Supporting sustainable economic development
and direct trade in Guatemala

The Road to Successful Entrepeneurship

Scrooge-Counting-MoneyAll things being equal, you are probably a 30-year-old Muslim female farmer who speaks Mandarin and supports 2.6 kids on US$1,700 a year.  Statistically speaking, that's the average person around the globe, yet that probably doesn't sound very much like you.  So how can you, the potential social entrepreneur, be effective around the world when your background and perspectives are so different from those whom you would like to help?

Here are some common misconceptions that can throw your development journey off-course.

I am normal
Globally, the most common language is Mandarin. The most common careers are agricultural trades. There are more Muslims than Catholics or Protestants or Agnostics. The average person, worldwide, earns $1,700 annually.1

Most of us tend to think we're average, and we are, in a local context. We live near people who are similar to us economically, religiously and politically. It makes us think we are normal, yet worldwide, we're nowhere near the norm. Odds are good that your income is far above the world average; your education is far above the world average; your political views are far right of center; and your religion, though similar to many, is different from most.

It is essential to recognize that our backgrounds influence our perspectives, and that radically different perspectives yield radically different points-of-view. Our work as social entrepreneurs will be of little use before we understand the viewpoints of those we work with.
We are fighting for equality
Making people equal means shifting resources from societies of abundance to societies of scarcity. From an aggregate perspective, abundant societies seem to have plenty of resources to share with societies in need. But on an individual level, members of abundant societies fight against equality, oftentimes without realizing it.

There is substantial resistance to equality in the political, economic and military arenas. Most existing economic systems serve to consolidate wealth, not distribute it evenly. Most taxes, tariffs, quotas, duties, and the like, function either directly or indirectly to concentrate wealth. The rich - who control the armed forces of the world - fight for inequality, or at best to maintain the status quo. In the words of American author and critic Henry Louis Mencken, "The urge to save humanity is almost always only a false-face for the urge to rule it."2

And you, too, are resisting equality. The average charitable donor considers themselves generous if they tithe; giving 10% of their income. But in order to achieve equality, people in developed nations would have to give away an average of 96% of their wealth3. Anything less maintains the uneven playing field.

Those with the power to achieve equality fight against it, while those who desire equality are powerless to achieve it.

Something is better than nothing
Something is better than nothing, right? It just has to be, right? That's what our intuition tells us, yet reality and intuition sometimes collide. Do you believe that a 12-year-old sweatshop worker is better-off earning nearly a dollar a day than earning nothing? Do you believe that a certified coffee-price which is below production cost is better than nothing? Do you believe that commodities market prices which represent losses to farmers are good because at least the farmer gets something? Is something always better than nothing?

The poor don't have much to lose
If you're a millionaire, and you invest $1,000, you can tolerate the risk. If you lose that $1,000, you've still got plenty. A poor fellow who only has $100 cannot risk it, as a loss would send him into financial ruin. It's easy to think of that $100 as petty cash, as nothing to lose, yet that small amount in the hands of the downtrodden is what keeps the kids fed. Risking that ‘nothing' means risking the lives of children.

Perhaps that seems melodramic, or maybe it is obvious. Yet, many economic development programs designed to help disadvantaged communities provide loans at 30% interest and require land titles as collateral. This is an incredibly high risk for subsistence families, as the loss of a land title often means the loss of any means of support. In other words, the risk is born by the person least able to accept it, while the security is held by the person who least needs it.

The myth of maximization
Many problems can be broken-down into a question of maximization and minimization. What car do I buy that maximizes utility but minimizes expenses? Which brand of milk do I buy to minimize my cost per gallon? Which diploma will maximize my career options and earning potential? We are raised to think in those terms.

In the world of development and social entrepreneurship, we often apply this concept in ways that simply do not work. For example: "How can I donate money to maximize the benefit to the most people?" The way to maximize the benefit is actually to give to the smallest number of people. We can inadvertently dilute resources in the name of maximization. Another example: "How can I maximize profits and therefore maximize the benefits of a development business venture?" There are two ways: maximizing sale price and minimizing cost. By maximizing sale price, you're extracting maximum cash from the consumer. By minimizing cost, you're extracting maximum resources from the producer. Both of these scenarios increase wealth for the intermediary (the development business venture) while decreasing wealth for the producer or the consumer. Maximizing wealth for somebody means minimizing wealth for somebody else.

Social development can often be analyzed mathematically. As a mathematical equation, it is difficult, often impossible, to maximize more than one variable. That means other variables will be reduced, often without conscience thought.

We can do more harm than good if we don't analyze our best intentions carefully.