Should businesses care about the poor?
Bill Gates spoke recently at the World Economic Forum and said that businesses should pay more attention to the poor and called for “kinder” capitalism.
“We have to find a way to make the aspects of capitalism that serve wealthier people serve poorer people as well,” Mr. Gates will tell world leaders at the forum… In particular, he said, he’s troubled that advances in technology, health care and education tend to help the rich and bypass the poor.
Among the fixes he plans to call for: Companies should create businesses that focus on building products and services for the poor. “Such a system would have a twin mission: making profits and also improving lives for those who don’t fully benefit from market forces,” he plans to say.
I very much agree with Bill Gate’s thinking. It will be ideal if companies can share his thought. However, in reality, I believe only a small number of companies are financially capable and have the capability to do philanthropy.
For-profit companies exist because they want to make money, not because they want to help the poor or want to make the world a better place to live. Companies answer to their shareholders. Shareholders have the objective to maximize their investment returns. It’s true that many successful business models based on doing good things for people and the world. That’s because they create business value and ultimately lead to profit gains. It’s naive to think that companies have the moral obligation to care about people and the world.
If businesses are not in the position to take care the poor, then who should be responsible for a such task? I believe that’s the role of the government. The government has the obligation to take care of the poor. It must take appropriate actions to minimize the wealth imbalance between the poor and the rich.
Spotted on Slashdot.
I got the impression from Gates that he was talking moreso about products like the OLPC, which really took an innovative approach to marketing for their product. Thats something where you could build a profit margin you’re comfortable with, you’re selling two machines at once essentially, and you’re providing computers to kids in 3rd world nations. Some companies take direct actions like contributions, or getting into the carbon credit thing, or what have you. I think thats a lot more difficult to justify to stockholders, but when you can find a way to build a profitable business model around a product which at its heart is charitable, well, you’ve hit the sweet spot.
The true insanity of the economic system of this country right now is that the bottom line has become such a fixation in the minds of investors, that able-companies can’t be involved in much philanthropy anymore. Take a company like Apple, which just posted its best quarter in the history of the company, and due to lower-than-expected forcasts for the next quarter (being as though, you know, we’re kinda heading into a recession), the stock bled 40 points over 2-3 days. We’re talking about a company that just raked in billions in sales, and they their stock bleeds over one quarter’s projected sales. They’re more than capable to go out and do some philanthropic work, but they’d be crucified on wall street for it.
I think this is where Bill Gates finds himself at the crossroads, he’s been a part of this ridiculous economic structure we live in, which has gone more and more pure capitalist as the years go on, and yet he feels a moral sense of responsibility to the world too. And he doesn’t understand why business can’t meet some of these goals, and I actually tend to agree with him. The short-sighted approach is to say, well, I want the company to gain a cent more per share next quarter. But in the best interests of the company, the best way to keep revenues stable is to make sure the world doesnt turn on its head. I think that view has been lost on a lot of people though.
My only other comment would be, I don’t think you can adequately look out to government to try to narrow a wealth gap because in a capitalist system, you’re pretty much trying to stabilize the wealth gap. Its kinda a shame but, its also pretty much the fairest system the world’s come up with to date. Keeping the status quo in check is essential to keeping the markets stable, and if suddenly you had a large class of people who possessed skill sets and refused to do cheap labor, that’d pretty much break down a bunch of companies. Letting the lower class grow kills off a lot of business, which also isn’t good for bottom-lines.
Bottom line is, its not a real surprised Gates is looking anywhere for philanthropy to start. Hes pretty much beginning a second era of canegie and rockefeller type movement, and for the good of the world, it’ll hopefully work out.
Comment by Andrew — January 26, 2008 @ 3:45 am
Andrew,
I share your view. Many companies are crippled in doing philanthropy because their investors’ only care about the dollar sense of return on investment. I believe that we need more people like Bill Gates and companies like Google who can influence the business world to care more about people.
I disagree with you on thinking that government is incapable of narrowing a wealth gap. Certainly that breaking up large corporations is an undesirable solution to solve the wealth imbalance problem. In a capitalist system, the government have many effective tools, e.g., setting up social safety nets for the poor, providing health care for people who can’t afford to pay and creating education programs to help the less fortunate people to acquire work skills.
Comment by Harry Chen — January 26, 2008 @ 6:25 am