Today, Haiti, Tomorrow...Haiti?

We are all aware of the Haitian humanitarian crisis. Many of us have given to various organizations that are helping to provide relief to a country desperately in need. I want to challenge you, however, to consider aid to Haiti in a new light.

According to the CIA World Factbook, Haiti's per capita income is $1,300 annually, ranking it 203rd in the world (out of 229). Inflation is 15.5% (194th highest in the world) and unemployment is not even reported as a number, rather as "widespread unemployment and underemployment; more than two-thirds of the labor force do not have formal jobs." These numbers are from well before the recent earthquake.

A tremendous amount of aid will pour into the country over the next few months. After that, our memories will fade, the money will dry up, and then what? Will more than half of Haitians finally be employed? Not likely. Recovery from disaster is hard...recovery from endemic poverty is nearly impossible.

So I want to challenge you to join me and my family in making a commitment that goes beyond a text message. For the past four years, we have been sponsoring Robendy through Compassion International. Robendy lives in Haiti and happens to have been born exactly 8 years to the day before our twins. He lives on the side of the island away from the worst of the damage, but beyond that, we know no more than you do about his current fate. He was our first thought on hearing about the earthquake.

Sponsorship is different than giving to disaster relief. Instead of a chunk of cash now, sponsorship is spread out over time, a steady drip of help to those in need. It keeps us engaged, and though the contributions are automated, we are constantly reminded through letters, updates, and bank statements that we are involved, every day, in what happens in Haiti.

Compassion is not the only organization that has a sponsorship model. Haiti is not the only country in the world with poverty. So I don't really care if you give through Compassion, and I don't particularly care if you give to Haiti. I do care that you make a commitment beyond the headlines. Haiti will need us next year, just like they did last year. Will you be there?


Click here to access Compassion International's sponsorship page.
Click here to access Compassion International's Haitian disaster relief page. 


PS - I did no research into other organizations for this post. If you have one you would recommend, please mention it in the comments. Also, if you have a sponsorship story, I would love to hear it.


(Photo credit to Compassion International)

Basic Economics

I have made several references to this book, so it seems worthwhile to devote a post to it. I downloaded Thomas Sowell's Basic Economics: A Citizen's Guide to the Economy from Audible.com as part of a 3-for-2 special. A bit ambitious of me to go for a book on economics, but I was well rewarded.

Here's the summary:

A price-coordinated economy takes advantage of distributed knowledge to most efficiently allocate scarce resources to meet the desires of consumers.

Along the way, Sowell fleshes out a lot of details and give examples about how rent control leads to housing shortages and food price controls lead to overproduction and starvation (at the same time!). Throughout, he keeps coming back to the idea that knowledge is king and only free price fluctuations (i.e. a free market) can make use of knowledge quickly enough to be useful.

Another recurring theme is that the intent and effect of government intervention are not the same. A favorite line is that there are not enough economists for politicians to worry about when election time comes, so they can make policy without regard for actual effects understood by the specialists.

Missing from the book is a full treatment of so-called "externalities," which cannot be accounted for by price. What is the value of beauty, clean air, or human goodness? Attempts to fit such things into a price-coordinated economy will always be awkward and forced, but that does not negate their value.

I posted on Twitter at one point that Basic Economics should be required reading for anyone wanting to express an opinion about anything. That may have been a little strong, but not by much. The book reveals the logic behind economies, not matter how they are structured, and opens our eyes to how decisions today may affect the future. Words and meaning are two different things; Sowell tries to get past the first and into the second. He (or we) may not succeed all the time, but the effort is worth it.

Wealth vs. Poverty

Another insight from Basic Economics: wealth is the most effective weapon available against poverty.

Now that I have heard it, it seems self-evident. Poverty is the lack of money (in one sense). Wealth is an abundance of money. The best way to eliminate a lack is with an abundance, so wealth can eliminate poverty. Logical, right?

Yet the biggest complaint I hear about capitalistic economies is that the rich get richer and the poor get poorer. Wealth is, by this measure, exacerbating poverty. How can this be? Mostly by making a false statement.

In an efficient capitalistic free market, the top level of wealth does rise. Note that it is the level of wealth, not necessarily individuals within that. If you were rich in 1975, you might well be richer today, but you were also passed like you were standing still by Warren Buffet and Bill Gates. In addition to the top level rising, the bottom level rises, too. The bottom levels of American wealth today drive better cars (measured by durability, reliability, etc) than many in the top levels did 50 years ago. Better goods indicate greater wealth.

The trouble comes when the gap between the top and bottom levels widen. The absolute value of an individual's wealth is only relevant when compared to a contemporary (it seems). So the fact that I am wealthier by nearly any measure than my grandfather was, or the average Bangladeshi is, makes no difference if my neighbor is wealthier than I am.

So being poor today may feel poorer than yesterday, but that is not objectively the case. As America has created wealth, it has reduced absolute poverty. Further reductions will never be achieved by reducing wealth (through large taxation and welfare programs), but rather by creating more and more of it. Wealth can fight poverty; little else can.

Business and the status quo

Thomas Sowell's Basic Economics has been an interesting listen for me (in audiobook form). One of the fascinating points he made is that pro-business does not equal pro-free market. In fact, it is often just the opposite. A free market thrives on open competition, while existing businesses thrive on keeping competition out.

A more accurate statement is that pro-business means being in favor of the status quo, both in a positive and negative sense. In the positive, businesses can best provide services and earn profits when they know what the rules of the game are. In countries where the laws change with the whims of the current ruler, the risk to businesses is too great to make investments and generally conduct profitable business.

In the negative, the status quo protects current business at the expense of innovators who may be able to produce the same good or service at a lower cost or a better product at the same cost or some combination.

I have nothing to add to Sowell's view paraphrased here except to encourage us all to think about what people are saying and what it means. Is GM really for free trade and fair competition? Is libertarianism in the best interest of businesses? My assumptions have been challenged, and yours might be, too.