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The Agenda

NRO’s domestic-policy blog, by Reihan Salam.

Mothers of Invention



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Steve Randy Waldman reminds us that while entrpreneurs really do strive to meet the needs of customers, even as they constantly invent new needs, they compete to meet needs on a purchasing-power-weighted basis. That is, the affluent U.S. consumer counts for much more than the poverty-stricken Congolese consumer. This raises an interesting possibility: abundance for a privileged minority of global consumers might lead to a satiation of wants that results in technological stagnation: “purchasing-power weighted necessity is the mother of invention, but people with needs have little purchasing power while people with purchasing power have trivial needs.” And though my guess is that investor Chamath Palihapitiya, a Facebook veteran, is not one of Waldman’s avid readers, he did recently make a closely related point:

He argued that in contrast to past decades, where tech entrepreneurs were inventing silicon chips, putting computers on every desktop, or wiring the world, we’re now “rehashing ideas from 2003.” He didn’t name a specific company, but when Palihapitiya talked disdainfully about an instant messaging app that allows you to send photos of everything from an apple orchard to your genitalia, and that the message disappears after a short period of time, it’s not too hard to decipher who he’s talking about.

“That was a bad business plan 10 years ago, and it’s a bad business plan now,” he said.

All of this seems particularly frivolous, Palihapitiya said, at a time when people are “dying left and right” and there’s significant inequality: “Everybody should be focused on these big ideas.”

What Palihapitaya surely understands, however, is that as long purchasing power is distributed very unevenly, it will take more than moralistic exhortation to convince entrepreneurs to meet the needs of the global poor. C.K. Prahalad has offered a contrary view — that there is a “fortune at the bottom of the pyramid,” as the aggregate purchasing power of the global poor is very high indeed. And there is at least some reason to believe that multinationals are pursuing this opportunity, as evidenced by the efforts of various business enterprises to expand their operations in sub-Saharan Africa, where only 2 percent of the population lives on more than $10 a day. Indeed, one could make the case that there are more entrepreneurial energies directed at the global poor now than has ever been the case, in large part because of an increase in indigenous entrepreneurship as many in the developing world have made it beyond mere subsistence. (This is a develop Dayo Olopade chronicles in her forthcoming book The Bright Continent.) So while it would be a fine thing for more of America’s greatest entrepreneurial minds to be focused on meeting the needs of the global poor, as Palihapitaya explicitly and Waldman implicitly recommend, the fact that more Kenyan and Rwandan minds are being brought to bear on these challenges is arguably a much bigger deal. 

For more optimism, I recommend Annie Lowrey’s new column on progress towards the eradication of extreme global poverty for the New York Times Magazine.



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