Poverty as an Information Problem
I have a friend (let's call him Z) who is much happier than he should be. He's been working as an office boy (serving tea and coffee and running errands) for four years in the UAE. He's hard-working, creative, and ambitious, but because he was born in Bangladesh instead of a "freedom country", as he calls them, he's at a severe disadvantage. His contract has ended in the UAE, and now he's gone back to his country, where he'll be forced to decide between supporting his family and getting an education. Had he been born in a rich "freedom country", he'd probably be going to graduate school right now.
If we who live in freedom countries knew people like Z and were confident that investing in their future would truly make a difference, we'd help them. You see, with only $6,000 over five years ($100 a month), Z could both support his family and go to school. While this is not a huge amount of money, it's not trivial, and none of us wants our hard earned cash to go to waste helping someone that won't put it to good use.
If there were some way to bridge this information gap, to know how to find good human investments in the developing world, we could begin to solve the poverty problem, creating an economically empowered, politically active class of people who could solve problems locally. For decades, development aid has been focused on huge, macroeconomic projects, but it's time to turn this on its head and give the most ambitious, capable people at the bottom of the pile the best chance possible to claw their way to the top.
Consider this: a peer-to-peer investment website based on a "human capital rating", funded by small donations from people in rich countries, where donors can use the rating to manage the risk of investing in someone's future. How would an individual in a developing country, a person like Z, improve their human capital rating? They would earn points by demonstrating the ability to achieve goals and developing social connections with others who achieve goals. The human capital rating would track connections on social media, as well as on the website itself. Even institutions like schools and non-governmental organizations could gain trust by improving their human capital rating over time, attracting more funding.
I'm no web designer or actuary or social media guru or international banker, but I do know that if people in freedom countries knew what was really going on in the world, they'd find a way to help. People like Z are happy and kind and loyal, even though they were born in the wrong place. It's time to give them a hand up.
What do you think? Would a human capital rating work?
If we who live in freedom countries knew people like Z and were confident that investing in their future would truly make a difference, we'd help them. You see, with only $6,000 over five years ($100 a month), Z could both support his family and go to school. While this is not a huge amount of money, it's not trivial, and none of us wants our hard earned cash to go to waste helping someone that won't put it to good use.
If there were some way to bridge this information gap, to know how to find good human investments in the developing world, we could begin to solve the poverty problem, creating an economically empowered, politically active class of people who could solve problems locally. For decades, development aid has been focused on huge, macroeconomic projects, but it's time to turn this on its head and give the most ambitious, capable people at the bottom of the pile the best chance possible to claw their way to the top.
Consider this: a peer-to-peer investment website based on a "human capital rating", funded by small donations from people in rich countries, where donors can use the rating to manage the risk of investing in someone's future. How would an individual in a developing country, a person like Z, improve their human capital rating? They would earn points by demonstrating the ability to achieve goals and developing social connections with others who achieve goals. The human capital rating would track connections on social media, as well as on the website itself. Even institutions like schools and non-governmental organizations could gain trust by improving their human capital rating over time, attracting more funding.
I'm no web designer or actuary or social media guru or international banker, but I do know that if people in freedom countries knew what was really going on in the world, they'd find a way to help. People like Z are happy and kind and loyal, even though they were born in the wrong place. It's time to give them a hand up.
What do you think? Would a human capital rating work?
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