September 21, 2007

News & Opinion: Social Contract Networking

By: 800-CEO-READ @ 5:25 PM – Filed under: Management & Workplace Culture

I believe very strongly in personal responsibility and hard work, but have never really understood it when people say that someone else should "pull themselves up by their own bootstraps". I mean really, if someone were to accomplish that feat literally, they'd pull their own feet out from under themselves and fall right on their backside, so even as a metaphor it seems absurd. I know it's just a figure of speech, but its very utterance seems to deny any existence of a social contract. Even if one does deny the inherent existence of such a contract in society, and there are plenty who do, is it not incumbent upon a democratic government to provide some material support to its most disadvantaged citizens when the private sector fails to do so? Does it not help move the business of the country forward, or at least keep it stable, when it does so? FDR thought so, and though he was considered by many at the time as a "traitor to his class", his New Deal policies are seen by many others as the savior of American capitalism and society, tempering the sometimes harsh realities of the market with social safety nets. The Indian government set up its own kind of new deal for their most disadvantaged citizens when they wrote their constitution back in 1950. The Dalit community, often referred to as the "untouchables", make up 16% of the Indian population, and after centuries of living at the bottom of a rigid caste system, the 1950 constitution offered many of them the prospect of a better life. As reported in Wednesday's WSJ, there is some controversy surrounding these policies today. Yaroslav Trofimov writes:
Under India's constitution, Dalits are entitled to [certain] benefits, including 15% of all federal government jobs and admissions in government-funded universities. This provides the country's most downtrodden with a way to escape their traditional occupations such as emptying village latrines, burying cow carcasses, and tanning animal hides. But there is a catch: Any Dalit abandoning Hinduism for Christianity or Islam loses these privileges, and can be fired from jobs gained under the quota. The rules are enforced by vigilant local officials who keep a close eye on villager's comings and goings. [...] Such thorough enforcement means that secret lives have to be lived throughout India's society. "If they ever find out I'm a Christian, I will lose my position, no question about it" says a Dalit school teacher who behaves as a Hindu when he teaches in a state school near Medipally but decorates his Hyberabad apartment with pictures of Jesus and the Virgin Mary.
Now what to do? The private sector isn't yet meeting all the needs of the disadvantaged in this situation, and the government has put restrictions on their programs to do so. This is when charities often enter the picture, but as Phil Smith and Eric Thurman note in A Billion Bootstraps, even "experienced philanthropists from Andrew Carnegie to Bill Gates have complained that giving money away is often more difficult than making it in the first place." The authors call the U.S. non-profit sector a "$900 billion black hole" because there are few reliable statistics about it and it can be very difficult to know exactly what is being done with the money you contribute. This is not to suggest we shouldn't donate to charity, but Smith and Thurman's book offers both a humanitarian and entrepreneurial alternative by documenting the world of microfinance. Muhammad Yunus, who wrote the forward for this book and has written his own book on the topic, won the Nobel Peace Prize last year for his pioneering work in the field of microcredit. Realizing that the largest contributor to poverty is not lack of skill or ambition, but access to capital, those in the vanguard of this "barefoot banking" movement began making small loans to individuals mired in poverty with no access to traditional loans. One such example from the book:
In Tamil Nadu, the southern-most state in India, Shanti, a 28-year-old mother of two young sons, weaves delicate silk saris to sell in the neighborhood. Born into the extreme poverty rampant in this region, Shanti's weaving skills were hard won, and she has worked diligently since childhood just to survive. Though renowned for the quality of her saris, Shanti was earning only $2.60 per day, barely enough to allow her to care for her children. Desperate for the capital required to expand her business, she became indebted to a local loan shark who charged outrageous interest rates. Later, she learned about microcredit and took a loan for $60 that she invested in her business. Her income has since increased to more than $6 a day, and she is now free from crippling debt. Today, Shanti is able to focus on growing her business and creating a better life for her family.
This is globalization on a human scale. If we can foster friendship and goodwill through this kind of entrepreneurship and cooperation, I think we may start to gain back some of the admiration and standing we've lost in the world over the last few years. And though I'm still not sure about the bootstraps analogy, A Billion Bootstraps has given me an even greater appreciation for what hard work and perseverance can accomplish with just a little support.