all problems… Obama this, Obama that. It’s a much bigger problem than one man and started ages ago, before he was born. Right now our paradigm is flawed and needs fixin.’
I’m reading Mark Pennington’s book Robust Political Economy, and he sums up in his conclusion 3 main objections to Classical Liberalism, (which is essentially a belief in the ‘free markets’ and a minimal state). This is something that any libertarian leaning person should understand!
Here is my paraphrased, layman’s term interpretation of what he’s written (p. 264)
The three main reason people dismiss Classical Liberalism are
1. the crazy idea that people make rational decisions in the free market and get to optimal outcomes that way (invisible hand, or the idea that individual actions and choices in a voluntary market benefit everyone.
2. Classical Liberals are so individualistic they dismiss “the communal identifications that shape human lives,” or individuals’ need for connection with other human beings and being part of a wider community or group.
3. Classical Liberalism doesn’t care about or solve problems of social justice and the unequal distribution of power and social status.
Mark Pennington’s book is essentially a collection of arguments seeking to show that none of these stand up to scrutiny.
Looking at the free market and compassion, I’ll keep all 3 in mind. When it come to efforts to help people out of poverty, I see these common arguments:
1. Voluntary solutions aren’t enough – people wouldn’t give enough; they’d be selfish. There wouldn’t be enough help. There would be an undersupply of help.
2. Private welfare organizations and safety nets are gone – if we were to ‘privatize’ the welfare state, the mutual aid societies, the churches, the grassroots organizations and extended families, they just wouldn’t be there to fill the gap. There’s an undersupply of alternatives; It’s too late to change it.
3. Everyone should help their neighbor, and making it mandatory through government action is the moral thing to do…