Showing posts with label capitalism. Show all posts
Showing posts with label capitalism. Show all posts

Saturday, October 15, 2011

The Occupy Wall Street Movement

Dear loyal readers of Zacstravaganza,

I apologize profusely for my complete and utter lack of blogging since the semester began. Now that I am in the heat of my 1L year at American University Washington College of Law, I am so preoccupied with contracts, torts and civil procedure that unfortunately I have not been able to allocate due time to blogging.

I wish that I had more time to conduct primary source research and writing, but alas, I have only been able to express myself in tweet between classes and in creating my own LOLcats.

To tide you over, here are some topical LOLcats. I have been told that some of these are entertaining, though others fall as flat, painful bellyflops. Your commentary and insight is much appeciated.













Hopefully sometime in the near future I will be able to express myself in more erudite, long-form passages.



Sunday, June 12, 2011

Medicare Should Be More Like a Pizza

by Herman Cain


Our Medicare system is facing a fiscal crisis. What we need to solve the financial crisis in our Medicare system is not a bunch of professional politicians. What we need is a businessman with the common sense understanding of how economics works, someone who knows how to run a successful enterprise, someone like me, Herman Cain, the former CEO and turnaround wizard of Godfather’s Pizza.

This visionary, Herman Cain, has taken major franchises with financial troubles and turned them around with my business know-how and ingenuity. And I can tell you that the biggest problem with Medicare that needs to be turned around is that it’s run from the top down by the Government. For example, let’s say that you were hungry and wanted to eat a pizza. Let me ask you – would you walk down to City Hall and ask the Government to bake you a deep-dish Omaha, Nebraska-style pizza pie? No, you wouldn’t, because Government bureaucrats are not particularly skilled in that particular trade! You would continue walking down the street until you arrived at a private business establishment specializing in the production of deep-dish Omaha, Nebraska-style pizza pies; for example, Godfather’s Pizza.

Medicare does not offer consumers a choice. Medicare says that the Government is going to distribute to everyone the same health insurance coverage at the same price regardless of their needs or desires. Imagine if you walked to the pizza parlor, you sit down at a table and the waitress serves you a vegetarian pizza with spinach, eggplant and artichokes – and you’re like, “Hey, I wanted pepperoni and anchovies!” And then the waitress is like “Tough – deal with it.” And then 10 minutes later the waitress serves you a side-order of Cinnasticks and you’re like “But I didn’t order these!” and she’s like “Yeah, well we’re serving it to you anyway”. And you, the customer, have to pay the bill at the end even though not one of your needs were efficiently met. That would be Big Government Socialism straight out of The Communist Manifesto, that’s what it would be. Just like Medicare.

As the founder of Godfather’s Pizza, I know that you need to offer your customers a choice to fit their personal needs. At Godfather’s Pizza, we have a menu of all the different sizes and toppings and various options available. Let’s say you the customer want a Meat Lover’s Pizza with pepperoni, bacon and meatballs – that is what you will be served. If you want a Hawaiian Pizza with a Stuffed Crust add-on – the free market will provide it with the utmost quality and efficiency. You order what you want, you pay for what you order – that is how capitalism works, my friend.

Therefore, if I – Herman Cain – am elected President, I will pledge to increase the range of options and flexibility offered to customers. I will call this initiative “Expanding the Medicare Menu”. Let’s say that you the customer wants just your basic insurance coverage for annual physicals and catastrophic care – you would pay for one price. But if you want toppings, that will cost you extra. If you want cancer insurance you pay an additional fee. If you want diabetes insurance you pay an additional fee. you the customer should be able to anticipate what sort of medical issues you might need to pay for in the foreseeable future and you pay for that topping. If you aren’t sleeping around then why should you pay for some promiscuous harlot’s abortion insurance? That would be like if you want a cheese pizza and the guy behind you in line wants broccoli and meatballs and both of you pay the same price! Socialism!

Another problem with Medicare is the free-rider problem. You have all these people who are working hard, paying their dues – those people should be able to get the Medicare coverage they deserve. But you have all these free-riders who choose not to work, who think that they can just sit on their booty and have society pay for their Medicare for them. That’s not right.

That would be like if you went into Godfather’s Pizza with your wife and kids and sit down on our patio and you order a Jumbo deep-dish pizza pie with peppers and mushrooms and a side of garlic knots. And then as you’re trying to enjoy your pizza which you paid for with your hard-earned money – and some bum on the street walks up and says “Hey Mister, could you please gimme a slice?” That would be bogus, that’s what it would be. If that happened to me, I’d say “Hey Bum, can’t you see that I’m trying to enjoy my hard-earned dinner with my family? Why don’t you go buy your own pizza pie?”

Our Medicare system today is run like a soup kitchen for a bunch of homeless bums. If you want to be served, you have to wait on line. And then you have to fill out all these forms to prove that you are in fact a bum. And the servers take so long because not even staffed by professionals but by volunteers. And those few times when it is actually professionals working at Medicare they feel like they can serve you all slow and stuff because they’re unionized and they can’t get fired no matter how bad their service is. That is why the service is so inferior – because you get what you pay for, and when it’s a bunch of corrupt union bosses and patchouli-stinking trustafarian rabble-rousers running the assembly line, your service is going to be of poor quality.

At Godfather’s Pizza our service is prompt and speedy. We guarantee that if you order your pizza delivered that it will be at your doorstep in 30 minutes. If your pizza gets delivered in 40 minutes then you shouldn’t tip the delivery boy and that would be their punishment for such poor service. Likewise, we should bust the public employees union that the Medicare workers are in and restructure their pay rates so they get compensated on commission and with tips. That way, they will bust their butts to get health insurance provided to the customer quickly with no waiting and no lines.

The Liberals might say, “Herman Cain, I disagree with you. I think that Medicare should be run by a Big Government Nanny State because what about all the lazy bums who can’t afford to pay for health insurance? We have to tolerate some inefficiency to help those lazy bums.” To those excusers of sloth and enablers of dependence, I, Herman Cain, say this: “No, you are wrong. You are wrong because those bums should get their act together and pull themselves by their own bootstraps and get a job so they can pay for health insurance themselves.”

Those mollycoddle Liberals would probably say “But Herman Cain, you are being insensitive to all the lazy bums who are unemployed, they can’ t get a job because the economy is in a deep, prolonged recession.” Well to those mollycoddles I would say “Do you think that I , Herman Cain, came to be who I am because I was just handed life on a silver platter? No, I have my job as the CEO of Godfather’s Pizza because I have a demonstrated record of accomplishment and success in the business world – that’s why I am employed and that’s how I can afford to have health insurance.

If everyone could just believe in the American Dream like I do and pull themselves up by their own bootstraps then even the lazy bums could be the Founder and CEO of their own business. Then everyone would be able to pay for their own health insurance on Medicare’s New and Improved Health Insurance Menu like at Godfather’s Pizza. And then everyone would have the health insurance package they want at a price they can afford a low price, with no lines, no waiting and no Big Government telling them what to do. Now that is what America is all about!


Monday, January 10, 2011

The Shortcomings of Microcredit

Don’t get me wrong; I think that microcredit can be a wonderful tool to foster gainful employment and reduce poverty amongst the most financially-marginalized segments of the population. One of the primary financial barriers to poverty-reducing economic development in Second and Third World countries is that credit is only readily available to established business interests and entrenched elites; in countries like Bangladesh where Dr. Muhammad Yunus established the Grameen Bank, microcredit banks have indeed opened up entrepreneurial opportunities to rural peasants, the urban poor and women. And microcredit has not only served as a boon for the poor in Dhaka and Calcutta; microcredit programs have helped financially-marginalized groups to capitalize upon their innate entrepreneurial potential in places as varied as Harlem to rural Arkansas.

However, I’m glad to see that the New York Times is finally reporting that microcredit is something less than the miracle cure for poverty that it’s all too often cracked up to be. Critics of microcredit have long abounded on the ideological antipodes – diehard leftists oppose Dr. Yunus’ movement because it threatens the promise of State Socialism, and paradoxically enough free market purists object to the Grameen Bank’s dependency upon government subsidies. But when such a pillar of mainstream liberalism as The Grey Lady is reporting on the shortfalls of microcredit, now even the material objectivist must acknowledge that - like any other money manager – even some of the most well-meaning bankers to the poor have been been practicing reckless lending policies.

Nevertheless, especially since the popularization of the term microcredit from development circles to lay audiences, most lending institutions throughout the world are keen to at least rhetorically jump on the microcredit bandwagon – and the vast majority of self-described "microcreditors" have significantly less scrupulous lending and management practices than the Grameen Bank.

When most people hear the term microcredit they think of a financial scheme which extends loans to the poor at low, easily-repayable interest rates. However, all that a bank needs to do to call itself a “microcredit institution” in most developing countries is to conduct any banking activity under the broad premise of lending very small amounts of money with the stated intent of reducing poverty. What should separate microcredit from common loan-sharking is that the former species of loans to the poor should be issued at low interest rates. However, what constitutes "low interest rates" is relative. In countries where borrowers tend to pay grossly usurious rates along the lines of 60 percent annual interest, it is not so terribly dishonest for a bank to issue small loans to the poor at only mildly less usurious interest rates – say, 40 percent – and call themselves "microcreditors".

Microcredit can be empowering if a bank extends a loan of $20 to an unemployed Bolivian woman who wants to set up an empanada stand. But microcredit can just as easily refer to a situation in which a bank lends $20 to that same unemployed Bolivian woman to buy a pair of Jimmy Choo knock-offs. Predatory loans come in small sizes too. Particularly in economies where banks do not offer adequate financial products for individuals to save their money for regular consumption, it is fairly common practice for individuals to take out micro-loans for items that have little to no potential to be described as “business investments”.

In Mali, people often take out small loans from the local Kafo Jiginew franchise as Americans pay for our large expenditures on credit cards. One common big-ticket item that rural, property-less farmers will take out loans for is a motorcycle; one would argue that a new gasoline-powered motorbike is necessary to improve the efficiency of his business – he could travel to markets in nearby cities to sell their goats and chickens more quickly. Under such fairly valid-sounding proposals, the loan officer would lend them $600 to $700 for the cheapest bike on the market. But the economic reality is that the real value of a motorcycle in a proto-commercial agricultural economy is not derived from any profit that could be measured in dollars and cents. The total benefit of this microcredit-financed endeavor is more or less the sum of the value of time saved and the sheer prestige of driving around the village in a motorcycle – neither of which is going to help him sell any more chickens. Now, the farmer’s financial standing is even more precarious as he has to pay for gasoline for his bike and interest on his loan with more free time but no additional monetary income to show for it. From capital’s self-interested perspective this loan might have been a pretty shoddy investment decision – yet a bank like Kafo Jiginew has every right to classify such reckless lending as “microcredit”.

Compared to other endeavors for which banks issue micro-loans, a motorcycle is sadly a relatively sound investment. It’s somewhat less common for microfinance institutions to give small loans of a few hundred dollars to people who wish to buy cell phones and computers for their business operations which are used more often for listening to mp3s and downloading porn than they are for any profit-increasing business communications. Other times men would take out small loans of $10 or $20 to bet on the horses in France – consider it micro-leverage for investment on the commodities market. It is even more common for people in countries with underdeveloped financial institutions to take out exorbitant loans for things as frivolous as televisions, alcohol and cigarettes. If you think that subprime lending is a phenomenon exclusive to the U.S. real estate market, then you are sorely mistaken.

Economies predicated upon agriculture are particularly sensitive to predatory lending practices because the brief period after the harvest is typically the only time that peasant farmers ever stand to receive any monetary income. In the least-developed, poorest of the poor agricultural economies like parched Niger and Mauritania, the single millet harvests only come after the year’s brief, single rainy season; in significantly more prosperous and developed agricultural economies like Ghana and Tanzania, there might be enough rainfall for two long growing seasons so farmers’ revenues come in twice a year. When an economy based on rain-irrigated agriculture faces a drought, every single farmer might need to take out a loan in order to feed his family. However, loans taken out to finance pure consumption are not likely to ever be repaid – especially in a subsistence agricultural economy in which food is rarely sold on the market in exchange for currency. With so much demand for credit, interest rates rightfully go way up. The politically incorrect truth is that there is a rational reason why interest rates in these credit markets are generally so high: in developing, stagnant and regressing agrarian economies alike, the rural poor are not very creditworthy.

But the world’s poor still need to be able to obtain capital without resorting to debt slavery if they are ever to improve their lot. The advent of Grameen-style microcredit is without a doubt a step in the right direction as it popularizes and democratizes lending, but it is also no panacea to the ills of the various financial sectors of the developing world. So what then should the doe-eyed idealists of Davos, Wall Street and Cambridge do if they sincerely wish to rid the world of poverty?

The harsh reality is that aside from conducting checkbook activism on Kiva, there are not a whole lot of options available for private good-doers to extend affordable credit to small entrepreneurs in the Hindu Kush. The opportunities to improve the lending practices of the Global South lie for the most part at the feet of the banking and government elite who reside in the gated communities of these countries’ capitols – in so many words, the very individuals who have the most vested interest in the status quo and not a whole lot of desire to expand credit to the masses who live in shantytowns and mud huts. Western development agents and business consultants might have a role to play in reforming the financial sectors of foreign nation, but only insomuch as we can educate and persuade these elites to implement change in their respective institutions.

Bankers in countries like Guinea and the Ivory Coast tend to practice such egregious usury partly because they make a disproportionate amount of loans to their friends and family-members. In many African cultures it is considered the social obligation of anyone with money to share it with anyone and everyone who might ask for a handout; not only for the haves to lend money to the have-nots, but for the haves to simply give it away – people who keep all of their money to themselves are often shunned and isolated from the rest of the village. Judging by the rate at which credit applicants actually get denied, it would be fair to say that such communitarian social mores are expressed in the decisions of loan officers who simply can’t say no to their blood relatives no matter what sort of lavish status symbols they plan on buying on credit. Not surprisingly, a sizeable portion of these terrible loans never get amortized, so banks do have to charge high interest rates on all of their loans – large and small – simply in order to stay in business. In order to stem the worst of the worst lending decisions and make credit more accessible, banks need to crack down on crony capitalism by introducing stricter standards of professional ethics, increasing transparency in their lending practices and holding loan officers accountable when they issue such egregious loans.

Another one of the reasons why interest rates remain so daunting to would-be entrepreneurs in the Global South is that so many of the microloans issued by banks go to finance not just business investments but also consumption goods that cannot lead to direct financial returns. According to free market ideals people should be able to spend and consume as they want to without having to go into debt, but banks have to start offering modern financial products in order for that ideal to become a reality. Microcredit is only part of the equation; what the world’s poor need even more desperately is some form of microsavings. In many of the countries where microcredit is needed there simply are no financial products which reward small account holders for saving; in these markets, people have to pay the bank exorbitant fees simply in order to keep an account open and thus saving money in a bank account is a losing endeavor for all but the super-rich. If the yeoman farmers and proletarians of the world could stow their money away in bank accounts which reward savers with interest instead of vice versa, they would be able to pay for things like emergency health care without having to resort to the crushing debt which crowds out the market and stifles entrepreneurship. Microsavings is even more necessary for the rural peasants and urban poor of the world to accumulate their own capital to start a small business independent of the whims of any bank – a phenomenon which could foster the strengthening of bourgeoisies and middle classes in societies dangerously stratified between the tiny financial elites and the sprawling, starving masses.

In order to obviate the absolute most predatory sort of micro-lending, quasi-modern banks also need to take a step backward in order to go forward by creating new financial services which cater to those borrowers whose means of production remains defined by pre-capitalist subsistence agriculture. In particular, banks which issue microcredit and microsavings accounts to the poor need to establish cereal banking divisions which allow small farmers to deposit their surplus in years of good harvests and to withdraw a few sacks of millet, rice or corn to feed their families in years of drought and blight. Chauvinists of Western capitalism might be inclined to pooh-pooh cereal banking as a philanthropic sideshow, but those who think that the archaic proto-commercial economy has nothing to do with the shortage of affordable credit in the relatively modern money market are profoundly mistaken. When there is a drought which threatens the subsistence farming population with starvation, everybody wants to take out loans from the bank to pay for basic foodstuffs – loans which most likely will never be repaid by people who have no source of monetary income – and so interest rates skyrocket for everyone. The expansion and development of cereal banking can serve to reduce the risk of all participants in the money market and should drive down interest rates for all borrowers – including those who wish to take out a loan to start a new cash business.

The impoverished masses of the underdeveloped world are also shut out from affordable credit largely because in most of these countries where they live the law does not recognize any titles or deeds to the one thing they have: the land they live on. As a result, peasant farmers and urban slum-dwellers have no de jure property they can use as collateral to help them receive a favorable loan. Developing countries should heed the advice of Peruvian economist Hernando de Soto and overhaul their property laws to codify the de facto land property of the credit-needy poor so that they can collateralize what little they do have. Champions of traditionalism and leftists opposed to private property in general howl at what they perceive as the injustice of such unabashed Neoliberalism and Western imperialism – but I dare de Soto’s detractors to come up with a better way of addressing the basic causality between land that cannot be collateralized and the paucity of affordable credit. If the humanitarians of the world are so genuinely concerned about predatory lending, they should applaud the efforts of the World Bank, USAID and the like when they push such property-livening legal reforms which could serve to reduce the incentive for banks to charge such usurious interest rates in the first place.

Microcredit has warts just like any other financial product, but the shortcomings of this strategy to foster economic growth and poverty reduction do not mean that it must be discarded to the ash heap of history. Indeed, much of the Global South’s economic ills could be abated if their respective banks were to simply begin genuine microfinance programs which emulate the Grameen Bank’s commitment to issuing loans at low, affordable interest rates strictly for the purpose of business development. Yet the expansion of real microcredit is only a partial reform of economic systems which fail the bottom billion of the world's poor; if these countries are ever going to fix their credit markets in a way that systematically reduces let alone eliminates poverty, their bankers, borrowers and legislators are going to have to comprehensively reform their financial practices.


Monday, October 4, 2010

Do You Cause More Harm than Good by Giving TOMS Shoes to the Poor?

After returning from a two-year tour with the Peace Corps I have only been home in New York for three weeks, and over the course of these three weeks at least a dozen people have told me to check out this new brand of TOMS Shoes and their “One for One” campaign – leading me to believe that this is the new trendy thing in humanitarianism. If you haven’t heard the pitch already;
In 2006, American traveler Blake Mycoskie befriended children in Argentina and found they had no shoes to protect their feet. Wanting to help, he created TOMS Shoes, a company that would match every pair of shoes purchased with a pair of new shoes given to a child in need… Blake returned to Argentina with a group of family, friends and staff later that year with 10,000 pairs of shoes made possible by TOMS customers.
Now in its fifth year of operations, TOMS has given away more than 1 million alpargata shoes to children and adults in Argentina and more impoverished, even more trendy Third World societies where the poor go shoeless such as Haiti, South Africa, Rwanda, Ethiopia, Guatemala, Kentucky, Louisiana and Mississippi. Blake does not consider himself to be just another businessman selling a product to make a profit, but as the CEO of a “movement”.
After all, an Argentinean alpargata shoe is not just a fashion choice to impress your Williamsburg hipster friends with your awareness of the oppressed indigenous peoples of the world. So their Birkenstocks were made by high-paid union workers and their Chacos were manufactured with limited carbon footprints – that’s so bourgeois! But if you buy a pair of TOMS Shoes for yourself, you’re directly helping the poor because Blake is going to give another pair to a child running barefoot through the rubble-strewn streets of Port-au-Prince!



The way the TOMS system works is very straightforwardly the way that it is advertised. Similar alpargatas of comparable quality sell for a retail price of $20 to $25, so when TOMS sells their shoes for $38, $44 or $54 the consumer is essentially buying one for the price of two. So yes, TOMS is giving half of their shoes away to the poor, but its not like those donations are coming out of corporate profits - all of the charity is paid for by the Western consumer. TOMS Shoes is profiting from both the shoe the wealthy Western consumer buys for his- or herself and TOMS Shoes is profiting from the second shoe the wealthy Western consumer buys for the person in need.

All through the promotional materials, Blake Myscoskie lays out the case that his shoes are not mere fashion items but humanitarian supplies necessary to promote health and education;
A leading cause of disease in developing countries is soil-transmitted diseases, which can penetrate the skin through bare feet. Wearing shoes can help prevent these diseases, and the long-term physical and cognitive harm they cause.
For those Westerners who have never stubbed their toe, Blake explains how the shoeless suffer from mundane ailments;
Wearing shoes also prevents feet from getting cuts and sores. Not only are these injuries painful, they also are dangerous when wounds become infected.
Furthermore, the lack of children wearing adequate footwear impedes education;
Many times children can’t attend school barefoot because shoes are a required part of their uniform. If they don’t have shoes, they don’t go to school.


Blake seems to have an adequate understanding of the importance of wearing shoes in the developing world. Though I feel the need to elaborate upon one particular “soil-transmitted disease” to which the One for One media implicitly refers: hookworm. If you talk to any doctor familiar with tropical diseases, they will tell you that there are many reasons why one should always wear shoes outdoors; ants, snakes, scorpions, ascariasis, schistosomiasis, rusty nails, broken glass, splinters, etc. But if there is one danger that a doctor is going to cite as a reason to wear shoes in the tropics, it is probably going to be hookworm.


The hookworm is a parasitic nematode which lives in the bodies of carriers and the soil, or to be more precise, in soil soiled with fecal matter. There are many species of hookworm which inhabit different kinds of mammals. People who walk barefoot around places where pigs and humans shit freely are prone to stepping in dirt teeming with larvae of the hookworm species Ancylostoma duodenale or Necator americanus which prefer to reside in our digestive tracts. The larvae need a host in order to feed so they penetrate the skin – usually the underside of the foot. Hookworm larvae then migrate under the skin through the vascular system and into the lungs, and from there they crawl all the way up to the trachea where they are eventually swallowed. The larvae then travel down through the esophagus and the digestive system until they finally reach the intestine where they mature into adult hookworms and grow to a size of 5 to 13 millimeters. Once female hookworms have reached reproductive maturity they can lay as many as 30,000 eggs a day – or 15 to 54 million eggs over the course of a single worm’s lifetime. Hookworm eggs pass through the host’s feces, and once they hatch a pig will eventually lay in the muck or a barefoot child in Nigeria will walk through a schoolyard without adequate latrines… and the life cycle of the hookworm continues…

Hookworm causes a host of physical symptoms among its human hosts, including nausea, fevers, painful diarrhea and anemia. Children born to mothers who were also incubating hookworm eggs in their intestine tend to suffer from low birth weight and prematurity. And I am inclined to assume that Blake Mycoskie’s One for One campaign is referring to hookworm when it invokes the “long-term physical and cognitive harm” caused by diseases incurred by barefoot-walking poor people; after all, hookworm is by far the most widespread ailment which causes cognitive harm which could be prevented by wearing shoes. Especially if contracted at a young age, unwitting hookworm hosts become increasingly more unwitting as the natural development of their brain is retarded and their cognitive abilities either level off at early childhood or they pointedly regress. This is among the many reasons why adequate sanitation and hygiene is so vital for improving education in the developing world, because when children are shitting all over the schoolyard and walking barefoot across the contaminated soils at least a quarter of the student body will probably contract hookworm and become neurologically incapable of learning.

Accordingly, one must understand that the combination of people walking barefoot, inadequate sanitation infrastructre and open defecation is one of the primary reasons why all of the above symptoms are so pervasive in the developing societies of Africa, South Asia, Latin America and Oceania. It is estimated that 576 to 740 million people are afflicted with hookworm worldwide; a stunning majority of 198 million are estimated to reside in sub-Saharan Africa (about a quarter of the total population of 800 million). If you haven't digested that statistic thoroughly enough, that means that - in addition to Down Syndrome and Klinefelter's Syndrome and general malnutrition - as much as a quarter of sub-Saharan Africans might be suffering from some degree of mental disability because they have been walking barefoot in fecal matter.

However, after a thorough reading of all of TOMS Shoes’ literature, I could only find indirect allusions to and one single fleeting mention of what is perhaps the gravest reason why anyone who walks around in the tropics should not walk barefoot. The sole explicit mention of hookworm I can find in the entire plethora of One for One materials is presented in such a way – buried in a misleading post titled “Let’s Talk About Podoconiosis” – that the symptoms of hookworm can be easily confused with this very completely different disease that is only related in that it can also be prevented by wearing shoes.

The One for One campaign explains the relevance of shoes to public health by focusing on podoconiosis – an illness which causes the grotesque swelling and deformity in the feet and legs properly known as elephantiasis.

Not to be confused with lymphatic filariasis – the elephantiasis-causing disease caused by parasitic worms transmitted via mosquito bite – podoconiosis is the significantly more obscure elephantiasis-causing disease found almost exclusively in certain populations of people who walk around barefoot over red clayish soils associated with volcanic activity and thereby rich with the alkali silicon dioxide. Repeated absorption of alkalis into the skin causes the lymphatics to form fibrous tissue and block and for the femoral nodes to enlarge; eventually the skin of the infected area swells with fluid, and it becomes thicker, nodular and rough like the skin of an elephant (hence “elephantiasis”). Podoconiosis disables its victims to such an extent that they cannot work and it disfigures them in a way that they are usually shunned as social outcasts.

Since the environment for this disease exists only in remote mountainous areas, podoconiosis is found almost exclusively amongst isolated subsistence agriculturalist and pastoralist societies in places like Sudan, Kenya, Uganda and especially Ethiopia. In certain pockets of the Ethiopian Highlands where the soils are particularly rich with volcanic alkalis and the traditional farmers and herders walk around their fields barefoot, as much as 6 percent of the population is thought to suffer from podoconiosis. It is very difficult to conduct an accurate census in these parts of the world where such a significant part of the population migrates with the seasons or is properly nomadic, so compiling reliable statistics on this particular disease is a rather arduous task; nonetheless, epidemiologists estimate that anywhere from 500,000 to 1 million people worldwide currently suffer from podoconiosis.



Let’s say that you were looking for a way to reduce the spread of disease in Ethiopia. If you buy a pair of TOMS Shoes it will cost you anywhere from $38 for a pair of Youth Canvas Classics to $79 for a pair of Highlands Botas - plus shipping and handling. Equivalent products cost $20 to $25, so the cost of manufacturing a cheap shoe like this cannot possibly be more than $10 - it's probably closer to $5. The average markup from American shoe retailer to the consumer price is around 40 percent, the average markup from a shoe company to a retailer is around 50 percent. What that means is that even if you're buying two of these shoes, TOMS is making oodles of money on both the shoes you buy for yourself as well as the shoes you buy for charity. Yes, a single pair of these shoes per se is really only worth about $5 - but that figure is only applicable if Blake Mycoskie is manufacturing these shoes and sending them to the Third World himself; but if you buy a pair of Pink Murray Organic Cotton Men's Vegans online for $54 the cost which you pay to give a pair of shoes to Ndugu the Amhara cattle herder is more or less half that - or $27.

If there are 1,000 children at a school in an Ethiopian village, for you to provide TOMS alpargatas for the entire student body should cost about $27,000. I will be generous and assume that these foam-and-rubber-soled, twill and suede-topped shoes will last their wearer an average of 2 years before they inevitably rip, degrade and fall apart to the point that they either no longer serve any protective function or they cannot be worn at all – seeing that these kids will be walking over rough terrain and doing heavy labor in the fields, 2 years is an extremely generous estimate. And I’ll be even more generous and assume that 100 percent of the recipients of these free shoes will be protected from contaminated soil as long as their shoes remain intact and wearable. So by handing out 1,000 pairs of free shoes to the sum total of $27,000, you could theoretically protect 1,000 children from hookworm, ascariasis, podoconiosis and stubbed toes for about 2 years.

Another way to improve public health would be for you to donate to a reputable non-profit on the ground in Ethiopia to build latrines at a public schoolyard so the students wouldn’t have to walk through each other’s feces in the first place. I’ve built a row of latrines at a school in Mali for a total price of $1,969, and I've built latrines in private homes for an individual price of $41 per latrine. Though I have never built a latrine in Ethiopia, my understanding of cement prices gives me no reason to think that the cost of latrine construction there should be all that much more expensive than in Mali. Even if no one ever conducts any repairs beyond superficial maintenance, a decently-built concrete latrine should last for about 25 years. Though it would not protect them from disease transmission outside the schoolyard, a disproportionate amount of disease transmission is concentrated around schoolyards without adequate sanitation - so these $1,969 latrines could thoroughly reduce the chances tens of thousands of children contracting hookworm, ascariasis, giardia, dysentery, cholera and schistosomiasis over the course of a quarter century.

For $1,969 you could give 72 kids in Ethiopia a pair of shoes which will inevitably rip and degrade into rags within a few years – or you could send your money to a Peace Corps Volunteer or Oxfam or Water Aid to build one row of concrete latrines at a school which should last for decades. For the price of sending TOMS Shoes to a school of 1,000 kids for 2 years, you could build 13 latrines at 13 schools to benefit the health of tens of thousands if not a hundred thousand kids over the course of 25 years.

Giving a child in Ethiopia a pair of shoes might very well be a moral thing to do, but when a development agency or NGO is pursuing some sort of public health agenda they have to do these kinds of calculations to determine which of many policy options available to them are worth the expenditure of finite financial resources. If you are going to donate your money to some sort of humanitarian cause, you should do the same kind of math to determine which charity you feel best deserves your money.

Even if cement prices fluctuate and building latrines becomes relatively more expensive, it’s fair to say that – dollar-for-dollar – you could reduce the incidence of disease incredibly more cost-efficiently if you were to stop giving away free shoes and use that money to contribute to the construction of latrines at public schools. Or you could contribute to the construction of a water pump so people don't have to drink unpotable water contaminated with guinea worm. Or you can pay to build a hangar at the clinic so that parents don't have to stand in the blistering sun for hours at a time during polio vaccinations and more kids will get vaccinated. Or you could pay for a village community health organization to get their hands on visual educational materials so they can train illiterate people to recognize the warning signs of tuberculosis. Or you could pay for the training of midwives in a rural village. No matter how expensive constuction materials might become in Ethiopia, the fundamental issue is that money spent on public sanitation infrastructure or education programs is going to be inherently more cost-effective than money spent on personal hygiene products because they last much longer for the direct benefit of a much greater number of people.

If Blake Mycoskie were running a non-profit charity mandated to reduce disease as effectively and as efficiently as he could on a dollar-for-dollar basis, then he would be spending money on sustainable water and sanitation infrastructure or rural health clinics or AIDS education materials in public schools. But he’s not – he’s a shoe salesman. As much as TOMS Shoes considers itself to be a “movement” rather than a mere profit-based firm, let us not forget that they are a shoe company first and a humanitarian aid agency second. And their niche in the galaxy of non-profits and quasi-non-profits-that-are-actually-for-profits is that if you buy a pair of TOMS Shoes, they give a pair to a poor person in Haiti or South Africa. Epidemiological or economic data be damned, their policy is to give away shoes.

But unless you yourself own stock in the TOMS Shoes company, you don't have any vested interest in sending a Tutsi girl a pair of shoes. You can donate to one of infinite charitable causes. Why not pay for her to have clean water? Or a mosquito net? Or a year's worth of antiretroviral treatment?

So what if we assume that podoconiosis is the only disease that you care about, that you are dead-set on contributing to that one particular cause - and the only way to prevent podoconisis is to get more Ethiopian Highlanders to wear shoes? Or let’s even forget about disease transmission and assume that you want to decrease the number of people without shoes as an end unto itself. Does that mean that giving away shoes is the best way to clothe the naked? Not necessarily.

To shed some light on my own point of view, as of late I have developed a strong sense of skepticism towards rich people who aim to improve the lot of the poor by simply giving things away because I have seen firsthand how such acts of well-intended charity can all-too-often result in painful belly flops of failure and can even be counterproductive to its stated goals.

While I was a Peace Corps Volunteer in Mali from 2008 to 2010 I lived in a concrete home built by the Christian NGO World Vision to house its own development extension agents (missionaries with secular humanitarian agendas) who lived there from 1988 to 1998. Though World Vision’s personnel had never returned since they closed down operations in Sanadougou in 1998, 10 years later the legacy of their actions remained tangibly apparent. Not only had they built the house I lived in, but they had built a clinic across the street from my house which was full of patients and decently staffed every day. They built a kindergarten which was still used despite the fact that it was falling to pieces. They built a solar pump system which could provide the town with potable water, but it was never managed, never maintained, in need of serious repairs and was for all practical purposes non-functional. They built a library that no one ever borrowed books from. They built a dance hall that was used a total of 4 times in 2 years. And even more durable than their legacy of steel and concrete structures, the well-intentioned NGO had completely distorted the incentive for perfectly rational economic actors to spend their own money to buy shoes for their children.

Every Christmas countless churches throughout the affluent West decide that they should spread their love for all of God’s children by putting together boxes of gifts to send to poor kids in Africa. By May or June hundreds of these boxes of gifts would have arrived in World Vision’s Bamako bureau and eventually a portion of them would make it to Sanadougou and the World Vision agents who lived in my house would go out and distribute these gifts to Christian children in villages around the area. As I have been told by my neighbors in Sanadougou, these gift boxes contained soccer balls for boys, baby dolls for girls, and every gift box contained an age- and gender-appropriate pair of shoes. Depending who was telling the story, I was told that “the White People gave us cadeaux” on various years with occasional differentiations in the contents of the box – my understanding is that the Christian NGO personnel distributed shoes to kids around the village to celebrate a number of Christmases in June.

None of these shoes from Christmases past still existed for me to see in 2008 – even the most professionally child-sewn Nikes could never last a decade’s worth of wear in Africa. The enduring legacy of these well-meaning Christian philanthropists was rather the dog that did not bark; at least part of the multitude of bare feet. In Sanadougou all but the poorest adults would walk around in a pair of shoes, so did most kids 12 or older – those old enough to work in the fields. But the majority of kids younger than that – young enough that they are most susceptible to serious complications of hookworm, ascariasis, etc. – always walked barefoot. Of course, part of this is because many a farmer did not have all that much monetary income to spend on shoes for every single one of his 9, 12, 15, 20 children. But there were also a lot of people who did have enough income from cash-cropping, livestock sales, blacksmithing, carpentry and assorted other trades, people who could most certainly afford to pay for shoes for their kids but decided to spend their money elsewhere.

In Sanadougou’s market a pair of the cheapest, lowest-quality Chinese-manufactured plastic shoe costs 800 francs CFA (~$1.60). The equivalent pair of flip-flops costs 500 francs (~$1). A packet of tea costs 200 francs, a kilogram of sugar costs 450 francs, a cigarette costs 100 francs, and a full motorcycle gas tank costs 2,000 francs – 3,000 if it’s a Yamaha. In a small town like this, phone cards are sold for denominations of 1,000 or 2,000 francs. 500 francs for a pair of flip-flops is not so unaffordable to explain why so many kids in my village walked around barefoot.

Some adults in Sanadougou were very, very poor and could not afford shoes even for themselves – but they could afford to brew three rounds of tea and sugar every night. I’d go to the butigi to buy some matches and there would be Nouhoume sitting in his place as usual enjoying his afternoon cigarette and he’d point at his cracked, broken feet,

“Madu, you have so much money! Why don’t you buy me a pair of shoes?”

“Y’know, Nouhoume, if you forego cigarettes from today until Thursday, on Thursday you will have saved enough money to buy a pair of shoes yourself!”

What really infuriated me was when people would show off to me their conspicuous consumption of top-of-the-line Western electronics that they absolutely could not afford – because it was always shamelessly juxtaposed with the abject want of necessity. In particular I remember this one guy Sori Sogoba; Sori is a 22-year-old who farms millet and peanuts and goes to Bamako every cold season to sell phone cards, and he has a wife and three kids who walk around town barefoot. And he has an iPhone. Just about every time I saw him he would always steer the conversation to “My iPhone is better than your dinky Nokia. Your telephone can’t even play music videos!”

“Yeah, but everyone in my family has a pair of shoes.”

I would try to make the connection between the abundance of unaffordable luxuries and paucity of necessities like shoes and mosquito nets whenever granted the opportunity. And I pissed off a good many people in the process – especially Sori.

He would respond, “Yeah, well, I don’t have to buy them shoes because one day The White People are going to come back and give shoes to the children. My kids don’t have shoes because The White People haven’t come yet!”

In so many inversions, dozens of Malian parents have told me this same sorry excuse on even more numerous occasions. They would always cite the fact that once upon a time the World Vision gift-givers drove around the village in their big SUV and handed out shoes to a couple dozen children every other year or so from 1988 to 1998. The Time That the White People Came and Gave Shoes to the Children is one of the few legends of Sanadougou lore that is recounted over the teapot on a fairly regular basis, and in accordance with their Messianic creed they had every reason to have faith that one day The White People shall return – with shoes, of course. Back in 1997 many of today’s fathers were then among the recipients of the White People’s Christmas gift drive, so it seems only natural that this formative experience has made a lasting impression on their parenting now that they have kids of their own.

Of course this is a completely unscientific survey, but from my casual conversations with dozens and dozens of poor Minianka farmers in Mali, I only have reason to think that a significant number of people were telling me the truth when they told me that they had decided upon the inaction of not splurging 500 francs on a pair of shoes for their child at least partly because of the expectation that The White People would take care of this expenditure for them – and therefore they consider that to spend their own money on shoes would be a waste of 500 francs that could otherwise be spent on… say, five cigarettes. Likewise, I don’t think I’m going out on too far of a limb when I conclude that there exists a significant population of children running around Sanadougou barefoot and contracting hookworm, ascariasis, etc. who are lacking shoes precisely because once upon a time between 10 and 20 years ago World Vision decided to give away shoes for free.

Indeed, it is also quite likely that a number of men who told me that they didn’t need to buy their children shoes because in the past a Christian charity gave away free shoes were just making sorry excuses and that they would have never bought their kids shoes even if this precedent of Western intervention in the local shoe market had never been set. Even so, these men were still able to abdicate personal responsibility for the welfare of their children by citing the (in their minds reasonable) expectation that someone else would do their job for them – because this one time they did.

The incentive problem caused by the free distribution of shoes in Sanadougou seems quite similar to the problem with the free distribution of mosquito nets. As I have written in prior musings, every year the Sanadougou clinic gets a shipment of a few hundred mosquito nets from UNICEF which they give for free to every pregnant mother whom they admit to the maternity. Even though the overwhelming majority of the population is never going to be eligible for one of these free mosquito nets, the fact that some people are getting free mosquito nets allows for an economy in which no one – not even the wealthy and educated who do understand the value of this product and have more than enough money to obtain one by their own means – will ever feel obligated to buy mosquito nets for themselves and for their children. Even though sleeping under a mosquito net is the simplest, cheapest, most cost-effective way of preventing malaria, the knowledge that foreign charities are intervening to help some people obtain a mosquito net for free allows everyone else to completely relinquish any self-determination of their own health and well-being. Once a precedent like this has been established in the collective mind of the tribe, it’s really difficult to undo.

Philanthropic Westerners must understand that even though their intentions in giving might be perfectly benevolent, in practice just giving things away to people can have destructive implications. Before you give to a certain charity or purchase a pair of TOMS Shoes, it is imperative to comprehend that in these parts of the world where people have next to nothing, incentives can work in such ways that the recipients of your aid might adopt behaviors that Western do-gooders simply cannot conceive. I’m not saying that you should not give to charity – all I’m saying is that before you give whimsically to just any humanitarian-sounding cause, first take into consideration that it is possible that your unconditional generosity might just distort incentives to such a perverse extreme that any good that they might have achieve in the short run might be negated by the greater harm that they might cause in the long run.

So should Blake Mycoskie get out of the business of distributing shoes to poor people? Not at all. I do think, however, that he should consider getting out of the business of giving away shoes for free. Blake Mycoskie is a shoe salesman – he should be selling shoes to poor people.

In a study by Population Services International, a campaign to distribute free mosquito nets in Zambia resulted in only 30 percent of all recipients ever actually using their free mosquito net. However, as economist William Easterly describes the effort in culturally-similar Malawi:
PSI sells bed nets for fifty cents to mothers through antenatal clinics in the countryside, which means it gets the nets to those who both value and need them… The nurse who distributes the nets gets nine cents per net to keep for herself, so the nets are always in stock. PSI also sells nets to richer urban Malawians through private-sector channels for five dollars a net. The profits from this are used to pay for the subsidized nets sold at the clinics, so the program pays for itself. PSI’s bed net program increased the nationwide average of children under five sleeping under nets from 8 percent in 2000 to 55 percent in 2004, with a similar increase for pregnant women. A follow-up survey found nearly universal use of the nets by those who paid for them.
If people are still going to buy their $20 shoes for $54, TOMS Shoes should consider tinkering with the current “One for One Movement” and replacing it with some sort of distribution method that aims to decrease the number of people who are shoeless and nevertheless abstain from doing anything that might create a perverse incentive for people to not buy shoes with their own money. Why not try to emulate PSI’s successful Malawi Model? Step up efforts to sell alpargatas directly to Guatemalan and Rwandan and Haitian elites at a price that they can most likely afford – and only after the style catches on amongst the trend-setting upper class reach out to potential middle class and working class and subsistence agricultural class customers and set prices accordingly at levels that each respective class can most likely afford. Sell a pair of alpargatas to the poor for one dollar or fifty cents – a price that is low enough that it is within their price range and yet somewhat more expensive than free.

If TOMS is making profits giving away a free pair of shoes for every pair they sell, I find it difficult to believe that they could run into financial trouble by charging a nominal price for the shoes they now distribute pro bono. The only way that selling shoes to the poor could possibly be detrimental to the company’s bottom line is that a significant number of wealthy Westerners are buying alpargatas solely because of the premise that they are giving a pair to a barefoot kid in Ethiopia. But TOMS Shoes doesn’t even have to abandon the “One for One Movement” – only now, their slogan should be “For every pair you buy, we will sell a pair of shoes to someone in need for only fifty cents.” I find it hard to believe that the class of customers who will buy a pair of shoes because they want to make a political statement with their wallet is going to abandon the TOMS line if they're only selling shoes to the poor at 95 percent off.

Selling a quality product for a profit in places like Ethiopia and Rwanda is nothing to sneeze at. There are already shoes for sale there – the problem is that the only shoes that most people can afford are cheaply-made Chinese shoes that are of poor quality and they do not last through the rigors of farm work and they break too easily. Some people can afford decent shoes, but too many cannot. That is why the world needs entrepreneurs like Blake Mycoskie to devise a successful business model to sell durable shoes to the poor at prices that they can afford.

Nevertheless, as the company’s policies now stand, at the moment I remain a skeptic of TOMS Shoes and the “One for One Movement” because I think that its goals are misdirected and that its model does not seem to be cost-effective compared to viable and proven alternatives for reducing disease. I believe that at best this company is selling its customers a bunch of overpriced earth shoes whose expense can only be justified because they come with the satisfaction of thinking that one has made a difference, and at worst they might actually be increasing the likelihood that more children will walk around barefoot. But I also believe that this basic premise of TOMS Shoes is not without hope, and with some structural changes to the way that they do business in the developing world this firm can make a much better long-term, sustainable change in the clothing market which allows for more of the world’s poor to afford a decent pair of shoes.

In the meantime, I think that anyone who is buying one pair of mediocre shoes for the price of two is just wasting their money. If you want to spend your money in a way that helps the world's poor, you might as well just buy another brand of alpargatas for $20 and take that other $34 you would have spent had you bought a pair of TOMS and donate it to Oxfam, Habitat for Humanity, Doctors Without Borders or some other genuine non-profit that is more likely going to spend it on more worthwhile projects that will make a much greater impact.



Thursday, April 22, 2010

The Number Five

There are so many deficiencies in human capital which make it difficult for the Malian economy to function that one might be tempted to cast the blame on economic illiteracy. Very few people here understand that profits = revenues – costs because the Bambara language has not evolved different words for money to express those three distinct concepts. Quite often rural shops fail because the butigitigis purchase their wares in the cities and then resell those wares to their customers in village for the same exact prices – with every sale, they actually lose money. Most vendors don’t even bother to keep ledger books; they just eyeball how much money is flowing through their business in relative terms; “a little”, “a lot”, “enough”.

But economic illiteracy is only the tip of the iceberg; it has not been uncommon for merchants to hand me incorrect change – not because they are necessarily trying to cheat me, but because they simply cannot handle the math. Most owners of big shops in this country are able to invest 500 francs in a small calculator, and most are so uncomfortable doing subtraction in their heads that they whip out their machini every time they make a transaction – but that doesn’t mean that they know which buttons to push. The deficiencies in Malian human capital run even prior to arithmetic.

I myself never really understood how devastating ignorance can be on the local economy until I sat down one day in market to talking with a Malian vegetable-seller named Ma about the prices of the goods she sells at market. As we were discussing all of these numbers Ma stopped her own thought in mid-sentence, smiled radiantly and hunched over to trace her index finger into the dirt:



“One, two, three, four, five, six!”

And that is how I was introduced to the concept of “innumeracy”: the inability to read or write numbers. Innumeracy is a phenomenon causally related and integrally tied to illiteracy, of course, but it comes across to the numerate observer as incredibly more astonishing. In a society completely bereft of novels and plays or anything application of the written word more complicated than the labels on tea boxes, being unable to read does not seem to be all that much of a handicap. But numbers are an intrinsic part of material existence prior to their utterance by humans, and for an adult member of society to be unable to recognize or portray the visual representations of these numbers in any system at all means that they cannot possibly comprehend a base-ten system, that they can at best comprehend mathematical concepts as complex as the amount of digits they have on their two hands.

The sorry fact of the matter is that the Malian monetary economy is predicated on society’s inability to recognize and identify the numbers printed on their own currency. Back in the days of colonialism and the first two and half decades after independence, Malians conducted business with the sou – the smallest denomination of which was a 1 sou piece. But in 1984 the Republic of Mali joined the Economic Community of West African States and adopted the CFA as their new currency, and since this new currency had already depreciated in value from rampant inflation the smallest denomination in circulation at the time was a 5 CFA piece. Those who could actually read those numbers and speak a little French referred to the money with the proper French terms for each denomination: “cinq francs”, “dix francs”, “vingt-cinq francs”, “cinqant francs”, etc.

But very few Malians could make sense of the squiggles representing those concepts on their coins and bills, and even fewer could speak French. Though the different denominations of this new currency were easily distinguishable by size and color, the vast majority of the Malian population could make no sense of the “5”, “10”, “25”, “50”, “100”, “250” and “500” engraved on their coins, and they especially couldn’t decipher the “1,000”, “2,000”, “5,000” and “10,000” printed on their bills – that is, if an innumerate person could ever get their hands on a paper bill to begin with. So they referred to their new ECOWAS currency with the same names as the sou; since the 5 CFA coin was the smallest denomination like the 1 sou piece, innumerate Malians referred to it as the Bambara word for “one”, the 10 CFA coin as “two”, the 25 CFA as “five”, the 50 CFA as “ten”, etc. There were a lot of people who could in fact read those numbers, but if they read them correctly they couldn’t do business with the innumerate.

Moreover, this is a culture that regularly bows to the lowest common denominator - no matter how absurd. The older generations who came of age during colonialism were disproportionately more likely to be unschooled and innumerate, and Malian society is largely structured upon youth’s deference to elders; in this country, if Grandpa has no teeth, then no one can eat solid foods for dinner so as to not hurt his feelings. So just as the House of Habsburg purposefully mispronounced every “s” as a “th” to humor the grotesquely underbitten, dreadfully lisping King Carlos II, the entire population of Mali established the practice of misidentifying their currency to accommodate those who do not recognize that the numeral 5 stands for the number five.

As though Malian shop-owners don’t already have enough problems staying in the black without any accounting or arithmetic, there is a unique problem which besets those who are in fact numerate; the spoken terms used to identify prices are five times smaller than when those prices are written down – thereby making every transaction at least five times more confusing than necessary. If a shop-owner does know math and he knows that a customer’s order is 9,750 francs, he has to ask his customer for “one thousand, six five hundreds and sixty” no matter how nonsensical that is.

Even I have a really hard time converting between numeric prices and Malian illiterate prices, accepting the cognitive dissonance between seeing one value of numbers on budgets and currency but referring to it as something else. Let’s say I’m haggling over cement prices and the market price for 83 sacks at 7,100 francs a sack and the vendor’s starting price should be 589,300 francs, but I don’t have any scratch paper on me so I have to figure out in my head, what’s 589,300 divided by 5?... well, 100,000… then… what’s 89,000 divided by 5?... um… 16,000… plus 1,800… then 60… so 100,000 plus 16,000 plus 1,800 plus 606 equals… 117,860…

“The price for this should be '117,860', but since I’m buying so much cement here how ‘bout you cut me a break and cut it down to '100,000'?”

“ '100,000' is too low. '107,225'.”

'107,225' ... what’s that in real numbers?... multiply by 5… 500,00… plus 35,000…”

And even I have to give up and take out the calculator application on my phone and translate every numeric price into an illiterate price, and even though I and the cement seller can actually do relatively advanced math the negotiations take so long that we get confused as to what the other is trying to say and we completely lose track of each other’s offers because the only common language we share requires that we manhandle our numbers out of deference to all of those who don’t know what to make of the numeral 5. This is why – as much as I hate speaking to people in French in this country – Bambara and all of Mali’s other tribal tongues are wholly inadequate and the language of the former colonial power is in fact necessary for dealing in transactions more complicated than a few thousands francs.

If you can imagine how difficult handling money in this country is for people like me who can in fact do math, now try to imagine how much harder it is for the masses who need to use their fingers to count to ten…

It is pretty hard to find statistics quantifying the population of the innumerate – maybe that makes a lot of sense, actually – but if slightly more than 70 percent of all Malians are absolutely illiterate, and identifying individual numbers is significantly easier than sounding out combinations of letters into words, then the innumerate population must number at least a few million persons out of a total population of 13 million. But seriously, when is the average millet farmer eking out a hand-to-mouth existence going to interact with any amount of currency so complex that it cannot be adequately expressed with the illiterate numeral system? The fact of the matter is that most people living in countries like Mali are still living in a pre-modern subsistence level agricultural economy in which they farm the coarse grains that they eat, they eat the coarse grains that they farm, and there usually isn’t enough to feed the whole family to begin with. Unlike cash crop farmers, it is fairly rare that subsistence farmers can produce any sort of surplus that can be traded for currency, the whole question of money is a relatively minor aspect of their overall business plan.

And so long as they are illiterate and innumerate, Malians are extremely vulnerable to exploitation by the better-educated urban elite. There probably isn’t very much exploitation present when two rural peasants trade between themselves, like when Amadou the farmer goes to his village market and sells handfuls of tomatoes or onions to his neighbors. Though exploitation is certainly present if Amadou farms cotton on a third of his fields and sells it all to the representative from the nearest big city textile mill. Mills like CMDT and Comatex enjoy perfect monopsony over their respective local cotton markets, so they can still collect supplies of raw cotton year after year by paying the farmers only 200 CFA for a kilogram of cotton. A typical small-scale farmer will sell about 100 kilos after an extremely successful harvest – so for that year, they will take home a monetary revenue of 20,000 CFA (roughly $40). To an innumerate farmer who does all of his counting on his fingers, all of those zeros equate to a completely incomprehensible sum of currency – he will consider himself such a wealthy waritigi that he will spend without abandon.

But in reality, the innumerate farmer is getting royally screwed. The only reason why the textile mills can pay below market value for their raw materials is that no one else in town is buying – the peasants can either take the below-market value offer from CMDT or get nothing. Maybe the executive leadership of the textile companies knows about this disparity, but Amadou the farmer has no means of tracking global commodity prices, he doesn’t even know that he is being exploited. He understands so little about the value of money that he thinks that he is coming out on top, so the next year he is going to whittle down his acreage designated for cereal crops so he can grow even more cotton.

What exactly is Amadou the farmer going to do with the 40,000 francs he earned from selling cotton this year? Perhaps he will invest it in a new plough, another donkey, some better hoes and shovels. Perhaps he will hide it under the loose brick behind his bed in case of emergencies. But most likely, he is going to blow it all on tea, sugar, cigarettes, warm Coca Cola, millet beer and prostitutes. If he hasn’t already, there’s a good chance that he will spend 20,000 francs on a cell phone which he will use can play Tetris and the snake game – he will have to pay more for credit if he wants to actually make any calls. Amadou will spend hardly anything on better food, clothing or medicine for his family; taking care of the children’s day-to-day needs is generally considered the complete responsibility of the women of the family. There’s a good argument that such profligate spending could be reformed if women had more say over family decision-making or if men knew enough about science that they appropriately valued modern medicine– but there’s an even better argument that money would be spent more wisely in this country if people actually understood its value.

And while Amadou the farmer has blown all of his cotton money on toys and candy, the cotton he planted last year has mined all of the nutrients from the soil and put nothing back in, so the third of his fields used for cotton production have become too barren for food production in the long run. Amadou might have money, and he might have even more of it if he expands his cotton acreage the next planting season, but if this trend continues he will eventually be forced to purchase his food – and the 200 francs earned for each kilo of cotton will by no means suffice to compensate for the lost food production. So even though Amadou made what looked like a lot of money this year, the nutrition and health of his family will suffer from the paltry stores in his granary. If Amadou was duped into planting too much cash crops in proportion to food crops he will have to sell off some of his cows or donkeys, maybe even take out a loan at an usurious rate of interest in order to feed his family until the next harvest.

Maybe the typical Malian farmer could avoid such hardships if they could buy better fertilizers, high yield seeds and machine tools. Maybe they could be better off if they actually knew how to manage their finances. But neither can become a reality so long as the typical Malian farmer does not comprehend that the numeral 5 stands for the number five.



Friday, February 26, 2010

Solar Pump Repair and Maintenance Project



In 1998 the World Vision NGO financed the installation of a solar pump system in the town of Sanadougou. The aim of this project was very straightforward; in this growing market town of more than 4,000 people where the bulk of the population regularly suffers from giardia, dysentery and worms inadvertently contracted by drinking from unsanitary wells, public health could be drastically improved with access to potable drinking water. World Vision hired Bamako contractors to build a groundwater pump, and two water storage towers to be powered by an array of solar panels. The contractors built a pump-serviced livestock-watering trough in the adjacent vicinity of the complex as well as 7 tap posts strategically-located throughout the town; altogether, there are 17 taps – 3 of the posts have room for 3 individual taps while the 4 other posts have only 2 taps. As promising as this system might have been at the onset, the entire system is now essentially useless due to lack of maintenance and necessary repairs. In response to these pressing needs, the Sanadougou Water Committee has petitioned their Peace Corps Volunteer to help them institute a plan to repair and reorganize the entire system.

The solar panels, the pump and storage towers are perfectly fine, but the entire system as a whole is seriously malfunctioning due to breakages at the livestock watering trough and in a way-station in the metal pipe connecting the water pump to the taps in the Filablena neighborhood. These parts cannot be shut off and flow at the maximum rate at all times.



The ever-flowing watering trough and broken way-station overload the capacity of the entire system, directly exhausting the supply of potable drinking water and often leaving the taps dry. Even when there is water left for human consumption the water pressure is significantly diminished, which allows for rust to develop and diminish water quality. Furthermore, the perpetually-flowing components create vast puddles of standing water which serve as a fertile environment for mosquito breeding. Note that the picture above was taken during dry season on a day when most of the overflow had evaporated in the 105-degrees Fahrenheit heat – during cold and wet season, the puddle of overflow from the livestock-watering trough expands almost all the way to the leafless tree in the center-left of the photograph.

The Water Committee has analyzed these broken parts and they have given them to local plumbers to try to weld them back together, but the plumbers have returned to say that these parts are beyond repair; Peace Corps Assistant Water and Sanitation APCD Adama Bagayoko has analyzed these parts as well and independently concluded that the only course of action is to purchase entirely new components. I apologize that I am unable to find the English translations, but specifically, the parts we need are (in French): une ventousse, un compteur, une vanne, un raccord union, une coude MF, un reducteur, une vanne p26, le clapet vapere. We plan on buying these broken parts from the Bamako suppliers SETRA, and we will hire the local welder Smeila Fané to reassemble the malfunctioning parts and weld them onto the rest of the solar pump system. To our understanding, there is no evidence of malfeasance or negligence for the broken parts – this is merely repair which should be expected in such a large system after 12 years of running and is now long overdue.

However, even if we were to replace the broken components at the livestock-watering trough and the way-station, this solar pump system would still be operating well below capacity and with little benefit for public health; only 3 out of 17 taps are currently operational. The problem with the taps is that they are simply too easy to break; children are used to pumping water with the vertical pump handles with such strenuous work that they have to jump up and down to obtain water, and though the horizontal handles to the tap system can be opened with the flick of a wrist, this is a point which apparently has not been conveyed as children have broken all of the tap handles.



Though the direct cause of this problem was of course the children themselves, this result was inevitable when World Vision built this system with the flimsiest, most fragile handles available. And since these little pieces of metal are now gone, the entire solar pump system is now effectively useless, completely wasting the charitable donations of well-minded humanitarians to the tune of about a million dollars. Well, to be fair, it wasn't a total waste - now for a million dollars the cows of Sanadougou could drink better-quality water than their human masters.



Since the townsfolk of Sanadougou cannot access the potable drinking water provided by the solar water pump, they resort to unsanitary, uncovered wells for their supply of drinking water. These traditional wells – which are really little more than holes in the ground – are home to vibrant populations of worms, snails, amoebas, giardia cysts, and in some cases even frogs and fish. In some locations – particularly during rainy season – these unimproved wells are directly polluted with wastewater and contaminated with human fecal matter. The fact that the people must fall back on such substandard water sources is the prime reason why giardia and dysentery are endemic in this community, and why diarrhea is after malaria the most common preventable cause of infant and child mortality.

Of the 3 taps that are functional, they are functional only because certain individuals have put in their own money to buy their own private taps with locks; one being the tap shared by the Peace Corps Volunteer, the doctor and kindergarten teachers, and the other two are adjacent to mechanic shops where they are used to clean motorcycles with potable drinking water. What differentiates the sites of these taps and the other are the functioning ones are used exclusively by a small number of relatively wealthy people who are both willing to spend money on clean water and also confident that their resources will be used almost exclusively by themselves with few (if any) free-riders. Asides from the tap managed by the Volunteer, the two other functioning taps provide little public health benefits to the population as this potable drinking water is used almost exclusively for cleaning motorcycles. As regrettable as this situation might be, it aptly demonstrates the universality of a saying from the American West, that “water flows uphill towards money”; as the rest of the community pays nothing, they are unable to obtain potable drinking water even from the tap system installed next to their homes at great cost.

When World Vision built the solar pump > tap system a decade ago, the NGO agreed to finance the totality of the initial startup costs only because the Mayor agreed that the citizens of Sanadougou would pay for maintenance and operating costs on a pay-as-you-go basis. However, such payments never happened since the taps were free for all to use and break anonymously; and since no one at le Bureau de la Mairie or the Water Committee could possibly know who was and who was not drawing water from the taps, they could not change anyone; without any accrual of maintenance costs, the system of course degraded into oblivion.

With this history in mind, the Sanadougou Water Committee unanimously resolved to 1) replace the broken taps and 2) begin a payment program so that the Committee will be able to garner revenue to finance inevitable maintenance and repairs in the future. The Committee decided that they cannot do only one of these things, they must do both at the same time. And in this way they will capitalize on the opportunity granted them by the need for repairing the solar pump system to fundamentally overhaul its use under the guidance of the Water Committee.

First of all, we need to get new taps that cannot break so easily. After children broke the last tap next to my house I bought a new tap with a hole through the handle so that it can be locked by the user. By limiting the access to this tap to the holder of the three keys, only I, the doctor and the kindergarten teachers next to me could get access to potable water. However, the doctor and kindergarten teachers were really bad about locking the tap after using it. And even when it was locked, children would come to the tap and try to open it – though they could not access water, they could break the handle in trying. After six months, even this tap deteriorated to the point that it could no longer be used.



A month ago I bought another new tap which can only be opened with a key – though unlike the previous model, the key goes directly into the head itself and there is no external handle at all. In other words, there is really no external part on this tap that can be broken by children. What is more, there is only one key to each tap – which means that responsibility unambiguously falls on him or her to maintain it and that they cannot pass the buck to someone else. This model seems promising enough to serve as a model for refurbishing the remaining 14 taps which are currently useless because their handles have been broken off.



Having showed this new tap to the Water Committee, we agreed that we must pair the repairs of the broken livestock-watering trough and way-station with the replacement of all the broken taps with new lockable taps with keys to ensure that the human population can have a sustainable supply of potable drinking water. As my homologue Sidiki Sogoba jokes, “Otherwise, we would spend a lot of money to help only the cows.” And this is the crux for our plan to reorganize the solar pump > tap system. Part of Sanadougou’s community contribution will be to purchase 17 new lockable taps at 3,000 CFA a piece, and these are going to be paid for neighborhood by neighborhood. Likewise, since each tap comes with exactly one key, the Water Committee is going to decentralize the daily operation and maintenance of each tap neighborhood by neighborhood.

Under our plan, each individual tap will be the responsible of exactly one person to whom the Water Committee and village chief – in consultation with the neighborhood – will assign the sole key. For example, the tap post in the neighborhood of Jigila has room for two taps, so we will assign the key to one to the butigitigi whose shop is directly adjacent to the tap post and the other key to a woman next door. Since water collection is primarily the duty of women in Malian culture, we are going to emphasize the assignment of keys to women whenever possible. Very rarely do men ever draw water, so only in circumstances such as this where there is a man who can in fact be counted on to always be next to the tap will we assign keys to men. The Committee agreed that the key criteria in assigning keys should be individuals’ proximity of their home to the tap, reliability of being at that location at any given time, maturity, ability, responsibility, trustworthiness, and of course their interest in volunteering for such a duty. We also agreed that persons of great importance in this community e.g. the chief of the village, the Mayor, the imam and the pastor should expressly not be assigned keys, for their other duties would make them unreliable to be in the vicinity of the tap at all times.

The kletigi – “holder of a key” – would be a position of great responsibility and great power. They have to be willing to open the water tap for all people at all times, to make sure that children to not play with the taps, and to moreover keep a record of who draws water from that tap and how much. Ultimately, the crux of the position of kletigi will be to collect money from every person in the neighborhood who draws water from that tap. The Water Committee agrees unanimously that we have to establish some sort of a payment system to pay for the maintenance and operational costs of the entire solar pump > tap system so that the next time that a pipe leaks or a tap needs replacement, the Committee will have money on hand to pay for any necessary repairs. In so many words, the Sanadougou Water Committee understands that potable drinking water is a valuable commodity that cannot be procured for free, and thus they have taken it unto themselves to transform this useless, broken-down NGO “cadeau” into a functioning utility that bends to the laws of market economics and finance its maintenance and operating costs through user fees.

The Water Committee still needs to work out how exactly they are going to conduct the payment program. There is one camp in the Committee that argues that people should pay a small price i.e. 5 or 10 CFA for every bucket of water so that payment is perfectly conditional to use; another camp in the Committee argues that such a scheme would be impractical to implement and so water tap subscribers should pay a flat monthly rate. The eventual payment policy will probably allow for users to pay for water either by the bucket or by a flat monthly rate. One area of agreement is that on every market day the Committee should assign one kletigi to man the taps next to the market so that they can draw water and collect money from all of the market vendors and customers who would otherwise consume water as free-riders. Each individual kletigi would be responsible for keeping accounts of how much money they collected from each individual and to forward those user fees to the Treasurer of the Water Committee. Another issue that has yet to be decided is whether the kletigi’s should receive any compensation for their work, for the Committee acknowledges that their duties can be an inconvenience, and I voiced wariness that any individual kletigi might pocket user fees which are meant to pay for maintenance and repairs.

One could pose the question of moral hazard in this situation; e.g. “The NGO built this solar pump system on the premise that the village would provide maintenance indefinitely thereafter – why should a foreign development agency pay for the maintenance costs that the villagers agreed to pay themselves?” I can commiserate with this argument; however, it is overlooking a number of important facts: 1) the Mayor's Office which made this original agreement and the Water Committee that wants to revamp the solar pump system are completely separate entities; 2) the World Vision NGO originally built this entire system with easily-breakable taps completely inappropriate for public infrastructure in an African village; 3) the NGO completely dropped the ball in organizing a payment system; 4) the village has never had any experience repairing or maintaining a running water system before. Not to be paternalistic, but the NGO must have had unreasonably great expectations that the Mayor’s Office could be able to effectively manage this complex system without any background experience and without any guidance, training or even suggestions. From my own experience, I can say that World Vision made an enormous mistake by entrusting this responsibility to the Mayor's Office and not the independent Water Committee, because in a rural village it is the traditional, informal government that actually wields all substantial power over public infrastructure - and the Mayor is really just a figurehead who gets paid to be everybody's friend. And le Bureau de la Mairie in question frankly has no genuine interest in managing the public drinking water system. As the Committee explained to me, it was precisely in the Mayor's best interest to just yes the NGO about instituting a payment system and do nothing once they packed up and left, because whereas presiding over a giant new cadeau and not asking anything of anybody is a boon to re-election (even if it evenually falls apart without maintenance), asking the people to pay for public services with user fees or taxes is decidedly not in the best interest of any self-interested public office-holder. Yes, eventually the Water Committee and le Bureau de la Mairie have to be able to eventually manage this system entirely by themselves – but in the meantime, now that one of the two groups has put forward a proposal to get serious about organizing these waterworks and fix what is broken, I think that it is perfectly reasonable to match their own repairs with $483.72 to rebuild a functioning system requisite for sound management.

Altogether, this project will allow the Sanadougou Water Committee to take the long-neglected solar pump system and overhaul it into a functioning water utility, re-organizing it with respect to market forces to benefit the public good. It will respond to the Committee’s desire to repair and reorganize the waterworks by raising funds through the Peace Corps Partnership to pay for new parts for the broken livestock-watering trough and way-station. The Committee will pay for the transportation of the materials from Bamako to the village of Sanadougou, they will hire a local plumber to assemble the parts and a local blacksmith to weld the necessary pieces together. They Committee will also raise money from the villagers to purchase new, lockable heads for the 14 broken taps. And the Committee will follow up by instituting a payment system – probably monthly for certain subscribers, daily for all others, so that they can gain the necessary revenues to pay for maintenance and operating costs in the future. Even after the initial repairs are complete, we will spend the rest of my service working to strengthen the Committee’s accounting and budgeting skills. And if this works out, the Sanadougou Water Committee should be able to build the capacity to effectively manage the solar pump and tap system indefinitely without any need for further foreign intervention.

If you are interested in making a financial contribution to repair and maintain the people of Sanadougou's drinking water infrastructure, click here. This project should be on the Peace Corps Partnership website within a few weeks.