A6 Meeting: Public Presentation

Entitlement and Anarchy

“Bang for the buck” is at the core of all economic decisions. It is also at the core of economic and ethical philanthropic decisions. One maj or discussion has developed in the recent years among the upper crust of deep-pocketed intellectuals about the access to computer technology to the very poor in places such as Africa and South Asia. On one side were the money pumpers – the likes of Larry Ellison proposing that the cheaper the computer the more access to more people. The opposition from the idealists, head by Bill Gates, proposed that it was not enough to provide just any computer; the poor deserve the best that technology has to offer as well. It is hard to decide whether this debate is more analogous to a teenager buying a $500 first car to get on the road or the Seinfeld muffin top fiasco where the homeless demand the entire muffins be donated, not just the bottom halves.

In development plans for the poorer regions of the world the consensual approach has usually been aligned with the “better than nothing” ideology where the rich give what they can find and the poor get what they can grab. The standards of micro-lending have embraced this ideology, assuming that the bare minimum is enough to kick-start the small entrepreneur’s financial growth. Perhaps the strongest argument against Grameen Bank’s involvement in Bangladeshi development has been its haphazard distribution of land through small loan purchases. The incremental purchasing of lands moving away from the central cities of Bangladesh and other developing countries has been bla med for the rapid urban sprawl taking over rural areas. For countries whose populations are still in the transitional phase of rapid growth due to high birth rates and low death rates low density suburban development is not an efficient or sustainable pattern of development. There is a need for some level of master planning when it comes to providing people homes and ways of life through development. The implementation of an overseeing organization is ethically problematic though, since it conflicts with the idea of the small entrepreneur having full liberty about how to invest in business, land, and construction. In the general structure of micro-credit, the loan is not pending a particular direction in investment.

Argentine architect Victor Pelli presents a dilemma to begin his book, Habitar, Participar, Pertenecer – how does a designer balance the necessities of the individual with the satisfaction of social standards? He proposes no earth-shattering solution in his book other than reason and sensibility. He emphasizes the effectiveness of individualized attention, small-scale studies and projects, and the assumption that no one knows better than oneself what one needs. As a designer himself, he reminds the all too often omnipotent educated designers that they must provide a service to those in need, not indoctrinate them and force them into our idealizations of what their lives should be.

Structuring the Microcredits of Development

This first tree is a general overview of the standard micro-credit loan process followed by most organizations along the Grameen Bank philosophy. This structure has proven extremely effective but is not specific to any developmental strategy.

This second diagram is my initial proposal for a micro-development process that is sparked by an architect's initiative and produces financial and personal growth for the borrower as well as profits for the investor architect.

What I can learn from Carrefour, Wal-Mart, and other giants

Everyone hates giant hypermarkets. Middle upper class and upper class hate giant hypermarkets. They hate hypermarkets that aren't Target. They hate hypermarkets because they destroy the local businesses, the small mom-and-pop shops that are left without means to fairly compete. Yet, there are plenty of business lessons to be learned from these dark empires - lessons that can be translated into good.

There is something to be said about two of the largest businesses in the world consistently making profits while left and right there are investment companies breaking down when their sole raison d’être is to find means of making money. If their customers were well-off individual investors with surplus money and the companies themselves were investors with their collective surplus one would think it would be much easier to muster a profit with all that exra transitional money instead of selling low-priced goods to the lower and middle classes 99 cents at a time.

Observing the trend in the past ten years between the DOW Jones, Wal-Mart (top), AIG (bottom), there seems to be a lopsided success on Wal-Mart's side when compared to the general market without any predictions of a devastating crash.





Its strange to think so much time and effort goes into market research in so many businesses. They worry that recessions and economic fluctuations will create variations in the sizes of their markets and their consumption power. These markets are often soccer moms, teenagers, retiring baby boomers, and so on. How are these market researchers so narrow minded to miss the largest and most consistent market in the world - the lower half. Sociologists emphasize the fact that the poorer half of the world is consistently lacking in every possible aspect of life quality. They are too often considered non-productive and non-consuming heads in an unresolvable misery. This stance dismisses the basic belief that people are created equally and hold unlimited potential to grow as contributors to society. The poor do not need charity, they need access. They do not need free material goods, they need a means to produce and purchase those goods themselves. Wal-Mart and Carrefour provide the access and low prices to the upper crust of the poorer half, those who have reached the point of making purchases of minimal luxury. Their market base will not disappear anytime soon. If anything it will only grow throughout developing areas. It is no coincidence that Carrefour's largest market after its home in France is Brazil. The lower class is a consistent and powerful share of the market. They are increasingly more demanding and more economically decisive as they become more empowered. Therefore, they are also a safe and stable consumer basesince they are the most accurate followers of the "invisible hand" of Keynesian economic theory. Their money is almost entirely rooted in production as opposed to the middlemen of service that consume profits from the transaction of money, money that is more availavle in good times than bad. The labor intensive lower class is still the base of the economy and will always consume.

There is so little confidence in the blue collar worker, the informal businessmen, the "uneducated", yet they are the most adaptive and innovative class in our societies. Rarely will we see a laid-off accountant stoop down to work at the supermarket or sell hot dogs on a corner. They have financial fat to burn and will burn it beyond their means, into debt and terrible business decisions. They have too much pride.

The unspecialized worker will find a job somewhere somehow. He will find a way to survive - he has no time for pride, which shamefully leaves him at the hands of exploitation. He must be empowered to create his own way of life from scratch, to blossom into a small-scale businessman with his footprint on his land and his society. This is the point at which architects and developers participate in a business model that will benefit both sides. The investors shift their loaning strategy to a much smaller scale where the consumer is the resident or owner of the new modest dwelling and will only be considered productive once their way of life is established with the minimal infrastructure provided by the builder. They do not have any credit until they have already received the loan and building and will repay their debt once their business picks up. Architects are responsible for creating the most efficient and appropriate dwellings for the individuals and their growing communities. Ideally the architect is the banker, their surplus from larger projects in richer areas can fuel the banking of the small projects. The architect can more than ethically charge interest for the loan, charge for the design, and profit from the exposure in a developing area as a sensitive and competent designer and builder. An investment model along these lines is a viable proposal for the future of development and urbanization in the developing world as well as poorer areas of the developed world. It is not a new model by any means, if anything it is reverting to the principles of the construction business with a conscious and competent designer as its central catalyst.