Stop Paying The Poor So Much

Recently I was asked to serve on a panel after a screening of the documentary Poverty Inc. In the course of the discussion I brought on the story about the Haitian woman who was employed by a nonprofit run by Americans and was able to save $2,000 over the course of 6 months to buy a house. It’s a great story.

Being able to earn (let alone save) $2,000 in half a year is a very good income in Haiti. GDP per capita, price adjusted) in Haiti was $1,760 in 2015 when the scene was filmed. The woman was able save in 6 months more than the average yearly income of Haitians. That is like being able to save $45,000 in 6 months in the US. Something that is far out of reach for most.

Woman who was profiled in the documentary, Poverty Inc

Like most people employed by nonprofits in the developing world, they are not hired for specific skills that they possess but because they are poor.So not only is this Haitian nonprofit paying workers extremely generous wages but they are specifically hiring workers who would otherwise earn very little in the marketplace. How is this not charity? Would a Haitian owner pay the workers what these Americans are? Let that marinate…

The obvious question that was posed by the audience in response was “then what should we pay the workers?” That’s an honest question and an important one. I, like you, want the workers to be paid as much as possible but not in a vacuum. When we pay far above what the work is worth then we cause all the same problems that other forms of charity create.

In the United States an employer will pay you what the work is worth but if you suggest that employer in Haiti should pay workers what the work is worth, people freak out. And by people I mean Americans thousands of miles away freak out, not Haitians. It’s an honest reaction and one that is largely fair. They react because they care. But do you see how dangerous it is when we act differently towards those in poverty than we would for those like us?

Would you like it if people treated you differently out of pity and guilt? That sounds terrible because your self worth is undermined. That is far worse than being in poverty.

So what should we pay the workers? For starters, treat them like people with dignity and expectation. Pay them what the work is worth but let’s expand on this.

Why do Apple and Google pay so well? They need skilled workers who are the best at what they do and the products they create and help build are very valuable and warrant higher wages.

The nonprofit in Haiti is selling products to the US which means that they need a standard of quality that is high. They need good workers but also the products being sold in the US sell for much higher prices than if they sold domestically and therefore there is enough margin for the business to pay more in wages. They should pay more than the market wage but they shouldn’t pay excessively more than the market wage because that is charity. When it crosses the line into charity is subjective and depends on the specific case but paying workers what the work is worth allows employers to pay workers more. Just within a framework.

I work in Kenya with a leather goods manufacturer (See our YouTube Page). I care about the workers and want them to be able to provide for their families to the fullest extent. Leather itself is a valuable material and the quality needed to sell in the US market is very high. I need the best workers I can find and the products we make have a great margin so I have room to pay workers well. That is part of the reason why I pursued leather because I can do right by the workers.

Working in the factory in Mombasa, Kenya

When this business takes off I want the workers to benefit like I do but one thing I cannot do is compromise the business by incorporating charity. I would much rather create a profit sharing scheme down the road and let them benefit enormously than pay excessive wages now and put the whole operation in jeopardy. Not because the business can or can’t sustain it but because the workers are not stupid. They know charity when they see it and they will act accordingly.

Ask people who have worked abroad and employed locals. One thing that is very common is the lack of gratitude by local employees and the dumbfounded attitude founders have towards them. Just because someone is doing work doesn’t mean you are avoiding the pitfalls of handouts.One organization in Uganda had to call in local police to quell a riot, tear gas and all, because their workers were revolting. This organization was paying very well on top of many other benefits they were giving workers but the workers wanted more. Why? Americans are rich and they are poor. They knew they were receiving charity so why not try to receive more?

Starting A Business In Kenya But It Started In Barnes & Noble

Summer of 2007 I the thought that nearly every college student has before entering their junior year (and senior year). “What the heck am I going to do after college?”

Until this point in my life the only thing I knew I cared about was sports, soccer specifically. As much as I wanted to pursue a career as a professional athlete, there was strong evidence I needed a backup plan.

The wisdom of my dad was and is often in my ear. “Sometimes it is just as important to find out what you don’t want to do as what you do want to do” was one of his many mantras growing up. That is important advice but at some point I need to find what I DO WANT TO DO. During this summer I determined I can’t wait for it to come to me, I have to go find it. The second thing I remember distinctly during that time about my dad was that he works incredibly hard but loves his job. Working for the rest of my life in a career I didn’t love sounded awful and I know my dad would agree.

That summer in the armpit of Los Angeles, the San Fernando Valley, I was living with some friends and working at an Applebees. Though I was doing as much as any college kid during summer, the excess time I had was driving me crazy so I decided to do something I hadn’t done in years. Read a book. I didn’t read a single book I was supposed to in high school. I tried to read one book senior year but gave up because I was still failing the quizzes because I was so uninterested in the book I didn’t retain any knowledge of what was going on.

In Glendora, CA a Barnes & Noble had just opened and it was exactly in between where I was living and where I was working. I strolled in there one afternoon and heading to the history section. History was always the subject I enjoyed most but what do you do with a history degree? Politics is interesting but the last thing I was to do is join that mess. Next to the history section I found the Current Affairs section and let my eyes wander until I found a book on Sudan. It’s title? Sudan.

The war, excuse me, the genocide that was going on in Sudan was finally getting press in the US. Save Darfur bumper stickers were common and it had been brought up in discussions at college in the previous months. It caught my attention because all conflicts have their roots in history, it’s relevant, and it’s tragic. That question that came to me was “how would we actually Save Darfur”? That question is rooting in my skepticism that most people talking about Darfur don’t have the slightest clue about the place. “What would these do-gooders actually want us to do?” That’s just how my mind works.

The book doesn’t start in the early 2000s when the specific conflict began but when Sudan got it’s independence in 1956. After reading the book it was so obvious that we weren’t going to do anything. We couldn’t do anything. Short of invading and occupying the country there weren’t any options. The issues involved were far to complex for any simple options so guess what? We didn’t do anything.

The book was a tough read obviously but the key point here is that not only did I read it but I wanted more. It was clear to me that in regards to trying to solve civil war I didn’t know where to start. But I knew that there was something here. I care about people who are suffering and so do many others and the learning process that I went through reading that book was something I wanted so much more of.

That summer I read 17 books in Barnes & Noble. Yes, all of them read in the store. I was in college and spent a summer in community college because I couldn’t afford to stay at Azusa Pacific University. I didn’t have the money to buy those books. (I still feel a little guilty about spending so much time there and not buying the books I read. I did spend money at the Starbucks in the store. Does that count?) One book was a 750 page book on the history of India since independence. I read it over the course of 14 days and 11 visits to Barnes & Noble. I didn’t read it that fast because it was good but because I didn’t want create a habit of not finishing a book. The only way to read something else was to finish the current one.

The reading and learning as I moved from History to Economic History to Economics. Basic Economics by Thomas Sowell was the second gem that I read. The concept of taking simple economic ideas like rent control and demonstrating that the effects are actually the exact opposite was incredibly fascinating to me. I don’t know if I’m a contrarian by nature or if I simply don’t believe the world is as simple as others want to make it out to be. Either way, I was soon to discover a field that was riddled with things that we think are true but are quite so. International Development.

I still go to Barnes & Noble to read books start to finish. I’m currently reading Shoe Dog by Phil Knight but I don’t go nearly as frequently. Partly because some Barnes & Nobles have closed (people like me are probably to blame) but I thankfully can afford to buy a book or two and don’t need to abuse their business model.

If you’re interested in seeing the business I am starting, click here.

Not Visiting Parents Harms Your Credit Score

On May 1 of this year citizens of Shanghai, China could see their credit scores go down if they do not “visit or send greeting often” to their parents. It gives the right to parents to file a lawsuit against their children for neglect. The law is “aimed at better protecting the rights and interests of senior citizens” which is hard to argue with but the method by doing so is peculiar.

Typically the government protects its senior citizens through government programs that are funded by taxes like Social Security or Medicaid. Changing behavior is a very difficult thing to do and is even less likely to be successful when imposed by an impersonal entity like the government. Beijing announced it is embarking on a massive “social credit” system tracking what people are saying on social media. That makes sense in a defacto authoritarian state but, those crazy in-laws aside, we should all be taking care of the elderly.

37_chinese_ideal_family_05

Yet be fooled that the Chinese government is acting out of benevolence. All governments would love if the social services they provided were taken up by individuals so they could shift their spending elsewhere. Entitlement spending is essentially dead money because it has to be spent and therefore pet projects get sidelined. There are no ribbon cutting ceremonies for paying out pensions. Only revolts when they aren’t paid.

By 2018 Shanghai will be home to over 5 million residents who will be 60 or older. Due to China’s One Child Policy, China is getting old much quicker than most societies should. The government sees the wave coming and knows that they will have a tough time accommodating its senior citizens. Policies like this one are in an effort to shoulder the burden that the Chinese government knows that is will have a tough time with.

Shanghai has often been an experimental city with Chinese policy because it has always had strong government ties. Ties which were entrenched with its state-led development of the 1990s. Therefore order must be maintained for their rule to be maintained.

The law itself is vague and not explicit on how often children must visit their parents but it is nevertheless peculiar to see the hand of the state intrude in such a fashion. It will be interesting to see if the law is extended to other cities or provinces but in the meantime let us all make sure we are taking care of our parents and grandparents. Before of course the government says we have to.these-are-your-parents

How Microfinance Is Used – First World Application

Costco is glorious. I remember as a kid sitting in the cart and getting piled in massive boxes as my mom stocked up for the pleasure of having us kids running around all summer free from the prison that is school. Otter pops and bagel bites for days.

costco-1

Costco is often dubbed the “$200 dollar store” because you can’t leave without at least burning through a good chunk of your wallet. It is often a love hate relationship but one that saves its customers hundreds of dollars through buying bulk and taking advantage of large sales. Despite Costco’s greatness, a new study out of Michigan’s Ross School of Business finds that people who have the greatest incentives to take advantages of these savings are the least able to do so.

“Households commonly utilize strategies that provide long-term savings for everyday purchases in exchange for an increase in their short-term expenditures” the study states. Poor households are often limited in using these strategies because of the cash required needed to spend at a given time. You can’t take advantage of the “$200 dollar store” if you don’t have $200 even though in the long run it saves you money. This is a liquidity constraint. Taking advantage of sales can save you a lot of money but if you don’t have money at that particular time you can’t do so. We know the saving you need money to make money, well you also need money to save money.

Microfinance is always pitched as providing capital to invest in small businesses but often this only occurs with about 50% of the loans. Solving this liquidity constraint is one of its biggest uses and can be very beneficial to the poor. Larger expenses are difficult for the poor to address. The poor can’t afford to save for tomorrow because they have nothing left over after paying for today. Those living paycheck to paycheck face similar problems. With credit they could pursue longer term strategies that save them money but without it those options are off the table.

Microfinance recipients are discouraged to use loans for consumption which on the surface makes sense. We always want to poor to invest but we are naive in not recognizing that sometimes consumption actually helps us save. In Kenya, the poor who receive cash grants by Give Directly often purchase tin roofs to their homes. This is a wise decision even though it is consumption because  tin roof lasts longer and will have a cost advantage over thatch in a relatively short time. Thus freeing up money in the future.

Perhaps it isn’t so surprising that the Costco phenomenon usually takes place in suburban settings because the middle class is best positioned to have enough cash on hand to buy bulk and wait for sales. Whereas Walmart focuses more on lower-income customers and doesn’t focus as much on offering customers goods in bulk.

It is obviously counter intuitive that spending rather than investing will help the poor save more money but we subconsciously do this all the time in our own lives. This week I received a rather poor diagnosis on the my car (though I knew such a report was bound to be coming soon with a 15-year-old car and 225,000 miles on it). Luckily the car is still functioning fine for the time being and I can spend time doing research and find the right deal on a car. The poor typically can’t do research and have to spend now. Thus costing them more money in the end.

Smoothing consumption is the term giving to the ability to spread out spending regardless of when money comes in. Since most of the poor are in agriculture when income only comes after harvest, the ability to smooth consumption can be life changing. Microfinance is a tool that can do exactly that.

What we know about Shanghai is wrong

Perhaps you have seen the picture below. It truly is remarkable that in roughly 20 years the Shanghai skyline changed so dramatically and it has often been used as a symbol of China’s roaring economic and political power ascendancy.  I myself have used the picture in passing to reference the larger Chinese economic growth miracle but the more I learn the more China’s current problems are revealed in the same picture.

shanghai

Pictures are deceptive because they can both contain and leave out a lot of information. Shanghai is far more wealthier today than 20 or 30 years ago and on a per capita basis is much better than most of China. Yet while Shanghai is prosperous, native Chinese in the city by and large are not.

In the late 1980s both poorest and wealthiest citizens saw their incomes increase by 6 and 7% respectively. That by any definition is inclusive growth or pro-poor growth. By the early 2000s something had changed. the top 10% grew by more than 15% whereas the bottom decile saw their income decrease by almost 4%! What happened?

In the aftermath of the Tiananmen Square uprising, party officials centralized power in all facets of the country. Pro-poor growth led by entrepreneurs gave way to the top-down state-led capitalism that China is famous for. The gains of the 1980s had been stripped from the people and given to the state to launch their ambitious urbanization projects.

Today the Communist Party and corporations have soaked up all the gains that can be visualized in the picture. What lost out was entrepreneurship and education. Shanghai is greatly lagging in all these areas. While big business is done in the city, it is lead by State-owned Enterprises and Foreign Corporations. Employment in the 1990s actually decreased despite the massive growth of the city. This is further explained by tax information that shows that the rest of China has been in fact subsidizing the city. Patent activity from the Ministry of Science and Technology also show that Shanghai is lagging.

Why do we all believe in the success of Shanghai? Because we know so little about China. How many have spent significant time in the country and/or studied it records (which are often biased)? Jayant Patil, finance minister of the Indian state of Maharashtra once lauded Shanghai’s 450 km bullet train without knowing that the train actually only runs 30 km. His statement was emblematic of the misconceptions that foreigners have about Shanghai and the rest of China.

China has done so much well but as in all aspects of life past choices will eventually catch up with you. The teetering of China’s economy today is rife with issues finding their roots in the 1990s when there was a reversal of the pro-market (and ultimately pro-poor) policies that reigned supreme in the 1980s.

Source: Capitalism with Chinese Characteristics – Yasheng Huang

World’s Fastest Growing Economy on the Brink of Starvation

The fastest economy is the world is of course Ethiopia. Wait what?

Africa boasts a few of the fastest growing economies with Congo, Ivory Coast, and Mozambique in the top 10 with Tanzania and Rwanda at 11 and 12 respectively. That is great news for Africa but how great is it? A very poor country like Ethiopia can grow fast but it is so poor that it is still a very poor country. Much of the growth in Africa is resource driven but not Ethiopia’s and its growth has been in the double digits for over a decade. China has got nothing on Ethiopia. But then why is the country on the brink of mass starvation?

The government finally admitted in December at over 10 million citizens are in need of emergency aid. The same El Nino that is slamming Southern California right now appears to picked all that rainwater from Ethiopia. Here El Nino causes heavy rains, there it causes drought. But that isn’t the full story.

The economic gains that are clearly coming to Ethiopia do not seem to be trickling down to the people. The poverty rate has decreased from 55% to 33% which is good but far from the effect it should have had. China decreased its poverty from 84% to the teens. It took then longer than a decade and they weren’t quite as poor as Ethiopia when they started but the difference is enough to see that Ethiopia is lagging.

In Africa, not just Ethiopia, you need money and connections to be successful. The poor don’t have those. In Ethiopia all land reverts to the state. You are not allowed to buy and sell land. When 90% of the population is in agriculture are the people going to invest in the land they don’t own? The government is quite aggressive in their eminent domain, in effect making sure the poor stay on undeveloped land.

So when drought comes, no improvements in the land have been made and yields drop. Just as important there is less work to be done since there is less yield. The poorest workers are landless workers that see big drops in their wages when famine comes. In some cases there is enough food but people don’t make enough money to buy because there is no work outside of agriculture because the government makes it so tough to do so.

Ethiopia may be growing fast but you can be sure that the government will secure most of those gains. Africa is far too good at assuring that.

Economics of ISIS

The Atlantic put out an article in September about the working of the ISIS economy. High taxes in a highly oppressive state. It is working for now but how will this play out? What does history show about such economic tactics?

ISIS cannot be easily compared to other states but there are some significant parallels. Economics is about the allocation of resources. Allocation of resources for ISIS is fully about supporting the warfighter. Through coercion they can dictate where resources go. Are they devoting an unsustainable amount of resources towards the war?

The Soviet Union under Stalin had a similar goal though not acting as belligerent as ISIS. They sought to take resources from agriculture and put them towards industry (military included). Agriculture prices were suppressed and all economic activity was controlled to maximize the goals of the regime. Farmers (the poor) suffered greatly but it was successful in greatly increasing industry. The US was greatly fearful of what they saw happening in the USSR and on the surface there was plenty to be worried about.

The machine was working brilliantly until the 1960s when there was nothing left the strip from the agricultural sector. The USSR was on the brink of collapse. That is until they discovered more oil. As some may recall, oil prices were soaring in the early 1970s and remained high. This provided a massive windfall to the Soviets and their machine could lumber on without skipping a beat. Prices began to fall in the 1980s and by the end of the decade, well we know what happened. The Soviet Union collapsed. The stripping of resourced had been exhausted.

figure-1-fsu-oil-production-vs-oil-price

ISIS is getting as much as they can from the people and able to sell oil on the black market. Is this activity unsustainable? Yes but the more important question is how long will this all last?

The Soviet Union took over 50 years to fall apart and no one wants ISIS around for even close to that long. No one has a crystal ball but one can surmise that stripping from the people will be exhausted rather quickly. They do not have a large population like the Soviets to draw from and ISIS looks more like Great Leap Forward China than the USSR. In short the Great Leap Forward in China was the USSR’s economic system on speed. In three years agriculture was decimated and at least 30 million perished. China had no oil to cushion the blow.

The people in ISIS controlled lands have a long history of oppression and there is not cultural affinity with many of its subjects as ISIS is a sectarian group that many do not fall into. The people only have so much left to have taken from them and will likely run out in a few short years if not months.  ISIS tactics are also harder to stomach as they come in forms that are very visible to the people. ISIS controls food and charges highly inflated prices. No citizens of any country take kind to excessive increases on basic necessities. High takes are more opaque. Seeing 20% increase in your taxes is hard to quantify though you would be upset. When the price of bread goes from $1 to $10, everyone knows exactly how ridiculous it is. Taxes would serve ISIS better but they are harder to enforce, therefore ISIS has to find another way.

ISIS does have plenty of oil but having oil and getting oil to a buyer are two different things. CNN estimates that ISIS makes about $1 to 2 million a day in oil sales. This is before any military action has been taken against oil facilities. Most of the production is happening in Syria meaning there is much more they could be earning in Iraq if they can get those facilities online.

Can military action eliminate ISIS from benefiting from oil? Not fully but they can put a serious dent in the activity. Enough to put a serious squeeze on the regime. The USSR didn’t run out of oil in 1989, they just didn’t have enough at the prevailing prices. ISIS can face a similar fate in the near future. The US will be mindful of environmental damage but the political calculus is certainly working towards reducing the role oil is playing for ISIS.

ISIS will be on the decline soon and many are at least hinting at acknowledging that but this by no means that ISIS will be fully out of the public eye anytime soon. Russia at times does not look too much different than the Soviet Union and we all know how good Afghanistan looks right now. To answer the larger question of the future of the region, one guess is as good as the other. But as optimistic as one wants to be, this is one region where even I struggle to be hopeful about.

Latest Research on Africa. Interesting Results All Around.

Interesting papers about Africa coming out of the Annual Bank Conference on Africa that challenge many of the things we think we know about the continent. The summaries are not mine but hopefully I can offer my own commentary when time permits.

  • Burgess et al (2015) show how road expenditures in Kenya were dramatically higher in districts with the same ethnicity as the president, a relationship that is significant during Kenya’s autocratic periods but not its democratic periods, suggesting that democracy can mitigate ethnicity-related violence.
  • Adhvaryu et al. demonstrate how resource accumulation (measured via rainfall) has a net positive effect of conflict despite competing component effects: greater opportunity cost of conflict, but also more to fight over and more resources to fund a militia.
  • Chris Blattman (et al.) showed that cash grants to “criminally-engaged Liberian men” had positive effects on income and crime (i.e., less crime) but they faded. When combined with cognitive behavioral therapy, the package had enduring impacts (at least a year).
  • Extreme rain and drought both boost livestock theft in Kenya: raids driven by resource scarcity but also by weather that makes it easy to carry out a raid (Ralston).
  • Civic participation program in Rwanda lowers reported satisfaction with government services and knowledge of government affairs, potentially by encouraging people to speak their minds (Nichols-Barrer et al.).
  • A program gives a grant in Sierra Leone and randomly varies who manages it – traditional village elites versus randomly selected households. Elites manage the projects better and don’t capture more (Turley et al.).
  • In Ghana, higher police salaries translated into more time in traffic stops and higher bribes paid (Foltz & Opoku-Agyemang), measured using difference-in-differences before and after a salary increase, comparing bribes paid by the same trucks in and out of Ghana.
  • In case you doubted that informal is normal, as much as 97% of trade between Algeria and Mali is informal, argue Benassi et al. as they seek to measure the difficult-to-measure.
  • Surveys of both voters and politicians in Kenya suggest that voters perceive violence perpetrated by politicians negatively (even within their own ethnic group) whereas politicians don’t realize that. Evidence from vignette experiments (Rosenzweig).

Socially Conscious Consumers are not Better People

My parents grew up in a much different time. The United States was in the beginning stages of the Cold War and by the time high school graduation was coming for them, being drafted into the Vietnam War was an ever present concern. My parents’ parents served in the military many in their generation honorably did. The focus wasn’t really on thriving during those times but surviving and understandably so.

Millennials (myself included) have grown up in a much different world. The only superpower we have ever known is the United States. The US has always been on top and we know of no other reality. Because of generations before us, millennials do not have to try to survive as we assume that we will and can afford to focus on thriving.

Psychology was jibberish to me in high school and in college when I took a General Psych course that I was absent about 2/3 the time (no exaggeration). Part of maturing is seeing insight in things that you previously disregarded and psychology has been that for me recently. Not too long ago I was talking with a friend about generational differences and he brought up Maslow’s Hierarchy of Needs. Part of me always hates specific terminology because puts concepts in a box that doesn’t always hold true but in this case the concept is key.

Maslowr

Maslow’s HOA is not that complicated. It simply states that we have personal needs that must be addressed first before we can address any other needs. This is exactly why socially conscious consumers are young and older generations are much less represented in this category. My parents and grandparents grew up in a time where personal needs like safety and providing for one’s family were not given. They had to be fought for. And they did. The prosperity that Millennials enjoy today is because of them and Millennials need to acknowledge that far more than they do. Millennials believe that the rich will always be rich and companies will always be profitable because this is the only world we know. A broader view shows us that we can take these for granted but history is boring (except for people like me).

This isn’t necessarily bad though. Because of the security and belief in our own future, Millennials are able to dream and think about how to address others needs. That is a beautiful thing. Millennials apply themselves in areas that previous generations have not. But that is always the case. Each generation sees gaps in the previous generation and does it’s best to fill them. Millennials are no different.

Due to technology and increases in income, Millennials are able to be connected to the global poor and social issues like no other generations before them. Yet it doesn’t come as a result of higher enlightenment or evolution. It is the simple process of each generation trying to do the most that they can for the world.

Is it much of a surprise that socially conscious consumers are typically wealthier and educated? The poor in the US still care about the global poor but they have immediate needs that must be addressed first and it isn’t selfish of them to think that way. I care deeply about the global poor but I acknowledge that I am lucky to be able to do so. I am not a better person because of that desire. In fact I would argue that my parents are much better people than I am because they sacrificed in ways that I will never have to.

People Over Profit is more Profitable?

Last week I ordered People Over Profit by Dale Partridge. As you can expect the premise is that companies need to care about more than just the bottom line, profit. It is a very interesting read because it addresses the great void that we have with the market and our desire for something better. I think that there are a number of things that are very interesting and may write about a few of them as I go through the book but there is one central theme that permeates all of these kinds of books and articles. That companies will be more profitable if they care about more than just profit.

Think about that. The assumption is that companies only care about profit and they will do anything to be more profitable. People Over Profit states a number of times (even alludes to it on the back cover) that companies will be more profitable if they focus more on people. They we must ask: If companies only care about profit and focusing on people leads them to more profit, why don’t they care about people on their own?

The argument collapses on itself. If a person only cares about X but are able to get more X by focusing on Y then they will focus on Y all on their own. The real question is that if we believe that companies will be more profitable by focusing on people or planet or purpose (insert buzzword) then why don’t they do it. Either the assumption that they only care about profit is wrong or the assumption that people over profit will be more profitable is wrong. They can’t both be true because the world doesn’t make sense if they are.

Businesses are focused on profit. I don’t think that there is much evidence to think that assumption is wrong and I think you would agree. The assumption that people over profit will yield more profit sounds very fishy because companies don’t do it and they only care about profit.

With anything in life there are trade offs. Some companies are able to find a way to look like they care about people but are financially and competitively able to do so without harming profit and sometimes enhancing it. But those are most companies. Patagonia is a higher end outdoor retailer which focuses on quality. Patagonia can be praised for donating 1% of revenue but they have a strong niche that doesn’t compromise their competitive edge and one could argue enhances it because it is perfectly in line with their niche. It makes sense for them but wouldn’t make sense for a discount retailer that competes on price. Not because they don’t care but because their customers don’t care.

Companies care when their customers can afford to care and the process happens on its own. Perhaps through profit good things can be done. Focusing more on Y to get X is happening but on its own. Not because we suddenly care more about people. The dangerous assumption though that is being made and not challenged is that good cannot be done through a focus on profit. That is not kosher will millennials today but I would argue Patagonia makes much more sense if we view the company through that lens than the one Dale Partridge advocates. Still an interesting read and recommended though with a critical eye of course.