WOMEN WHO MAKE THE WORLD BETTER: June Arunga

WE ARE PLEASED TO ANNOUNCE THAT JUNE ARUNGA IS FIRST WINNER OF IWF’S WOMEN WHO MAKE THE WORLD BETTER AWARD

Filmmaker June Arunga is a young woman who, while growing up in Kenya, thought deeply about the terrible poverty of her continent and pondered how wealth is created.

She could have embraced the hackneyed ideas of the aid establishment or the celebrities who drop into an African country for a photo-op and to pontificate on the sins of the developed West.

Because she didn’t take this easy path, because she has the courage to grasp and then promote less popular ideas and because she has the talent to present her ideas compellingly in writing and film, June Arunga is making the world better. She has the impudence to say that what elite activists sneeringly call a sweatshop may actually be a factory that improves somebody’s standard of living.

Ms. Arunga, 25, has a law degree from England’s Buckingham University. She cooperated with the BBC to make “The Devil’s Footpath,” a film in which she traveled throughout Africa to probe the subject of poverty. Now in California, she plans a career as a filmmaker.

We wish we could get rock star Bono (you know, the sheltered assets fellow who wants more of your tax money to go to Africa) to read this interview.

We don’t know about Bono. But we definitely urge you to read this compelling interview-it’s original, will make lights go on in your head, and will, if you don’t already know Ms. Arunga, introduce you to somebody who cares more about curing poverty than spouting trendy “philosophy.”

The name of the award takes its name from Kate O’Beirne’s book, Women Who Make the World Worse. We will from time to time bestow the award on a deserving woman. Please don’t hesitate to make nominations.

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IWF: What we call sweatshops in developing countries are highly controversial right now. Could you comment on this?

ARUNGA: From my experience talking to people here, many have never been to what they call a sweatshop. I don’t believe that people should be exploited by their employer or treated badly or not given due compensation or work under harmful conditions where their health is at risk. But what many people think of as sweatshops are basically factories or establishments that they judge by American standards. So, if they went to Vietnam where the Nike factories used to be attacked or to Kenya and found a factory where it was really smoky and people had to work under what would be considered dingy by American standards, they would feel it was unfair, that people are being exploited and that conditions should be improved.

One would have to look at it on a case-by-case basis. I don’t speak for places that have exploitative tendencies but my experience is that people use standards that don’t exist in these countries, when they’ve never been to poorer countries, to judge places of work. Now the typical sweatshop, for example, if you went to Kenya today and found a local manufacturer who had managed to start a business and become somewhat successful as an employer and can employ more than just his family you would think that it’s pretty dingy. But the people who work there really value their jobs and the alternatives they have other than working in that factory are way worse. Often the conditions they are living in their own homes are what an American would think is dingy, too, but they love their homes and make improvements to them as and when resources are available. The person they are working for is an honest businessman who is doing the best he can. With the resources he has available to him, he puts up whatever kind of operation he has and is paying people as much as he can based on their productivity and on what a competitor would likely offer the same person. He has to have money left for a profit to feed his kids and reinvest in his business. Critics say he shouldn’t be in business and that the place should be closed down because it is a sweatshop. [These critics] are basically leaving the entrepreneur with no choice, the workers with no job. Often times the worker is left with the option of going back to subsistence farming, where there is no surplus to sell so they can have money to pay for education and healthcare for their children, not to mention the consumers (some of whom are entrepreneurs themselves e.g. retailers) without the valuable goods and services the business was providing. Basically, these critics are proposing to ground these local economies to a halt.

QUESTION:Then are you making the argument that some of these controversial factories might actually be beneficial to the workers?

ARUNGA: I did a documentary called “Globalization Is Good” with a Swedish Economic Historian called Johan Norberg for Channel 4 in the UK, and we compared the effects of globalization in Kenya, Taiwan, Vietnam, and Sweden. And one of the things we covered in Vietnam was what people call sweatshops, and we interviewed people who worked in these places. The typical worker’s experience was that when they first started working there they walked to work because they didn’t have any skills or money and they lived in slums. All they wanted was a steady paycheck, a foot in the door, some experience and skills, so that they could be on the conveyor belt to higher wages. If you work on your small family farm, with rudimentary technology like a hoe or horse and plough, no money for fertilizers, or seeds and unreliable rainfall, you are at the mercy of the weather (so are you children’s education and health), spend all day under the sun, you don’t have a steady paycheck, can’t afford running water, electricity or telephones and so your kids spend their days fetching fire wood from the forest, fetching water from streams, and working the farm with you all to just make three meals a day. You don’t have money to buy things like cooking fat, shoes, clothes, coal, send your children to school, or have extra money for medicine if somebody falls ill. So having a paycheck is like moving a level up from being on these small inefficient farms that are characteristic of rural life in poor countries. In the meantime, the world is moving along, other humans are making money to buy all their basic needs, and acquiring ever increasing technology that makes them even more productive and makes them more money to invest in rest and recreation (something you will never have), and besides that forms of human organization get more sophisticated, as we have seen with modern corporations. If one does not get onto this band wagon at whatever level is available to them (and they have a right to, if they want to), then they will never catch up.

QUESTION: Thus the trend of rural to urban migration.

ARUNGA: Right. People are leaving the farms and going to try and acquire skills that increase their likelihood of making a living and making their dreams come true. But for me it goes beyond that. It averts the likelihood that they will take their talents and dreams to the grave, when they could have found fulfillment in exploring these during their lifetime. When they come all they can do is start with a menial job because they have no skills to offer anyone. They value opportunity to be exposed to the corporate culture, management systems quality control in the production process and the working of markets generally. They learn how to show up on time. They learn how to work under a supervisor– things you take for granted when you have been to school and had a job all along. A Vietnamese woman on the documentary said that over time people bought bicycles to ride to work. So the company had to create a place for them to park their bicycles. But soon they bought scooters, and, now, if you look at the parking lot, most of them have cars because they have become valued, skilled workers and they have more money. None of them think of where they work as sweatshops with the connotation it has here. Their dignity is attached to the fact that they are progressing in life, becoming more sophisticated, providing for their families, and having fewer fears of death from hunger and disease.

QUESTION: Are you saying that lives are actually improved by these institutions denounced as exploitative sweatshops in the United States?

ARUNGA: One young woman who was in her mid-twenties and whom we interviewed for the documentary said that her family was really poor, but that she was glad to be in the process of building a house. It was halfway built, but she was already living in it because living in a half-built house was better than living in the slum where she had been living. She was so proud to be a property owner in the city, something her parents had never dreamed of. For the activists who talk about people being exploited in sweatshops, this is what I’d say: There’s nothing wrong with sweat.

QUESTION: What is the better way to alleviate poverty in Africa– more aid or free markets?

ARUNGA: Free markets are the only way for people to preserve their dignity. Imagine if you were born into a station in life where you could only receive charity and not be able to explore your talents, come up with ideas that you think could solve the problems around you, convince somebody of the merits of your idea, have somebody invest in your project and then actually see the problems around you being solved. What markets do basically is to attempt to solve problems, an imperfect and constantly evolving trial and error process to finding different approaches to meeting human demand for goods and services. If there is a need for something, anyone can decide to solve the problem for a fee. You find out what need matches your talent, knowledge or resources, then you take the risk by putting money on your proposed idea, if your solution is good and people find it valuable, they pay you the fee you are asking for in return. There is basic human dignity that comes from people being involved in the market and solving problems and making a living from being useful rather than receiving charity. I don’t think charity is a way to wealth, and I never heard of one telling their children it is either.

QUESTION: So charity isn’t helpful?

ARUNGA: There’s nothing wrong with one-on-one charity or with groups identifying less fortunate people–we all get in trouble from time to time and may need relief. As a government policy, long term, however, it doesn’t work. Furthermore, government to government charity, or aid, is what I really have a problem with where one government decides to give money to another government because the people in the country seem poor. If the people in the country seem poor, we need to ask the question: Why?

We know how wealth is created. Wealth is created by enterprise, by people taking a bit of money and putting it to productive use and expanding that money, making a profit. If that is not happening in the aggregate, if most of the population is poor, that is what needs to be addressed.

QUESTION: Why is Africa a poor continent?

ARUNGA: For somebody who is born in 1981, like myself, who is trying to make a living in Africa, the things that stand in their way of becoming successful is, one, just how hard it is to find capital. [In America] there is a central record of your credit worthiness and you can get small advances from banks. That does not exist in African countries, and, if it does, very few people have access to it. Most people in most African countries don’t have their property registered at all. So you might be a diligent, hard-working person who always pays your debts but there is no method of keeping track of this, except for your friends and people who know you personally. The only people you can get credit from are your immediate family and friends. This makes it difficult to expand your business; there is no link to a larger pool of money that is stranger’s savings, like you have in the US through the banking systems. There may be somebody on the other side of town who is sitting there with a bigger pool of money, but that money cannot be advanced to some good idea that you have because there is no credit card available to you to link you to that money.

QUESTION: What effect does that have on business?

ARUNGA: Many business ideas are born and they are underfinanced and so stagnate, that is why we have few local multinational companies, because these grow from small businesses. Another problem with the non-registration of property is that people don’t have collateral. If you don’t have title to property, you can’t walk into a bank and mortgage your property for loans. You can’t borrow against your property. You can build a house on it if you have the money, but you can’t make the equity work for you on other ventures. Capital is a big problem for Africa. The irony is that there is so much capital seeking investment opportunities around the globe, and the countries that need it most, seem to be the ones that discourage its influx with poor policies that are hostile to investors (both local and foreign), have unreliable courts to enforce contracts, and protect the interests of entrepreneurs.

QUESTION: And, of course, there is the problem of corruption?

ARUNGA: Since African governments have been notorious for corruption and appropriation of investments, it has made foreign and local investors very shy about investing in Africa. If you are in America and you hear of a good venture in Zimbabwe that you might be able to put some money into, you might think twice because not too long ago the person who runs the country just basically kicked people off their property (both natives and Europeans) and took or destroyed their property. One is not assured of the integrity of the judicial system that one would turn to for legal redress in such a case. This is also a problem for local people. A vicious politician can see your land and like it and go to the registry and change the ownership because it is easy to corrupt officials. If you go to court [to try to regain your property], the courts are corrupt.

I know this from personal experience because my own father lost his whole business. He started a large-scale fishing business and the government just closed it with no explanation. He spent years in court trying to get his business back and some compensation for the boats they took. Just to have the files stay in the court, so that they don’t disappear, he had to bribe everyone from the court clerk to the court janitor. This makes capital very shy about investing in Africa. Apart from that, there are very high taxes.

QUESTION: These are such serious impediments to improving African economies…

ARUNGA: There is undeniable evidence of something that would work. One of the biggest impediments to the growth of business is over-regulation, of already-established businesses or for businesses trying get off the ground. Sometimes it is almost impossible to get licenses necessary for entry into business, so there is no competition, and the existing monopolies offer limited services, at high prices, putting their services and the attendant benefits from those services out of reach for most people. There was the case of telecommunications in Kenya. Less than a decade ago, there was a big wave of liberalization where the government just decided with the stroke of a pen to stop being a monopoly. Kenya used to have 300,000 telephone lines. Most people thought they were just too poor to afford a phone. The truth is that phones were artificially expensive because the government insisted that there had to be only one telecoms provider, a corruption ridden and grossly inefficient government corporation with little incentive to create new technology or respond to customers’ needs. There were so few telephones in Kenya that most small businessmen had to travel to close small deals or inefficiently use pay phones on either end. When they liberalized the phone industry, several foreign and domestic investors were waiting in the wings to get into the mobile phone market. Today, these companies can barely keep up with the swelling demand. Here is a case where you might have thought people were too poor to afford a service and the government needed to give them aid. But private money was able to supply this service. We went from 300,000 with telephones to over 3 million with phones. Business efficiency was increased across the board, from taxi drivers, to hairdressers to big business by the significant reduction of the cost of communication through allowing competition in telecoms.

QUESTION: You have arrived at decidedly different conclusions from many who want to solve Africa’s economic problems with infusions of cash from the West. What and who are some of your intellectual influences?

ARUNGA: My upbringing was a huge influence on the way I think. I was raised in the Protestant Christian tradition where you were taught that you had to work hard and be responsible and that your talents were God-given, and you were expected to multiply them. We were taught you had to identify your talent and put it to use. That was an important influence, as well as being taught to respect other people’s property. Beyond that, I watched movies. I got a glimpse of the way people lived in other countries where a child at fifteen could find a job. I had relatives with advanced degrees, and often for years they could not find work.

My biggest fear in life was ending up poor. I had a personal drive not to end up poor. I wanted to know: What is the origin of wealth? I went to the Foundation for Economic Education (FEE) in NY through sponsorship from the Staley Foundation in Seattle. At FEE some of the world’s greatest economists go in and out the door, and they had an incredible library that I took advantage of to educate myself in economics and the working of markets. Some of the most important influences on my thinking were the works of Fredric Bastiat, Ludwig Von Mises, Milton Friedman, Hayek and Hernando De Soto’s book, The Mystery of Capital. Poverty kills people. But I’ve seen that there are many instances when policies can change by the stroke of a pen.