Leveraged buy out of poverty
An alternative to stupidity
By
Hridayesh Kant
(Founder of Project Small Family, Inc.)
First Draft (Feb 2005)
Copyright information
I want you to read this and someday I hope to make money out of it. So here is the great plan and associated rules.
- As long as it is reproduced in its original form in totality, you can make personal copies in any form
- You can distribute it to your friends and strangers in numbers which should not amount to mass distribution, provided you do not monetarily benefit from the transaction.
-
You are allowed to mass distribute (and profit from it)
it in countries with per capita income less than US$2,000 per year or total
fertility rate (TFR) more than 2.2. This implies that
If confused about any of the above, here is the golden rule.
Unless you make lot of money, I am unlikely to come after you.
Still confused. I can be contacted at HKGupta@ProjectSmallFamily.org
To the reader
There is only one original idea in this book and that is
‘It is possible to
stop world population growth in a very short time by financially rewarding poor
young women to delay pregnancies. No other existing scheme can match the
effectiveness of this approach.’
Rest of the book just expands on the idea mentioned above. Everything in this book has been said somewhere else by someone else. If a quote is not exact, it is my fault in not remembering it correctly. If a source is not acknowledged, it is due to my failing memory. Fact that I have reused quotes and material speaks greatly about the original creator and how much influence it had on my thought process.
This book is about logical thinking and reasoning. You may end up believing in what you read here and that would be as bad as believing in what this book is trying to debunk.
A good prequalification to benefit from this book would be to understand (not believe) the logic behind the theory of evolution.
For the uninitiated I will try to explain some of the underlying principles of the theory in simple English.
- It is about the survival of the fittest, not the fastest, strongest, cleverest, fattest or any other -est.
- Reproduction is generally detrimental to individual well being.
- Survival is of species, not of individuals, making reproduction an essential part of evolutionary success.
- It does not choose survivors, it just recognizes them.
- Genetic traits are passed on to next generation because they belong to survivors not because they are good. In long run it leads to the selection of traits favorable to survival of species.
- Genetic diversity happens because of mutation.
- Evolution is not a grand scheme of nature; it is lack of it.
Preface
Something wonderful happened in the tribal region of
- There was no medical help provided.
- There was no teaching.
- There was no preaching.
- The scheme was voluntary.
- And it was not a miracle.
All we did was got them interested by creating a beneficial situation for them.
What does it mean?
If we were to replicate these results worldwide (process is easy to replicate and practically idiot proof), we can stop the world population growth in a short time and keep it there forever.
What happened next?
Armed with this wonderful approach I tried very hard to
convince international aid agencies, large foundations, top level politicians
and bureaucrats in
What happens next?
“When all else fails, write a book.”
Writing this book is my last ditch effort to keep this process alive in the hope that somebody someday will pick it up and succeed where I failed.
Acknowledgement
Conventional wisdom is highly overrated. All it is good for is to maintain the status quo or occasionally delay innovations by thumbing its nose. But then there are those who thumb their noses back. This book has been inspired by them.
Thanks are due to the person or persons who came up with the crazy idea that the Earth was spherical, whereas it looked pretty flat to anybody with 20/20 vision.
And to the people who fought for the notion that Earth goes around our sun and not vice versa.
And to Charles Darwin, for coming up with the brilliantly simple theory of evolution, to explain the complexity of organisms.
And to Henry Ford for legitimizing the assembly line concept thus replacing master car builders with master third-nut-on-right-rear-tire fixers.
Thanks are also due to a large number of people, some total strangers to me, who supported Project Small Family, Inc., either in kind or kindness. I will name names, only if and when this project becomes successful.
And finally to Kindness.
“It is impossible to have a deal unless both parties feel benefited at
the time of deal making”
- Capitalism one-o-one
Table of
Contents
Current welfare projects in third world –
wasted efforts
How not to design a welfare project
Constraints on a good welfare scheme
Rapid population control through controlled
financial incentives
Ray of hope – Project Small Family, Inc.
How PSF process helps target audiences?
How is PSF process more effective than
other population control approaches?
Guidelines for large project implementation
Message to implementers of PSF projects
PSF process would like to thank
HIV/AIDS eradication using PSF methodology
I wish to eradicate global poverty.
Only way to achieve it is by encouraging poor families to follow small family norms as practiced by rich people.
In an ideal world, rich people should share their wealth with poor to help them.
In our not so ideal world, rich will never share their wealth with poor and I will not even propose it because I do not believe in ideals.
I believe in human greed (and fear too but do not wish to exploit it).
Let me introduce some concepts before we get into problem solving.
Let us do a simple experiment.
Open two shops.
- One sells $100 bills for $99.
- Other sells $100 bills for $101.
Why do all the customers shop at first shop despite the price difference being just 2%?
If you know the answer to that question, you know how to make anything work. All you need to do is create a beneficial situation (real or perceived) for customers and they will flock to you (remember they are greedy).
Capitalism understands this concept and thrives.
Socialism/communism/welfare refuses to understand it and lets its people suffer.
I, Hridayesh Kant, am challenging the basis behind all the poverty eradication approaches as they exist today, to satisfy this criterion of creating a beneficial situation.
Most of these will fail this simple test.
Welfare sector all over the world has failed to eradicate
global poverty for the simple reason that they do not wish to sell $100 bills
for $99. Their customers, the poor, refuse to buy into their current offer of
$100 bill for $101. It has not happened yet and is unlikely to happen in
future.
Let us first talk about McDonald’s[1] shareholders. If you are a shareholder and McDonald’s happens to make money, you are entitled to a percentage of that income irrespective of the fact whether you eat at this fine establishment or not. On the other hand if you ate at McDonalds, they will charge you based on number of burgers/fries/sodas ordered by you. The amount paid is irrespective of your ownership (3 shares you inherited) in this corporation.
Why am I talking about McDonald’s in a book about welfare sector? I want you to think of a nation (or planet Earth if like me you believe in the concept of global village), as a corporation. All citizens of this nation should be treated as shareholders as well as consumers. I want to talk about national budget and tax collection. This discussion is going to be the back bone of the arguments I make in this book.
If we think of all the citizens as shareholders in this nation, they automatically become entitled to their share of the national tax collection. This should happen irrespective of their contributions to the nation. Fact, that they have citizenship, should be enough for this entitlement irrespective of their earning capacity, criminal behavior, morality and bankruptcy status.
The consumer side of the same equation says that individuals should pay for what they consume. This brings in the concepts of income and taxes. Anything earned by you is like eating at a restaurant. Making more money is like eating more fries; you get a bigger bill (read taxes). You eat nothing, you pay nothing. Some individuals will disagree with me on the revenue and taxes with the argument that they earn because of their ingenuity and taxes just redistribute their hard earned money to those not working that hard. To all these ingenious people, I will humbly request them to relocate to some poor African country with an ineffective tax collection system and use their ingenuity to make kind of money they make today. A well managed country is like a high end restaurant, it lets you make more money (better quality food and service), and you need to pay for that.
Let us combine these two concepts. A country earns revenue (taxes) by letting people make money. These taxes should be flat rate (proportionate to the income) without any kind of deductions. On the other hand everyone irrespective of the prosperity should be entitled to a share of this collected tax.
For ease of calculations let us keep this profit sharing to about 50% of the revenue (This figure is close to what Intel, Microsoft etc report as operating profits versus revenue). So if a country collects an average of $100 per person as taxes, it should simply write a check for $50 (A direct bank transfer would be preferable, reducing paper usage is one of my other aims) to each of its citizen and use remaining 50% for its expenses. In this scenario Bill Gates receives $50 per month as dividend from his shareholding in USA, Inc. along with the guy who sleeps at sidewalk. To many, Bill Gates does not need/deserve this, but remember he too is a share holder in USA, Inc.
Once we agree to this scenario, every thing becomes easy. A flat rate tax system without any deductions will make life easy for everyone, and a universal ownership dividend will alleviate the need/argument for all brain damaged welfare schemes.
Will this ever happen? No. Too many people will lose their livelihood if governments became efficient and transparent. More over my aim here is not to streamline the working of USA, Inc., I am just trying to introduce this concept to support my case for leveraged buyout of global poverty.
I got this welfare bug sometime back when I came across a
news item that a poor woman in
A mother sold her child for $60 and thought it was a beneficial situation! How are we going to solve this problem? We need to help her but how? Writing a check for $60 to get back her child (as done by some good soul in similar situation) is not going to get rid of this situation. We need to create a system where no mother has a need to sell her children.
As discussed earlier, rich people will not come in drove to solve global poverty. That leaves us empowering this poor family to help itself from its own assets. Let us start with an asset/liability analysis of a poor family in a poor country.
These families have nothing of value. No land, no jobs, no accumulated wealth or education. On liability side they have large family size, extreme poverty, ill health and a sense of hopelessness. One can not think of assets in this hopeless situation.
But assets this family needs, if it has to come out of poverty. Since there are no visible assets available within the family, we need to look at family’s relationship with the outside world and see if we can find something there. While analyzing this hopeless situation I had a eureka moment. All national governments and international aid agencies always talk about per capita money raised or spent. All of a sudden I had an asset (even if by my twisted logic) available to me belonging to this poor family. The money spent (even if it never received it) in the name of helping this family either from national budget or international aid had this family’s name written all over it. It was their money, to be spent for their welfare and this share was based on the number of family members.
Once we accept the logic that this money belongs to this family and is based on number of people in the family, we run into some serious problems. In order for a family to maximize this benefit, they should have as many members as possible but this will lead to further poverty as larger families consume more resources, and larger size even with increased total aid will lead to even larger expenses. Only way a family could benefit from this situation was to claim more members than it had thus receive more benefits while maintaining expenses at smaller numbers. This is an ideal situation for corruption where you claim what does not reasonably belong to you.
Now we have an identifiable asset in terms of number of members and also liabilities in terms of number of members. If we were to legitimize this opportunity for corruption and let the family keep the entitlement irrespective of its size, we have created a win-win situation. A family producing more number of children gets more benefits (whatever the corrupt distribution system allows it to have), but a family not having expected number of children is given an equivalent amount of what was to be spent on the children not produced thus taking away the incentive to produce more children. In fact this encourages families to produce less number of children in order to maximize per capita benefits.
What have we done here? We have taken a liability (number of children expected to be born in a family) and converted it into an asset. Suddenly there is an additional income stream and reduced liability (fewer children born). This family, now, has extra money which can be used for productive purposes like education.
With this explained, I am now ready to talk about a little
experiment called Project Small Family (PSF) and the possibility of stopping
world population growth on a dime by doing a leveraged buy out of poverty.
Before you get to know this process, prepare yourself to go through lots of
pages trying to explain status of welfare as it exist today and what it should
be in my view.
Need for welfare systems?
A lot has been said about the welfare societies. Communism takes it to extreme and distributes to everybody what is technically earned by some. Socialism takes a part of wealth and redistributes it. Even the capitalistic west has large number of welfare programs to redistribute some wealth to poor.
Whatever the structure of society, this redistribution of wealth is always referred to as welfare or something similar sounding, as if the rich wanted to help poor. Reality is directly opposite. Welfare projects are created in order to safeguard the interests of well off. We need to protect rich from relatively poor, thus creating a well fed society where poor have no need to go around shooting rich. Altruism has a selfish motive of self preservation by making oneself look good to the less fortunate.
The rich in a society should understand this selfish need for welfare activities, then and only then we can create a highly efficient welfare system thus creating a safer society for all of us.
With the current pace of globalization and increasing
awareness it is not possible to have extreme poverty without discontent.
Earlier the poor people did not know better and considered poverty as their fate,
but with the increasing awareness, better off among poor feel bad for the
plight of poor around them. This is the cause of all social conflicts. It is
not the poorest and the most disadvantaged who protest, it is the rising
aspiration of better off among them which motivates them to demand more. A very
good example of this can be seen in the relationship between high and low caste
Hindus in
The present day caste conflict in
To avoid a long painful transition period of social adjustment, it is important that welfare projects are implemented quickly, efficiently and in a fair manner. A long stretched out welfare program leads to apathy among those who fund it and discontent among beneficiaries.
Current welfare projects in third world –
wasted efforts
Kalahandi, Orissa in
Kalahandi is not an exception, this phenomenon of poor not rising above poverty line despite massive aid, is repeated all over third world. There is something wrong with the way help is administered to those who need it. Either we are addressing the wrong people or we are not doing it right. Answer is both. Most of the international projects suffer from poor design and subsequent poor implementation. Poor design also leads to wrong targeting, instead of helping the poorest it leads to helping better offs among them.
We will now look at all design issues and the players involved with these projects.
But first, a story
about milk (Can’t remember the source)
Once upon a time,
there was a king who had everything going right in his kingdom except that he
suspected that the royal milkman was adding water to the milk supplied to the
royal household. Having never read this book, king naively appointed a milk
inspector to keep an eye on this milk man.
This made matters
worse. Milkman now had to bribe the milk inspector and to compensate his bribe
expenses he increased the amount of water in the milk
King was not at all
pleased. Instead of chopping off the heads of the milkman and the milk
inspector (Like all good kings did in those times), he appointed a supervisor
to keep an eye on the inspector. Newly appointed supervisor was soon
compromised and the additional bribe to this supervisor led to more water being
added to the milk.
King was confused but
he was not the king for nothing. Instead of realizing his mistake, he persisted
and appointed a manager for quality control. This led to more water in milk and
resultant creation of ministry for milk quality. And so on.
Before I finish this
story, let me tell you that this milk quality management ministry is still
expanding and the royal household is drinking milk which is 90% water. No harm
done as milk is fattening to begin with.
End of story
Most of the welfare projects suffer from similar fate. There are very few examples of poverty reduction as a direct result of poverty reduction schemes.
It will be very easy to blame individuals for the failures of poverty alleviation schemes. Reality seems to indicate otherwise. Failure of communism all over the world indicates inherent flaws in the system. It will be foolish to assume that those involved with communism experiment were all corrupt or incompetent; a more logical explanation would be that the communism as a concept is not workable irrespective of its laudable goals.
First problem with welfare projects is the approach. Somehow in their wisdom these agencies think that by providing food, education, housing, medical facilities and clothing to these people, they can get rid of poverty. All these things are necessary but providing them is not the solution, we need to enable people to acquire each of these things. What we need to create is opportunities for people to rise, and they will take care of themselves. We also need to raise our expectations for these people. Instead of looking at these people as helpless, we should think of them as being in a helpless situation.
Unfortunately for these people, aid givers look at them as helpless and lesser beings. They are treated with kid gloves and an attempt is made to provide them with material things. Even this giving of material things does not work very well because of inherent corruption and inefficiencies.
Road blocks to implementation
Over time, welfare sector has lost its focus. Instead of being in problem solving domain, it has shifted its focus to business of helping. This shift in focus has made life difficult for implementers at all levels starting from funding agencies to last mile implementers interfacing directly with beneficiaries.
- Lack of effort/result relationship – There is a very weak link between efforts and results[2] in any welfare project. A poverty reduction scheme trying to give away free food can be extremely efficient at the distribution side (effort) but will hardly make a dent in poverty. To be fair to these schemes, poverty alleviation is not their main aim; it is to help the needy.
- Slow gratification – For a good person involved in welfare project, watching abject poverty on day to day basis, slow pace of progress is biggest de-motivating factor. Even the good things like education, have returns far away in future.
- Hand holding – Humane side of welfare projects leads to some kind of interface between participants and implementers. This last mile implementation requires large number of implementers. It is difficult to find large number of good and honest people in any poor society suffering from extreme deprivation. This results in undesirable people gravitating to such jobs in large number and crowding out good people.
- Vulnerability to corruption – Hand holding and lack of accounting in welfare projects lead to corruption. Corruption happens because systems with weak design/governance allow implementers to benefit with very little chance of getting caught and punished. It is unfair to blame individuals for becoming corrupt. We are all fallible, it is wrong to subject us to temptation.
How not to design a welfare project
A process is as good as its design. Corruption, inefficiency, lack of infrastructure and manpower are all ground realities in poor countries. If one needs to design a working solution, one needs to address all these realities. Unfortunately for the poor of this world, very little effort is ever made to tackle these realities at the design level of welfare processes. It will be very easy to ask a hungry person to protect a plate of food and blame him later for eating it, whereas the fault lies in the initial assignment itself.
A good design overcomes the need for a large number of good implementers, a bad design can mess things up even with best of people working on it.
We will now analyze the characteristics of welfare projects and the causes of failures.
There are two parties involved in any business transaction, sellers and buyers. Sellers have a profit motive, and to achieve that they try to discover an opportunity either by entering a product category or by creating a new product category. Having identified the market segment they try to distinguish themselves by either creating a better product or product image through promotion. Buyers on the other hand try to maximize their purchasing power by looking for the best product deals. This attempt at maximizing the gains on both sides ensures an evolutionary market place, where only the good survives and the inefficient/unwanted is weeded out.
Welfare projects suffer from lack of ownership. By definition these are not-for-profit entities meaning that top officials have no direct interest in the success of these projects. All, these officials derive from these projects is salaries (and bribes if they are not honest). Their only interest is the continuation of their jobs implying the need for the continuation of their organizations. If we successfully eliminate poverty, most of these organizations will become redundant and people employed by them will lose their jobs[3]. This is not much incentive for these people to meet their objectives; in fact it is counter intuitive for them to be result oriented.
Any welfare project has two parties associated with it.
1. Welfare Agencies
Welfare agencies are generally governments, private charities or quasi government bodies like UN agencies. They normally represent a group of people and no body has any personal financial benefit at stake. Implementers do get salaries but it is irrespective of the results achieved. Most of the time the measure of success is the effort involved, not the results achieved. Since there are no personal stakes involved, the cost benefit analysis of the project is not an issue at the time of project design.
2. Beneficiaries
Beneficiaries of welfare projects are generally disadvantaged people. These people do not have requisite capabilities or motivation to do well in society without external help. Due to unconditional nature of welfare support, they look at it as entitlement and are unlikely to do anything which will stop this benefit to them. It is counter intuitive for them to improve their lot and stop receiving these benefits.
I once watched a program on British television where some out of work people on dole were doing the cost benefit analysis of either staying on dole or taking a low paying job. This discussion was happening in a pub and most of them found it advantageous to continue on dole as long as possible unless a better paying job turned up. Initially I was surprised by their attitude but later on I understoo