business

When Helping Hurts, Chapter 9 – “And to the Ends of the Earth”

Synopsis

  • This chapter mainly deals with the concept of micro-financing or MF. MF takes business away from loan sharks in the majority world. MFs provide means to credit at a reasonable rate to encourage self-sufficiency through the development of small businesses (usually ten people or less).
  • Large-scale manufacturing has been most economists solution to the poverty of the majority world. However, large-scale manufacturing happens slowly, requires infrastructure, etc. Small businesses can be up and running quickly.
  • Wealth accumulation that provides a cushion for small businesses can be difficult in the majority world, where culture may dictate that when a person has accumulated anything, it should be shared with the community. Therefore, there is a desperate need for savings that are secure and private.
  • One mode of MF is to put borrowers into borrowing groups that require members to guarantee each other’s loans. This leads to a high rate of repayment.
  • Difficulties in MF include problems in providing savings services, failure to reach the extreme poor (who may require loans in the five to twelve-dollar range), failure to reach the rural poor, exclusive focus on businesses, and lack of evangelism and discipleship activities.
  • Any church or ministry that gets involved with MF needs to do their homework and know what they’re getting into.
  • One model is the SCA, or Savings and Credit Association that encourages fellowship and discernment among the community. The provide affordable loans and a means for savings.
  • People may view MF as a cure-all for poverty, but it only addresses part of the need. Never forget that we have poverty of relationship with self, the community, and God. Holistic poverty alleviation must address all areas of poverty.
  • Business as Missions (BAM) is another model. Entrepreneurs start businesses in the majority world, providing jobs, education, and increased productivity through their investment.

My Thoughts

Micro-financing is fascinating. It’s amazing what a few well-placed loans can do to encourage economic development and self-sufficiency in the majority world. What relevance does this have for the poor in the United States?

In my ministry, I mainly deal with men who are released from prison. For the majority of them, they have no job. They have no housing. Many don’t even have a supportive family. When they apply for a job, they will have to share with the prospective employer that they are a felon. It takes a special business owner to extend employment to a felon. So, their job prospects are not good.

Wouldn’t it be wonderful if these men could start their own businesses? They would get off public assistance, move out of subsidized housing, and become productive members of society that give back for what they’ve taken. Unfortunately, very few of the men that come out of prison have the necessary skills to run a business. So, MF would not be a good solution for most of them, but the few that are willing and able to run a business could make a dramatic change in other returning citizens’ lives by taking them on as employees.

It seems to me that many drug dealers are already entrepreneurs. Why? It’s the avenue of business that’s open to them. The startup costs are minimal. The product is in high demand. The profit margin is tremendous, but the cost to the community is tremendous. Also, there’s a reason the profit margins are so great – the risk of failure means years of incarceration.

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When Helping Hurts, Chapter 8 – “Yes, In Your Backyard”

Synopsis

  • The poor are all around us, even in suburban neighborhoods.
  • “In summary, poor people in North America could benefit from all of the following: (1) the ability to work at jobs with living wages, (2) the capacity to manage their money, (3) the opportunity to accumulate wealth, and (4) a greater supply of quality education, housing, and health care at affordable rates. Moreover, like all of us, poor people need highly relational ministries (delivered through the body of Jesus Christ) that help them to overcome the effects of the fall on their individual hearts, minds, and behaviors.” (Fikkert and Corbett (F&C))
  • Training for the new job opportunities needed as our society changes is a key to getting out of poverty.
  • Training should include soft skills such as living out a biblical work ethic, working on a team, having a good attitude, personal integrity, respect for authority, conflict resolution and and strong communication skills.
  • Training should include hard skills  that may be specific to a particular job, like a mechanic learning how an engine works. Hard skills might also include learning how to manage money so the materially poor can build wealth.
  • Christian businesses must be brought onboard and see their business as a vocation to expand the kingdom of God.

My Thoughts

The American way is one of individualism. We are supposed to, “Pull ourselves up by our bootstraps.” I’ve never quite understood where that saying came from, but I know what it means. It means that in America, we have the power to fix our own problems and we shouldn’t need anybody else to help us. American individualism is politically best expressed through the Republican Party, which many Bible believing Christians claim as the political party that best represents their beliefs. In many areas, I think that’s true. However, I think we need to shed our identity in a political party and find our identity in Christ alone.

Is it the government’s job to fix poverty? No. I don’t think it is. Where the government has tried, it has failed spectacularly and done so using our money. The government isn’t prepared to fix poverty because it is a spiritual problem that manifests itself physically. Most Bible believing Christians recognize this and thus tend to vote for the party that curbs “social spending.” So, many Christians understand that the government isn’t responsible for the poor, and that’s good. However, where we go off the Biblical rails is when we provide an American answer for an issue that requires a Biblical response.

“Pull yourself up by your bootstraps!” is not a Biblical response. The scriptures teaches us that we should work and be responsible for our families. However, it also puts tremendous emphasis upon the church coming alongside the poor.

“During the seventh year, let the land lie unplowed and unused. Then the poor among your people may get food from it, and the wild animals may eat what they leave. Do the same with your vineyard and your olive grove.” Exodus 23:11

“However, there should be no poor among you, for in the land the LORD your God is giving you to possess as your inheritance, he will richly bless you.” Deuteronomy 15:4

“If there is a poor man among your brothers in any of the towns of the land that the LORD your God is giving you, do not be hardhearted or tightfisted toward your poor brother.” Deuteronomy 15:7

“For I was hungry and you gave me something to eat, I was thirsty and you gave me something to drink, I was a stranger and you invited me in.” Matthew 25:35

Cornelius stared at him in fear. What is it, Lord?’ he asked. The angel answered, Your prayers and gifts to the poor have come up as a memorial offering before God.'” Acts 10:4

“If anyone has material possessions and sees his brother in need but has no pity on him, how can the love of God be in him? Dear children, let us not love with words or tongue but with actions and in truth.” 1 John 3:17-1

Chapter 8 of “When Helping Hurts” provides American Christians with some concrete, biblical ways that we can not only bring relief to the poor help them pull themselves out of poverty. Training gives the poor skills they can use productively, and Christian business owners can provide a place for them to put their skills to work. At the end of the day, everybody is better off. The poor get jobs that help them be responsible toward their families, they stop relying on government handouts that are funded by the rest of us, Christian business owners get good employees with a biblical view of work that will help their businesses flourish, and all of it comes through obedience to God.

When Helping Hurts, Chapter 6 – “McDevelopment: Over 2.5 Billion People NOT Served”

Synopsis

  • In the post-World War II era, the Western world has spent over 2.3 trillion dollars to reduce poverty. Yet, despite the tremendous spending approximately 40% of the world’s population lives on less than two dollars a day.
  • Despite a vast increase in anti-poverty spending since LBJ, the poverty rate in the US continues to hover at around 12%.
  • In a quest to be as efficient as possible, relief groups have sought to systematize an one-size-fits-all approach to addressing poverty. The problem is, since no two communities are the same or have the same causes of poverty, this approach is destined to fail.
  • Alleviating poverty requires that outsiders not do something to or for poor communities, but look for solutions together with them. When poor individuals and communities have ownership over programs, they bring knowledge, expertise, and a desire to see the work be fruitful. When outsiders impose solutions upon communities, the community has no stake in seeing it succeed because they know it won’t work and if it doesn’t those outsider rich folks will just pour more money into the project.
  • “Participation is not just the means to an end but rather a legitimate end in its own right.” Fikkert and Corbett (F&C)

My Thoughts

This chapter presents an intriguing irony. I would state it like this:

1. Rich people are good at making money. They have a particular set of skills, insights, and best practices that help them be successful at taking a little bit of money and making it into much more money.

2. In taking care of material poverty, we desire to take a little bit of money and equip poor communities to make much more money. Rich people should be really good at this! Let’s use their methods!

3. The skills, insights, and best practices that allow businesses to be successful are not the skills, insights, and best practices that make for successful poverty alleviation.

Ouch.

Profit requires streamlined approaches that minimize material waste and maximize profits. Business is all about efficiency. A successful business will always put the best person on the job. Successful franchises use standardization, speed, uniformity, etc. These practices reduce uncertainty (which dampers expansion) and maximize predictability. These practices help rich people get richer because they minimize their risk by helping them to invest in those places where their money is most likely to grow. The best way to build a profitable fast food restaurant is to build them all exactly the same. The best way to build a car is on an assembly line. Standardization and uniformity are the lubrication that keeps our modern capitalist economy humming. Standardization and uniformity mean efficiency, lower costs, higher returns. If you want to be a successful entrepreneur you standardize, then provide a product cheaper and faster than anybody else.

Yet, these practices implemented in poverty alleviation mean certain failure. A poor community in the Appalachians will not climb out of poverty the same way a rural Chinese community will.

The skills, insights, and best practices that allow for robust poverty alleviation are slow and inefficient. They require us to build relationships with the communities. They require us to give over control for projects to people that may not be the best educated or the fastest workers, but who know things that we can’t possibly know – the community.