Blog Action Day – the 3rd price

Poverty is regarded by many as the biggest problem facing the global community. It’s an issue that is unlikely to be resolved any time soon due to the fact that poverty isn’t the problem. It’s actually the symptom. The problem is unequal distribution and misallocation of income, something we won’t ever hear from governments, companies or anyone other than the extreme left and charity groups.

Here’s the thing: There’s enough food, energy, resources and production capacity and collective intellect to end poverty today. It’s just that the resources available have a distribution issues. It makes wealthy people like us (I know you’re wealthy because you’re reading this on a computer screen) in developed countries wonder if any of our handouts will ever help. And the truth is this, handouts to the poor will never solve the issue of poverty. It’s also very important hear we understand the true meaning of the word ‘poverty’ before we try and solve it. Here’s how I define it:

Poverty definition: The state or condition of having a deficiency of the necessary or desirable ingredients to provide sustainable means of support.

Given the definition above it must be said that poverty can only be alleviated be providing the required ingredients for those in poverty to be self sustaining. And this ingredient is infrastructure.

Health Infrastructure

Education Infrastructure

Commercial Infrastructure

Appropriate Government Infrastructure

They are the essential ingredients for a wealthy country – with ‘wealth’ referring to the collective well being of an economy and standards of living. Typically ‘poverty’ stricken countries have the natural resources, it’s the governments and power brokers within that country which misallocate the inputs. (They keep too much for themselves, at the expense of their people) – There is nothing more common than Military Rule of Law and large estates for ruling parties in poverty stricken countries, and this is no coincidence.

What matters to all of us on a day like blog action day is focusing on the positive actions we can take. The two recommendations I can give are the following:

  1. Invest in altruistic activites which build infrastructure in poor nations (Like Kiva which you can read about here)
  2. Focus on the 3rd price tag – (which you can learn about below)

There are 3 prices tags in everything we purchase:

First price tag: The cost of purchasing the good or service, usually represented in a dollar amount.

Second price tag: Cost to use, maintain and hold the product or service.

Third price tag: The cost of the wider social implications.

The three costs of anything never did live on separate islands. Just like any complex economic, social or biological system, they all interact. And we need to throw away our default thinking that anything imported from a 3rd world country is automatically bad. That it means cheap labour has been taken advantage of. It may well be that the injection of external capital has improved living standards. Created infrastructure investments and had wider positive social implications.

Instead what we need is conscious consumption where we develop a knowledge base of where our dollars are going. It’s time we started to vote with our wallets as well as our voices, pens and keyboards. It’s not that hard to do. There are plenty of ‘brands’ out there which are set up to build infrastructure, provide employment and educate people to drag them out of poverty. If we’re buying a big ticket item, or even just a t-shirt on line or some artwork, it’s not hard to ‘Google it’. Find out whose behind it, see if there’s a company who does more than just make and sell stuff – but build the society around it. Let’s use our dollars wisely.

Imagine how powerful it would be if the 3rd price tag became part of everyday common vernacular? If everyone consider the social implications of their purchases? We do it for the environment, why not for poverty? If we start the conversation about the 3rd price tag, eventually sentiment will change and even our collective behavior.

2 Comments Blog Action Day – the 3rd price

  1. kouji haiku

    i love kiva. 🙂 am currently unable to donate, so for now, i turn to sites like freerice, kiva, and goodsearch, as ways to help alleviate poverty online.

    saw this post via the front page of blog action day. it’s great that you’re participating. 🙂

  2. dr.dre

    Great to see you posting on this one Steve. I am really surprised you said nothing (explicitly) about attempting to engender entrepreneurship in poor nations. I presume this is the “business infrastructure” you speak of.

    Aid is most useful if encourages individuals and communities to build their own solutions. The two missing ingredients in very poor countries is a lack of enforceable property rights and a lack of access to capital (however small the amount). Without these two pieces of infrastructure, there is little incentive or opportunity to do the things that have (eventually) made our societies wealth and substaining. Why would I plant food, make goods, trade them, offer services, seek payments if I was unsure of whether my labours would produce an output i was assuredly able to sell (i.e. certain that noone would steal it away from me, or claim it as their own)? How would I embark on these endeavours without some initial funds to make the crucial first purchase (even if only a few dollars)?

    This is why microfinancing is my #1 aid target when donating moneys to these causes. There are fantastic programs out there that lend in appropriate locations in sensible amounts to facilitate the purchase of crucial “start-up” resources (like goats, sewing machines, water pumps, solar panels, sales carts etc). There are also indigenous firms and emerging market multinationals who have done amazing stuff at the “bottom of the pyramid” in areas such as telecommunciations, utilities delivery, finance infrastructure and agribusiness. They are hard for us Westerners to encourage when they don’t sell their wares in our markets.

    While I like your “Googling” idea, I think you’ll find so few of our products have a positive or negative impact on the poorest nations (such as sub-Saharan Africa). These nations are so poorly integrated into the global eocnomy outside of extractive resources. I am also less strident about the “exploitiveness” of low-wage manufacturing. There is strong historical evidence to suggest such labours are transitory, and perhaps a necessary phase that economies go through on the path to development. Given a blogosphere, we would have been kicking and screaming about the poor conditions experienced by workers in Japan in the 1950s, Honk Kong and Taiwan in the 1970s, Malaysia in the 1980s and so on. These countries upskilled quickly and used the (crude) infrastructure and trade link s that emerged from these activities to move on to higher tech, higher return activity pretty quickly. Sure it is brutal to work long hours for what we see as pittance wages in primitive conditions, but it also beats sustenance (or less than sustenance) agriculture.

    Wow, this comment has dragged on. Must be indicative of the provocativeness of your post. Happy Action Day to you and your readers…

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