How to Fix African Poverty

[music]

0:00:07.7 Trevor Burrus: Welcome to Free Thoughts, I’m Trevor Burrus.

0:00:09.7 Aaron Powell: And I’m Aaron Powell.

0:00:11.1 Trevor Burrus: Joining us today is Magatte Wade, the Senegalese founder and CEO of skinis​skin​.com, which she describes as “the lip balm with a mission,” and she’s dedicated to promoting black dignity while creating jobs and [0:00:21.8] ____ of prosperity in her home country. She also serves as director of the Atlas Network Center for African Prosperity. Welcome to Free Thoughts.

0:00:29.9 Magatte Wade: Thanks for having me, Trevor and Aaron. I’m glad to be here.

0:00:33.5 Trevor Burrus: How did you become an entrepreneur? Or you’ve been an entrepreneur many times, so what was the first one?

0:00:39.0 Magatte Wade: Yeah, so… So yes, I became an entrepreneur pretty much just by some… Because of a reaction. My first company was a beverage company, and it was basically trying to bring back to the forefront forgotten beverages from my childhood, right? But they were very healthy beverages using ingredients that came from agriculture, which was mostly giving a livelihood to the women who used to grow these ingredients, and in this case, primarily we’re talking about the hibiscus flower. And so, really it was a reaction to the fact that, especially back in the days, anybody back home who thought that they made it or were somebody, it was the way they would show status is by drinking Western soda pop brands, Coca-​Cola, Pepsi, Fanta, things of that nature.

0:01:25.2 Magatte Wade: And then while they did that, well, obviously, the need for the traditional beverage was decreasing and with that, the livelihood of these women, who were growing the main ingredient, were going out of the window. And so these women were getting themselves now to leave the countryside to go into cities, to try to find jobs, oftentimes domestic jobs or things of that nature, when they were not flat out out on the street, you know, with their children begging for money, and you can see this whole cycle of poverty, how it was going. So it was really a big no-​no for me, on one hand my culture dying, on the other hand, these women losing their livelihood, and I was just like, you know, criticize by creating, start a brand, start a company where you bring back these beverages. It’s up to you to make it cool and fashionable to consume these.

0:02:11.2 Magatte Wade: And so that’s how I really got started as an entrepreneur, and as well for me, you know, this… For me, entrepreneurship is really that, it is the act of criticizing by creating, it’s as simple as that. You’ve got a problem with something, go create the alternative that goes for… With it.

0:02:27.7 Trevor Burrus: The issue of… That I thought it was interesting, this idea of status as shown by drinking Western drinks. Generally, even broader than that, is that an issue in African countries, that there’s not enough focus on… There’s too much focus on the West, and maybe just America, and not enough on their own cultures and traditions and those… The power that lies in those traditions?

0:02:52.7 Magatte Wade: Yeah, that… And that phenomenon, we find… And it’s getting better now, because I think youth around the world is… There is this new sense of renewed sense of pride that’s going on all over the continent, but it’s definitely thanks to initiatives like ours, because when I started, I cannot tell you how often I had my own fellow African friends laughing at me, you know, the ones who went to Harvard and all that, laughing and be like, “Oh, with all the great education you were able to receive and you know, what do you do with that? You go and start a flower juice company.” And they were laughing and I’m like, “Laugh all you want. We’ll see who is gonna laugh all the way to the bank.”

0:03:33.0 Magatte Wade: And really, it was just not cool back then. For them, back then you go to work, especially if you have this fancy education, you go work for McKinsey, you go work for like Accenture, you do these things, like, you’re vying for big managerial positions at one of the big companies. And so this concept that… And I think it also came from the place of thinking that the West would actually not buy into this. How often did I hear, “You’re so delusional if you think they… ” And I’m like, “Who is they?” “Well, them, the West, is ever gonna accept anything that comes from us as good.” So you see it was this entangled between the sense of feeling of inferiority of some kind, plus just not trusting that the other side can see us for who we are and that we can excel.

0:04:15.7 Magatte Wade: It was this combination. But I found, you know, discussing with other people from the developing world… So anybody who is not from the dominant cultures, and so the dominant cultures are America, obviously, along with some European countries, what you find is, for those of us who don’t come from these dominant cultures, it is the same problem. I always talk to my Chinese friends, they have the same issue. The Chinese people would just be like, “Nope. It… ” They would look down on their own staff. Same thing with my friends from India, same thing from my friends from most part of Latin America. So we all had this, our eyes just said… And then it does make sense because if you start to measure then that sentiment, there is something that looks at the top 1000 brands in the world, so back to when I started my first company, trying to build an African brand, there was no African brands on that list.

0:05:07.4 Magatte Wade: The first one you would see was South African Airways, a brand started under apartheid South Africa. And so for me, and at the top of the list, it was dominated by Americans first, and then the French brands, Louis… Most of the time legacy brands. We’re talking Dior, Louis Vuitton, you know, Chanel, brands like that. And of course, some Italian brands. You know, you’re seeing Maserati, you’re seeing, you know, those type of… You know, and also all the Italian leather goods and leather brands, Fendi. And then a few German brands, especially, you know, Bosch and their cars. Also, you had… All the way to Sweden, you had, I think it’s Volvo, if I’m not mistaken.

0:05:51.6 Magatte Wade: So anyway, so what was funny to notice is to notice that that, our ranking, was very much reflective of how… Of who felt strong about their tradition and their culture and who did not, and which culture was the focus for everyone else to show their status. And so that’s what I discovered.

0:06:13.3 Aaron Powell: What does the entrepreneurial scene look like in Senegal?

0:06:17.6 Magatte Wade: Well, the entrepreneurial scene in Senegal looks… It looks very vibrant, but what if I told you that 94% of all the businesses in Africa… In Senegal are in the informal sector. So lots of activities going on, but for an overwhelming majority, it’s in the informal sector. And of course, people are enterprising in all realms, in the realms of tech, agribusiness, name it. So people are… Yeah, it’s… Things are happening. But the fact that 94% are in the informal sector is a problem. And I’m sure we’re gonna go into it.

0:06:58.0 Aaron Powell: For listeners, yeah, who don’t know what that term means, what is the informal sector? And how is it different from the formal sector?

0:07:04.7 Magatte Wade: Yeah. So when you are in the informal sector, it means that your business does not legitimately exist, right? You did not register it. It does not exist legally. When you start a business normally anywhere in the US, even if you have a sole proprietorship, you’ll go and you register it as a sole proprietorship. If it’s gonna be a C-​corp, you do a C-​corp, S-​corp, S-​corp, LLC. I’m sure people listening have an idea of that. So now imagine that you have a business, but none of that, but you’re not… You don’t have an LLC, you don’t have a sole proprietorship. Which means oftentimes, you don’t have an EIN, the employer identification number. And that number is critical, because this is the number that you’re gonna need to be able to open a bank account that goes with the business. Otherwise, you’re probably gonna have to keep doing your operations using your own name.

0:07:51.7 Magatte Wade: It means you cannot get insurance for the business. And then you have employees, the employees, they could be working for you for ever, retire, but not have access to any retirement because technically they don’t exist. And they don’t exist because the business doesn’t exist. So that is what it is to be in the informal sector. Your business is not legit. It’s not legally registered; therefore, administratively speaking, it does not exist.

0:08:22.1 Trevor Burrus: So it’s like a lemonade stand on the front lawn of… Some kid running a lemonade stand who doesn’t have an EIN or anything like that, it’s informal, which is fine for a lemonade stand, but it seems like a problem if 94% of businesses are informal. I mean, the obvious question is, is this just because of bad government mostly, is the biggest reason for this because of bad government?

0:08:43.7 Magatte Wade: Yeah, so I think for most people to understand why that is the case, they just have to follow the entrepreneur, and they have to follow the incentives, and also the risks and the threats. So why would you not want to be legal? Because if you’re legal it gives you also some types of protections, but even investment, how can you seek investment if there is no funnel… Official funnel to invest in? What? You wanna invest in me, so I’m gonna tell you, “Write your check to myself.” Nobody’s gonna do that, no investor’s gonna do that, right? And then similarly, when you have a business, you can separate your liabilities from your own person. That’s why in America it’s so great, I think, for people to… People are so entrepreneurial, because businesses having a business entity shields them from legal suits of any kind. So the business is one thing and you are you.

0:09:39.9 Magatte Wade: So here the reason why… Then when you look at all of that, and you’re like, “Why would somebody not wanna be a registered business?” Well, because first of all, if I tell you, the minute you become a registered business, at least in Senegal, there is a minimum level tax you’re gonna have to pay every year. In our case, it’s $1000. So even if you don’t make $1, you’re still gonna have to pay $1000 worth of taxes. It is just how it goes. And even to file for those taxes, which normally should be very easy. I made no money, but okay, you said, it’s still $1000, here. Even that to file it, is so cumbersome and so complicated that most people are like, “Forget it. I’m not doing it.”

0:10:22.5 Magatte Wade: And then being a legal business means that you are gonna be exposing yourself to all type of regulations that absolutely make no sense, right? So starting with the labor laws, all the way to… What do you call it? All the way to even what it would take for you to be able to import the inputs that you need for your business. So in my situation, for example, the minute they know that something is coming in from the standpoint of me doing business, then they’re gonna try to charge me 45% tariff on some of my inputs. Some of them were close to 70%. Beyond that, it’s also all the overseeing that they have on your business. Like, they say, okay, you said, you said you have a… You have a… How do you call it? You have a manufacturing lab, we have a manufacturing lab, we manufacture skincare products in Senegal.

0:11:22.7 Magatte Wade: So in order for me to be able to bring products in and escape the high rates that I told you about, the high tariff rates, then I would have to A, be able to show the government that… I have to show them my formulation, I have to share with them my formulations. Would you guys feel safe sharing your formulation with the government and not even knowing where it’s gonna end up? I mean, oftentimes these are literal trade secrets, right? It’s almost like if Coca Cola had to tell the world what their recipe was, you know that recipe would have eventually ended up in the hands of competitors and who knows what else, right?

0:12:00.0 Magatte Wade: So you have to tell them exactly the formulation, and the reason why they tell you… They justify that is because they say, “If we’re gonna exonerate your input from the normal tariff, we wanna know that you’re not gonna take advantage of it. So we need to know exactly how much of X ingredient should go into X product because we wanna allow you for only that number and nothing more.” And I’m like, “Okay, let’s say I even agree with that. How do we… Who do I go to?” “Well, the government has some registered agents who look into these things.” “Okay. Let’s say I still agree with that. Where are they?” “We don’t know. Let us check.” It’s been two years that they’ve been checking, nobody can get back to me with that information.

0:12:49.9 Magatte Wade: At the same time, yes, you’re gonna have to have a location that is suitable for the type of business you’re trying to do. Here in the US, you have an over-​surplus of sites to manufacture anything. You can get an X warehouse, refurbish it a little bit, or sometimes for people who are in the food industry, you can rent commercial kitchens, you just come in, rent it for a few hours, you go, you’re compliant, everything is good. We don’t have any of this stuff available back home, and the reason is because we just don’t have that many businesses operating this way anyway.

0:13:26.4 Magatte Wade: So, what it means is for me to even start my business and to be legal, to be running this business legally, I would have to go to… Then I had to build, and this was our situation. We had to build. All of this money that you’re investing in the building before you even get anything started, before you even prove your point, proof of concept, it’s all of that. And then the other thing is also, when you’re legal, and you wanna hire somebody, then the state tells you, “Wait, what’s the work that this person is gonna do, and which title are you giving them?” So depending on the title, and depending on their degrees, mind you, that I want somebody to just weigh out ingredients and make this lip balm, has nothing to do with their English Literature PhD that they have, but they’re gonna tell you, “Because so-​and-​so has a PhD, and you’re giving them this title, based on state grades, you should pay person X this amount.”

0:14:23.3 Magatte Wade: Absolutely no consideration for market prices, anything, nothing. Does this person have a right background or not. And by doing that, they make it effective that I cannot hire somebody who has a PhD in Literature, even if they’re very good at doing the job I need them to do, but it has nothing to do with their literature background. So you see why people are just like, “I’m not gonna go into the formal sector, absolutely not.” And taxes… Trying to figure out your taxes, it’s one thing to say the taxes are too high, it’s another thing to say, it is so… The tax laws are so complicated they fit into truckloads of laws, so much that you have to hire an expert to file your taxes, which means extra cost, compared to people who live in places where up to $1 million in revenue, we don’t… Just file quickly, and then you’re not paying us anything anyway, like the state of Texas.

0:15:14.2 Magatte Wade: It is so complicated there, that I have to hire a CPA. And even these CPAs will tell you, “Look, I just want you to know, the tax code is so complicated, that even us, the experts, will make mistakes.” And what does it mean to make mistakes in countries like this? It means that as an entrepreneur, you are constantly running the risk of being harassed by the government and/​or put in jail, or your company shutting down, because one day… From one day to another they can show up and say, “You’ve been filing your taxes wrong for the past three years, this is how much you should have owed us, and you need to pay now.”

0:15:48.9 Magatte Wade: And they do that to you, for example, maybe because you’ve been talking, saying things that they don’t like to hear, and when that’s the case for you, they will come and say, “This is how much you owe us, pay us now.” Like right now in Senegal, there’s a situation like that, one of the TV companies, definitely anti-​government, and what they came up with is that this company owed them $500 million, I think, supposedly, in back taxes, and so now they just froze all of their accounts, and this TV channel is effectively gonna die. And then it’s never gonna be because it’s political, we all know it’s political, but officially, it’s their fault because supposedly they didn’t pay their taxes.

0:16:27.4 Magatte Wade: They only do that when they’re ready to go after you, or to try to make you… To shut you up, or because you’re really bothering them. These are many of the reasons why so many people are just saying, “I have absolutely no incentives going into the formal market.” Or to be said better, yes, there are many incentives to go into the formal market, but given the situation and how things are, the pluses are… The minuses outweighs the benefits. And that’s why they decide to stay… They made the calculation very quickly, and it is more favorable to them to stay informal, than it is to go formal.

0:17:10.4 Aaron Powell: What role does… I mean, granted, with all of these problems which are lessening the number of businesses, keeping businesses smaller, it would seem like also dis-​incentivizing the creation of the infrastructure that legitimate businesses depend upon, like if I want to offer payment solutions, I need businesses to be my business. And if they’re all underground or informal, it’s a smaller market for me to build for and so on. But the people are creating them, the 94% are in the informal sector. What role are these businesses playing in alleviating poverty in these communities? Because when we tend to think about, for so many people in the West, poverty alleviation in Africa means international aid. It means sending dollars over.

0:17:56.4 Magatte Wade: Right. Yeah, so, these companies, the best way to think about them is, some of them are actually quite big size, but they will never be able to be bigger than they are currently. But most importantly, a lot of them, a lot of them are… When I say 94% of the businesses are in informal sector, it doesn’t mean that we have… That we have a… Businessisation, I don’t know if you can call it that way, of a country that’s at 94%. That’s not what I’m saying. I’m saying that out of the few companies, businesses that are being created, 94% of them are informal sector, so you still have an overwhelming majority of people who don’t really truly have a legit activity.

0:18:39.7 Magatte Wade: So many people wake up in the morning, and they’ll go line up, like sometimes you see it in the US, and they’re waiting for daytime jobs. Maybe to go help somebody move something, or to go to port and help unload a container. For the day, they get paid $4 or $5, and then they go home. Tomorrow… They don’t know what tomorrow is gonna be made of. So the few businesses that we have, that’s what they usually suffer from. These are not terribly also competitive businesses because they’re like replicas of each other.

0:19:13.2 Magatte Wade: Like I’m sure you’ve seen that in some parts of Latin America, or maybe you’ve seen pictures, or maybe you’ve gone to some parts of Africa yourself, you’re gonna go and drive, drive, drive sometimes and see many stands of mangoes being sold. So each stand is a woman selling her mangoes. In a way that’s a part of what we call the informal sector. I’m sure in the US, you might not call it that way, but that’s part of informal sector, just so you know, but as you can see, this doesn’t really create a job for anybody, this is more like a type of necessity entrepreneurship.

0:19:43.7 Magatte Wade: And the truth is a Gallup poll has been done at some point with a lot of these women who have stands at the market at various African markets, and there is… It was an overwhelming majority of people who would tell you, and I see it every day, ’cause every day we get knocks on our door at our factory from women who have a stall at the market asking us for a job, and it was… This came out in research where it was shown that, I think it was 84%, something wild and crazy like that, 80%… 84%, I believe it was, don’t quote me on that number, but it was in that vicinity, of recipients of finance, so the micro entrepreneurs give… Saying that given a choice, they would prefer to have a job and quit this activity of theirs.

0:20:29.7 Magatte Wade: And that’s precisely what it is, because when you are a necessity entrepreneur like in their case, it’s better to do what they’re doing than just sitting home and not having anything, but given a choice they would prefer to have a job, and those jobs, those valid, legit and sustainable jobs, are usually created by opportunity entrepreneurs, so people who saw a hole in the market, and are saying we’re gonna go fill it. And you can imagine that when you see 20 stands of mangoes on the side of a road, each stand belonging to a woman, when you stop your car, they’re starting to race, they’re racing because they wanna get to you first, and then usually they’re gonna try to get you by guilt, even if you want maybe the next bowl of mangoes from the other lady, right, “But you know, I almost killed myself getting to you. I was here first. Please, I know you like her bowl of mango more than mine, but please. Just so that I have something to take back to my kids tonight.”

0:21:22.8 Magatte Wade: See, that’s not entrepreneurship. This is not how you win in the marketplace. There’s nothing competitive here, they’re all selling the same stuff, and they’re only… Their only game, their only strategy, marketing strategy, is gonna play on your guilt and/​or you know, take the prices, reduce the prices, and they all do that, it’s a race to the bottom. So this is kind of what we have, and you can quickly now see how this really… This is not sustainable, this is not how you create a healthy middle class. Absolutely not. So when you ask me about what’s the role of the informal sector in creating jobs, I think that was the question, you can see all the ways in which it’s really not, where people are in survival mode, this is like subsistence price.

0:22:04.7 Trevor Burrus: But for good entrepreneurship that, as opposed to this necessity entrepreneurship, that seems to be very important to alleviate poverty. And the other thing Aaron asked about was that people don’t usually think about entrepreneurship, the opportunity entrepreneurship, they think about foreign aid and that’s how we do it.

0:22:26.1 Magatte Wade: I got it, I got it. Yeah, so thank you for explaining more, Trevor, what Aaron was trying to ask me here. So yes, so when people think about how do we fight poverty in Africa, they oftentimes are thinking, let us send them, let us send them aid and let us send them goodies, free goodies. Some companies, even like Toms Shoes would say, “Let us send them some free shoes,” so you Westerners, every pair of shoes you buy, we send them… We send them a free pair of shoes, we won’t will tell you it’s the crappiest level, it’s the crappiest version of shoes we make,” but still one for one, it’s been a fantastically successful campaign.

0:23:09.8 Magatte Wade: So yes, traditionally the West has thought that aid is the way, and free goods are the way, but you couldn’t be farther away from the truth. I think that’s one of the most… Again, talking in, being in times of… I don’t know if you wanna call it racism, patronizing or whatever it is, but this concept, this idea that poverty will be solved by aid… So here, at the end of the day, I tell people, you’re poor, one is poor because one has no money, at least not enough money to take care of one’s basic needs, and one has no money because one has no access to… One has no source of income. And a source of income for most of us is a job, isn’t it, right? It’s a job.

0:23:55.3 Magatte Wade: Where do jobs come from? They come from the private sector, and most primarily, it comes from the small and medium-​sized entrepreneurs, small and medium-​sized legit businesses. Therefore, don’t you think that we should make it, we should look at the environment that’s offered to citizens of a nation in terms of how hard or easy it is to start a business? I think so. And there we have various indexes that measure how easy or hard it is to start and run a business anywhere in the world. One of them is a the Doing Business Index of the World Bank, another one is the Fraser Institute Economic Index Freedom, and we have many of them.

0:24:36.0 Magatte Wade: And what they all have in common is that most sub-​Saharan African countries, except maybe for five of them, you routinely are in the bottom of such list, [chuckle] and the bottom 20 is dominated by African nations. Sixteen, I believe, out of four, the last 20 on the list of 100 something, 94, I think countries, it goes up and down because as you know, we add countries sometimes and sometimes make some of them consolidate, so anyway, that’s amazing. And so, but no one looks there. Then all of a sudden you can see the relationship, why are these nations poor? They’re poor because they do not provide enough economic freedom, so that their would-​be entrepreneurs can freely enterprise, create these many businesses that in turn create these many jobs, that in turn create a middle class, which means poverty is gone, you’re no longer a poor country.

0:25:32.8 Magatte Wade: So this is what the aid industry just… It is mind-​blowing to me that to this day, to this day, at least today, the 80% of the thought is no longer in the fact that aid is the way, it has gone down, but the fact that it is still a consideration for sustainably getting rid of poverty, it’s an aberration to me, but maybe I actually should listen to a what they are saying. What they’re saying is, “We’re gonna alleviate poverty,” and even that, is that the best we can do? With everything that we know today about prosperity building, the role of the free markets and the free enterprise and economic freedom, is that how can we even still be talking about alleviating poverty? Our goal is to make you less poor. What the… Anyway, so there you go.

0:26:30.7 Aaron Powell: What about micro-​lending? Which seems to be increasingly popular in the West, and at least on its face, seems like if the issue is we wanna be unleashing this free enterprise, then instead of government aid going over and ineffectively spreading money around, we’re giving money directly to entrepreneurs at the smaller scale, which on the one hand seems like it might work, but on the other hand, if the problem is less money, but all… And is instead all these burdensome regulations and lack of clarity, then the money is not gonna really help.

0:27:03.3 Magatte Wade: Absolutely, you’re making a very good point. So, I am very much a proponent of “yes, and,” and so, yes, micro-​finance is a very good first step, right. It helps people, I guess, like what we’re saying earlier, instead of having to flat out die of hunger, I help you with financing to buy a chicken so you can sell the eggs from the chicken to make a living. To me, it’s always better than, “I’m gonna let you die on the side of a road,” right? So, because of that micro-​finance is a very good first step, but let us make no mistake, micro-​finance oftentimes also goes to necessity entrepreneurs.

0:27:43.0 Magatte Wade: Again, I am not sitting here saying one is better than the other, but if we wanna be serious about prosperity building, opportunity entrepreneurship is what we need to see happen. And maybe the people who are doing necessity entrepreneurship today will become opportunity entrepreneurs under different circumstances, that’s more what we need to get to. So yes, micro-​finance is a first good step because it makes sure that someone doesn’t just flat out die of hunger or anything else like that. But, like I said, this is, there are always some outliers, but last time I checked, I haven’t heard of any big company, you know, you don’t hear of many big companies today that started out as a micro business, so that’s number one.

0:28:27.4 Magatte Wade: And so number two is, this is where my problem comes in, because now, at least now we’re paying more attention to the concept of entrepreneurship as the way out, as the way forward for poor countries, that’s good, that’s a great thing. But oftentimes, when we talk about it, we get stuck at what we can see, which is, “Oh, they need more financing, Oh, they need more connections, for market connections, like customers, they need more of that, they need more mentorship,” and so that’s why you have seen all of this proliferation of incubators of various kinds all over the continent, and everybody else being just like, “Oh, if only we give more micro-​finance, only we give also more maybe SME financing, everything is gonna be great.”

0:29:19.2 Magatte Wade: No, it’s not, because this is what I tell people, if you’re gonna try to help cure my disease, any disease that you might have, but yet it is still, you’re still doing, you’re still in a frame that is feeding that disease. I can send you all the chemo that I want, but at the same time, you’re still feeding the cancer with sugar, right? Maybe at some point we need to think about, maybe we need to, sugar also has to go, or in this situation, the sugar would be all of these bad regulations. So while you’re doing this targeted intervention on the sick cells, what are we doing to make sure that we’re not feeding the bad system continuously?

0:29:57.3 Magatte Wade: And so this is where I feel like, but maybe this is just us humans, we are so much more comfortable with what’s visible. See, what the business environment is, it’s so invisible to most people who wanna do good, because at the end of the day, the basis of being able to be an entrepreneur is, is you need to have this concept of rule of law, you need to have this concept of clear and transferable property rights, private property rights, and so on and so forth. But these for most people are, they don’t even know, even in this country, you ask people, what is the rule of law? What? Or, you know, property rights, or we’re even having this country people saying that the private property rights is wrong, it’s racist, stuff like that, and you have idiot entrepreneurs who are like, “Oh, yeah, we think this is true.” I’m like, “Do you not even understand?”

0:30:48.8 Magatte Wade: So you see what I’m talking about, this amalgam, this misunderstanding, this conflation, and when it’s just a flat out, not seen. And so this is now the fight, and so what I’m seeing is 80% of the resources, at least the resources that, at least from the people who recognize that entrepreneurship is the way, there, I feel like among them, 80% of them are focused on the visible parts and 20% is focused on, people like me are focused on this other part that’s not visible. But I like to say only being focused on the visible part, putting 80% of your resources on the visible part, it’s almost like pouring good money after bad, because until and unless you’re really able to fix the bigger systemic problem, yeah, you might still have a few tomatoes being coming out of your nice little tomato plant, but these three tomatoes you’re getting right now and you’re excited because they’re big, ripe and juicy, you could be having thousands on this tomato plant if only you gave it the right nutrients, the right soil, or right exposure to to sun and all of that stuff.

0:31:56.1 Magatte Wade: And that’s what people are missing out on. So I’m afraid that once again, it’s the bigotry of lower expectations, we’re all excited because this and that, but we would never accept that for our own lives, and I’m talking here about on the Western side.

0:32:11.0 Trevor Burrus: A lot of companies go to third world countries, African countries, South Asian countries, so they can set up factories and take advantage of cheaper labor costs, less labor regulation, and those are often called sweatshops. Many people have a huge problem, they try and track, you know, who built their goods. They don’t buy Nikes and things like this, so they can feel like that they’re participating in moral consumer behavior. Should we care about things like sweatshops in countries, in poorer countries?

0:32:44.9 Magatte Wade: Well, to me, first of all the way that they call it sweatshops, I think that is something that we should try to have clarity on, because of course when it’s called sweatshops, it’s already sending a bad signal. Maybe some people can call my manufacturing in Senegal a sweatshop. But I can tell you that if you talk to my… And then why? Why would they call it that way? Because labor is cheaper there than here, or are they saying that I’m mistreating my employees? And if they want to say that I’m mistreating them, I want to tell them my employees have it actually better than you do, because for a country like mine, we pay our employees, unlike everybody else in the country who pays once a month at the end of the month and then people spend all of their money within the first 10 days and the next 20 days they’re basically scavenging around, everybody borrowing from everybody, we decided we’re gonna charge… We decided we’re gonna pay our people twice a month just like in America, because I felt like that frequency was so good.

0:33:41.5 Magatte Wade: And at first we’re even paying them once a week, right? And they said, “Oh, we don’t know what to do with our money. Pay us every two weeks because that way we get to spend it better.” And I said. “Okay, fine, you’re the boss. You tell me what you need. I’m here to do whatever you want, but if you tell me it’s better this way, we do it this way.” So that, and then everything was designed in what we do so that people don’t do repetitive movements. So everybody within the within the manufacturing facility knows all the jobs and there is no such thing as you have a janitorial, so and so is this, so and so is that. It’s all the tasks, everybody’s trained on them so they get to rotate, so they get to give a rest to different parts of their bodies.

0:34:20.6 Magatte Wade: Everything that we do, also we think about the ergonomics of how it’s gonna be for them, where they sit and all of that stuff; do they sit too high, not too high all the time, not all the time. Everything I focus on beauty, like well lit areas, very beautiful. To me, beauty matters. So, and everybody deserves access to beauty. And most importantly too, we have a Montessori-​inspired school for the children of our workers and for free, who has that here? So I would like to talk to these people who talk to me about a sweatshop. What do they mean by sweatshop, number one? Okay.

0:34:54.6 Magatte Wade: So if for them, sweatshop is just because you’re there because you’re, they get to be paid less, because that’s… It’s a country that is where we don’t need as much to cater for all of our needs. If that’s your thing, then I say also talk to these people, because, do you know the line that there is for people who want to work at these places? There’s a huge line, because not working there, especially for women, this is a huge liberator for women. These places that they call sweatshops are huge liberating places for women, because when a woman gets a job, she will tell you, especially in these countries, she finally has a status, she finally becomes a person, she finally becomes a human being. And from there, people also start to respect her in her family, right?

0:35:41.8 Magatte Wade: I have seen women that we hired who are like, “Look, until I had my job, no one… My husband treated me poorly. My parents-​in-​law, especially the in-​laws, treated me like crap, but now I couldn’t tell you, a life has completely changed for me.” So this is what these jobs provide to people. So to me, unless you’re making people work under very unsafe conditions, like where the roof is about to, is going to fall, or their body parts are at risk all the time because these machines you’re using, you wanted to use them because they’re cheap, because they don’t have protection methodology or whatever. That to me is wrong, but it’s not just wrong there, it’s wrong anywhere, right?

0:36:20.9 Magatte Wade: And we have places like that in the US as well. So but this concept of, “Oh, just because they get to hire them cheaper than if they were in the United States, which made complete sense, and therefore is sweatshop, therefore, it needs to die,” then I’m like, you need to go there and look at these women in the eye and tell them. Like this one woman… Even the New York Times came around on this, because the New York Times, I think their article was talking about this one woman who said, now she’s got her job, she’s all happy, but before that she had to wash, I think it was her father-​in-​law’s feet and then drink the water of the dirty… The dirty water from washing his feet. This is the… So do you want that for her or do you want her to have a job and be at least be raised at the level of being a human being?

0:37:00.4 Magatte Wade: And so for me all of these people who come from… I know they come from a place of decency and a place of care and concern, but they need to stop and remember, what is the starting point for these people, which is probably what the starting point for people’s own great-​grandparents were in this country. How many of our great-​grand… Your great-​grandparents, grandparents here, worked in factories, every single day showed up at five o’clock and left at 4:00 or 5:00, doing like the same gesture every day. But that’s what it took so that person then made money enough to take care of their families, then put their children through college. They never went to college, that kid now doesn’t work in a factory but works in something with more like white collar whatever, and so on and so forth.

0:37:48.9 Magatte Wade: And today, generation today, investors, they’re doing this, they’re doing that. So please, can we just stop this… It’s almost like, I used the various steps of a ladder to get to where I am. And today, oh, no, well, it’s so beneath us and we can’t. So I would say, whenever you’re having this type of behavior, you are actually being inconsiderate. I’m sorry to say that to you. I know you thought you were being so nice and so caring, but I’m here to tell you that you’re full of it and stay out of my way, please, because you make no sense. And I have a real life to live, I have a real social climbing to do and your nonsense is not gonna help me with that. I’m perfectly happy with the job right now, because it is a huge improvement on what I was doing before.

0:38:35.8 Magatte Wade: And maybe not me, but my children will have an even better life, but it will go through this step. So I understand that you have lost track of all of this because now you’re in your fancy home that your grandpa had to work in a factory to help the family lineage get to, but it is… This is what it is. So butt out and thank you for your concern. But these are the real practical steps it’s gonna take, and I’m very happy with my job. Yeah, it gives me everything I need. I have economic independence.

0:39:07.3 Aaron Powell: Well, then to those people in the West, those well-​meaning activists and just people who want to help out to the extent that they can, what should they be doing? Like a lot of these companies that are creating factories in the developing world are American companies or Western companies that are subject to pressure from their consumers over here, their stock market price, their brand perception and so on. And so are there things if it’s not shut down, what we perceive to be sweatshops, are there things that we can be doing as consumers, as people who have some influence over these multinational corporations?

0:39:50.8 Magatte Wade: Yeah, I would say, first of all, educate yourself and stop being attracted to the bandwagon of what is fashionable and the bandwagon of just like what’s cool, right? So many of these people, they jump in, they have absolutely no idea of what the heck is going on. And also stop taking your cues from only one side of a story. I’m not telling… Try to understand both sides of a story, three sides of a story, five sides of a story, because it is not as black and white as it may sound. As a matter of fact, whenever something sounds very black and white, it’s probably not, you’re probably not getting it right. Because life is messy. Life is complicated. And we have to make trade-​offs all the time, right?

0:40:30.8 Magatte Wade: So for me, it is like instead of listening to all of these idiots who are making, simplifying the issue by this good, this bad sweatshop. No, say, “Okay, these people are getting a good job.” Yeah, if you wanna… First of all, educate yourself, because if you educate yourself, you’ll understand what’s really going on. And therefore also, you’re gonna be reminded of the importance of a job. And in some of these places, maybe they’re doing a job that you would never do. Well, look around here in the US. Division of labor, some people will take jobs that you would be like, “I would rather die than take that job,” others… It’s just the way it works, and leave us alone.

0:41:10.8 Magatte Wade: So what I would tell them first is educate yourself, because you need to understand really the relationship of… You need to understand what poverty really is. And you need to develop a new, sound appreciation, especially for what I call, for simple jobs. And then from there, then you can work on your trade-​offs, because to me, it’s not the fact that they’re being paid less than an American, because it makes sense to me, if you’re living in a country where rents are… I don’t know, I’m just making it up, $300 a month, you don’t have the same issues as living in the Bay Area where a typical rent is now getting close, I think, to $3,000, it’s just not the same. And it makes sense.

0:41:50.3 Magatte Wade: So that, to me, is not really the problem. But if this company can tell you, look, we made sure that people are working under very safe conditions, right? The facility’s safe, they’re not being raped by their male managers or whatever, there is good tracks for woman to get to management, whatever. Go after those things. And then if they check the bar, and then companies will know to communicate around that as well. And actually, that’s what they’re gonna do now. Now they’re gonna be make sure that, “Oh, I check all of those boxes, because my customer wants that.”

0:42:24.5 Magatte Wade: But then from there, let life be, let life be. So that’s what I would recommend most of these people. But what I have found is, at the end of the day, though, it seems… So that’s what I recommend to the honest, to the honest people who want to help. Everyone else, I’m afraid that we’re talking to an empty head, they’re not there for helping. It’s about social signaling. It’s about showing how virtuous I am, even though it’s based on dubious philosophies, but the people who really care and I believe they’re out there, and I know that there are many, many, many, many, many of them, I would love for them to hear what we just talked about, because it will give them a new perspective.

0:43:06.3 Magatte Wade: And they do that already with their own children, by the way. And I’m not saying that people in the developing world are children. But what I’m trying to say there is, when someone is just getting started out in life and in so many ways, so many of these developing nations, it’s almost like it’s a start, they’re starting out, right? So when your daughter or son or whatever, this young person is starting up their lives, of course, they take a barista job and this and that, and then from there next thing you know, they’re working as a CTO as one of the top tech companies or they’re data analysts or scientists at Amazon, whatever it is. You see? That progress of life, you accept it for your young people, right?

0:43:52.9 Magatte Wade: But imagine now that these countries are almost at the same level. And I’m not saying it… I hope you’re understanding what I’m saying. Because we have messed up so much, because we have followed such crazy socialist philosophies, because by the time most African nations became so-​called free, so since the late ’50s, early ’60s, the decolonization process, most of Africa became free, but then the leaders, the new presidents in almost all the countries were socialists or were communist. We all know that communism or socialism does not like business. And of course, because of that, 60 years later, we’ve got nothing to show for. So you might as well just believe that we’re just getting started. So we’re these teenagers getting started, right? So as a teenager who’s getting a barista job, that’s what’s happening for some of these women. But make no mistake, they’re gonna move it and they’re gonna move fast, but these steps, no one can just leapfrog over them.

[music]

0:45:07.8 Aaron Powell: Thank you for listening. If you enjoy Free Thoughts, make sure to rate and review us on Apple podcasts on your favorite podcast app. Free Thoughts is produced by Landry Ayres. If you’d like to learn more about libertarianism, visit us on the web at www​.lib​er​tar​i​an​ism​.org.