Gerald Giam

Bill Gates calls for "creative capitalism" at WEF

Microsoft chairman Bill Gates delivered a groundbreaking speech at the recent World Economic Forum (WEF) about “creative capitalism”. He argued that corporations have the potential to do great things for the poor, but only if they are given the incentive to do so. Here is his full speech and Q&A with Klaus Schwab, the conference organiser. Excerpts of his speech from his website are highlighted below the video.

Pure capitalism not benefiting everyone

The world is getting better, but it’s not getting better fast enough, and it’s not getting better for everyone.

The great advances in the world have often aggravated the inequities in the world. The least needy see the most improvement, and the most needy see the least—in particular the billion people who live on less than a dollar a day.

There are roughly a billion people in the world who don’t get enough food, who don’t have clean drinking water, who don’t have electricity, the things that we take for granted.
Diseases like malaria that kill over a million people a year get far less attention than drugs to help with baldness.

Climate change will have the biggest effect on people who have done the least to cause it.

Why do people benefit in inverse proportion to their need?

Market incentives make that happen.

In a system of pure capitalism, as people’s wealth rises, the financial incentive to serve them rises. As their wealth falls, the financial incentive to serve them falls—until it becomes zero. We have to find a way to make the aspects of capitalism that serve wealthier people serve poorer people as well.

Capitalism harnesses self-interest in helpful and sustainable ways, but only on behalf of those who can pay. Philanthropy and government aid channel our caring for those who can’t pay, but the resources run out before they meet the need. But to provide rapid improvement for the poor we need a system that draws in innovators and businesses in a far better way than we do today.

Recognition as an incentive for corporations

At the same time, profits are not always possible when business tries to serve the very poor. In such cases, there needs to be another market-based incentive—and that incentive is recognition. Recognition enhances a company’s reputation and appeals to customers; above all, it attracts good people to the organization. As such, recognition triggers a market-based reward for good behavior. In markets where profits are not possible, recognition is a proxy; where profits are possible, recognition is an added incentive.

Adam Smith, author of The Wealth of Nations wrote, “How selfish soever man may be supposed, there are evidently some principles in his nature, which interest him in the fortunes of others, and render their happiness necessary to him, though he derives nothing from it, except the pleasure of seeing it.”

Creative capitalism

Creative capitalism takes this interest in the fortunes of others and ties it to our interest in our own fortunes—in ways that help advance both. This hybrid engine of self-interest and concern for others serves a much wider circle of people than can be reached by self-interest or caring alone.

A Dutch company, which holds the rights to a cholera vaccine, retains the rights in the developed world, but shares those rights with manufacturers in developing countries. The result is a cholera vaccine made in Vietnam that costs less than $1 a dose—and that includes delivery and the costs of an immunization campaign. There are a number of industries that can take advantage of this kind of tiered pricing to offer valuable medicine and technology to low-income people.

Role of Governments

The highest-leverage work that government can do is to set policy and disburse funds in ways that create market incentives for business activity that improves the lives of the poor.

Under a law signed by President Bush last year, any drug company that develops a new treatment for a neglected disease like malaria or TB can get priority review from the Food and Drug Administration for another product they’ve made. If you develop a new drug for malaria, your profitable cholesterol-lowering drug could go on the market a year earlier. This priority review could be worth hundreds of millions of dollars.

Connecting the poor with rich word markets

Another approach to creative capitalism is simply to help businesses in the poor world reach markets in the rich world.

A few years ago, I was sitting in a bar here in Davos with Bono. After Asia and most of Europe and Africa had gone to bed, he was on fire, talking about how we could get a percentage of each purchase from civic-minded companies to help change the world. He kept calling people, waking them up, and handing me the phone. His projections were a little enthusiastic at first—but his principle was right. If you give people a chance to associate themselves with a cause they care about—they will pay more, and that premium can make an impact. That was how the RED Campaign was born, here in Davos.

Corporations sharing their brainpower with the poor

I hope corporations will consider dedicating a percentage of your top innovators’ time to issues that could help people left out of the global economy. This kind of contribution is much more powerful than simply giving away cash, or offering your employees time off to volunteer. It is a focused use of what your company does best. It is a great form of creative capitalism, because it takes the brainpower that makes life better for the richest, and dedicates it to improving the lives of everyone else.

When you look on a global basis…at the tough problems of the poorest, a company really should stick to what it knows well. Does it know food, does it know distribution, drugs, media, cell phones? You are developing something that’s lower cost and are true to the identities of that organisation.

On the Gates Foundation’s goals

I’ve set very ambitions goals. Of the 20 diseases that our global health program goes after, for over half of them we could make a very significant impact. Reduction in the mortality rates in developing countries has an effect of reducing population growth, which then makes other things like education and nutrition a lot easier.

I think these are great ideas that we should try to push for in Singapore. There is little doubt that our country is marching forward towards capitalism, with lower income tax, more regressive taxes like the GST and now means testing. We will no longer be able to rely on just the government to foot the social bill. This makes it all the more important for corporations and wealthy individuals (and there are a lot of them in Singapore) to do their part to uplift those in our society who have been left behind by globalisation and economic progress.

Suharto dead

From Reuters/Straits Times:

Indonesia’s Suharto has died: police

JAKARTA – INDONESIA’S former president Suharto, who ruled with an iron fist for 32 years, has died, a senior police official told reporters on Sunday at the hospital where he was being treated.

‘Indonesia’s second president Haji Muhammad Suharto has passed away at about 13.10,’ Major Dicky Sondani told reporters.

Mr Suharto was 86 years old, and had been in critical condition in a Jakarta hospital since Jan 4 suffering from heart, lung and kidney problems. His doctors said he suffered from multiple organ failure and went into a coma on Sunday. — REUTERS

That’s not the way to build confidence in youths

I was disappointed to read about the school principal (of a mission school, no less) telling her Sec 5 students that they might as well apply now for places in ITE because as they were unlikely to do well in the ‘O’ levels at the end of the year. However, I was even more disappointed to read Minister of State for Education Lui Tuck Yew’s reaction to the public uproar about the principal.

In the Straits Times report, Principal’s ‘wake-up call’ to Sec 5 students had to be ‘conveyed’, RAdm Lui was quoted as saying, “Principals need to do their job to convey this message to the students and teachers to do their part to challenge them, set high goals and to help them achieve these goals.”

The principal was clearly in the wrong and it would have been better to just admit it and move on.

What is the point of telling Sec 5 students at the beginning of the school year that basically you all cannot make it and better give up? So what if statistically 40% of them end up not making it to poly, as RAdm Lui said. That shouldn’t stop them from trying their level best in their O levels at the end of the year to overcome the odds.

If they don’t do well enough to qualify for poly, then they can go to ITE after that. No shame in having tried but “failed”. But was the principal expecting them to quit Sec 5 and go straight to ITE?

For RAdm Lui to come in and say that the principal was just challenging her students to “set high goals” is to completely overlook the fact that she had just implied that they should set lower goals for themselves.

I’m all for not mollycoddling our youths. Discipline them when they misbehave. But insulting their intellectual abilities is the wrong way to spur them on to achieve greater heights. That approach to motivation is so ‘yesterday’.

————–

That tearful answer that won Hillary New Hampshire

I don’t think I was the only one who was a little surprised and disappointed to learn that Hillary Clinton won the New Hampshire primary, edging out the pre-poll favourite Barack Obama. Many have attributed her win to an answer she gave to an independent voter who asked her how she managed to carry on doing what she did. Here it is:

The results speak for themselves. Women in NH chose her over Obama by almost a 10 percentage point difference. I must say that watching this video leaves me little doubt that Hillary really does love her country and want to lead it forward. But I believe so do the other leading candidates.

Nevertheless this is an important lesson for politicians not to hold back showing their soft side. After all, people vote for a human being, not a policy wonk.

Cabby’s actions now not "illegal". He only "flouted rules"

Last night (this morning actually), I wrote a post commenting about the article, Discount ads on taxis illegal: LTA, which appeared in the late Monday night (7 Jan) edition of the Straits Times. The sub-header was, “Marketing tactics and soliciting are against company rules and the law“. The ST usually publishes a teaser of a breaking story for the next day’s print edition.

In my blog post, I had questioned how the actions of the taxi driver could have been illegal. He had simply placed a handwritten cardboard sign at his windscreen offering to waive the new peak hour surcharge.

Surprise, surprise….In today’s ST, the headline changed. It now reads “Cabby who advertised discounts flouted rules“. The sub-header is now, “LTA backs cab firm and says such tactics may lead to soliciting, which is illegal” (emphasis mine).

There are two possibilities:

Either:

(a) LTA ordered the ST to make those changes after realising that there was no basis for pronouncing the cabby’s actions illegal, or that the taxi driver was conclusively “soliciting”; or

(b) the ST was irresponsible and untruthful in using the word “illegal” twice when LTA never used it, and implying that the cabby was “soliciting”.

No responsible media or government agency should use the word “illegal” lightly. If what the cabby did was really illegal, then that means he had broken the law and the police should have taken action against him to enforce our much vaunted “rule of law”.

The change should have been marked as a correction with apologies, as is the usual practice with credible newspapers.

In any case, there doesn’t appear to be a hint of contrition for the error on either LTA’s or ST’s part. In today’s article, they were still trying to justify why the cabby’s actions could be illegal, because it “may lead to soliciting”.

In Singapore Law, soliciting usually refers to either unauthorised fundraising by charities, selling sex in a public place or unauthorised street collections. Could some legal eagle please explain to me how placing a sign on your own cab window can be deemed “soliciting”? The taxi driver wasn’t asking for donations, prostituting himself (yucks!!!), or busking with a guitar along the street, was he?

The bottom line is that LTA really had no business pronouncing judgment on this minor infringement of a private company’s rules (if at all). It only serves to confirm in many Singaporeans’ minds that the Government is firmly on the side of taxi companies and not consumers or taxi drivers.

Update:

A friend from SPH sent me this clarification:

STI works independently of the newsroom in that the reporter writes for the print version of the paper. STI takes the draft of the story and puts it up online when it is done. It writes the headline and the summary. Because of the demands of instant news that needs to go out, sometimes the copy may not be perfect and the headline written hastily.

If you read the story, it is exactly the same. In the story, there is no mention of LTA saying that the action was illegal. So the “official and correct” headline is the one you spotted after the fact.

You are right about writing a correction. I have no idea what the policy is for online news. If that had been written in the print headline, for sure ST would have to run a correction. But I suppose they have different rules online.

ST is still trying to converge its newsroom with its online site, so mistakes will be made. Don’t get me wrong, I’m not saying “give them a break”. I think its great that people like you point out the mistakes. Hopefully this will get the attention of the editors and tighten rules around the editorial process.

I have forwarded your blog post to the guy in charge of STI fyi.

Fear not, cab companies…LTA to the rescue!

Discount ads on taxis illegal, says LTA
Marketing tactics and soliciting are against company rules and the law

By Maria Almenoar

A CABBY’S attempts to get more passengers by advertising his discounted rates has been shot down by authorities.

Trans-Cab driver A.L. Tan had placed a handwritten cardboard sign at his windscreen offering to waive the new peak hour surcharge, which is 35 per cent of the metered fare, compared to old rate of a $2 flat fee.

According to cabbies, since the fare increase last month, many passengers are avoiding taking cabs during the peak hours of 7am to 9.30am, and 5pm to 8pm.

Mr Tan’s cab company has warned him that his marketing tactics run against Trans-Cab’s company policy.

The Land Transport Authority (LTA) on Monday backed the taxi company.

‘If these drivers advertise, there will be an increased tendency for them to solicit for customers based on lower fares advertised if no commuters board their taxis,’ said the LTA spokesman.

Read the full story in Tuesday’s edition of The Straits Times.

This is simply amazing! On one hand, the Govt says that the taxi market has been liberalized, so taxi companies can set fares as high as they like and the govt won’t interfere. Yet the moment a taxi driver tries to be a bit more entrepreneural, the LTA suddenly swoops in from nowhere to censure the poor man.

The LTA spokesman said, “If these drivers advertise, there will be an increased tendency for them to solicit for customers based on lower fares advertised if no commuters board their taxis.” (Read: If we let one fella do it, EVERYONE will do it and we’ll end up with ridiculously low taxi fares.)

SO?! That’s better for consumers, right? Oh sorry, I forgot the interests of companies come before citizens. After all, companies pay taxes, but most of us lousy plebians hardly pay any income tax. How naive of me.

And pray tell how is something like this illegal? Is LTA going to justify this or are we supposed to take their declaration as the Gospel truth? ST reader grognard, who commented on this article, wrote:

It may be against company policy, but it is hardly illegal.

The Public Transport Council Act (CAP 259B) states:

Bus, taxi and rapid transit system fares
23. —(1) No person shall be entitled to demand and take any bus, taxi or rapid transit system fare in excess of that approved by the Council.
[29/95;29/99]

(2) Subsection (1) shall not prevent any person from demanding or taking a lower fare than that approved by the Council.
[29/99]

Perhaps LTA officials need to ask themselves: Am I a transport company regulator or a transport company advocate?

Joining Young PAP as your stepping stone to Parliament?

The Straits Times ran two reports on Saturday about how Young PAP is expanding its recruitment drive to woo new citizens and overseas Singaporeans. It also featured an interview with the YP chairman, which gave some insights into the dynamics of the organisation.

Young PAP (YP) chairman Vivian Balakrishnan fielded questions about the political aspirations of the young. Some excerpts:

On whether some YP members may feel ‘bypassed” as most candidates in previous elections did not come from their fold.
Dr Balakrishnan: I think the way to phrase the question would be, ‘Will joining the YP mean you’re excluded from consideration as a candidate?” The answer obviously is no. We will not discriminate against someone as a candidate… simply because it doesn’t make sense for us to do so… But whether or not you’re a candidate is not a matter of ambition but a matter of whether the party needs you with your particular set of skills, experience and whether you help build that slate of candidates that the party wants to offer.

On how those who are in the YP just to further their own ambitions will be exposed over time.
To be blunt, and I don’t want to name names… go and look at the last batch of candidates who, in a sense, jumped ship in order to get a shortcut to appearing on the ballot box. Now look at what they are doing, or have they jumped ship again, and you’ll find that there’s a certain behaviour pattern. From where I stand, good luck to them, I’m quite glad we made the right decision in not fielding them and in happily letting them go elsewhere and try their luck.

But what it also means is that I’m prepared to continue to be open and prepared to continue to take that risk, that some of the people who join us may have other agendas and may subsequently even stand against us. To me, it’s a risk worth taking, because if I were to go to the other extreme of being very selective and very tight, I run the risk of missing out opportunities to meet many, many more people.

So it doesn’t matter if there are a few opportunists who come in because in the PAP, time is the real test. And opportunists will not have the patience… the energy to survive the obligations and the duties which membership imposes on the PAP members.

I’m quite amused at the way Dr Vivian (as his YP “comrades” call him) just rephrased the first question to avoid alienating many of his party faithful who will probably never become MPs, despite their noble aspirations.

The second answer was a political snipe directed at a few opposition candidates in the last election who started out in the PAP then switched to opposition parties. However, the Minister skirted over the bigger issue which often dogs YP, which is the perception that there are many opportunists still within the YP ranks.

Those who jumped ship would probably have accepted that their chances of getting elected under the Opposition banner were very slim. It would be unfair to exclude the possibility that some of them genuinely felt that the PAP was not the party they could support, and therefore joined the Opposition. However, the opportunists who didn’t jump ship know that their best chance of getting into Parliament is to get selected as a PAP candidate. Fortunately the PAP leadership is known to be “allergic” to people with political ambitions but little substance.

Looking at the slate of new PAP MPs from the 2006 General Election:

No more than half of them were YP members (I just made some assumptions, based on their resumes).
5 of the new candidates were appointed office holders (i.e., parliamentary secretaries or ministers of state) soon after the elections, but only 1 of them was (possibly) a YP member.
Of the other 4 office holders, all were either senior government officials or top executives in Singapore government linked companies (GLCs).
Of the remaining YP members who remained backbenchers, the vast majority of them are “grassroots MPs”. These are individuals who are deemed to be able to connect well with the ground, mainly because of their proficiency in their mother tongue, and their extensive grassroots experience through Meet-the-People sessions, Citizens Consultative Committees (CCCs) and Community Centre Management Committees (CCMCs).
All the other non-YP candidates have stellar professional careers to boast of.

According to the ST, some 100 people join the YP every month. That’s 1,200 people in a year — quite a sizeable pool of people to pick from. Yet half (possibly more) of the 2006 candidates were recruited from outside the party. This is probably another uniquely Singapore aspect about our government.

For those who aspire to get invited for tea sessions with the PAP, it is worth bearing these points in mind:

Joining the YP might get you noticed, but don’t expect to get picked as a candidate unless you can connect very well with heartlanders. This applies especially if you are Chinese.
If you are really keen on making a difference to government policy by becoming a Minister, you’re better off focusing your talents and energies in building up your credentials in the Civil Service, where Ministers can observe close up how you implement government policies. Being a scholar helps a lot but is not a requirement.
If you don’t join YP but still want to be a backbencher PAP MP, then focus on building your career and becoming a senior manager in a well-known company. The PAP leaders love recruiting people who fit their definition of success. A passion for politics is desirable, but optional.

Obama for President?

So it’s official that Barack Obama has got the Democratic Party caucus vote from the state of Iowa, beating rivals John Edwards and Hillary Clinton. On the Republican front, Mike Huckabee has come out tops in Iowa.

Of course, this is just the first of many caucuses and primaries leading to the party nominations. But I like the results I see so far from both camps. Whatever it is, please let’s not have Hillary Clinton or Rudy Giuliani ending up in the White House.

I’ve been following Obama’s campaign on the Internet for several months now, and I must say I’m rather impressed with the man. There is something different about him. Inspirational leadership is what comes to my mind.

I remember watching a video of a speech he made in a predominantly black church in South Carolina (or some other southern state). Instead of playing to the crowd and lamenting about how black people are suffering from discrimination in America, he preached self-improvement and self-reliance. Obama is a second generation American, whose father is Kenyan.

Of course as a non-American, my primary concern for the President of the United States is what his or her foreign policy will be. On this front, I’m hopeful that Obama’s proposed approach of using soft power to advance America’s interests will be more effective than simply brandishing their military might at every turn. He has even proposed engaging traditional enemies like Syria in dialogue, something the Bush administration has steadfastly refused to do.

The US President has such a big impact on so many countries beyond just America. I hope more Americans realise the weight of responsibility that rests on their shoulders as they choose their next leader.

Kenya Burning

I’m troubled by the post-election violence that is taking place in the East African nation of Kenya now. Following the presidential elections, which the incumbent President Mwai Kibaki apparently won by a razor thin margin, supporters of opposition leader Raila Odinga have gone on a rampage, killing many people from the dominant Kikuyu tribe in what has been dubbed by the Kenyan press as Rwandan-style “ethnic cleansing”. Over 300 people have already died.

At least 36 people were killed when the church they were hiding in was set ablaze, allegedly by members of the Kalenjin tribe — incidentally the tribe that produces most of the world-champion Kenyan runners.

For most of us in this part of the world, it is easy to dismiss as just another troubled African state unable to maintain basic social stability. The sad thing is that Kenya was supposed to be one of the leading lights in that troubled continent. It is the largest economy in East Africa and one of the more influential countries in Africa. Although rife with corruption, the economy has been performing quite decently for the past few years, with growth rates above 5 per cent.

I visited the capital, Nairobi, and the port city of Mombasa two years ago when I was with MFA. Although far from being a developed country, there seemed to be a lot of hope in the air for the future of the country. The Singapore Ambassador and his wife, whom I accompanied, even remarked that the situation there had improved tremendously from just a few years back. I remember the Philippines Charge d’Affaires there talking about how good the business opportunities were for those adventurous enough to venture there.

In fact, we met a few Singaporeans there who run several businesses, including a rose plantation, that were making good profits. Kenya is one of the biggest exporters of roses to Europe.

I don’t know what effect all this violence will have on Kenya’s economy, especially the tourism industry. One can only hope that the economy will continue to hum, even as politicians slug it out. But I just find it so unfortunate that some politicians there are so power hungry that they would rather stoke tribal anger and violence to squeeze out their victory.

Free Saudi blogger Fouad Al-Farhan!

I just read in the Straits Times today that Saudi Arabia’s most prominent blogger, Fouad Al-Farhan, was arrested on Dec 23 by the Saudi authorities for allegedly violating “non-security laws”. You can read the report in the New York Times.

In a letter sent to his friends just before he was picked up by the authorities, Fouad wrote:

I was told that there is an official order from a high-ranking official in the Ministry of the Interior to investigate me. They will pick me up anytime in the next 2 weeks.

The issue that caused all of this is because I wrote about the political prisoners here in Saudi Arabia and they think I’m running a online campaign promoting their issue. All what I did is wrote some pieces and put side banners and asked other bloggers to do the same.

He asked me to comply with him and sign an apology. I’m not sure if I’m ready to do that. An apology for what? Apologizing because I said the government is liar when they accused those guys to be supporting terrorism?

To expect the worst which is to be jailed for 3 days till we write good feedback about you and let u go.

There may be no jail and only apologizing letter. But, if it’s more than three days, it should be out. I don’t want to be forgotten in jail.”

I know this is Saudi Arabia, not exactly a bastion of democracy in the Middle East. The Kingdom is an absolute monarchy, and does not allow political parties, civil rights groups or public gatherings. Nevertheless, this news is still upsetting and repulsive to me.

Unlike most other Saudi bloggers, Fouad uses his real name and features his picture on his blog. In a post in December, he listed his 10 least favourite Saudi personalities, including a businessman prince, a prominent cleric, a minister, a mayor and the head of the judiciary.

One of Fouad’s fellow Saudi bloggers, Ahmad al-Omran, was quoted as saying, “It’s really sad that a blogger who is writing about important issues out in the open would get arrested, while there are extremists who call for violence and hate, and the government is not doing much.”

I lend my tiny voice to a global call for the immediate release of Fouad Al-Farhan and urge fellow Singaporean bloggers to do likewise.