Profits & Disaster Relief

I’m currently spending a few days this week at the wonderful Kenan Institute for Ethics, at Duke.

Last night I was part of a Kenan panel discussion with Jacob Remes (a Kenan Graduate Colloquium Fellow and a Ph.D. candidate in the department of history here at Duke). Jacob sketched some of the history of disaster relief, and argued that the kinds of aid most likely to prove effective have typically been ones rooted in solidarity, rather than in charity. He said that the informal help of family and neighbours has most often proven more useful than official aid. (Here’s an editorial Jacob wrote on the topic: Aid that will work in Haiti.)

I’m no expert on disaster relief, but regular readers will know that I’ve touched upon it once or twice on this blog. In particular, I blogged about the role of both cruise lines and credit card companies in the wake of the earthquake in Haiti.

To try to link my own thinking on disaster relief to Jacob’s historical account, I looked at what features of solidarity (or, roughly, friendship) make it so important in disaster relief. My quick causal hypothesis is that the crucial features of friendship, here, are knowledge and motivation. And if those really are the two key factors, then it’s worth looking at what other mechanisms have those features. Human solidarity is a beautiful thing, but it’s not always there. So it’s worth considering other mechanisms.

So, I argued that, at least to a certain extent, market-based solutions have those same two features. First, consider motivation. Aid based in friendship is likely to be enduring aid because our friends (even loosely speaking) are motivated to help us. But famously, another pretty reliable motivator is profit. I hope that companies see opportunities for profit in Haiti, for example. Most of us who help will help by making a quick, one-time donation. Companies who see business opportunities in Haiti are more likely to make longer-term investments.

Next, consider knowledge. One of the most important features of markets is that market prices convey information about needs. So, knowing that the price for x has risen in a particular region tells entrepreneurs that there’s a need for more x. And that equals an opportunity to profit by meeting that need. The other way in which business can do well in terms of knowledge is this: those of us who are distant from the scene can contribute by helping local businesses — businesses that are likely acutely aware of local needs. Microcredit organizations like Kiva and Zafèn are in effect ways to combine local knowledge with foreign capital to help build local economies.

Now, I hasten to add that I’m not suggesting that all (or even the most important) answers to the big questions of disaster relief are going to come from the world of business. But when it comes to disaster relief, we need ‘all hands on deck.’ So it’s worth thinking carefully about just what the profit motive can, and can’t, do in terms of disaster relief. The profit motive may not be the noblest of human motives, but it is surely one of the more reliable ones.

4 comments so far

  1. Jane Garthson on

    Lucky you to be at an ethics event at Duke! Their strong ethics program is one of the reasons I always cheer for them during March Madness (and I bet they were still celebrating on campus).

    I support having businesses involved in disaster relief. The ethical problem comes with having government support such as CIDA grants based on the needs of business rather than the needs of the local people affected by the disaster. The trade potential or other such corporate considerations should NOT enter into the decisions about how aid monies are flowed or aid is delivered.

  2. DarryleHuffman on

    In the short term the relief we give now just helps the needs for a short time. Business must see Haiti as potential for economic expansion not just short term compassion. If business would go in and help and then stay there for the long term then they would be doing one of the best CSR actions they could do.

  3. […] is clearly an opportunity for many companies, both Japanese and foreign, to participate in the disaster relief effort. Whether they have an obligation to do so (i.e., a true corporate social responsibility) is […]

  4. […] Next, there have been a few stories about companies helping out by either donating goods or by fundraising for disaster relief (see here and here, for small examples). Many more such stories have no doubt gone unreported. It’s also been noted that some companies are going to benefit from the storm, especially if (like Home Depot) they sell goods that will be needed for reconstruction. Is there anything wrong with that? (See here for a previous blog entry on profiting from disaster relief.) […]

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