Free Market vs. "Free" Market

Whoa, Minas dude, you totally golded her

Paul Polak, author of Out of Poverty

"While it certainly is true that powerlessness, poor health, poor education and absent transport infrastructure are important root causes of poverty, there can be no question that the most direct and cost-effective first step out of poverty is to find ways to help poor people increase their income."

The "non-profit" or 501-c(3) status in the USA IRS definition of charity was an attempt to establish clear certification that an organization is doing good works and is not "profiting" from those good works.  The charity status has certain "third rails" - you cannot issue or sell stock, you cannot be both a charity and a political organization (respect limitations on advocating for specific legislation or candidates), you must file a 990 form and disclose your sources of income, etc.

An obscure IRS tax code for avoiding taxes on income has become, to many decision-makers, a shortcut to definition of good works (karma yoga).   It's used as a "certification" for good... (e.g., for helping poor people earn income.)

Churches are 501 (c)3, as are federal and state charted credit unions, veterans organizations, cemetary companies, and ditch and telecommunications infrastructure management companies.  You file for the status, and in return you get to pass along tax-benefits to anyone who donates to you, a Midas touch of tax breaks.  They pass income to USA donors, via the IRS.


There is no third party certification process, of course, to prove that an organization does not promote legislation or do anything to distinguish itself from another entity in the same business, much less proof that the organization does more good (helps people out of poverty).   Close your eyes and walk into a credit union, open them and tell yourself you are not in a bank.  Look at the pay and income of non-profit executives, ayatollahs, priests, and elders, and compare it to the pay of business managers and owners and investors, and you may see blurring of the lines of personal interests, despite what a tax code bureaucrat in an IRS office may have determined decades ago in review of a filing.

The fact that billions of dollars in federal tax benefits accrue for "pledge of non-profit" is a modern version of "state church".  We don't have "church and state", or a state advocacy of a specific religion.  But the state gives a tax-free status, and a right to extend tax cuts, to beatified organizations which file these papers.  Meanwhile, who would Polak say increases income for poor people - those who boycott refurbishment and recycling trade, or those who actively participate and reform it?

Why should USA tax rules define what trade model feeds and supports people of color, language, culture, and nationality across oceans?   The only explanation for this is the "cognitive dissonance".  We don't know if our e-waste got exported to Guiyu or Meltwater Acadamy, so we seek a rule for advocating one used electronics or "ewaste" export status over another.   E-Stewards has branded itself as a "non-profit" environmental organization standard.   WR3A, which did not seek the "charity" tax status (so that we could truthfully oppose or endorse legislation affecting our members overseas), has been branded a less-than-sanctified environmental organization.  Which organization is helping people out of poverty?

People in the USA do not really understand what "NGO" (non-governmental organizations) means.  R2 Solutions should not defer to a byzantine tax filing to determine whether an NGO is legitimate environmental organization.  E-Stewards plays on this cognitive dissonance by announcing that "environmental organizations" withdrew from the R2 Process, just as a car salesman uses cognitive dissonance to lead a thirsty buyer to his can of water.  While WR3A remained with R2, we pay taxes, which is presented as some kind of evidence that BAN.org is holier, that E-Stewards is the "environmental" choice.  Both are NGOs.  One trades with e-waste markets overseas, monitoring fair outcomes, and the other boycotts them.  NGO is not a "tax status", and WR3A is doing more for poor people than anti-export watchdogs are doing.

In the big picture, this is all just business, all of it.  Trade is business.  Government is business.  Charity is business.  Mafia is business.  Legality stops at state borders, and sanctimony is no different than branding.  I learned this the hard way.

When people have never traveled or lived in Africa, Asia, or Latin America, they form opinions based on photos, and opinions of journalists and non-profit organizations that they trust.  Through cognitive dissonance of risk, they choose "safe" sounding organizations, and assume the IRS definition of charity is the way to help Ms. Vicki and Las Chicas Bravas emerge from poverty in Sonora.

If you have laid brick in the hot sun, if you have put a shovel in earth to dig a grave for a child, if you have secretly handled malaria medicine in your hut so that others don't beg for it, if you have eaten by hand from the same bowl as a dying person who is laughing, you tend to forget the status invoked across the ocean by a wealthy nation which sets tax rules to distinguish between credit unions and banks.

If you have paid money to a truck driver to deliver goods, whether they are charitable or profitable, you start to understand that making money on donations or on commerce isn't much more than a marketing strategy.  The driver may refuse to unload your goods without a bribe.  He may need malaria medicine for his child.

To put fuel in a tank to get computers to a school in India, you need to pay the truck driver.  To pay the truck driver, you have two possible business models.  In BAN's model, you make the money after paying a USA repairman to fix the computer, or by taking a much older and heavily used computer from inside India, Indonesia, Egypt, Senegal, Brazil, etc.  In WR3A's model, you find that the USA discards are nicer than the in-country discards, you find that the repair geeks are better in India etc., and you make enough money to pay the truck driver and have some to spare for management of residuals and leftovers.

This is a simple economic comparison.  Which method increases incomes and decreases poverty?

Do-gooders and environmental activists in the USA need to study economics.  Marxist economics were seriously considered as a model by people in my generation of environmentalists, and we have yet to purge our environmental ranks of buffoons.  There are more Marxists seeking 501-(c)3 status than there are Marxists opening fair trade businesses.  What does this tell you?

In theory, the 501-(c)3 represents a third party enforcement.  But it isn't.  Civil law contracts are better than relying on a bureaucrat in DC to open a file cabinet and review a tax status.

Cognitive dissonence, Cognitive risk, Cognitive risk-benefit... without experience, reputation, and scientific method, people are deciding on certifications and tax status to protect themselves from making a wrong decision in trade.  When you choose, however, you have made a choice.  Only the scientific method of examining the outcome of your choice between the economic models will matter in the years to come.

I'm a professional recycler, and a professional degree-holding international relations expert.  But I did not file to avoid paying taxes.  So I'm tainted?  Or is anyone who thinks so an amateur?

Read the Basel Convention language for yourself.  It specifically says that export of electronics for repair and reuse is commodity and not waste and is legal (defining it as "e-waste" blurs that non-waste decision).   Any organization which gives itself the title of the Basel Convention and advocates to amend the Basel Convention and misrepresents it should not hide itself behind a two-year old IRS tax filing.

Misrepresentation is a type of lying.   Think of the children if you cannot think for yourself.  Read Paul Polak's book, "Out of Poverty:  What Works When Traditional Approaches Fail", and think of the children's families incomes if you are capable of thinking harder.  Which economic model allows them to buy their own malaria medicine?

If you haven't lived in Africa, with your own private stash of chloroquine, you don't understand why recusing yourself from trade kills children.  Gently used American computer monitors work better, and are more profitable, and the profits are what Africans buy bednets with.