The Theory of Social Business: to be (governed) or not to be (governed)

Here’re some thoughts on social business that Dr. Yunus is promoting in Bangladesh.  On his recent visit in Germany, he argued against government involvement in social business to prevent misuse of, say, government tax cuts by individuals or groups.  I believe he's invoking Ronald Coase's theory, only without the government involvement.   According to Coase, in a perfect world, firms work together to resolve transactions cost issues to the point where the transaction cost would be zero.  In reality, he also argues, transaction costs are not always zero.  Therefore, government intervention must be needed to resolve the transaction cost dispute when firms alone cannot resolve it.   

In Bangladesh, Grameen Bank’s success is largely augmented because GB is the only sustainable model.  In other words, there is hardly any competition.  But also it invokes the idea of monopoly, an economic inefficiency.  But long-standing corruption and lack of reform policies from government enabled GB to create such an impact on micro-lending business.  At the same time, GB has built an enormous empire in Bangladesh by establishing a number of other small- and social-business subsidiaries, like Grameen Knitwear and Grameen Fisheries.

But massive corruption in South Asia may bring opposing thoughts to the theory of Dr. Yunus’ social business model without government intervention.  For example, in light of the recent corruptions in its micro-lending sector in India, it could be argued that government actions could mitigate corruption.  It does not have to be just tax incentives.

Dr. Yunus has a strong pro-entrprenuership stance without government invention.  For countries like Bangladesh, India, and Pakistan government intervention or lack thereof is a double-edged sword.

The link to Dr. Yunus' comments on social business follows:

http://muhammadyunus.org/Yunus-Centre-Highlights/prof-yunus-against-govts-in-social-business/

Technology As We See IT

This week's technology snippets focus on the following topics:

Snippet # 1
The Washington Post, November 1, 2010

Topic:
Net-neutrality

Link:
http://www.washingtonpost.com/wp-dyn/content/article/2010/10/29/AR2010102905957.html


Description:
With a looming power shift in Congress, the debate over net-neutrality is heating up.  No one knows what the outcome of the election will be.  But every one is concerned about slow economy, joblessness, and housing woe.  Once again, people seek change to recover from the sluggish state of the economy. 

Reshuffling decades old telecommunication law poses a risk, both politically and economically.  It’s hard to predict what impact the net-neutrality will have on economy.  Taking away a free-market model in favor of a state-controlled policy does not seem logical because it removes competition. 
On the other hand, government accountability to control malpractices by the large organizations could enhance public trust and equal distribution of technology.
Either way, net-neutrality is a two-edged sword, not easy to handle but it must be disarmed from the grip of political quagmire and corporate power.  

Why do I like it:
I like it because it raises an issue from the business point of view which raises questions on the feasibility of net-neutrality.

Snippet # 2
CNN, November 2, 2010

Topic:
Social networking

Link:
http://www.cnn.com/2010/TECH/social.media/11/02/facebook.breakups/index.html?hpt=T2

Description:
The privacy is out the door – sounds like a cliché.  But this CNN report shows that the social networking sites like Facebook now use data based on their social traffic site to predict the break-up pattern.  Who knows what else they know.  But we cannot just blame Facebook.  We need to be vigilant about sharing and using personal data on the web.  Instead of posting actual date of birth why not making up one.  But the point of this article is that social networking sites now have incredible amount of personal information stored at their disposal.  And they will manipulate these data to their advantage. 

Why do I like it:
I like this article because it shows how nonchalant users can be about using personal information on the web.

Snippet # 3
The Washington Post, November 2, 2010

Topic:
Food and energy

Link:
http://www.washingtonpost.com/wp-dyn/content/story/2010/11/01/ST2010110106534.html?sid=ST2010110106534

Description:
The Buddhist philosophy preaches empowerment of human lives and nature.  This article, based on a new trend in China, focuses on the Buddhist philosophy in restoring balance of nature and nurture.  A group of young and affluent professionals are leaving their comfortable jobs for farming to harvest organic food.   Concerned about the quality of food, these Chinese professionals are poised to grow food naturally, free of pesticides and other artificial chemicals.  This trend is a stark contrast in a nation where industrialization and manufacturing are rampant in every conceivable city.  Farming is now considered a taboo.  

Why do I like it:
I like this article because of the novel intentions adopted by the affluent and young generation in China to restore nature’s balance by harvesting organic food.