Beyond Aid

"The Scott Bader was established in 1921. Today we are a Euro 220 million multinational chemical company, employing 600 people worldwide."

Hmm, not a company description that would normally catch my eye. My thought process would be something like, "chemicals, millions of Euros - oh only 600 people, wow somebody's getting rich off those chemicals.

And if it weren't for Small is Beautiful I would have left it at that. (For those who are just joining, I am just finishing up a series of posts by Jordan and I on the very interesting book - Small is Beautiful by E.F. Schumacher)

When Schumacher presented this as a model company my first thought was that they probably were not around some 30 odd years later. But there it is, Scott Bader is still very much around and succeeding.

What's so interesting about it? It is entirely owned and run by the employees. Early on Ernest Bader (picture) decided to hand over ownership of his company to his employees, even taking the steps to limit his own profits. And from what I can tell its been that way ever since. I encourage you to read their history pamphlet. It's a great story of faith (pacifism even for you Mennonites in the crowd) and business. If this was the status quo company model I can tell you that our world would be a much better place except that there would be no need for this blog which would be too bad!

So that's the last thing I wanted to bring out from Small is Beautiful. In summary, Schumacher attacks the concept of constant growth and bigger is better. From an environmental and societal perspective he demonstrates that our current study of economics is flawed and harmful. (I'm hoping to go to a discussion about steady state economics in a few weeks so keep posted!)

And now for something completely different...

The topic last week for my management of technology course was on the developing world. The required readings included a number of references to papers that back up what W. Easterly maintains. That foreign aid is simply not doing what it should. We also had to watch a video by Dambisa Moyo on her opinion of aid.

The suggested alternative was the theory by C.K. Prahalad that people, and especially corporations, can do good (financially) by doing good. In other words, viewing the bottom billion or two as consumers and producers and targeting them as such in the same way that corporations currently vie for the dollars of the developed world. From my experience this is already happening. India and China are developing products for people who live around the poverty line. From bicycles to cell-phones to watches and water pumps this concept is already old news. Part of me agrees with theory, and I even have some entrepreneurial ideas with this in mind. But part of me is a bit uncomfortable with this idea. Any comments?

This ties into a concept I mentioned a couple of weeks ago which was Foreign Direct Investment as an alternative to aid. Many countries, most notably the US, maintain that direct investment in a country is much more beneficial than aid and much less patronizing as well. Investment gets the country involved in the world economy and brings up the local education, access to technology and all that other good stuff (health, women's rights, etc) follows afterwords. As well, since FDI is entirely within corporations who are out to make a buck, mishandling and corruption of funds is much less tolerated than with typical aid that has to pass through many governmental hands. Unfortunately, it seems that FDI has far too many strings attached to truly be effective. Since companies simply want to make a buck, profits do not stay in-country and much of the investment simply goes back to the host country.

Both these proposals call for an end of foreign aid. Moyo seems to say let Africa suck it up (my words! - did I mention she's from Zambia!) while Prahalad at least proposes a new way to involve the developing world in the world economy. Any comments?

Anybody read "Dead Aid" yet?

Kurtis (from Waterloo)