I don't place a lot of value on Carlos Slim's advice. His vast fortune has basically been a result of his ability to practice regulatory arbitrage and own a monopoly (and stifle competition) in Mexico, a country with a highly inefficient governance system.
If the political system over there ever became really functional, his empire would be broken apart and much of his wealth would contract.
Even though Telmex (his landline company) was acquired from the state, and therefore was a monopoly from the start, Slim faced a monopoly by Iusacell on the wireless phone industry, which he managed to break and manage to get Telcel (his wireless company) to become a monopoly basically by making people want to switch.
Slim's story includes several investments on different industries, including specialty shops (Sanborn's) which he has managed to completely turn around from near-bankrupcy to huge commercial success.
I am not making a claim that his wealth from Telmex didn't contribute to his success, but implying he just managed to get where he is because Mexico's regulatory bodies are useless is a huge understatement to his ability in an industry where several key players (Like AT&T, Nextel, Telefonica Movistar, and others have failed).
Historically many fortunes were built because of special privilege from the King.
Ignoring for a moment the anti-competitive claims against Microsoft, consider that that fortune already hinges on the special privilege of intellectual property law, which is backed in full force by the US justice system. Not all countries have this protection. Microsoft does not do anywhere near as well in countries without it. Does this protection ultimately help US citizens.....that point is up for debate, but it exists, and businesses exist to capitalize on it. Is it something that should be expected? For now, yes, but two hundred years from now, my guess is that intellectual property rights will have eroded, and we will view Gates's fortune as a fortune built using special privilege, just like oil fortunes were built before regulations against monopolies, and just like many shipping fortunes were built before that with special privilege from princes.
Special fortunes typically need something special in the first place. Carlos Slim is not that much different from Bill Gates. Bill Gates spent a little bit of time as a heroic startup guy, but he spent the majority of his career doing much the same stuff that Carlos Slim does. If copyright law changed, as many MP3 sharers wish it would, his fortune would deflate as much as Slim's.
This is ad hominem if I've ever seen it. Especially in corrupt societies, I feel like jobs would fare much better than donations by: 1) Increasing economic activity which is required for growth 2) Making sure the money goes to where it's supposed to, and used the way it's supposed to. (Remember the stolen OLPCs? Donations don't always make it to the destination if they're juicy targets.)
Most people assume that just because he became so rich in a developing country he must have done it thru corruption. Carlos Slim is an engineer, he teached algebra and linear programming at the national university. Before buying telmex he was already very successfull in many areas( real state, industrial, financial, comercial and mining). Many people say that he was so rich because president Salinas helped him, but Salinas left 16 years ago and his businesses have flourshed in many areas and in many countries. Why can`t Mexico have somebody as talented as Warren Buffet?
I disagree with him, but there's merit in what he says. Let me give you an example.
I had coffee in an NGO-operated cafe in Siem Riep, Cambodia. All profits went to running a small school for 10 kids.
I did the quick math on a napkin, and realized they were doing far worse as an NGO/charity than they would be to help people as a for-profit business.
Observe: With a 20% net profit after all expenses (which I think they had, if not higher), they'd be able to have enough of a downpayment to open a second cafe within less than a year. A year after that, they'd have 4-5 cafes opened. In three years total, they could be around 8-12 cafes.
At that point, they'd be producing 12 times as much income. They'd also be employing 12 times as many people, and working in a cafe is a really good job in Cambodia. (Air conditioning, pleasant working conditions, friendly client base, regular hours, not dangerous - unlike most Cambodian work).
But by paying it all out right away, they have much less impact. What they're doing is good, yes, but they might be being a little shortsighted if their goal is to do the greatest good. Currently, they were employing 10 people or so (plus the people who did construction, installation, painting, decoration of the cafe, etc) If they reinvested profits for 4 years, they could be employing 120 people who all get better wages and working conditions who can help their families, and they'd be generating 12 times as much in profit. At that point, if they started getting 1/10th of what they were making to charity, they'd be giving more than they are with one cafe.
Consider that. As a charity, they operate one location, employ 10 people, and educate 10 children. If they ran it as a business, in only four years they could run 12 locations, employ 120 people, and with only a fraction of their profits could educate 12 children. Plus, they'd still have the other 90% of profits to open more cafes, or other businesses, or to help more people, or to open hospitals, or whatever. I've heard similar critiques from a local Khmer businessman and an Indian engineer/restaurant owner I met there. NGO's, while well intentioned, might be stifling development in Cambodia. Maybe. At the very least, running that cafe for-profit and reinvesting profits would've produced a hell of a lot more good very quickly.
I agree with you, but here is something to keep in mind:
It could be that the fact they donate all their profits to teaching children, might be sole reason why this cafe is profitable in the first place.
If this was run as a regular business, people would not have such an incentive go there. The same goes for a non-profit which has a goal that is not plainly visible.
> I did the quick math on a napkin, and realized they were doing far worse as an NGO/charity than they would be to help people as a for-profit business.
You're making the assumption that creating jobs is better than providing access to education. This may be true in the short term, but probably not in the long term if access to education in that area is a problem. I would say that given that investment in education takes years to pay off anyway it is probably a good plan to invest sooner rather than later. However without knowing more about the specific case it's impossible to say either way.
I'm purely speculating on a hypothetical situation here, but from the point of view of the NGO it may make more sense to invest in education. Creating 120 jobs is no doubt a good thing, but if what is needed most in the area is a school, then investing in more jobs is not doing the greatest good. Creating jobs where the workforce is uneducated is not going to improve the standard of living greatly in that area over an extended period of time. Providing the means for the next generation to obtain better jobs or have the education necessary to start their own businesses might. Maybe the NGO is playing the long game?
Also if they make a success of this model, running a cafe to fund a school, and prove that they can make it work then it will probably be easier for them to get access to funds to replicate that success elsewhere. This could easily have longer term benefits than creating a small amount of jobs. Not to mention that this model doesn't have to be replicated by that NGO.
You haven't made an argument against an NGO operated cafe, you've made an argument against an NGO operated cafe that pays out all its earnings.
Also, assuming that they have any sort of tax or cost advantage (if only from people willing to donate time/effort), for the same amount of business they have more money to put towards their purpose, be it for investment in more cafes or for educating more students now.
I can buy the argument that just shoveling huge amounts of aid to people doesn't fix anything long-term. But it's not solely a decision between that and no charity. He mentions employment, which often benefits from having a stock of not-yet-exploited research to commercialize (SV firms do a lot of innovation, but they also do a lot of commercialization of stuff for which the early-stage R&D was done in academia, at government research labs, etc.).
Charities funding research, and especially insisting that the research be published in some open-access and not-patent-encumbered form, can provide that raw material that new companies need. Charity-funded medical research can also directly produce treatments that improve conditions in a region long-term. And, although it runs into a bunch of political controversy, same for charity-funded research on things like new crop varieties.
they also do a lot of commercialization of stuff for which the early-stage R&D was done in academia, at government research labs, etc.
So they turn it from something of theoretical value to something that actually improves people's lives--to the point that they're willing to part with money to have it? That seems to add a lot more utility on the margin. Of course, it wouldn't mean anything if there weren't inventions to subsidize.
I think you need to look more specifically at what exactly the Gates Foundation does if you want to answer the questiona at the end of the article. They're known for fighting disease, primarily; disease in third-world countries is a major barrier to industrial expansion into these countries. Further, charity has achieved at least one major victory: the eradication of smallpox, perhaps the greatest achievement in human history, so I'd say it's contributed at least a little -- and the Gates Foundation has some good precedent for their goals.
With Bill Gates you at least know that there's an extremely intelligent person at the top, looking to solve real problems (assuming he's past the phase of donating Windows machines to schools).
I think that's the largest point: just giving out money to causes is typically a poor way to make a difference. However, if you intelligently spend that money (whether it be by empowering people through job creation or eradicating diseases) then you have a chance of making a lasting impact.
Now this is purely hearsay, but I've heard it said the creator of the smallpox vaccine regretted what he'd done because the amount of polio it produced greatly outnumbered the lives it saved.
First time I hear a claim that charity is responsible for smallpox eradication.
Sure, charities did help a lot, but it took Worldwide coordinated effort by WHO with primary donors being UN member states to achieve full eradication.
I have a friend who was well off and was very much against handouts for most people. He would go on about people needing to get a job, pull themselves up and how not finding work was a lazy man's excuse. Then he lost his job, house, car, dog and health in less than a year and even had to move back in with his parents.
Amazing how his opinions have changed now that he is the one who despite his best efforts is struggling to just barely get by. He still feels you should make your own way, but now realizes it can be much harder than it sounds.
The "go get a low paying job" safety net is not what it once was. People these days really need to get creative and find new ways to generate income.
It's a tough issue. I rarely oblige anybody asking me for money on the streets. If they ask for food, I don't mind buying them a meal, but just giving out money doesn't sit well with me.
If I could give somebody $50 or $100 and know that it would be used to make their life better, I'd do it without hesitation.
Might be an interesting field for a non-profit organization?
A couple of months ago I was there: a failed project, no job, no money flowing in by almost 5 months, and albeit of being moderately competent by several measures, I was struggling too as you say. My view of the world has changed a lot because of that period, but the things just are in that way. I still strongly believe that you must find your way up in the ladder, but things are not easy.
In the meanwhile I did my best to try alternative strategies. At the end, thanks to God I was able to find a great job at a German company which happened to have a research center in my country, and the things are recovering.
Where you find widespread poverty, you also find an absence of both the rule of law and freedom from expropriation. And you people trying to get to places that have those things.
The vast majority of people are inherently capable of meeting their own needs, figuring out the needs of others and trading with them for mutual benefit...if they are allowed to do so.
He amassed such a huge fortune by building walls around his software, limiting people's potential in a way.
Was it necessary? Did proprietary software need to happen to spur innovation? What about his uncompetitive practices?
I end up wondering what the balance of 'good' would be in the world if instead of taking everything he could, he had allowed others to grow and shared his source more. We wouldn't have the Gates foundation's fight against malaria, but we might have a more innovative and open global computing culture, and who knows what that would have meant.
Did proprietary software need to happen to spur innovation?
To the extent that the Wintel monopoly resulted in lower hardware costs, it's hard to see any intellectually honest Linux or BSD user arguing otherwise.
You would not be able to buy 3+ GFLOPS systems with gigabytes of RAM and terabytes of mass storage for less than $1000 without the kind of mass standardization that, history suggests, can emerge only from monopolistic behavior.
I'll agree with the common sentiment that Carlos Slim's general advice is worthless.
But, I think he's on to something here. From the article:
It is the 21st century billionaire version of the old adage, “give a man a fish and he eats for a day, teach him to fish and he eats for a lifetime
I think all he's saying is that one can't throw money at problems and expect them to be fixed. That's an opinion I'll agree with.
If we want to spend money and give to charities, that's valid...but if we're really looking for long-term fixes (see: ending poverty, world hunger, etc) then that's not the way to go about it. We'd need to really create a system behind the charities; when you give money, that should go into investing for the future and creating future solutions to fix problems, rather than simply repairing something in the now and here.
Look at natural disasters. A typhoon occurs and the world pitches in and sends hundreds of millions to the troubled country. That's fine. But what we tend to forget a month after the hurricane is that the reason the countries got hit so hard might just be because of poor infrastructure or inadequate technology or systems. Those things still stay in place long after the world sends money; if they tragically get hit again, nothing has changed and the world will (yet again) be expected to simply send more money.
My favorite example of "throwing money at a problem" is something that happened a few years ago:
Some clothing company (Gap, I think, but I'm not 100% sure) had a huge surplus one year that they decided to give away to some village/s in an impoverished South Asian country. All they did was take their extra clothes [money] and throw it at the problem of horrible poverty in the place.
What ended up happening? It was an amazing two year fix. The clothes were so much (in quantity) that they lasted for a few years before running out. During that time, the fact that Gap sent all these free clothes made the entire industry that used to make clothes for these parts go out of business. At the end of the two years, they were in a position that's worse off than what they were a few years back. No local clothes makers; no free Gap.
"Charity doesn't solve anything" might be a bit strong. But he's on to something. Throwing money at a problem doesn't fix anything in the long-term; the way to do it is to invest in the future, not throw money at the present.
That's a very interesting point. In your clothing example, charity was a crutch that hampered the progression of local businesses.
I could see many other forms of aid having the same effect. Creating a reliance that's completely out of the control of the region. If it evaporates at any point they're stuck in a much worse situation.
I think we could go about this a little more intelligently though. Outside funds could be used to train and evolve local business, giving them the tools required to succeed on their own once the aid disappears. If we went into the situation thinking; We only have X dollars, not a constant stream, so how can we use this money in a way to produce a long term positive outcome in the region?
I guess the problem then becomes finding a non-corrupt entity who knows best how to go about it.
That's an interesting point, could it extend to 'employment' too?
What I mean is, how do you set up employment that is self sustaining without wealth invested from outside? Is an industry that exists solely to support itself a house of cards, ready to collapse at the first sign of instability?
It almost looks like any investment is also "throwing money at the problem".
I agree, a job is much better than a handout. Regardless, infrastructure and education are two things that do help people create jobs and exit poverty.
If the people are responsible enough to use it correctly.
See this not happening in Afghanistan, where their acceptance of drugs and all other sorts of questionable behavior has left their populace lazy and subject to strongmen and corruption.
As a side note, I'm quite sure America will not become Afghanistan if we legalize drugs and pederasty. Why, I can't really say...
I think the perfect model is the one Mohammed Unis advocates: so called "social entrepreneurship". The business makes a profit but it has a set of shareholders who control all voting rights who are interested in having the business do things that are not only motivated by profit.
In a way, Google is a bit like this. Sergei and Larry setup the company in such a way that they have far more voting rights than the non-founders and thus use Google to pursue aims that are more social, for instance developing new energy technology or cars that drive themselves, etc.
The "teach a man to fish" argument has been around for a few millennium. But saying that philanthropy ends in giving away fish seems to me like an excuse for people to abandon charity altogether. Isn't Kiva still a form of philanthropy, even though it's just a loan? Charity cannot be about cementing poverty by creating dependence, but can work if it's a reallocation of resources (outside the free market) that results in more balanced partners.
Charity is most needed for problems that have no other natural source of funding. If the government/private sector can solve certain problems, then charities are perhaps not the best vehicle for solving those particular problems.
Buffett and Gates specifically focus on the former. Trying to reduce extreme poverty, provide healthcare, and educational opportunities. They also believe every life is of equal value. So the challenge then becomes helping the most people per dollar invested.
Some of the most well developed medical technologies/ solutions exists because their's a lot of wealthy people with those problems. A lot of male baldness and not so much malaria.
Malaria is a treatable disease. Millions die because they don't have access to care. You can't say these people would be better off employed, as if their health is not a factor in their economic output. Hence, the goal of trying to eliminate malaria is a valid philanthropic activity.
Buffett also donated through one of his children's foundations, to help solve/minimize the potential for a nuclear event. His view is pretty grim: the information is already out there, getting into more hands, and so the probability approaches 1 that an event will occur at some point in the future. What other natural funding exists for trying to solve this? It might be futile, it might be incredibly hard, but you need smart capable people working on this.
Furthermore, helping the rest of the world become a little bit more prosperous might reduce hostility, and violence that desperate people can be induced into. While businesses have had a great history of introducing wealth into the world, its always done with a profit motive. Where there is no profit potential, there is no interest of a business to be involved. A lot of these problems don't have those profit potentials. Hence, charity works in these areas.
Another important point regarding disease, in general, and especially malaria is that disease often leaves survivors with permanent physical disabilities and/or neurological deficits. I think a lot of people in the U.S. and Europe have this mistaken notion that malaria is like a bad case of influenza, mononucleosis, pneumonia, or some other common disease that we are familiar with. We think that the person gets really sick and feels awful and it could even be life-threatening, but that as long as you survive it, you fully recover. That simply isn't true.
Malaria primarily affects children and many survivors have severe permanent disabilities because of it (seizure disorders, deficits caused by stroke, psychiatric problems, etc.). And malaria is just one of many serious diseases in the developing world (tuberculosis, schistosomiasis, dengue fever, HIV/AIDS, hepatitis, etc.). If you acquire a severe disability before you're even old enough to enter the workforce, how does creating jobs help you? Creating jobs alone is insufficient to address the problems of Africa. You have to concomitantly address the heavy burden of disease if you are to have any chance of solving the economic woes of Africa.
The gist of their company is that for every pair of shoes they sell, they give a pair away to children in impoversihed countries. Seems like a really nice thing to do.
That said, I've always thought they would be better off helping would-be entrepreneurs in those countries to make and sell shoes of their own. IE, perhaps they could use their resources to help people in those countries learn how to make the shoes, provide some assistance in sourcing the materials, etc.
As it is today, if someone in those areas where they give shoes away has any aspiration of making shoes, they have no chance because they won't ever be able to compete with someone coming in and giving away free shoes.
When the kid who received the new pair of free shoes inevitably needs another pair, there is infrastructure in place for him to get those new shoes, rather than waiting for Tom's to show up again with more free shoes.
I'm not knocking Tom's because I think their intentions are simply to help people. But I do think they're missing the target - I think that is what Senor Slim is referring to.
Not a huge fan of Slim based on what I've heard, but I mostly agree with him on this. Makes me wonder though, what he's doing holding on to tens of billions in wealth if he could be building businesses and creating jobs for the poor instead. It makes it sound like "Business is better than charity, but I'd rather just be rich"
Rich in irony as well -- Slim's purchase of Telmex, the state-controlled telephone monopoly, meant that he could stifle competition and charge exorbitant rates. That's pretty much as far as you can get from encouraging employment for the poor.
I'm bemused by him implying that charity doesn't create employment or foster entrepreneurism amongst the poor.
It surely can't be seriously argued that wealth is better channelled through a single person's business empire representing nearly half of the country's stock exchange and 90% of its telecoms provision...
It seems strange that someone with the business acumen to become the world's richest man would not look on the inefficient and broken charity and aid systems as an opportunity to create a better solution. There won't be good new jobs in places where there isn't reliable electricity or clean drinking water.
Like most aging industries, the "making the world better" industry is definitely in need of some disruption. We see newer entrepreneurs talking about this space more and more, so I wonder how long it will be before the richest entrepreneurs start looking at new ways of solving these problems.
It is pretty clear that the growth in living standards over the last 100 years has a lot more to owe to the accumulation of capital goods than the working of charity. It's true that charity can alleviate short-term suffering, but Mr. Slim's assertion has a lot of historical support to it.
But charity probably does a lot more for the giver. I imagine giving $10 billion makes you feel about as good as making the $10 billion in the first place. Society will certainly admire you more.
Microsoft brazenly, fiercely ignored antitrust law. There's endless evidence in court on their attempts to illegally block the adoption of Java and Netscape Navigator. They were found guilty in U.S. v. Microsoft. And every web developer knows how much damage IE6 did to the progress of the internet. Gates' fortune is unquestionably tainted.
That said, the majority of economists would probably more or less agree with Slim. Buffett, Gates, and Slim could amass wealth faster than pretty much anyone else on earth. Just leaving the money invested in the global economy is not a priori worse than giving it all to charity. Compound growth is obviously self-sustaining growth. The HOPE is that charity can do the same.
Giving away tens of billions of dollars is an ENORMOUS informational problem. Good luck allocating it all even the least bit efficiently. The real answer is that no one can possibly know what the best use of all that money is.
What would I do with the money? Probably put it all in a Vanguard Total Market fund, or the closest fund imitating the true world economy.
As someone who is from a third-world country and self-educated, I can't stress enough on providing access to education.
We can create 5,000 jobs today. Simple workers with $10/hour pay. 100 years later and the country won't move. The workers don't understand the power of education, they won't teach well their children and in a third-world country, it's very unlikely they'll get a decent one.
I don't mean by education, an MBA, Ph.D... or all the buzz-words. I mean HN culture, real programmer, self motivation to work and exploit your full potential, mind openness to read and accept the other...
Comparing myself with my other peers, I'm a lot in a better condition and I feel proud of myself, doing something useful instead of spending my time on cafés and playing/watching football.
The education you're talking about doesn't exist in first world countries either. The education, from elementary school to college, is focused on "teaching" people to be good: citizens (that is, compliant with government demands), consumers, and employees. The highest virtue in schools in first world countries are athletics and popularity. The lowest virtues are learning.
If you create jobs in an area, then people have the economic power to come together and hire teachers and create a school. If an external party, such as government, creates the school, the school will be focused on the agenda of that third party.
Education isn't a commodity like cotton. Pretty much all cotton is the useful as cotton. Much of the education in first world countries is focused on keeping people down, dependent, and unquestioning.
Every decade the schools teach less, and in less detail. It is pretty scary. (I expect to be downvoted because I believe most participants on HN are college students or recent graduates who haven't had enough time out of college to get the perspective that results in these conclusions.)
[+] [-] jakarta|15 years ago|reply
If the political system over there ever became really functional, his empire would be broken apart and much of his wealth would contract.
[+] [-] maxawaytoolong|15 years ago|reply
Like Bill Gates and Microsoft, who were actually convicted as monopolists?
After working in aid in Africa, I have to say I agree more with the Mexican monopolist than the American one.
[+] [-] jamn|15 years ago|reply
Slim's story includes several investments on different industries, including specialty shops (Sanborn's) which he has managed to completely turn around from near-bankrupcy to huge commercial success.
I am not making a claim that his wealth from Telmex didn't contribute to his success, but implying he just managed to get where he is because Mexico's regulatory bodies are useless is a huge understatement to his ability in an industry where several key players (Like AT&T, Nextel, Telefonica Movistar, and others have failed).
[+] [-] nonce91329713|15 years ago|reply
Ignoring for a moment the anti-competitive claims against Microsoft, consider that that fortune already hinges on the special privilege of intellectual property law, which is backed in full force by the US justice system. Not all countries have this protection. Microsoft does not do anywhere near as well in countries without it. Does this protection ultimately help US citizens.....that point is up for debate, but it exists, and businesses exist to capitalize on it. Is it something that should be expected? For now, yes, but two hundred years from now, my guess is that intellectual property rights will have eroded, and we will view Gates's fortune as a fortune built using special privilege, just like oil fortunes were built before regulations against monopolies, and just like many shipping fortunes were built before that with special privilege from princes.
Special fortunes typically need something special in the first place. Carlos Slim is not that much different from Bill Gates. Bill Gates spent a little bit of time as a heroic startup guy, but he spent the majority of his career doing much the same stuff that Carlos Slim does. If copyright law changed, as many MP3 sharers wish it would, his fortune would deflate as much as Slim's.
[+] [-] bobbin_cygna|15 years ago|reply
"The only way to fight poverty is with employment"
"Trillions of dollars have been given to charity in the last 50 years, and they don’t solve anything"
"There is a saying that we should leave a better country to our children. But it’s more important to leave better children to our country"
That's what he said. It may be really wrong, stupid, or right. What matters is "is he right?".
[+] [-] makmanalp|15 years ago|reply
[+] [-] huherto|15 years ago|reply
Most people assume that just because he became so rich in a developing country he must have done it thru corruption. Carlos Slim is an engineer, he teached algebra and linear programming at the national university. Before buying telmex he was already very successfull in many areas( real state, industrial, financial, comercial and mining). Many people say that he was so rich because president Salinas helped him, but Salinas left 16 years ago and his businesses have flourshed in many areas and in many countries. Why can`t Mexico have somebody as talented as Warren Buffet?
[+] [-] unknown|15 years ago|reply
[deleted]
[+] [-] lionhearted|15 years ago|reply
I had coffee in an NGO-operated cafe in Siem Riep, Cambodia. All profits went to running a small school for 10 kids.
I did the quick math on a napkin, and realized they were doing far worse as an NGO/charity than they would be to help people as a for-profit business.
Observe: With a 20% net profit after all expenses (which I think they had, if not higher), they'd be able to have enough of a downpayment to open a second cafe within less than a year. A year after that, they'd have 4-5 cafes opened. In three years total, they could be around 8-12 cafes.
At that point, they'd be producing 12 times as much income. They'd also be employing 12 times as many people, and working in a cafe is a really good job in Cambodia. (Air conditioning, pleasant working conditions, friendly client base, regular hours, not dangerous - unlike most Cambodian work).
But by paying it all out right away, they have much less impact. What they're doing is good, yes, but they might be being a little shortsighted if their goal is to do the greatest good. Currently, they were employing 10 people or so (plus the people who did construction, installation, painting, decoration of the cafe, etc) If they reinvested profits for 4 years, they could be employing 120 people who all get better wages and working conditions who can help their families, and they'd be generating 12 times as much in profit. At that point, if they started getting 1/10th of what they were making to charity, they'd be giving more than they are with one cafe.
Consider that. As a charity, they operate one location, employ 10 people, and educate 10 children. If they ran it as a business, in only four years they could run 12 locations, employ 120 people, and with only a fraction of their profits could educate 12 children. Plus, they'd still have the other 90% of profits to open more cafes, or other businesses, or to help more people, or to open hospitals, or whatever. I've heard similar critiques from a local Khmer businessman and an Indian engineer/restaurant owner I met there. NGO's, while well intentioned, might be stifling development in Cambodia. Maybe. At the very least, running that cafe for-profit and reinvesting profits would've produced a hell of a lot more good very quickly.
[+] [-] Tutorialzine|15 years ago|reply
It could be that the fact they donate all their profits to teaching children, might be sole reason why this cafe is profitable in the first place.
If this was run as a regular business, people would not have such an incentive go there. The same goes for a non-profit which has a goal that is not plainly visible.
[+] [-] randomtask|15 years ago|reply
You're making the assumption that creating jobs is better than providing access to education. This may be true in the short term, but probably not in the long term if access to education in that area is a problem. I would say that given that investment in education takes years to pay off anyway it is probably a good plan to invest sooner rather than later. However without knowing more about the specific case it's impossible to say either way.
I'm purely speculating on a hypothetical situation here, but from the point of view of the NGO it may make more sense to invest in education. Creating 120 jobs is no doubt a good thing, but if what is needed most in the area is a school, then investing in more jobs is not doing the greatest good. Creating jobs where the workforce is uneducated is not going to improve the standard of living greatly in that area over an extended period of time. Providing the means for the next generation to obtain better jobs or have the education necessary to start their own businesses might. Maybe the NGO is playing the long game?
Also if they make a success of this model, running a cafe to fund a school, and prove that they can make it work then it will probably be easier for them to get access to funds to replicate that success elsewhere. This could easily have longer term benefits than creating a small amount of jobs. Not to mention that this model doesn't have to be replicated by that NGO.
[+] [-] secretasiandan|15 years ago|reply
Also, assuming that they have any sort of tax or cost advantage (if only from people willing to donate time/effort), for the same amount of business they have more money to put towards their purpose, be it for investment in more cafes or for educating more students now.
[+] [-] _delirium|15 years ago|reply
Charities funding research, and especially insisting that the research be published in some open-access and not-patent-encumbered form, can provide that raw material that new companies need. Charity-funded medical research can also directly produce treatments that improve conditions in a region long-term. And, although it runs into a bunch of political controversy, same for charity-funded research on things like new crop varieties.
[+] [-] byrneseyeview|15 years ago|reply
So they turn it from something of theoretical value to something that actually improves people's lives--to the point that they're willing to part with money to have it? That seems to add a lot more utility on the margin. Of course, it wouldn't mean anything if there weren't inventions to subsidize.
[+] [-] scythe|15 years ago|reply
[+] [-] zacharypinter|15 years ago|reply
I think that's the largest point: just giving out money to causes is typically a poor way to make a difference. However, if you intelligently spend that money (whether it be by empowering people through job creation or eradicating diseases) then you have a chance of making a lasting impact.
[+] [-] yters|15 years ago|reply
It was on the internet so it must be true!
[+] [-] borism|15 years ago|reply
Sure, charities did help a lot, but it took Worldwide coordinated effort by WHO with primary donors being UN member states to achieve full eradication.
[+] [-] grannyg00se|15 years ago|reply
[deleted]
[+] [-] MrFlibble|15 years ago|reply
Amazing how his opinions have changed now that he is the one who despite his best efforts is struggling to just barely get by. He still feels you should make your own way, but now realizes it can be much harder than it sounds.
The "go get a low paying job" safety net is not what it once was. People these days really need to get creative and find new ways to generate income.
[+] [-] zacharypinter|15 years ago|reply
If I could give somebody $50 or $100 and know that it would be used to make their life better, I'd do it without hesitation.
Might be an interesting field for a non-profit organization?
[+] [-] alexitosrv|15 years ago|reply
I saw the tip of the iceberg, and it was scary.
[+] [-] stretchwithme|15 years ago|reply
The vast majority of people are inherently capable of meeting their own needs, figuring out the needs of others and trading with them for mutual benefit...if they are allowed to do so.
[+] [-] awakeasleep|15 years ago|reply
He amassed such a huge fortune by building walls around his software, limiting people's potential in a way.
Was it necessary? Did proprietary software need to happen to spur innovation? What about his uncompetitive practices?
I end up wondering what the balance of 'good' would be in the world if instead of taking everything he could, he had allowed others to grow and shared his source more. We wouldn't have the Gates foundation's fight against malaria, but we might have a more innovative and open global computing culture, and who knows what that would have meant.
[+] [-] CamperBob|15 years ago|reply
To the extent that the Wintel monopoly resulted in lower hardware costs, it's hard to see any intellectually honest Linux or BSD user arguing otherwise.
You would not be able to buy 3+ GFLOPS systems with gigabytes of RAM and terabytes of mass storage for less than $1000 without the kind of mass standardization that, history suggests, can emerge only from monopolistic behavior.
[+] [-] kloncks|15 years ago|reply
But, I think he's on to something here. From the article:
It is the 21st century billionaire version of the old adage, “give a man a fish and he eats for a day, teach him to fish and he eats for a lifetime
I think all he's saying is that one can't throw money at problems and expect them to be fixed. That's an opinion I'll agree with.
If we want to spend money and give to charities, that's valid...but if we're really looking for long-term fixes (see: ending poverty, world hunger, etc) then that's not the way to go about it. We'd need to really create a system behind the charities; when you give money, that should go into investing for the future and creating future solutions to fix problems, rather than simply repairing something in the now and here.
Look at natural disasters. A typhoon occurs and the world pitches in and sends hundreds of millions to the troubled country. That's fine. But what we tend to forget a month after the hurricane is that the reason the countries got hit so hard might just be because of poor infrastructure or inadequate technology or systems. Those things still stay in place long after the world sends money; if they tragically get hit again, nothing has changed and the world will (yet again) be expected to simply send more money.
My favorite example of "throwing money at a problem" is something that happened a few years ago:
Some clothing company (Gap, I think, but I'm not 100% sure) had a huge surplus one year that they decided to give away to some village/s in an impoverished South Asian country. All they did was take their extra clothes [money] and throw it at the problem of horrible poverty in the place.
What ended up happening? It was an amazing two year fix. The clothes were so much (in quantity) that they lasted for a few years before running out. During that time, the fact that Gap sent all these free clothes made the entire industry that used to make clothes for these parts go out of business. At the end of the two years, they were in a position that's worse off than what they were a few years back. No local clothes makers; no free Gap.
"Charity doesn't solve anything" might be a bit strong. But he's on to something. Throwing money at a problem doesn't fix anything in the long-term; the way to do it is to invest in the future, not throw money at the present.
Just my (albeit a bit long) $0.02
[+] [-] rapind|15 years ago|reply
I could see many other forms of aid having the same effect. Creating a reliance that's completely out of the control of the region. If it evaporates at any point they're stuck in a much worse situation.
I think we could go about this a little more intelligently though. Outside funds could be used to train and evolve local business, giving them the tools required to succeed on their own once the aid disappears. If we went into the situation thinking; We only have X dollars, not a constant stream, so how can we use this money in a way to produce a long term positive outcome in the region?
I guess the problem then becomes finding a non-corrupt entity who knows best how to go about it.
[+] [-] r0s|15 years ago|reply
What I mean is, how do you set up employment that is self sustaining without wealth invested from outside? Is an industry that exists solely to support itself a house of cards, ready to collapse at the first sign of instability?
It almost looks like any investment is also "throwing money at the problem".
[+] [-] bryanh|15 years ago|reply
Charity != giving people money.
[+] [-] johnrob|15 years ago|reply
[+] [-] cynest|15 years ago|reply
[+] [-] yters|15 years ago|reply
See this not happening in Afghanistan, where their acceptance of drugs and all other sorts of questionable behavior has left their populace lazy and subject to strongmen and corruption.
As a side note, I'm quite sure America will not become Afghanistan if we legalize drugs and pederasty. Why, I can't really say...
[+] [-] narrator|15 years ago|reply
In a way, Google is a bit like this. Sergei and Larry setup the company in such a way that they have far more voting rights than the non-founders and thus use Google to pursue aims that are more social, for instance developing new energy technology or cars that drive themselves, etc.
[+] [-] zachster|15 years ago|reply
[+] [-] sbaqai|15 years ago|reply
Buffett and Gates specifically focus on the former. Trying to reduce extreme poverty, provide healthcare, and educational opportunities. They also believe every life is of equal value. So the challenge then becomes helping the most people per dollar invested.
Some of the most well developed medical technologies/ solutions exists because their's a lot of wealthy people with those problems. A lot of male baldness and not so much malaria.
Malaria is a treatable disease. Millions die because they don't have access to care. You can't say these people would be better off employed, as if their health is not a factor in their economic output. Hence, the goal of trying to eliminate malaria is a valid philanthropic activity.
Buffett also donated through one of his children's foundations, to help solve/minimize the potential for a nuclear event. His view is pretty grim: the information is already out there, getting into more hands, and so the probability approaches 1 that an event will occur at some point in the future. What other natural funding exists for trying to solve this? It might be futile, it might be incredibly hard, but you need smart capable people working on this.
Furthermore, helping the rest of the world become a little bit more prosperous might reduce hostility, and violence that desperate people can be induced into. While businesses have had a great history of introducing wealth into the world, its always done with a profit motive. Where there is no profit potential, there is no interest of a business to be involved. A lot of these problems don't have those profit potentials. Hence, charity works in these areas.
[+] [-] blahblahblah|15 years ago|reply
Malaria primarily affects children and many survivors have severe permanent disabilities because of it (seizure disorders, deficits caused by stroke, psychiatric problems, etc.). And malaria is just one of many serious diseases in the developing world (tuberculosis, schistosomiasis, dengue fever, HIV/AIDS, hepatitis, etc.). If you acquire a severe disability before you're even old enough to enter the workforce, how does creating jobs help you? Creating jobs alone is insufficient to address the problems of Africa. You have to concomitantly address the heavy burden of disease if you are to have any chance of solving the economic woes of Africa.
[+] [-] sportsTAKES|15 years ago|reply
The gist of their company is that for every pair of shoes they sell, they give a pair away to children in impoversihed countries. Seems like a really nice thing to do.
That said, I've always thought they would be better off helping would-be entrepreneurs in those countries to make and sell shoes of their own. IE, perhaps they could use their resources to help people in those countries learn how to make the shoes, provide some assistance in sourcing the materials, etc.
As it is today, if someone in those areas where they give shoes away has any aspiration of making shoes, they have no chance because they won't ever be able to compete with someone coming in and giving away free shoes.
When the kid who received the new pair of free shoes inevitably needs another pair, there is infrastructure in place for him to get those new shoes, rather than waiting for Tom's to show up again with more free shoes.
I'm not knocking Tom's because I think their intentions are simply to help people. But I do think they're missing the target - I think that is what Senor Slim is referring to.
[+] [-] pchristensen|15 years ago|reply
[+] [-] mcknz|15 years ago|reply
[+] [-] asolove|15 years ago|reply
[+] [-] MikeCapone|15 years ago|reply
[+] [-] Lendal|15 years ago|reply
It doesn't do any good to teach a man to fish if he dies of starvation while waiting for the fish to bite.
On the other hand a failure in employment only leads to higher demand for charity. So they're both equally important.
[+] [-] ESchmidtSeesYou|15 years ago|reply
Who do you value more, the current generation or future generations? Essentially the perpetual argument over the standard discounting problem.
[+] [-] notahacker|15 years ago|reply
It surely can't be seriously argued that wealth is better channelled through a single person's business empire representing nearly half of the country's stock exchange and 90% of its telecoms provision...
[+] [-] wolfrom|15 years ago|reply
Like most aging industries, the "making the world better" industry is definitely in need of some disruption. We see newer entrepreneurs talking about this space more and more, so I wonder how long it will be before the richest entrepreneurs start looking at new ways of solving these problems.
[+] [-] araneae|15 years ago|reply
[+] [-] jacoblyles|15 years ago|reply
But charity probably does a lot more for the giver. I imagine giving $10 billion makes you feel about as good as making the $10 billion in the first place. Society will certainly admire you more.
[+] [-] ESchmidtSeesYou|15 years ago|reply
That said, the majority of economists would probably more or less agree with Slim. Buffett, Gates, and Slim could amass wealth faster than pretty much anyone else on earth. Just leaving the money invested in the global economy is not a priori worse than giving it all to charity. Compound growth is obviously self-sustaining growth. The HOPE is that charity can do the same.
Giving away tens of billions of dollars is an ENORMOUS informational problem. Good luck allocating it all even the least bit efficiently. The real answer is that no one can possibly know what the best use of all that money is.
What would I do with the money? Probably put it all in a Vanguard Total Market fund, or the closest fund imitating the true world economy.
[+] [-] csomar|15 years ago|reply
We can create 5,000 jobs today. Simple workers with $10/hour pay. 100 years later and the country won't move. The workers don't understand the power of education, they won't teach well their children and in a third-world country, it's very unlikely they'll get a decent one.
I don't mean by education, an MBA, Ph.D... or all the buzz-words. I mean HN culture, real programmer, self motivation to work and exploit your full potential, mind openness to read and accept the other...
Comparing myself with my other peers, I'm a lot in a better condition and I feel proud of myself, doing something useful instead of spending my time on cafés and playing/watching football.
[+] [-] lzw|15 years ago|reply
If you create jobs in an area, then people have the economic power to come together and hire teachers and create a school. If an external party, such as government, creates the school, the school will be focused on the agenda of that third party.
Education isn't a commodity like cotton. Pretty much all cotton is the useful as cotton. Much of the education in first world countries is focused on keeping people down, dependent, and unquestioning.
Every decade the schools teach less, and in less detail. It is pretty scary. (I expect to be downvoted because I believe most participants on HN are college students or recent graduates who haven't had enough time out of college to get the perspective that results in these conclusions.)