In business school you are surrounded by people who believe in the power of markets. There are people in my class who are passionate about freeing markets, about scaling enterprises, and about generating profits. Yet some of those SAME people are advocates of giving things away in development work. I have had countless discussions with people who see “aid” as the only way to help “the poor”, and debate with me about why that aid needs to give things away.
I am in Cambodia for a few weeks meeting with our team at PEPY (more for my good than theirs, as I missed them and couldn’t stand being away too long!). Standford University’s MBA program just came through on a learning trip and met with our team at PEPY Tours and I joined for the day as I always enjoy meeting with students, especially groups like this looking to discuss social enterprise. This time, I got into yet another discussion over dinner with an MBA student who was holding the position that if you don’t give things away, you can’t reach all of the people who need it now.
One of her arguments was that “since people don’t have things now, the distribution channels clearly don’t exist to get them what they need.” The problem is, aid is much worse at creating distribution channels, especially long term ones, and any that do exist will be destroyed by giving that same product away. When will our MBA programs start teaching that business in “your country” is based on the same principals as business in “their country”? Imagine if you started your next software company or organic farm or hedge fund, and someone started giving away the exact same goods or services for free to provide aid to the people of America (which, as we all know from our debt levels, we might well need). I bet those MBA’s would be less excited about giving things away if it was their business that was at stake.
Take eggs in Rwanda. This is a fabulous two minute video highlighting an example of a distribution system being destroyed by aid:
I have been away from Cambodia for only 4 months and all of a sudden there are hundreds of small kids bikes with back racks all over the rural country side. I have seen so many aid organization’s bike projects over the years designing “the best new bike for ‘the poor’” and here is a basic small Chinese-made bike which is nearly perfect for the needs and finally reaching these so called “poor”. And why are they everywhere? Not because someone gave them away. I should know, as PEPY used to have a small bike scholarship program in the area before – probably harming markets and surely delaying the purchase of bikes like these. Fortunately we stuck around long enough to learn that we needed to be investing time in people rather than giving away bikes. These small bikes I see today are not available now because of aid but because someone is making money off of selling them and therefor has found a way to make sure that they are available far and wide… and I bet that person didn’t even need an MBA to figure that out.