If poverty was purely a lack of cash then we should end it this year.
The World Bank, financier of last resort to bankrupt governments, has a great deal of competition. The Global Fund has $ 6.8 billion. The Gates Foundation has $ 31.9 billion. Google has chipped in with $ 90 million in their foundation. Even the US government, so much maligned, has tripled their development aid to $ 9 billion. There are now more than 50 billion-Dollar foundations in the US alone.
Many of these foundations are having trouble giving away the minimum of 5% of their capital that they must to maintain their charitable status.
Yet poverty remains as intractable as ever. Clearly money isn’t the only problem.
Money is not wealth. Neither does it have any intrinsic value. It is simply a physical reflection of the wealth in an economy. Printing more money doesn’t increase the wealth of an economy – there is still the same amount of physical stuff as before – but it does debase the value of the currency. And capitalism is no different from the internal combustion engine.
An engine works by the same rules under a communist government as it does in a free-market democracy. It’s just that in a communist economy the government decides what the efficiency of that engine will be and how well it will work. Then everyone gets the same engine. If you doubt how bad this can be, just ask some East Germans about the Trabant.
In a free-market economy the vehicle comes in a wide variety of styles. If you don’t like the car you can complain to the manufacturer and indulge in consumer action. If you didn’t like the Trabant you had to take issue with a police-run, Soviet-era, state.
Social development has been a lot like a centralised Soviet-run economy. There is only one choice, and you will take what you’re given. Soviet states ran very well; if you didn’t mind poverty, shortages, and corruption.
All of these new charitable foundations, started by entrepreneurs, rely on third-party development organisations started by socialists. They’re speaking different languages.
Development is not as simple as just giving people the things they lack. Oxfam has, since the early 1980s, assisted subsistence and micro-farmers to grow coffee around the world. Their success at raising charitable donations for this inspired other organisations to follow suite. Not surprisingly all this activity resulted in a global coffee slump even as Seattle coffee culture swept the globe. Who does Oxfam blame? Why Starbucks of course. It seems that consumers don't pay enough for coffee.
Yet farming is not simply about growing the same cash crop year-in-year-out on the assumption that it will always have the same value. Commercial farmers study global supply trends and decide what crops and how much of it to farm. As one crop becomes devalued they farm another. They diversify by raising a number of different crops and livestock. Development organisations do not teach this finesse. They expect market conditions to remain identical. But demanding a stable coffee price despite massive supply is the same as expecting Playstation 1 games to remain at the same price as newly introduced Playstation 3 games. In the real world retailers left with PS1 stock dump it in the bargain bin in the hopes of getting rid of it.
Demanding an esoteric idea of "fairness" requires very real unfairness and has resulted in organisations like Oxfam colluding with corrupt dictatorships (like Ethiopia's).
The future of development relies on teaching the poor the mechanisms of a market economy, not simply the appearance of one. And this requires that we modernise social development organisations. The problem with this is the same as trying to convert a communist-era economy into a free-market one without turning it into modern Russia; filled with corruption, oligarchs and dramatic differences between rich and poor. It requires continual scrutiny and feedback.
In this new year of 2007 let us start a conversation about development. In the same way bloggers hold each other to account (most especially over the recent Acer Ferrari fiasco) let us hold development organisations to account.
If they believe that they are doing a good job, let them explain and prove and win our support. Let us not allow them to blame others for their own mistakes. So that the poor are not always with us.
Universal provision of formative education is considered a basic right in our constitution. The standard approach, followed by virtually every government in the world, is that they should build schools, staff them, and supply their services at a subsidised price in order to promote education equality.
The surest sign that this is a dismal failure is the astonishing growth in the number of private schools as soon as this is implemented. And the fact that no South African politicians send any of their own kids to state schools. Waiting lists at private schools are groaning under the weight of demand. This entrenches the rich – poor divide and creates a form of educational aristocracy where the children of the rich have greater access to opportunities.
Fee-paying parents flee poorer schools which become ever poorer and less able to serve the needs of their remaining students.
Governments around the world have responded by offering perverse incentives to failing schools. Bad, under-resourced schools receive extra money but, since the teachers and staff are not incentivised to improve or penalised for failure to do so, there is no reason to change the status quo. This often achieves the bizarre end of rapidly increasing education budgets with just as rapidly increasing failure rates.
South Africa has a middle road between pure government owned and subsidised schools, and private schools. These are the Model C schools where parents take an active role in the school’s governance to ensure participation and standards. Many Model C schools have become as elite as their private counterparts.
Now government has a bright new idea: force these schools to take on more non-paying students. The choice the schools have is to raise fees – in essence punishing those who can afford to pay – or offer a lower standard of care as class sizes increase and resources become stretched.
Parents will respond either by moving their children to private schools and so result in further hardship as the amount of revenue drops; or the schools will go private.
Either way the objective of offering disadvantaged children better access to education fails.
There is another way of solving this problem. It is by recognising that the purpose is not to subsidise school operations, but the educational opportunities of youngsters.
If the government intends on spending money subsidising education then that cash can be issued directly to learners as a voucher to take to any accredited school to pay their fees. If the school charges more then the parents have to make up the difference.
The beauty of this system is that it encourages competition between schools to attract learners. It allows parents the choice of including private schools in the range of places they can send their children. It should not matter, after all, where children are educated as long as they receive a high standard of care. Even more importantly, it will attract educational entrepreneurs to open new schools or expand existing ones.
And for any politician who would deny young, disadvantaged learners the opportunity to choose a school best suited for their needs, I pose a simple question. How many politicians have entirely abandoned government schools and have sent their offspring private?
If the politicians exclaiming the benefits of state-provided education refuse to send their kids to government schools, why should the poor be forced to?
A slow-motion tragedy has unfolded in our education system over the past 12 years. In 1995 the newly elected democratic South African government swore to ensure that education would be at the centre of their agenda.
Since a low-point in 1999 when only 46.4% of final-year school leavers (matriculants) passed the department worked hard at improving the numbers. Not by improving the education system but by ensuring that fewer people wrote the final exam (4 000 fewer wrote this year than last) and also that the exam was made easier. That worked well to 2004 when a high of 73.2% of matriculants passed.
Now to 2006, and the class of Madiba (so called because they are the first crop of students to have started school after the 1994 democratic transition). This year students managed a paltry 66.5%.
The 350 000 students who wrote included only 4.8% who passed maths on the higher grade. Without maths learners stand little chance of gaining entrance to university or taking on higher educational studies in the technical subjects required of a modern worker. Even more worrying than any of these numbers, though, is the dwindling number of students achieving a sufficient education to allow them to even gain entry to higher-education: 16.2%
It should be a cause for shock and despair regarding the much vaunted "outcomes-based education" system introduced by the state in 1995. The system was declared as the saviour of modern education. It has failed, and failed spectacularly.
It is no surprise that the number of private schools in South Africa is blossoming. There are now 1 098 of them, and their university-level pass-rate was 78.8% with a spectacular 21.4% achieving an "A" aggregate.
Instead of simply forcing state schools to accept more non-paying students, it is time for the Department of Education to adopt the same mechanisms of the private sector and give our children hope for employment and success.
