RDVP class 9/27/2004

The two readings to prep for the class were one by Paul Theroux, describing an observer's view of the life in Africa and the folly of reformers who had come to "fix" it. The second reading, by Hernando de Soto, was a more technical one, describing the costs of bureaucratic red tape (in terms of process steps required and years or decades to do things like obtain title to land). A second chapter from de Soto's book focused on the benefits the West has gotten from its system of ownership/title which allows physical assets like homes serve a dual purpose as collateral in the financial space. He argues that trillions of dollars are locked up in "dead capital" in the land and buildings around the world that cannot be accessed because the system is not in place--too many competing claims prevent anyone from having a clear title.

Stuart gave a quick bio similar to what we fellows had done:

• a passion for building things
  
• a career trajectory from journalism through startups to social ventures and managing the Reuters program (with a stint managing research as well)
  
• an interest in cycling (including a trip on Hawaii)
  

Then he started us off on the question of whether entrpreneurship is the right starting point for international development, given the deep structural issues. There followed a discussion of the merits of working within the system vs. outside of it; along with other forces that can act as change agents (funders like the World Bank or media). We reflected further on the pace of change and the tipping point, and presence of a charismatic "voice" that can lead the change (or act as a visible symbol of society's changing perceptions). Carlos posited that people that want to change the structure are re-distributors of wealth, but entrepreneurs are creators of wealth.

This led Greg to reason that the marketplace is the way to assign value, and there's no reason that social ventures/goods shouldn't be subject to the same scrutiny. Margarita agreed that one-sided charity (givers who get nothing in return) create a bad power dynamic (leading to ineffective deployment of resources). Stuart chimed in that this was the point of the reading: To succeed you must understand the needs: not just the needs of the people, but the structural issues. Our projects don't start from a clean slate; even our own subjective point of view influence what we think is good. Margarita and Greg echoed the desire to ensure that philanthropy was a two-way street, with the "customers" needing to have "skin in the game" (e.g., pay something, or volunteer time) so that we, the program directors, can ensure that they VALUE what we are trying to do.

We talked further about the benefits of building on top of a system or structure (can leverage others' work, esp. in tech) but also the challenges of being seen as attacking the status quo (e.g., "mechanizing" banks in India).

There was further discussion about whether we are (or should be) encouraging everyone to be an entrepreneur, where the risks of failure could be harsh. Sure, the market is harsh, but is there any viable alternative? We should be creating things that allow more people to succeed as entrepreneurs, according to Greg, like a franchise model, for example. Carlos argued that people are already plenty entrepreneurial, but that hasn't enabled them to lead a comfortable life--it's the urban equivalent of subsistence farming. Margarita described the role of government of providing the risk capital for public projects--putting in the first, riskiest money, but allowing the private sector to get the lion's share of the gains if it works out.

Stuart as the realist, pointed out that for all of our projects there will be someone who doesn't want us to succeed.

In that context, we talked a bit about established players that had something to lose, including bureaucrats that supplement their incomes with bribes. Jack mentioned that Kenya had successfully implmented an anti-corruption program; Mans talked about a reality TV show that taped the catching of corrupt officials; and Margarita said that part of the e-government initiative from the World Bank is to drive out corruption.

All in all, an interesting discussion, based more on the fellows' experiences rather than the details of the reading. A good mix of advice, speculation, interesting citations, recounting of personal experiences and synthesis. I look forward to future discussions.