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Information and Poverty

posted on Thursday, September 11, 2008 07:38 AM

A couple of months ago as I recently discovered, an elite gathering came together to discuss the concept of Creative Capitalism. At the meeting economist CK Prahalad offered his view on the cause of poverty.

"If you look at traditionally how we have looked at all this product and services especially high-tech products like cell phones, we would never have gone to the poor. But, I think that growth opportunity is there, as the cell phones have demonstrated. Also, it is changing the asymmetry of information, be it the farmer, who can now get prices, weather conditions, or someone who can make small transactions with SMS messaging, suddenly the asymmetry of information which is the essence of poverty — that is why people are poor, they don't have access to information — that is changing very, very dramatically. What is happening in the cell phone industry, three billion people are connected for the first time in human history, I think it will be four billion soon. That I think gives me tremendous confidence that we can really take Bill's idea and see it through to its logical conclusion, which, for me, is how to democratize commerce."

It was published in Time magazine under the title Creative Capitalism Roundtable.

http://www.time.com/time/business/article/0,8599,1828415,00.html

Then there's this from 12 years ago, this month:

"The greatest initial social and economic risk of the Information Age is in creating two distinctly different classes of people: the technological haves and have-nots. Those who have access to information and information technology have a reasonable expectation to survive and prosper. Those with limited or no access will be left out. This holds true for individuals as well as nations. The key to the future is access to free flow of information. To the extent that the free flow of information is restricted or diminished, people will be left to endure diminished prospects of prosperity and even survival.

In order for economic development to take place in any given location, the very first thing required, before anything else can possibly happen, is information. This information includes first and foremost where to look for the necessary resources to do anything. If new businesses are needed, knowing they are needed and finding funding for them are two very different things. The first step is to locate possible capital resources in order to move forward, and this step is no more and no less than information. Once resources are located, the next step is what terms and conditions are involved in obtaining those resources -- more information. Once this is known, paperwork must be completed, business plans made, market research and due diligence conducted, and all of this compiled and forwarded to the appropriate parties. Again, nothing more than information. In fact, most of the work involved between identifying a need and solving the problem is information acquisition and management: getting and developing information."

The same paper advocates the concept of modifying capitalism to a more inclusive model and of of a social enterprise trust fund mechanism which is now very much part of what's being proposed in 'Obanomics'.

http://www.p-ced.com/about/history/

Astonishing to me, that the ideas of a homeless man were being uttered just over a decade later by leading economists, billionaires and the man who will probably take up the most powerful job in the world.

Social Enterprise Magazine picked up on this last week and offered to publish what I described to them about the influence of a UK based social enterprise on the development of targeted economic development on US democrats:

This is what they offered to publish:-

Advocacy for SE within the US Democrats began with a white paper for social capitalism delivered to the Clinton re-election committee in 1996. It was posted in synopsis as a web document in 1997.

http://www.p-ced.com/about/history/

From there, the author moved on to Russia and leveraged a USAID project to include a Grameen-model microfinance bank in Tomsk, Siberia. The bank model was replicated in Tbilisi Georgia in 2003. Unlike prior Harvard (HIID) macro attempts to deploy top-down development in Russia, it advocated a policy of targeted bottom-up micro development. It yielded results of more than 15,000 loans in Tomsk, with loan service and business survival >95% over 4 year duration with the Grameen type lending model - without collateral..

http://www.p-ced.com/projects/russia/

This led to the incorporation of P-CED UK in 2004 as a profit for social purpose business -- an enterprise model not available elsewhere at that time. Work began in Ukraine at that time, producing a microeconomic development and social enterprise strategy paper known as a 'Marshall Plan' for Ukraine in October 2006. The paper called for large scale investment in social enterprise and the establishment of business which re-invested profit in childcare reform.

http://www.p-ced.com/projects/ukraine/national/

Auxilliary papers regarding project processes and outcomes, specifically in childcare reform, were sent to the US Senate Foreign Relations Committee where it would be available to Barack Obama among others.

Thus it is no surprise to learn of this direction in policy. For us who advocate and observe progress in social capitalism, it seemed inevitable at some point.

Comments

BHANU MURTHY MATHI

Sunday, September 14, 2008 02:41 AM

It is really nice Mr. Jeff. I am enlightened with your "information and povery". Bhanu Murthy

Barry Crisp

Monday, September 15, 2008 01:35 AM

Very Interesting - thank you for sharing!