Episode Details

### Making Money WITH the Poor When Iqbal Quadir applied to US colleges from his home town in Bangladesh he was surprised to discover that not all American universities were found in Washington, DC. That's how it was in Bangladesh, where everything of importance was centralized in the capital city, Dacca. He later realized that Bangladesh was not unique; in most developing countries, the infrastructure is concentrated in one or two cities, leaving the rural areas almost blank. As he acquired degrees and experience in finance, he realized that this centralization is not only a mark of poorer countries, it is probably a cause of their poverty. Quadir presented this broad outline of development in order to give context for his belief that technology can alleviate poverty. He reminded us that 500 years ago, when the western countries were still "developing" their own societies, their political systems were no better, and often worse, than the instable corrupt regimes of many developing countries today. England had a series of kings who were impeached, arrested, ousted, or beheaded for their crimes. It was only after citizens were empowered by economic markets did the balance of power shift from the central king to decentralized citizens. All steps that devolve power away from a central authority -- including laws, trade, and education -- will raise democracy. In Quadir's view, it's not that centralization per se creates poverty. Poverty is the natural beginning state of all societies, east or west. Rather, decentralization is the engine that removes poverty and brings wealth. To the degree that infrastructure, education, and trade can be decentralized, wealth will rise in proportion. To the degree that infrastructure, education and trade are centralized, poverty will remain. Whereas many of us in the west, particularly the digital west, agree with this intuitively, we act contrary to this observation when we give large-scale aid to poor countries. As Quadir's colleague William Easterly argues in his book The Elusive Quest for Growth, the billions and billions of dollars spent on aid for developing countries has not only *not* helped, it has set them back decades. Aid, as we know it, kills development. This harm occurs because almost all previous aid has funneled through a central government or semi-governmental organizations and that official route tightens centrality. Even if the governments were saintly, and they are definitely not, the scale of money flowing through these centralizing nodes prohibits the distribution of resources, infrastructure, trade, and education. The more aid that arrives, the less development can actually happen. Technology is the escape from this quandary. Quadir came to see that "technologies that connect" could liberate productivity. He matched his experience in Bangladesh as a 13-year-old boy having to walk 10 kilometers to get medicine, only to find out the medicine man he sought was not home, and then walking back empty handed, having wasted a day -- all because there was no connection between his home and the pharmacist. Many years later in New York he wasted a day at work when there was no electricity to run phones or computers. Productivity required connectivity. If connectivity could be decentralized then it would lead to increased wealth. Quadir settled on the cell phone as a way to decentralized connectivity. In the early 1990s cell phones were big, dumb, and very expensive. Calls were $3 per minute. Only the rich could afford them. But he wanted the poorest people in the world to get them. How would this be possible? First, he believed in Moore's Law: that the phones would decrease in price and increase in power every year. That seemed inevitable to him. He said he could see "micro-chips marching toward the poor." He was right about that. Second, he piggybacked his hopes on a remarkable invention of another Bangladeshi, Mohammad Yunus, who developed micro-financing (and later won a Nobel priz