How to Help Poor People in Poor Countries, Part 1

AIDS treatment and vaccinations seem to address the most serious utilitarian problems but I believe the marginal value of additional charity in these areas is low. Increasing female education / literacy in the third world seems like a serious contender because of the enormous benefits in child-mortality, female freedom, and other effects, but I could not find any large organizations that specialize in literacy. I assume I could just start my own foundation and might just do that.

Another possibility is grants and investments to encourage the development and marketing of salinity and drought resistant crops. Again, I could find people working in this area but not with sufficient scale. Given the limitations of fresh water in the Middle East and Africa, this could be a huge win.

Two different approaches.

1) Spend the money in the West (ie, the industrialised countries) on political lobbying so as to achieve the following:

a) Unilateral free trade on the part of the rich countries. The poor ones can do whatever they like.

b) Abolition of TRIPS.

2) The second approach. Bit geeky, but stay with me. Tariffs are a horrible way for a country to raise money. However, they’re also, in a near barter or poor economy a very simple way to raise the necessary tax money. So spend the aid on helping the poor countries construct taxation systems that don’t depend upon tariffs.

I would invest the vast majority into scientific research. Think Norman Borlaug style, not Hubble telescope. A much smaller amount would go into migratory support to charter cities. A smaller sum still would go to the Red Cross. The staggering of funds is to address different aspects of poverty, to provide targeted relief to acute issues and more diffuse benefits to complex poverty situations. I would only expect the migratory support to be a self-sustaining operation, the other two would not recover costs.

Brilliant question, David.

Even though this probably violates the rules of the questions, I would do the following.
1) spend 1 billion to buy political influence here in the US to the end of expediting 1 million visas from poor countries so that they could move to the USA immediately.

2) spend another 1 billion to move the 1 million people here.
3) there are 17 million empty housing units here, so the Feds work out a deal to give them all housing. GIVE, not loan nor lease.
4) spend the remaining 8 billion on transitionary education via the web on housing maintenance, language study, and how the US works from a free market perspective.

I firmly believe that the trillions spent over the years to this end has only proven that it can’t be done. Forgive the bending of the rules.

I’m with Nron, start businesses (especially if you’re Bill Gates and that’s what you know). That will give the poor opportunities they don’t have now.

These are all tongue-in-cheek (I don’t actually support using violence to this end), but here goes, in order from least to most violent, all based on the premise that the impact of a dollar can be multiplied many times if it leads to freer markets:

1) Airlift millions of copies of “Capitalism and Freedom” and a basic micro text to as many people as possible.

2) Simply bribe an existing dictator or two to allow complete free markets, free trade, more open borders, to root out corruption within the police and fire everyone else, and to disband the military in exchange for US protection. Hopefully by the time he dies, there will be some movement toward a more open and democratic form of gov’t (alternatively, go with the charter city idea mentioned above).

3) Send a private military company to swiftly take over the country and impose the policies above.

Acknowledging that fundamental change happens slowly, the action taken must not be one to induce rapid change, else the actual consequences will most likely be unintended and not good. Knowing that application of too much money (or its equivalent) only corrupts, the action must not immediately increase wealth. So the action must be one that only enables the population to make its own way, on a path it would also choose otherwise. Paying for health improvements and business infrastructure (without too much concentrated wealth infusion), and education infrastructure seems to be viable.

Fund research to develop a conscientiousness-enhancing drug (like Adderall, only more effective and with less side effects) and make the patent public domain. Establish a foundation to distribute it to the poor. This would have the effect of blowing every single serious objection to immigration from third world countries out of the water, since high-conscientiousness people are unlikely to commit crimes or go on welfare.

After that is done I would begin aggressive lobbying to let more people immigrate to first world countries. This would likely work more easily than it would now because the drug would make people in the first world more productive and wealthy, so they’d feel less threatened.

Global poverty is caused by poor legal institutions; North Korea and South Korea, East and West Germany are the simplistic examples. But consider that when an unskilled Mexican laborer crosses the border, he (there are estimates that 20% of 18-24 year old Mexican males are in the U.S.) experiences an increase in wage rates of 10x to 20x (from roughly $6 per day to $60 – $120 per day). No charity can compete with that kind of an income (and over time wealth) gain.

What most people seem not to be aware of is that poor countries have less economic freedom than do rich countries; see the World Bank’s Doing Business index and/or the Fraser Economic Freedom index. The example I like to point out is that it is easier to start a business, or fire an employee, in Denmark than in any developing nation. This enormous deadweight loss (18 documents to import a good into the Democratic Republic of Congo) means that indigenous entrepreneurs have little chance of creating businesses (and jobs) unless they are already wealthy and/or crony capitalists.

So one natural inference from this fact would be to allow for much freer immigration into those nations with decent legal systems, so that poor people can move to rich nations and make more money, and then send remittances home (already a leading source of income in many poor nations).

The alternative approach is to import world-class legal systems into poor nations. Paul Romer’s Charter Cities is one example of such a strategy, though the weakness of Romer’s approach is that it requires government-to-government treaties, a long shot in the best circumstances (though Honduras, to their credit, is moving towards such a possibility).

Instead, I’m working on a project whereby world-class law would be imported via choice of law and choice of venue clauses in existing international arbitration agreements. In effect multinational corporations ALREADY have access to world class law in their contracts due to international arbitration. They can, in effect, adjudicate a dispute in Mexico or Egypt by means of courts (and laws) in Holland or the U.S.

For details for how we are working on this project, request a whitepaper from me (michael@flowidealism.org) or come to the “Future of Free Cities” conference in Roatan, Honduras, sponsored by UFM and the Seasteading Institute.

Of course I would have the funds go to our project.

I’ve actually been thinking about this a lot lately. What is the best form of charity? Clearly, just giving a bum on the streets money is a waste. He’ll probably just spend it on alcohol and is he really reformable? Clearly you want the money to go to something that is an investment – that grows, like paying for a poor persons college. Not only do you give them money, but its money that actually solves their problems – long term. But even that has its flaws. After all, they are living in the United States – our “poor”, are richer than 90% of the world.

So then the answer has to do with the worlds poor – not USA’s poor. India, Africa, China, places like that. But you dont want to just give it away either – it robs them of the dignity that comes with “earning”. One thing that I thought about is that when you visit poor countries, and someone offers you a service – say wash your windows, or clean your tires – you tip BIG. Not only are you hitting the target group, but you are rewarding them for a service, and having people participate in the economy makes us all better.

But now were at three qualities of efficient charity: a) targets the clearly truly poor, b) an investment that grows and solves their poverty long term and c) one that gives dividends to the rest of us.

As contrarian as it sounds, I am convinced that the best form of charity is giving jobs and education to the worlds poorest countries – like China’s new growth and capitalist turn. As Tyler Cowen mentioned in his book Economic Stagnation, you get alot of immediate growth and return when a poor population is brought into the world economy – through education, jobs and industrialization. China is at the same stage that the United States was say 100 years ago. And we can expect the same returns – as more and more people are given the opportunity to advance through higher education and innovation. Not only does this make the poorest people better off, but the rest of the world gets alot of the dividends (think of all the added medical innovations, technological innovations, and general increase in standard of living we will experience because of China’s 1 billion+ citizens increased standard of living).

So in the end: what would I do? Probably spend it on whatever makes businesses MORE likely to invest in China, India and other poor countries that bring them further into the economic fold and pull them and their people out of poverty. Maybe invite Intel to open up a training center and design center in a growing country – if the decision ends up losing money, you promise to refund them their losses. If not, you entice another company.

Something like a company insurance policy with the goal of targeting especially poor countries. That is what I would do.

The first thing that occurs to me would be very basic public health improvements (vaccinations, sanitation of drinking water, mosquito nets, etc). But there’s already quite a bit of effort being put here, and I’m not sure off the top of my head how much low-hanging fruit is left.

The next idea would be to spend some portion of the money in the United States and other first-world countries to lobby (either congressional lobbying or a public advocacy campaign) for expanded legal immigration, especially from the poorest countries. Giving people a chance to help themselves through their own efforts is generally preferable to handouts, and immigration to first-world countries seems to be an extremely effective way for citizens of poor countries to improve their situations. I’m a little uneasy about this, due to my general skepticism for people trying to change government policy to address a problem when the same efforts could be used to address the problem directly, but this is a method that can only be done through the government because it involves removing a government barrier.

Another idea would be to try the “charter city” concept, to fund an effort to set up first-world institutions in selected areas of third-world countries.

I’d need to spend quite a bit of time and effort figuring out the most cost-effective way of helping people, but I suspect I’d wind up spending most of my efforts on public health and sanitation.

1) Only help those that are willing to help themselves (don’t mean to come off as conservative). Preliminary elections would be held at local communities to decide whether my help would be taken (this would take a lot of gumption in very corrupt countries). The contract being voted for would define property rights regardless of the governing countries code.

2) Assuming the election goes fine, I would have an independent police party (of which I would be accountable for) enforce property rights and ensure that those that are helping themselves a) don’t become victim of their neighbor and b) don’t become a victim of their native government (much trickier).

3) Fund schools in the communities that have accepted help. To attend would require some form agreement where certain tbd terms are met in order to maintain enrollment. Hopefully, this would give an incentive to show up and appreciate the knowledge and skills being taught. Also, each person would be accountable for their own education.

4) Lobby aggressively in the country’s capital to ensure that my measures would not be hindered by institutional corruption (I admit this in itself would encourage corruption). Hopefully, it would encourage local governments to compete for contracts to be voted on.

5) Hope for the best. This is a pretty idealistic, econ 101, approach. Yet, if I had the resources I would give it a shot.

I would get the 4 volume set Ingenious Mechanisms translated into the local written language, providing teaching when needed, or into an electronic media with a verbal translation.

This will provide the local group access to a wealth of practical design knowledge for solving daily problems. They can then choose which improves their lives the most.

Use some of the money to setup prizes for drugs AIDS/Malaria/Other drugs that provide a big benefit to people in poor countries. I believe the Gates foundation does some of this already. The cash prize gives incentive to drug companies who know they cannot make a lot of money in poor countries.

Using the money to help develop businesses should be helpful. But I don’t know how to best go about this sort of investment.