Why $20.09 Makes Sense
The IHF just launched its $20.09 Stimulus Campaign, an effort to stimulate sustainable development by investing where it matters most: at the grassroots in developing communities around the world. As the IHF team has talked over this campaign, we’ve gotten to thinking a lot about what makes $20.09 so much more than just a catchy idea. Everyone from Domino’s to your local car dealer has played on the stimulus theme, but the IHF $20.09 Campaign does more than just riff on a popular concept - it actually does some good in the world economy. As we move ahead with the campaign - and as you consider joining our facebook group, following us on Twitter, or donating - here are a few thoughts about what takes this effort beyond gimmicky to dynamic and life-changing.
1. Economists emphasize the importance of investment for long-term growth and economic prosperity. Investment, of course, can take a lot of forms. It can be, say, the purchase of a new machine at a factory - investment in physical capital. But at least as important is investment in human capital, the skills that people have at their disposal to use for the benefit (or detriment…I’m looking at you, Bernie Madoff) of the world around them.
You can think of it like this. All economic products are made up of “stuff” and “ideas” (or particular ways of using “stuff”). A table, for example, is made of wood (its “stuff”) cut and put together in such a way that you can put a fruit bowl on top without it falling off and sit around it comfortably (the “idea” of a chair). Since there is only so much “stuff” in the universe, economic growth depends on the production of new ideas that make possible more or better uses of stuff. Investing in physical capital is using an idea to turn stuff into desireable things. Investing in human capital is creating the conditions necessary for new ideas and new uses of things. In the long-run, all economic growth depends on the growth of human capital.
The IHF invests in human capital in our partner communities by supporting early childhood education in Mexico, helping young people earn secondary school diplomas in Guatemala, training Indian craftsmen to make health-enhancing ventilated cookstoves, and more. In the short-run, these investments benefit the people who receive them directly, but in the long-run, the skills that those people gain improve the lives of their entire communities and make an impact on the world as a whole. Where once it was impossible to build a ventilated cookstove, it now becomes possible. The people who live healthier lives because of that stove can now devote themselves more fully to improving the conditions in which they and their community live. The community as a whole can contribute new skills and ideas to the broader world. And…you see how it goes.
2. This all seems well and good, right? But, I can imagine someone asking, since this is a down time in our country, shouldn’t we keep as many resources here as we can? Now, I’m inclined to make the moral argument for why that’s not the case. And I hesitate to make the case for why it’s in the best interest of Americans to contribute money to projects for people in other countries, because I think we should do it regardless of whether it’s to our advantage. But with that caveat, let me briefly suggest why, in the end, it might work out better for all of us if those of us in more prosperous countries keep giving to projects like the IHF’s even when we’re down.
First, the long-run growth of economies in the Global South is important for the health of wealthier economies like America’s because the latter produce primarily complicated products and services that are relatively high-cost. If people in, say, Nicaragua can’t afford anything that the American economy has to offer, the US loses out on export possibilities. So, when developing economies grow, so do markets for American goods and services.
Second, improving living conditions in the Global South, like the IHF’s projects do, will speed up the adoption of environmentally friendly technologies and reduce many types of environmental degradation, such as deforestation for the collection of wood for heating and cooking, which removes carbon-cleaning trees and increases the risk of natural disasters like the 2005 mudslide in Santiago Atitlan, Guatemala.
So, there you have my thoughts about why the IHF $20.09 Stimulus Campaign makes sense. I’d love to hear what you think. Do you have questions? doubts? other ideas? Stick them in the comments below.
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