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)

I will teach you to be rich

Ramit Sethi wrote a book titled I Will Teach You To Be Rich. He maintains a blog of the same title. I know relatively little about him or his writing, but the little I have read seems positive (the recent post about money lies made a lot of sense to me). More importantly, he makes several strong points in his title alone.

1. "Teach"
   Being rich can be taught. It is not something that we are born with or without. What he teaches may be easier for some than for others, but rich or poor are not predetermined...we have control over learning one or the other. Teaching also requires our own responsibility. Sethi makes no claim to be able to "make" you rich, just teach you how to be rich.
   
2. "Be"
   Being is harder and more important than becoming. It is one thing to work hard for a year or two at reducing spending and making more money. It is something else entirely to maintain that for a lifetime and be rich, not just get rich.
3. "Rich"
   The goal is not wealth. The goal is not money, bank accounts, yachts, or anything else. The goal is to be rich. Having a rich life is one that is full. Money is a tool to obtaining a rich life, not the rich life itself.

I think his stuff is worth checking out. Let me know what you think.

Net Present Value

Net Present Value (NPV) is a powerful measure that businesses use all the time. For those that do not use it, NPV is the value of all future revenue minus all future costs, both discounted to the present day using the time-value of money. Using NPV, decisions can be made based on a longer-term view than simple up-front cost and benefit.

The trouble is, I ignore this in my everyday life. Yet it can make a huge difference. Paying twice as much for a jacket that lasts four times as long makes sense, except that I am cheap, and I rarely look beyond my wallet.

Two lessons come out of this.

1. Think about the future. It usually does not take much thought or time, but the decisions we make today matter (both purchases and otherwise).
   
2. Buy Avalanche Wear. I bought an Avalanche fleece vest many, many years ago only because it was on sale. Beyond making me think about this question, it has been my go-to mid-weight warmth in the Grand Canyon, on ski slopes, and around town. It has been the best outdoor clothing purchase I have ever made (and I have made a lot). 
   

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.

Acting with intention

CNBC was on in the break room of the training class I was in recently, which was eye-opening for me. Watching this financial hysteria over lunch made me wonder about how effective it really is. Do avid financial news network watchers have improved results (profits)? Somehow I doubt it.

Like all information we take in, it is worth thinking about the motivations of the people providing it. CNBC makes money on ads, which rely on viewers watching, not viewers making money. So even if the reporters and analysts have the best of intentions for providing useful financial information, their priority will always be toward keeping you watching.

That means excitement, crises, newness, not necessarily useful information. Yet the way to make money is generally to make a good decision and then wait (think Warren Buffet). So the constant barrage of information will more likely lead to losing money, rather than making it.

The question we should ask ourselves is, are we reacting to hysteria, or acting with intention?