If You Were Bill Gates, How Would You Solve Poverty?

If you were Bill Gates and had ten billion dollars to spend to solve poverty, what would you do? David Henderson, an economist at the Naval Postgraduate School, posed precisely that question to various economists at his school and those of us that read his blog. This is what I wrote:

I’ve actually been thinking about this a lot lately. What is the best form of charity? Clearly, just giving a bum on the streets money is a waste. He’ll probably just spend it on alcohol and is he really reformable? Clearly you want the money to go to something that is an investment – that grows, like paying for a poor persons college. Not only do you give them money, but its money that actually solves their problems – long term. But even that has its flaws. After all, they are living in the United States – our “poor”, are richer than 90% of the world.
So then the answer has to do with the worlds poor – not USA’s poor. India, Africa, China, places like that. But you dont want to just give it away either – it robs them of the dignity that comes with “earning”. One thing that I thought about is that when you visit poor countries, and someone offers you a service – say wash your windows, or clean your tires – you tip BIG. Not only are you hitting the target group, but you are rewarding them for a service, and having people participate in the economy makes us all better.

But now were at three qualities of efficient charity: a) targets the clearly truly poor, b) an investment that grows and solves their poverty long term and c) one that gives dividends to the rest of us.

As contrarian as it sounds, I am convinced that the best form of charity is giving jobs and education to the worlds poorest countries – like China’s new growth and capitalist turn. As Tyler Cowen mentioned in his book Economic Stagnation, you get alot of immediate growth and return when a poor population is brought into the world economy – through education, jobs and industrialization. China is at the same stage that the United States was say 100 years ago. And we can expect the same returns – as more and more people are given the opportunity to advance through higher education and innovation. Not only does this make the poorest people better off, but the rest of the world gets alot of the dividends (think of all the added medical innovations, technological innovations, and general increase in standard of living we will experience because of China’s 1 billion+ citizens increased standard of living).

So in the end: what would I do? Probably spend it on whatever makes businesses MORE likely to invest in China, India and other poor countries that bring them further into the economic fold and pull them and their people out of poverty. Maybe invite Intel to open up a training center and design center in a growing country – if the decision ends up losing money, you promise to refund them their losses. If not, you entice another company.

Something like a company insurance policy with the goal of targeting especially poor countries. That is what I would do.

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