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Future and alternative sources of energy

By Kathy Ferguson,2014-06-18 01:04
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Future and alternative sources of energy ...

    Festival of Thinkers 2007

    Theme 10 Future Opportunities: Entrepreneurship and poverty alleviation

    Abstract: All the ingredients for ending a person's poverty always comes neatly packaged within that

    person. A human being is born into this world fully equipped not only to take care of himself but also to contribute in enlarging the well-being of the world as a whole. Poverty is not created by people who are poor. They are the victims. Poverty has been created by the economic and social system that we have designed for the world. It is the failure at the top, rather than lack of capability at the bottom which is the root cause of poverty. In essence, in order to reduce, and ultimately eliminate, poverty we must go back to the drawing board. The most important step to ending poverty is to create employment and income opportunities for the poor. Self-employment is the quickest and easiest way to create employment for the poor. Credit should be accepted as a human right, because credit can create self-employment instantaneously. In developing countries, the poor go out and create their own jobs. But there are no supportive institutions or policies to help them. A big step towards eliminating poverty is to make sure that we offer financial services even to the poorest people. There are two types of entrepreneurs, personal-gain driven and social-objective driven. Global efforts should be organized to help the interested non-market social entrepreneur cross the critical point. The future of the world lies in the hands of the market-based social entrepreneurs. We cannot cope with the problem of poverty within the orthodoxy of capitalism preached and practiced today. The agenda of personal-profit-based private sector comes into serious conflict with the pro-poor, pro-women, pro-environment agenda. A powerful alternative is a social-consciousness-driven private sector, created by social entrepreneurs. The poor must be made active players in the process of globalization rather than becoming passive victims. Supported by microcredit, information technology can provide opportunities for poor and bring dramatic results in eliminating poverty. Each human being is too resourceful and intelligent to suffer from the misery of poverty. Poverty has persisted because we created wrong mindsets which did not allow poor people to know how much potential they truly have. All we have to do is to remove the heavy crust that keeps their abilities unknown to them. Enabling people to explore their full potential is an agenda we must take up seriously.

    Festival of Thinkers 2007

    Theme 10 Future Opportunities: Entrepreneurship and poverty alleviation

    Adapted from a lecture Prof. Muhammad Yunus delivered at the Commonwealth Institute in London under the title Eliminating poverty through market-based social entrepreneurship”.

Eliminating poverty by 2015

    The most daring of all Millennium Development Goals halving poverty by 2015 - is the most courageous

    goal mankind ever set for itself. It is important to focus on creating a world free from poverty, not only because it is unjust to have a world with poverty, but also because poor people can get themselves out of poverty if we give them the same or similar opportunities we give to others. The poor themselves can create a poverty-free world all we have to do is to free them from the chains that we have put around them.

    Very few people are really serious about reaching the goal of halving poverty by 2015. Leaders are expecting that as the decision has been made at the highest level, actions will follow, and a well-coordinated powerful machinery will get activated to get the job done. Unfortunately, so far it has not happened.

    Poverty is not as difficult a subject because it is not about space science, or about an intricate design of a complicated machine. This is about people. All the ingredients for ending a person's poverty always comes neatly packaged within that person. A human being is born into this world fully equipped not only to take care of himself, but also to contribute in enlarging the well-being of the world as a whole. Then why should 1 billion people on the planet suffer through a lifetime of misery and indignity and spend every moment of their lives looking for food for physical survival alone? We must find some explanations. This will help us achieve the 2015 Millennium Development Goals.

Poverty is not created by low-income people

    Poverty is not created by people who are poor. So we shouldn't give them an accusing look. They are the victims. Poverty has been created by the economic and social system that we have designed for the world. It is the institutions that we have built, which created poverty. The concepts we developed contributed to the creation of poverty and took us down a wrong path, causing misery for people. Our policies borne out of our reasoning to explain interactions among institutions and people caused this problem for many human beings. It is the failure at the top, rather than lack of capability at the bottom which is the root cause of poverty. In essence, in order to reduce, and ultimately eliminate, poverty we must go back to the drawing board. Concepts, institutions, and framing conditions which created poverty cannot end poverty. If we can intelligently rework these framing conditions, poverty will be gone, never to come back again. For this, five issues must urgently be revisited:

(a) widening the concept of employment;

    (b) ensuring financial services even to the poorest person; (c) recognizing every single human being as a potential entrepreneur; (d) recognizing social entrepreneurs as potential agents for creating a world of peace and progress; (e) recognizing the role of globalization and information technology in reducing poverty.

Self-employment is the quickest way to end poverty

    The most important step to ending poverty is to create employment and income opportunities for the poor. But orthodox economics recognizes only wage-employment. It has no room for self-employment. Yet self-employment is the quickest and easiest way to create employment for the poor. Credit should be accepted as a human right, because it is so important for a person who is looking for an income. Credit can create self-employment instantaneously. Why wait for others to create a job for you? A person can create his or her own job. And this is so much more convenient for women who would prefer to work out of their homes. We are so much influenced by orthodox economics that we forget that our forefathers did not wait for someone

    else to create jobs for them. They just went ahead in a routine manner to create their own jobs and incomes. They were lucky. They did not have to learn economic theories and end up with a mindset that the only way they can make a living is to find a job in the job market. And if you don't get a job, then march in the streets!

    In developing countries, even if you march in the streets, there is still no job for you. As a result the poor go out and create their own jobs. Since economics textbooks do not recognize them, there are no supportive institutions or policies to help them. That's why the money-lending business thrives. The money-lenders' business is as old as money itself. While we keep hearing about the spread of microcredit around the world, about its 98% repayment record, about poor people getting out of poverty with microcredit loans, about women’s empowerment, it has had no impact whatsoever on conventional banking. These banks continue to practice the same old banking by arguing that the poor are not creditworthy. A big step towards eliminating poverty is to make sure that we offer financial services even to the poorest people.

Each person is a potential entrepreneur

    In some important ways our designing of the theoretical framework of economics is responsible for perpetuating poverty. Economic theory in its simplest form visualizes people as providers of labor, born to take orders from a small group of a very special kind of people known as ‘entrepreneurs’. These special people are the only people who can think, organize, and act. All other people simply fill in the work slots created by the thinking and driving people. After creating a world overwhelmingly populated by uninteresting working people, economic theory gets busy with the interesting people the entrepreneurs

     because they are the movers and shakers of the economy. Powerful institutions and systems are built to ensure that the movers and shakers of the economy find it convenient to go in the direction they wish to go, and are able to utilize every last bit of their talents without any hindrance.

    Imagine how the economists would have built their theory if they had started out with an axiom that all men and women are created equal, each of them is endowed with unlimited creativity, and each of them is a potential entrepreneur. With this as a starting point, they would have built a very different economic theory, and we would have created a very different, and definitely much better, world as a result.

    It will be an uphill task to end poverty in the world unless we create new economic thinking and get rid of the biases in our concepts, institutions, policies, and above all, our mindsets created by the existing orthodoxy. Unless we change our mindsets, we cannot change our world.

Market economies missed a great opportunity

    Economic theory took the second, and most damaging, wrong turn when it came to explaining the driving force behind the competition among entrepreneurs. It recognizes the profit motive as the only motive behind this. Accepting this as the ultimate truth about capitalism, people who are not interested in making money stayed away from business in a capitalist world. For the same reason, people who enjoy making money headed straight for the market. So the market became an exclusive club of the fortune seeker only.

    Economic theory missed the most thrilling opportunity to change the fate of the world by completely ignoring the number and power of people who are more interested in social gains than personal financial gains, and those passionately interested in making the world a better place to live in, rather than remaining narrowly focused on their own personal benefit.

    By restricting the driving force of the market to narrow self-interest, economic theory also missed the greatest opportunity to become a truly social science. Nobody doubts that an entrepreneur can set up a pharmaceutical company to make a big personal profit. But it can be equally plausible that a person may set up a pharmaceutical company to sell quality medicines at the lowest possible price so that even the poorest family can afford them. If economics could envisage two types of entrepreneurs, personal-gain driven and

    social-objective driven, it would not only be more realistic, but it would help the world solve many of the problems that the profit-driven market doesn't solve today.

Who is a social entrepreneur?

    Anybody who is offering his or her time and energy to address any social or economic problem of a group or community is a social entrepreneur with the following behavior pattern:

    1. He or she competes in the marketplace inspired by a set of social objectives. 2. He or she may earn personal profit as well. But in this case, personal profit is a secondary consideration.

    3. The higher the social impact per dollar invested, the higher will be the market rating.

    Because of the way the orthodoxy of economics has given shape to the existing world, all the investment money now is locked up in only one category of investment: investment for making personal profit. The moment we open the door for making a social impact through investments, millions of investors right now would gladly put their money into a social enterprise if they can be assured that their investment will at least retain its original value, while making a significant impact on the lives of poor people.. Eliminating poverty will become easier if social entrepreneurs can take up the challenge of ending poverty, and social investors can put their investment money into supporting the work of social entrepreneurs.

    Social enterprise may be organized as a sustainable business, ensuring 100% cost recovery. A social entrepreneur can work within a scale ranging from zero cost recovery to 100% cost recovery. Once she reaches 100% cost recovery, she becomes a market-compatible or sustainable social entrepreneur. If a social entrepreneur can stay on the correct side of this point he or she can become a legitimate player in the marketplace. The more that social entrepreneurs are in the category of market social entrepreneurs, the more powerful they become as a business community.

    Social entrepreneurs operating on one side of this critical point are dependent on subsidies and philanthropy money to carry out their noble mission. We may call them non-market social entrepreneurs. The size of their operations will always be limited by the size of the donor money, changing donor priorities and procedures. However, it must be recognized that they have the longest tradition of social entrepreneurship. Market social entrepreneurs have a lot to learn from them. Together both types of social entrepreneurs can form a very strong coalition to bring changes in the ways that people do things.

    Some non-market social entrepreneurs will find it advantageous to move gradually towards self-sufficiency; transforming to a market social entrepreneur is like converting a bicycle into a race-car; one can go so much faster in reaching the goal. Global efforts should be organized to help the interested non-market social entrepreneur cross the critical point by giving her legal support, access to capital, marketing skills, and technology, connecting her with mentors. The future of the world lies in the hands of the market-based social entrepreneurs. Leaving the business world exclusively to the personal profit-driven entrepreneurs will create more and more social and political tension within and among countries than ever before.

    We cannot cope with the problem of poverty within the orthodoxy of capitalism preached and practiced today. With the failure of many developing country governments in running businesses and welfare programs efficiently, everyone is quick to recommend ‘hand it over to the private sector’. Which private

    sector are we talking about? The agenda of personal-profit-based private sector comes into serious conflict with the pro-poor, pro-women, pro-environment agenda. A powerful alternative is a social-consciousness-driven private sector, created by social entrepreneurs.

Globalization and poverty alleviation

    The role of social entrepreneurs becomes very important in the context of the race for globalization. Globalization should not turn into an open house for bulls to enter the china shop. If one of our prime objectives is to bring the quick reduction of poverty we must choose the global architecture which best

    ensures this result. The least the world should do is to set up a global regulatory body to stop globalization from going in the ‘wrong’ direction, and to encourage and facilitate it to go in the ‘right’ direction. Some

    important features of a ‘right’ architecture of globalization are:

    (a) The creation of a level playing field for the rich countries and the poor countries, and for big powerful

    enterprises and small weak enterprises. ‘Free trade’ must mean freedom for the weakest. The poor must

    be made active players in the process of globalization rather than becoming passive victims. (b) Globalization must ensure the easiest movement of people across borders. (c) Each nation must make serious and continuous efforts to bring IT to poor people. (d) Social entrepreneurs, information technology, and microcredit can play key roles in taking globalization

    in the right direction, including cutting extreme poverty in half by 2015.

    Poor people are like bonsai trees. They could have grown as giant trees if they were supported by the right environment for growth. It is the size of the pots in which they were made to grow that turned them into sad replicas of the real trees. In a similar way, poor people are sad replicas of the real persons hidden inside of them. They cannot grow to their potential size because society does not offer them the social and economic base to grow. We should look at the emerging knowledge economy supported by the process of globalization as an unprecedented opportunity for poor people and the poor countries.

    An individual poor person is an isolated island. Information technology can end that isolation overnight. Supported by microcredit, information technology can provide opportunities for innovative financing, connection with markets, and direct access to information, eliminate layers of middlemen between the poor and the market and bring dramatic results in eliminating poverty, if designed appropriately for the poor.

Grameen Bank experience:

    Founded in 1983, Grameen Bank, or village bank now works all over Bangladesh, giving loans to more than 4 million poor people, 96% of whom are women. The bank is owned by its borrowers. Over the past two decades, the bank has loaned a total of more than US $4.8 billion. The repayment rate has been nearly 99%. It makes profits is self-reliant. It stopped taking international donor money in 1995, and stopped taking loans from the domestic market in 1998. It has enough deposits to carry out its lending program. It gives income-generating loans, housing loans, and student loans to poor families. Independent researchers find that 5% of borrowers come out of poverty every year, children are healthier, education and nutrition levels are higher, housing conditions are better, child mortality has declined by 37%, the status of women has been enhanced, and the ownership of assets by poor women, including housing, has improved dramatically.

    Now, the obvious question that anybody will ask: if poor people can achieve all this through their own efforts within a market environment, why isn't the world doing more of this? The biggest problem for expanding the outreach is the lack of availability of donor money to help microcredit programs get through the initial years until they reach the break-even level.

Yes, we can

    We can reduce extreme poverty by half by 2015. We can do more than that. We can set ourselves on a course to eliminate poverty from the world for all time to come. We can get ready to put poverty in the museum, where it belongs. Each human being is too resourceful and intelligent to suffer from the misery of poverty. Poverty and the human species just do not go together. But in reality poverty has persisted because we created wrong mindsets which did not allow poor people to know how much potential they truly have. All we have to do is to remove the heavy crust that keeps their abilities unknown to them. Enabling people to explore their full potential is an agenda we must take up seriously, to make sure our efforts to reach the 2015 goal become a thumping success. This goal of halving extreme poverty must be achieved by 2015 if

    we pride ourselves to be sensible, sensitive, and creative human beings.

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