Small Businesses in the 3rd World

Recently, American investors have started funding startups in 3rd world countries.  It turns out that in Africa, the Middle East, and Southern Asia, there are a lot of artistic skills, without much local demand for the products.  Well, Americans have both the funds and the desire to purchase these products.  Some U.S. investors and charities have started providing funding for people in these 3rd world countries to start their own businesses based around these local arts.  Among other things, the funding is used to obtain training, pay for raw materials, and start shipping the goods to the U.S. where they can be sold.  Programs like this are helping to lift people in these countries out of poverty, and they are providing middle and upper class Americans with goods that are often of superior quality to factory produced products.  The problem is that this does not do anything for our large numbers of people in poverty here in the U.S.

Helping starving people in 3rd world countries is a noble goal.  Helping them in ways that reduce their dependence on us is even better.  It cannot last though.  We are not in any position to be giving people outside the U.S. significant amounts of our time and effort.  Poverty is increasing in the U.S., and we have plenty of our own starving people that need our help.  Our welfare system takes away some of the burden, but it adds others, partly because it is poorly designed.  What we really need is not U.S. investors providing funds for startups in Africa.  What we need is U.S. investors providing funding for U.S. poor.  Most of these businesses that we are funding in 3rd world countries could exist in the U.S. as well.

Americans can make shoes and rugs and many of the other things that we currently import.  Training is not that expensive, and it does not have to involve expensive trade schools.  Things like knitting and weaving can be learned on the internet.  Those with any level of artistic talent can learn how to make high quality costumes out of fairly cheap materials, and the current cosplay trend would help fetch some pretty good profits on this.  Things like blacksmithing and metal casting are also easy to learn on the internet, and in most areas of the U.S. there are groups that would be willing to help with training for cheap or even free.  This just brushes the surface.  There is a market in fixing old toys.  Learning to make simple web sites for individuals and small businesses is pretty easy.  Many people with unusual talents have managed to make a decent income just recording and publishing YouTube videos of their performances.  All of these things are artistic in nature, which means that they are not subject to the same sort of competition that normal jobs and products are.  There are only two things most poor Americans are missing: time and training (and sometimes equipment and materials).

American investors and charities should be looking at the American poor, instead of, or in addition to, those living in 3rd world countries.  They should offer funding, including enough for living expenses and training, for Americans who have or want skills in things that would provide the opportunity to start a small business based on artistic skills.  Besides helping those in the U.S., this could also be quite profitable for investors.  Demand for artistic products in the U.S. is fairly high, especially among the upper class.  Art knives made by reasonably skilled blacksmiths can demand $10,000 a piece or more, for products that take about one month to produce.  Hand crafted shoes can bring in a few hundred to a thousand dollars each for a week of work or less.  An old doll that takes a few hours to clean, repair, and repaint can bring in $20 or $30 with a half decent job (more for an experienced artist).  Hand knit or woven clothing and rugs can bring in a reasonable income as well.  Many people have managed to make a decent supplemental income with YouTube videos, and good ones can bring in ad revenue for months or years after they are published, without any additional work.  Even for those with less skill, these kinds of work can be done from home and supplement a poor income enough to make a significant difference.

What about those who are starving in 3rd world countries and do not even have food stamps to help them out?  The more we help our own poor, the more resources we will have to help others.  Every poor American we help out of poverty in a sustainable way is another potential donor, investor, or customer for poor people in other countries.  Instead of looking at investing in Americans as a drain from funds that could be invested elsewhere, consider it an opportunity for a more sustainable investment model for everyone in need.  Any investment that pays off will provide additional funding that can be used anywhere.  In addition, investors might encourage Americans they help to invest in or donate money to organizations that help people in other countries.  One rich person investing in some businesses in Africa will help a few people, until something happens that prevents that investor from continuing to invest (death or massive medical bills, for example).  Several thousand middle class Americans donating money to charities that help people start businesses in Africa will ultimately provide far better funding and be far more resilient.

The best strategy here is probably a mentorship strategy.  Investors should start investing in hobby-style artistic professions for poor Americans.  They should provide paid or volunteer mentors for every person they fund.  Those mentors should help beneficiaries manage their finances, find training, and setup their operations.  The mentors can also report back to the investors, to allow them to bail as soon as possible when a beneficiary is not using the funds wisely.  Another responsibility of a mentor should be to encourage beneficiaries to help out others once they are able to, and this theme should be repeated during regular meetings of the beneficiaries with the investors.  With mentors, chances of success will be much higher, and imminent failure will be much easier to detect much earlier.

The long term effect of this will be to teach Americans that cannot find jobs to create their own.  It will improve the U.S. economy, and it may even reduce the burden of the poor on the U.S. welfare system.  More importantly though, it will provide Americans with the means to provide aid for others far better than we are currently capable of.  A few rich investors helping the 3rd world poor start businesses to get them out of poverty cannot compete with what a robust U.S. economy composed of a large number of American middle class donors can do for them.  A common religious theme applies here: You must help yourself before you can truly help others.  To maximize the good we can do, we must first remove the mote from our own collective eye.