Reading the title, you are probably expecting a liberal political piece about the greatness that is the Democratic candidate for president. You are mistaken. It is not Obama’s politics that interests me right now.
It’s his campaign’s economics.
I believe that developing countries could learn valuable economic lessons from the way Obama’s run his campaign. The fundamental fundraising concepts used in it can be utilized as a rough blueprint to promote growth and prosperity.
Why would this interest me in the first place? I come from Albania - a (barely) developing country in the southern region of Europe. Having been under one of the world’s worst communist regimes since the end of WWII, we finally became a democratic nation in 1990. Now, 18 years later, some progress has been made but economic growth has been very hard to come by. In my humble opinion, this is due to the fact that communism not only ravages economies, but also destroys the business mentalities of the people affected. The latter is much worse.
I remember that right after the fall of communism, our government was hard at work trying to secure large grants and loans from the Europeans and Americans alike to get the country out of the deep economic hole we had been digging for 50 years. As a matter of fact, during then Secretary of State’s James Baker III visit in Albania in 1991, our “leaders” proclaimed that he was coming with a “blank check”. We needed large sums, so a blank check suited the occasion just fine.
Eighteen years later, having spent all grants and loans from the Europeans and Baker having forgotten his checkbook home, our administration kept chasing large foreign investors to revive and develop our industries, tourism and what have you. Small fish just will not do. For us sardines, it takes two weeks and a small bribe to open a business license. Big Tuna only, please.
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Meanwhile, after months of recordbreaking fundraising, the Obama campaign announced that they raised $150 million in September alone. And that’s not the surprising part. The average donation was $86. Their bet that large numbers of donors at modest sums will produce something spectacular had paid off.
This could be the key to developing struggling economies everywhere, including my dear Albania. Stop focusing on bringing in those mamoth investors to do a billion dollar project. Clear the way for a million local investors to easily invest $5000 a piece. The total economic effect will be five times as big, while the economic impact will be compounded exponentially with a million families affected. And I’ll tell you something else. A million nimble individuals with a million life experiences and educations, will always come up with better, cheaper and more efficient solutions to economic problems than massive monopolies can, one hundred percent of the time.
Some specifics:
- Clear away all the obstacles in the way of an individual opening a business. How easy should it be? If the whole process takes more than 15 minutes, you probably still have some red tape to burn through.
- To boost small businesses, let them keep all their profits (no taxes) so they can be reinvested into growing their businesses and hiring more people.
- Provide entrepreneurial education for individuals to spark new ideas and plant the seeds of innovation.
What are your thoughts? Should developing economies follow the example of the Obama campaign?
It’s difficult for me to say I support Obama in any way (we disagree on that); however, I agree in the basic point of your essay. A blank check or large sum of money from outside investors: I’m hard-pressed to know of a time where that has had any true lasting positive effect. But when you have citizen’s putting up their own money, they have much more of a vested interest in success.
Allison
The premise of the post was the Seth Godin concept: “Small is the new Big”. The Obama tie in was partly due to the fact that in my opinion it is very evident from looking at the way his campaign has raised money, that it embodies this concept, irrespective of if one agrees with his policies. The frustration that brought me to write this out after having thought it through for quite some time, stems from the current state of affairs in my country where any sort of economic competition is stymied to favor monopolistic businesses. And the sad part is that I know my people could do great things if given an opportunity to express their entrepreneurial tendencies. After all they are doing it in the US.