Recently in Terrifying Poverty Category

Outsourcing Philanthropy

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the top givers.gif
How selfish soever man may be supposed, there are evidently some principles in his nature, which interest him in the fortune of others, and render their happiness necessary to him, though he derives nothing from it except the pleasure of seeing it.”
- Adam Smith, The Theory of Moral Sentiments

Bill Gates quoted the above sentence after giving a gift of the Adam Smith’s two books to Warren Buffet for his very generous donation of some $ 31 billion to the Gates Foundation (only $ 6 billion was given to his children’s charities - he once derided those made rich by inherited wealth as “members of the lucky-sperm club”).

I watched the event online (would recommend highly) and was very moved by both the passion of Melinda and Bill to really make a difference in the world and Mr. Buffet’s belief in them. According to the Economist, Mr Buffett made his gift conditional upon Mr Gates giving up his day job at Microsoft;

“Mr Gates was taught by his mother that he had a responsibility to “give back”. Mr Gates famously brought forward his plans to give away most of his wealth after a World Development Report convinced him that by doing so it would have a greater impact than waiting until he grew old.”

NYT reports that Mr. Gates credited Mr. Buffett for encouraging him, in the early 1990's, to read a copy of the World Development Report.

But did the Sage of Omaha made the right decision in giving the largest share of his money to the Gates Foundation? The agency that seems to have had the largest impact on world development is arguably the World Bank and it currently has a monopoly in generating and disseminating policy ideas with regard to low income countries. I think one of the best ways to help the world’s poor would be to bring in some competition in this field.

Saving the World through Socratic Method

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Pablo links to an interesting NGO, ‘dropping knowledge’ which invites people to ask questions and later plan to host some ‘leading thinkers in the world’ to answer their questions.

See their blog- the drop, and their introductory video.

People seem to have a lot of free time and a lot of money for these types of things- could the money and effort be spent on more worthwhile cause? That’s my question.


How to save the world; Bolton v Gore

Copenhagen Consensus

Farm vs Blue-Collar Wages in China

The latest radioeconomics podcast with Dr. Fan Gang contains this bit of information about Chinese workers (starting at about 17:00):

The labor costs remain low for quite a long time. Why? Because, although in the past 20 years, China has relocated 200 million rural labor force into the industries and the service sectors, there's still 200 to 300 [million] workers -- labor workers -- in the farming sector (in the agricultrual). Most of them are waiting to move out. Their wage is even lower. You know, in the blue-collar workers, in the industries now, can make $1000 US Dollar per year., but the rural farmer only make $400 or $500 US Dollars per year. So they are looking for the job too. They are competing in the job market who are already in the sector, in the industries.... They are waiting for more jobs... People are desperate for the jobs.

Also, starting at 31:45, he notes that China's large ownership of U.S. government securities is not, in itself, a problem:

Number 1. We need to think about the problem -- not of who buys the treasury bonds, but why you issue so much Treasury Bond. I think that is the fundamental Issue... whoever buys the bonds depends on how much you issue. America's fiscal deficit is the issue we need to worry -- all we need to worry. Not only America... America may not worry very much, but we need to worry very much. Because, this is, from my point of view, as a macroeconomicst, this is a fundamental reason why the U.S. Dollar keeps falling.... One of the fundmantal reasons is the fiscal deficit... I would say the real problem is not who buy... is the why you issue so much.

I don't think the Chinese will stop buying... If we have more foreign reserves, we need to... get the best revenue... from this resource... You need a portfolio... avoid most of the risk.

No Escaping "Us and Them"

Your a good person, and want to do good by others. People are fundamentally the same the world-over, and deserve a shot to get the quality of economic life that you have. You recognize the current smallness of the world, and find it hard to understand how life south of the Rio Grande can be so much less appealing.

Yet, Us and Them is real. Don't believe me, ask Them!

Tou recognize that policies and institutional frameworks that work for us in the developed world should work for those in the developing world. Health, infrastructure, local governance, protection of property, constituional law is so much better where you are.

But we are just pretending that we can make them like us if we thrust down our social systems upon them:

"The only way to end poverty is to build viable systems on the ground that can deliver services to the poor in ways that are sustainable," she said.
Not quite. They only way to end poverty is to have the poor capable enough to build and run their own systems. We run our own systems - they've been organically grown. Our acculturation is a big part of what makes capitalism work much better in the US than in the EU.

International capital markets and investment are critical for transferring hard capital, human knowledge, and social institutions to the undeveloped world. But it is they who must adopt and stick to successful solutions. It is they who must change their cultures and ways of existence, if they don't want to be poor.

Our imposition of institutions as ties to loans or relief could work, but only if these become the norm. As long as Lee Coppock can't embarrass Liberian border guards, and ..., capitalism cannot take hold.


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