- International AIDS Vaccine Initiative
The idea is simple, test what is the best way to grow microenterprise in Uganda: straight cash, loans, skills training or a combination of the three.
What happened? The results were, please forgive the overused Upworthy adjective, unexpected.
Just giving people money was not as good as giving them loans. Training combined with the loans did even better, but training alone and loans alone did not help. However the improvements were only in men-run businesses, not women-run ones. Finally, the people who got training and just cash actually witnessed a fall in profits.
Nathan Fiala, of the German Institute for Economic Research, published his paper earlier this month based on his research in Uganda. The just give people cash advocates scored a big win with the stellar results from the recent GiveDirectly study, but microfinance is making a comeback.
“The results suggest that highly motivated and skilled male-owned microenterprises can grow through finance, but the current finance model does not work for female-owned enterprises,” writes Fiala in the abstract.
Two of my favorite writers or “thought leaders” on economics and philanthropy, Felix Salmon of Reuters and Matthew “Philanthrocapitalist” Bishop of the Economist, continue their war of words here and here.
As I noted earlier, this all started when Salmon felt compelled to emphasize that the point of philanthropy is not to make a profit. Yeah, I know that sounds obvious. But, as he noted, there are lots of folks out there — he included Matthew Bishop among them — who seem to confuse business with philanthropy.
“All of this is profoundly silly,” Salmon said.
Matthew Bishop responded that it is, in fact, Salmon who is the muddle-headed one. He called Salmon a “bigot,” which I still don’t quite understand in this context. Bishop’s point is that there is nothing inherently wrong with profit-making and trying to help poor people.
Anyway, you can read their arguments for yourself.
I posted earlier on an interesting debate between two economics writers, Felix Salmon of Reuters and Matthew Bishop of the Economist, about the nature of philanthropy.
The debate, in summary, is if making a profit is in itself a social good — and better than most of those other more limited humanitarian goals of reducing maternal mortality, digging wells or getting food to the hungry.
Salmon was arguing against the notion, and pundits like Bishop, who he thinks are (deliberately or not) confusing the potential social good of business growth with the social good of philanthropy. It was a rousing debate, which ended with a joust from Salmon. Here’s Bishop’s latest retort from his Philanthrocapitalism blog and an excerpt:
Felix is right that how the wealth-creation process of capitalism serves humanity has been debated for centuries, but it has entered a new phase, especially since the global financial crisis. Before then, much of the world had settled on a consensus that what is good for today’s stock price is probably good for humanity. That belief has been proven wrong. We now have an opportunity to build a better capitalism where the self-interest of investors and the interests of society are aligned more effectively. (And no, we don’t believe that a long-term focus in the corporate world would deliver nirvana, as government regulation will certainly still be needed, but we do think it would be a huge step in the right direction.)
There appears to be a deep-seated intellectual boil festering at the base of our discussions around philanthropy, foreign aid and development.
Those three words? I’m not sure anyone really knows what they mean.
I can’t see what you’re saying
Yes, I’m sure the experts on philanthropy, aid and development all think they know what they mean. But as a journalist assigned to cover this stuff — and asked to translate it into “normal” language — I’m increasingly running into debates about fundamentals, if not outright confusion.
Felix Salmon, a brilliant and often hilarious economics writer for Reuters, felt compelled to point out that Philanthropy Isn’t For Profit.
Duh, you say? Salmon was responding to the notion, which seems to be gaining popularity in some circles, that making a profit is in fact the best way to achieve a social good. He writes:
You can’t just invest money in the stock market and declare it the best way to do good in the world, any more than you can start an arms or cigarette manufacturer and claim that your pursuit of profits is the best way to improve global welfare.
Odd as it may seem, that’s a big question right now within the aid and development community.
By a simple measure of the number of news stories and organizational appeals out there, clearly the answer is: Yes, people should donate to disaster relief in Japan.
Perhaps the most blunt argument answering the question in the negative has come from Felix Salmon, economics columnist for Reuters, who said simply: Don’t Donate Money to Japan.
I’ve posted on this debate a few times, including an anonymous post from an aid worker decrying the “ugly game” of fund-raising around the Japan quake-tsunami disaster. Continue reading
World Economic Forum
I’m sorry to reveal a bias here, but all these attacks and critiques of the Bangladeshi economist and Nobel Peace Prize-winning pioneer of microfinance, Muhammad Yunus, appear to be so obviously opportunistic (if not an outright smear campaign), I can’t figure out why smart people just keep piling on.
As I’ve written about before on this blog, Yunus has come under heavy attack — accused of being a crook, of libeling politicians (is that possible?) and all sorts of wrong-doings — after publicly taking a stand against those who would make a profit off providing loans to the very poor.
The latest example of piling on comes from Matthew Bishop, a top business editor at The Economist and author of the popular book (and blog of the same name) “Philanthrocapitalism.” Continue reading