Monday, December 05, 2005

The $100 Laptop - a Good Thing, Right?

Over at TCS, some insight into why the upcoming $100 laptop may not be such a great idea. First, a look at the distribution of these laptops, which will be through sales to countries' governments:

In reality, two things will happen, one bad and one good. First, the bad outcome. As development economist Jeffrey Sachs used to recognize, poor countries tend to have governments with a lot of power (see his "Growth in Africa: It Can Be Done," The Economist, June 29, 1996, pp. 19-21). That's one main reason they remain poor. As Friedrich Hayek pointed out in his classic cautionary book, The Road to Serfdom, in countries where governments have a lot of power, the worst tend to get on top. Thus, the powerful bureaucrats who are charged with distributing the computers are not likely to be particularly ethical or caring, as maintaining their power is more important to them than raising their people out of poverty. In fact, these bureaucrats are likely to give the computers to their friends or to others who are politically powerful. In many countries, the bureaucrats may even try to sell them and pocket the proceeds.

Then, couple that with some basic economics:

Many people in those poor countries -- the vast majority, I suspect -- would not be willing to spend even close to $100 on laptop. What that means is that they would prefer to spend $100 on other items -- food, iodine pills for water, DDT to protect them from malaria, basic generic drugs, maybe even a sewing machine. And if their governments are buying laptops for them, the governments are getting the revenues from somewhere. Possibly, Negroponte will be able to persuade Bill Gates or others to cough up many of the funds. But the vast majority of the funds are likely to come from the governments of poor countries, which means they will come out of the hides of those countries' citizens, all but the richest of whom are fairly poor. So what started off as a completely innocent, let's-help-the-poor-in-poor-countries proposal will end up, with government involved, as just one more way of government using force against its own people to buy goods for them that they regard as luxuries, preventing them from buying the goods that they need to make it to next year.

There is no way to avoid the fact that many, if not most, of these laptops will end up on the black market. First, they're being funneled through basically corrupt governments. Some of those will be sold simply to line the pockets of the powerful. But even the ones that do make it into the hands of the very poor children they were intended for may end up there. Let's face it: if it's a choice between a luxury item like a laptop and the money needed to buy next week's dinner, they'll sell it to get the cash. There's no way around it. Just give each family $100 and the option to buy the laptop with it and see what happens. You may be surprised. I certainly won't be.


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