Spring 2013

A Bright Outlook

Dear Reader:

I am an eternal optimist. I think the world is getting more and more connected. That is a game changing improvement for the future and it overshadows negative, recent economic events.

All of us have to work in our “Global Village” in the future.  The inputs and outputs of every business and every household are being bought and sold on the world stage. I think governments that attempt to interfere with this are doing a disservice to their citizens.
– Jeremy Leonard

Question from Melissa:

Hello Father,

I have read and heard that education is the key to solving world poverty. But what does this mean?
Brazil has followed this philosophy in an attempt to solve their poverty problem. They have encouraged parents to send their children to school using payments and free lunches as incentives. They have also made it easier for students to get into and attend university.
So why is Brazil still so poor? They have more people educated as doctors and lawyers than they can possibly employ. This causes wages to decrease while increasing unemployment. I have seen postings for lawyers offering R$800/month (about USD$400). Plus, everything costs more here. There are still very few rich and a lot of poor. There are limited opportunities for people to find better work and improve their conditions.
Years ago, I asked our Filipino nanny why she would leave her children behind for many years to get them citizenships in Canada? She told me it was for opportunity. They were not starving in the Philippines, in fact our nanny had her own nanny there. Her children were in school and the older ones attended university. The problem, she told me, was that despite their education there were no jobs waiting for them after they graduated.
Education is, without a doubt, a very important part of society, but is it the key to solving poverty? If not, what is?
Maybe putting an end to government corruption is the answer. However, is any government, even in the first world, free from corruption? Can we educate people against corruption and teach them to work together for the greater good?
– Melissa Leonard

Answer from Jeremy:

Hello Melissa, I recently read a book by Daron Acemoglu and James Robinson titled, “Why Nations Fail”. They conclude that governments are the problem. “Institutions and politics determine whether a country is rich or poor – not geography, disease or culture”. Countries with governments that are not corrupt and support Capitalism work. (Be they benevolent dictatorships, democratic, communist, socialist, or capitalist).
Governments that are corrupt, or for other reasons do not support Capitalism, do not work. The authors split the world up into extractive and inclusive economic and political systems. Inclusive economic systems enforce property rights, create a level playing field, and encourage investments in new technologies and skills. Extractive economic institutions are structured to extract resources from the many by the few, and fail to protect property rights or provide incentives for economic activity.
The authors are unable to say exactly how to change an extractive economy into an inclusive economy. The world seems to do that itself in 200 year cycles.
As philanthropists, we do not have the tools to end extractive economic systems and replace them with inclusive ones outright. Education and helping with infrastructure, so society becomes more connected everywhere, is the best we can do to move toward a solution.
Work for All is trying to stimulate underdeveloped economies by supporting infrastructure projects and lending for business development, so that people, like Melissa’s nanny, can find opportunity in their own country.
– Jeremy Leonard