Who should read this book: Anyone interested in social entrepreneurship, micro finance, and ideas to help bring the world out of abject poverty.
The big assumption that is drilled into our heads during school is that people need to work for other people. That when you exit school, you get a job. In the words of Nobel Peace Prize winner Muhammad Yunus,
Are people born to be working for somebody else or born to do things they want? Without knowing anything, probably you’ll say no, people are not born to work for somebody else. That’s not how it works. When human beings came to this planet, they were not sending out job applications.
The financial system (including loans and credit) is of course centered around this model, that is, wealth is concentrated. So, what’s the solution? I don’t know, but Muhammad Yunus has an idea that’s shown some real progress. He is famous for leading the microcredit movement in Bangladesh and now he’s trying to flip this whole model on his head. He says that instead of going through life expecting to get a job, rather, we should be job creators. He believes everyone is an entrepreneur. He says don’t ask for a job, make your own. This may seem like a bold statement, but it’s really not. It’s just contrarian.
For most of history we’ve been entrepreneurs. As hunters and gatherer’s we had to solve problems everyday (and if you’re reading this today, you made it pretty far!). We had to figure out how to feed ourselves. We were bakers, farmers, cobblers, blacksmiths. We had street stalls and restaurants and shops and offered our services. Uganda ranks as the mostwhere 28% of people are entrepreneurs. That’s twice the number of the U.S. Surprised? Perhaps your definition of entrepreneurship needs to be expanded. If given a chance, we have the capacity for great creativity.
This doesn’t mean you shouldn’t work for a company. Not at all. No individual could have been able to create the microprocessor or iPhone. We need lots of peoples and lots of companies to innovate. The greater point is that people have options — job taker or job creator — but the system we have in place only fosters and really supports one path.
Big ideas from the book:
The limits of capitalism and profit motives
Our economic theory has created a one-dimensional world peopled by those who devote themselves to the game of free-market competition, in which victory is measured purely by profit. And since we are persuaded by the theory that the pursuit of profit is the best way to bring happiness to humankind, we enthusiastically imitate the theory, striving to transform ourselves into one-dimensional human beings. Instead of theory imitating reality, we force reality to imitate theory.
No one who cares about humanity is satisfied with a world in which a few hundred million people enjoy access to all the resources of the planet, while billions more struggle just to survive. Yet, of course, that is exactly the kind of world in which we live today. Consider just a few of the grim statistics concerning economic inequality. According to a study by the World Institute for Development Economics Research at United Nations University, in the year 2000, the richest 1 percent owned 40 percent of the world’s assets, and the richest 10 percent owned 85 percent. By contrast, the bottom half of the world population owned barely 1 percent of the planet’s assets.
Similarly gross inequities exist when we look at income. Five countries—the United States, Japan, Germany, France, and the United Kingdom—contain 13 percent of the world’s population and enjoy 45 percent of the world’s income. By contrast, three giant countries in the developing world—India, China, and Indonesia—have 42 percent of the world’s population but receive only 9 percent of its income.
Microfinance and the poor
New ways to exploit the poor are always being invented. For example, if you are a member of the middle class, you may never have heard of payday loans, small, short-term loans, usually for less than $1,500, that are given to low-income Americans who don’t have access to mainstream sources of credit. They use these loans to get from one payday and the next—to pay an unexpected doctor’s bill or fix a car or a broken appliance when money runs short.
Social business as a solution
Thus, a social business might be defined as a non-loss, non-dividend business. Rather than being passed on to investors, the surplus generated by the social business is reinvested in the business.
Social business is the missing piece of the capitalist system. Introduction of it into the system may save the system by empowering it to address the overwhelming global concerns that now remain outside of mainstream business thinking.
Advice for Warren Buffet
If Warren Buffett had asked for my advice, I would have advised him to use part of his money to create a social business whose mission would be to provide affordable, high-quality health insurance to the 47 million Americans without it. If Buffett himself—a business genius with decades of experience in the insurance industry —were involved in designing this social business, anybody can easily guess the outcome: The company would achieve a resounding success, and Buffett would be remembered in the history of American health care.