Where Should Your Dollars (and Hours) Go?

Speaking of 99%, although the Jester does find himself repeating much of what he says on panels and other public forums, he does try to find at least 1% that is novel.  This he does not so much because innovation is an unqualified good, as everyone seems to believe these days, but because otherwise, he and any returning members of the audience might, like some Edward Gorey character, die of ennui.

At the Mobile Disconnect panel at the New America Foundation, the discussion took an interesting turn around the use of public and donor funds. At one point, the Jester’s doppelganger felt the need to say something along the following lines: “It’s not that I’m against the existence of the technology itself, it’s more a question of how public and donor funds should be applied.”

The first half of this statement need not be explained to careful readers of the Jester. (For the rest: technology amplifies human intent and capacity; so, technology’s net impact might be good, bad, or zero, depending on the context.) The second half, however, deserves more explanation.

How exactly should public and donor funds be applied in international development? Well, one answer that seems hardly radical is to suggest that they be used to support efforts that other sources of money, i.e., that from the private sector, neglect. That is, to address market failures.

The private sector, of course, is renowned for spending its money on technology, but rarely does it fund the development of human capital. In fact, it wouldn’t be too great an exaggeration to say that the private sector hates to invest in human capital. For example, when the Jester was in the employ of a large technology company, he used to hear this bit of corporate mumbo-jumbo: “Your career development should be 70% on the job, 20% from others, and 10% from formal learning programs.” Translation: Any learning you do is incidental, except for a nominal amount we’ll spend on formal training. Even 10%, though, is a considerable overestimate – assuming people work a conservative 250 days a year, does any company actually pay to have 25 days of professional training for every employee?

Otherwise, most corporations do not pay for any significant portion of the schooling of the employees they hire, or for the education of their communities. Even job training is avoided unless absolutely necessary. Examples like India’s Infosys sending their fresh hires to several months of training are exceptions that prove the rule. (They’re also, incidentally, a sign of how poorly the educational system up until that point is meeting the demand for skilled labor.)

In development, this fact is even starker because the people concerned are so often unemployed by the formal sector. Thus, even corporations that might choose to invest in their own employees would have to be spectacularly foolhardy to contribute to the education of those not in their employ. (The Jester will not bother explaining why corporate social responsibility [CSR] initiatives hardly qualify, but readers are welcome to ask – there hasn’t been a Fool for the Day for some time.)

Of course, at this point, some readers will raise the question of privatized education. The Jester could go on and on about how efforts to privatize public schools have failed repeatedly, or that the famous low-cost private schools of India are still out of reach for many despite their ridiculously low tuitions, or that private tertiary schools tend to scam many of their students, but instead, he will cut through all such objections with one stroke: Let’s grant that some portion of education is privately run.

That still leaves the question of who will cater to the hundreds of millions of school children for whom education is a distant dream or a terrible joke. That still leaves the question of who will provide vocational training to the hundreds of millions of adults who could benefit from it. That still leaves the question of who will cover the basic healthcare for billions of those without.

Actually, the idea that public and donor funds should cover certain basic things for the least privileged members of global society is hardly new. But in this age of confusion about the capabilities of the private sector, there’s a tendency to forget that the private sector not only has strengths – of focus, of mission, of efficiency – but that it also has certain glaring weaknesses. The private sector, for example, swims upstream where the money is and towards products people like to pay for (which, alas, are not in health and education, especially among the undereducated). There’s always some line of household income below which the private sector fails to find profit. And, the private sector’s primary response to someone with subpar capacity is to fire them and hire a replacement. That’s right, if the private sector were in charge of development (even more than it is), it would fire the world’s smallholder farmers and their non-literate children.

In short, there are billions of people who could benefit from a boost in their human capital, and that boost is not coming any time soon from the private sector. Thus, for anyone even remotely charity-minded or progressively inclined, it makes sense to put resources not on what the private sector will take care of anyway – e.g., in the case of mobile… mobile handsets, mobile networks, mobile money, mobile apps, mobile start-ups, mobile mobile – but for those people, and towards those things, that the private sector routinely avoids.

And, this applies not just to public and donor funds, but also to public and donor efforts. Is it really worthwhile for people who care for the poor people of the world to invest their efforts helping mobile operators figure out yet cleverer ways to extract disposable income from their consumers? The private firms will do that themselves.

Meanwhile, there remain close to a billion people who are illiterate, whose illiteracy isn’t going to go away just because they can exchange money over their phones or contact friends on Facebook.

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One Response to “Where Should Your Dollars (and Hours) Go?”

  1. David Megginson Says:

    That was a strong posting — thanks for giving my brain and my values a healthy evening workout.

    Companies don’t like to invest in people because they can’t own the outcome. If I develop something for an employer, that employer can patent/copyright/whatever the result as intellectual property that stays with the company. If I develop myself for my employer, I can take the new skills with me whenever I want to leave.

    I can imagine two ways to address this problem:

    1. Re-legalize indentured servitude in rich countries, so that people become effective slaves until they’ve paid off the cost of any training or other personal development.

    2. Make intellectual property laws more sane (or at least less absurdly one-sided), so that investing in patents and copyright doesn’t make such a tempting alternative to human development.

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