Thursday, 29 October 2009

Spend it wisely

Helping others is good. And what is the easiest way for us to help: give money. Give money to charity, give a few coins to the homeless guy around the corner and pay our taxes so that the government redistributes it to the lowest scale of our society. But humans are nasty beings; if you give them money, they are going to ask for more, and more, and more.

If you give a homeless guy 5fr. he will go and buy a pack of cigarettes or a few beers with it. If the government promises you 70% of your salary for two years after you get laid off, you will have no incentive to look for a job - you'll just keep cashing in the money until it stops. This is human nature: we want everything while making the least effort possible.

For that reason, giving away money is not the best solution; it's the easiest one. But there is a more sustainable way of helping people: give them an opportunity. In other words, if you give the homeless guy a job - any job – in which he will make his own money, then I am sure that he won't spend all his income on booze and smokes. He will be in charge of his own income and he will work hard to keep cashing it.

This is microfinance. Instead of helping developing countries by giving them charity money that will probably disappear into the corrupt political system, you offer the local people an opportunity to start their own business. This way, every penny earned and spent by the population would be thought-through first - whereas if one receives charity money, s/he doesn't care how to spend it because s/he will keep receiving it the next month. Microfinance, despite its many flaws, is a great way for the private sector to get involved into economic development; because as we all know, the public sector is always confronted to corruption, bureaucracy, unmet deadlines and incompetence.

On that note, I read that the EU is willing to pay about 15 billion € a year - starting 2013 - in order to help developing nations cope with climate change. Many NGOs, such as Greenpeace, support the plan but say that 15bn€ "is too low" and that the amount should be closer to 30 - 40bn€ a year.

What does that mean for all the actors of this transaction?

1) The EU gives the image of helping developing nations cope with the climate change they feel so responsible for (new-age white guilt)

2) The developing nations are happy because they receive money without having to do anything. Part of it will go in the politicians' pockets and the rest will be invested into infrastructure that will probably take ages to be built because the projects would be undertaken by the public sector

3) The NGOs, such as Greenpeace, are also very happy because they will be in charge of many of the projects and the consulting to these developing countries. Hence, they will strongly benefit from these 15bn Euros, and this is why they are asking for more

So what to do? I have a solution* since all that money seems to be going to waste. The EU should invest in research and development for greener alternatives: greener energy, greener infrastructure, greener technologies, sustainable land management, etc. After that, it could offer this new technology to the developing countries in order to help them cope with climate change but also help them reduce their emissions. Here is why it is better:

1) The EU would be spending its money wisely into finding new technologies that it would also benefit from

2) It would avoid the corruption in the developing countries (it will still happen, but to a lesser extent)

3) This could actually contribute to reducing the CO2 emissions while helping the developing nations, two things at once

Plus Greenpeace will just have to be more honest and genuine about its activities, because I sure am sceptical about this organisation.

*This idea is not initially mine but I like it

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