I was honored to interview Michael Green recently. Here is the interview. Buy his books, Philanthrocapitalism
and Road To Ruin

Tell me about philanthrocapitalism.

What I can tell you about the genesis of the book, Matthew and I are old friends from school and then we both studied economics at university, and then went off in very different directions. He went off to the Economist writing about business, I ended up in Government working on international aid, we stayed friends and we talked about things in the world. About 5 or 6 years ago we came together again because Matthew was going out and talking to all of these Silicon Valley top entrepreneurs who were all getting into philanthropy.

I think because they saw themselves as natural problem solvers so they very quickly got into philanthropy. So Matthew was going along to talk about business and they would start having a conversation with him about philanthropy. So he was coming to me because I was working in aid. Saying: ‘what do you think about what these people are doing?’ Do you think it’s any good?’ My initial response was what they were doing was interesting, but they are business and aid is all about government.

My mind started to be changed when you saw people like Bill Gates [ doing his foundation]. So Matthew and I decided that we were starting to see a new trend from different perspectives. His from the business side and mine from the government aid side. So we decided to get together and chart what was going on. So the real time was about 2006 with Warren Buffet, giving his money to Bill Gates for his foundation. So here were the two richest men in the world who up until then had not really been big philanthropists. 
What we decided to do was go through all these different philanthropists, started from a position of some scepticism. The good ones in business actually had a lot of value to add, but what I saw was that the government can do some things well but the government is never going to be very good at taking risks.

Government is never going to be innovative. Whether that be politicians or civil servants or anyone. We don’t have government to do those risky things. So actually these people playing the role of being the rich capitalist in our system may be good ideas, to then be implemented later by government. So that was how we came up with the book.

So philanthrocapitalism is really about two things: One, the way the super rich donors are applying the skills of business to giving, using the tools in which they made money to giving their money away. The second idea is, if you look back in history, whenever you have a golden age of capitalism you will always have a golden age of philanthropy. So rather than philanthropy and capitalism being opposites. Philanthropy is the thing that complements the capitalism. Because capitalism creates disruption and turbulence in the world. Because it brings change. So essentially entrepreneurs are implementing that change through our history. 
They have been most sensitive to those changes and they have also been aware of their own responsibility to mitigate the impact of those changes. And deal with the social and environmental consequences of that change. So philanthropy is the thing that complements capitalism. To keep it sustainable in the long term. So philanthrocapitalism is about that. The word itself was Matthew’s bright virgin idea. The point: people who do best out of our economic system have an obligation in their own self interest to give back to all the rest of society.

Can ordinary people do anything to help?

The book first came out on the autumn of 2008. The paperback came out autumn 2009. In the original book we talked a bit about some of these online giving sites like kiva.org and global giving, but actually when we wrote the paperback we wrote a whole new chapter because we were being a witness to change. We called it mass philanthrocapitalism.

These sites on the internet are giving individual givers so much power these days. The way the internet has transformed business, it is now transforming giving. Online giving tools allow people to be selective in their giving. I give money to a charity, I have no idea how my money is used. They send me back a load of photos, saying haven’t we done well. These new online giving tools tell me exactly where my money is going. It helps me feel really connected. The way these transform business and giving. It allows ‘ordinary people’ to really do amazing things.

Tell me about your background

I grew up in the most boring part of south – west London. Glaswegian by birth. Left when I was 2 and a half. Was a Geordie for two and half years. Moved to the most boring part of south west London and grew up there until I went to university. In 1992 there was a chance to go and teach economics in Poland, which actually was funded by George Soros so I leapt at the chance. I spent four years in Warsaw. Fascinating time until 1996 when that country was changing and how they managed that transformation. When I arrived there of course Poland was really in the doldrums and just after the first year it really started picking up and recovering. So I learnt a huge amount then about the role of business and all these things about development and how that change really pushed Poland ahead. Came back to Britain, didn’t have a job, and I got taken in by government, working as an economist, doing aid. Thought I would do it for a year. Then found out I really enjoyed it. So stayed for 12 years and left 18 months ago.

Will poverty ever be eradicated?

Pockets of poverty. Say people living on less than 60% of median wage. I don’t think you will ever eradicate that. There will always be really big inequality. I think in terms of absolute poverty. People living on a dollar a day, people not being able to go to school, very high levels of disease that can be eradicated. I think we do have the resources to do it.

We do have the tools but what we are missing is the political will. With the right political will there are so many problems in the world that can be solved. And when I talk about Political will I am talking about the government of developing countries. That is the real missing piece of the jigsaw. And that has really got to be changed.

Has the recession hurt?

It has definitely hurt overall giving. The figures for UK giving have fallen by about a billion, I think, because of the recession. In terms of big philanthropy we haven’t. I think the Bill and Melinda Gates foundation for example is giving more. If you look at the latest Forbes list, wealth is recovering, so definitely, the richest are still spending money and the will of the rich to give is still there. It may even be stronger after the recession. A lot of people said this was a passing thing. A lot of our critics said this was a passing fad, that philanthrocapitalism was part of the bubble. But we have seen over the past few years is that giving is resilient. There has been some setback but I think it is going to come back even stronger over the next few years.

What can be done to promote long term social change?

Some of the things that will have an effect on social change are technology. If you look at global changes, the big challenge over the next fifty years is going to be the change of agriculture particularly. I think we have a huge challenge over the next fifty years. So you have got to see social changes in the context of ecological changes. So that is a negative change.

You also have huge opportunities, like the internet. Lots of the problems in the developing world can be solved by mobile phones. I think this could be the most transformative technology. One is it’s a way of getting information to those people. It is now a way you can transfer money to those people. It is a way for them to communicate to the rest of the world. Even more importantly what the mobile phone is doing in developing countries is allowing people to have their voice heard. So one of the impacts of the mobile phone on the developing countries that you see is that it is much harder for dictators to rig elections. Because if you have people with mobile phones outside polling stations you could say. ‘I have not been allowed to vote. They are stuffing the ballot box.’ They can phone in and share that to the rest of the world.

It is a huge tool for democratization. It allows people voices to be heard. In so many ways traditional government programmes are still those sort of 20th century, we decide what the targets are and then we tell people what they are getting. What the internet and the mobile phone allow us to do is create this dialogue of communication with people, but actually it means we can customize information, focus on what people really need, that is huge potential transformation. It brings the poor into the discussion about the kind of transformation they need rather than giving them what they think they need.

How do we balance the line between helping and a dependency culture?

I think the real challenge here is how do we actually help the poor to help themselves, whether in this country, or in another country. To take control and escape from poverty. Instead of being trapped in this dependency culture. There are a couple of things, in the developing world; you have got to give them property rights. There is a brilliant economist, Hernando De Soto, who shows that is the lack of property rights in the developing world that holds them down. You need to have a state that enforces those rights. You also have to provide those people with assets. Not just inanimate assets, but also skills and education 
The way to help the poor is that you give them assets that they can use. We all aspire to a better life but how do you give people the tools to do that? People know that it has to be education. That is 
how you create a level playing field. If you give people education I think they will find their way out. That is the secret.

What do you think of the growing divide between the rich and the poor?

If you look at the average incomes in the past 20 years. At the start of the 20th century there was a peak in super wealth. And then there is a huge reduction in inequality, what they call in America, the great compression, in the middle of the 20th century. Then in the last 30 years, basically since the Reagan era there was this massive spike in inequality. The rich have had the greatest share out of economic growth. The super rich have not even peaked yet. There has been a massive spread in inequality. I am less worried about inequality per se. I don’t think all inequality is bad. It does not bother me about the super rich. The real question is ‘are people trapped in dependency?’ Are people trapped in poverty. That is different. That to me is the real question rather than just the inequality.

Where do you think aid is needed?

There are a couple of things. Say a country like Pakistan. Here is a country whose poverty has gotten no better in 30 years. Over that same period, here is country who has managed to develop nuclear weapons. So, actually there are the resources in that society to meet the needs of the population. So the people who run the country choose not to allocate the resources. 
This is true of so many developing countries. The country in Africa with the most amount of poor people is Nigeria, which also has spectacular wealthy rich people. Are the population receiving a decent amount of the wealth of the country? 
Political leaders do not see that as something they have to do. I think one of the good things the philanthropist have done is challenge some of those systems. There is a guy called Mo Ibrahim who set up the CelTel company, who brought the mobile phones to Africa. He sold to MTC Kuwait, but what he has done is use lots of his money to run a foundation which is giving an annual prize to the best political leader in Africa. 
Basically, he has these people at Harvard that rank all the political leaders in Africa. Then he gives a prize to the person who has done the best job. What he says is that he is trying to start a debate about it. About political leadership. So the ordinary person will say, hold on, why has my guy not won? Actually there are real objective reasons, because my guy is not really doing anything. We have to see that change in the developing world. Where the leaders actually start serving ordinary people.

Do you think there will be a future revolution?

Slightly worried that there is the potential for a tremendous backlash against capitalism. Not in terms of an economic system, but in massive regulation. That would strain the whole financial sector. I don’t think people realise just how angry the public are about the financial crisis. It is not something that is going to go away.

We have this new book that has just come out in the States called ‘The Road form ruin’ which takes a look at the financial crisis. We have taken a look at the crises in the past and which shows how long the public stays angry. What we look at is banker bashing with regulations. This is where the captains of industry have to say, ‘we do have a responsibility to society.’ They have to start talking to society about how what they do is socially useful. If they don’t, the backlash could still come.

What influence do you think the coalition government is going to have? Will it make it better or worse?

I think this government … The natural assumption is that the Conservative manifesto talks tough about the banks butmost people are going to assume that behind the scenes they won’t do anything about it. On the other hand the lib-dems have this very easy populism. This was essentially the populism of a party that would never come into power. I think we could actually have a dream team here – you have a recognition that change has to happen because there is public anger, but also recognition that our future prosperity is at stake if we over-regulate. 
We have to build a better financial sector. What they are saying in the coalition document on financial reform is nothing particularly exciting. But I am encouraged about the idea of having a commission that will look at future financial regulation, to think seriously about how you rebuild the financial sector. The coalition could go either way; into heady populism, the other way into doing nothing. But there is also a chance that there will be some real change.

I do not know what ‘Big society’ actually means. All I have seen come out of the coalition so far has not told us much more what it is about. What my big concern about this is that I don’t know how much the big society actually owes to Phillip Blond and the ‘Red Tory.’ I think reading ‘Red Tory’ what really strikes me is that he has this huge resentment off capitalism and the financial market. My fear would be that, therefore, the big society vision sees itself as something that is about specific sectors, like the social enterprise sector on its own. Rather than being connected. 
Which I think would be enormously disenchanting.

I think it has to be reworked to check out the link between the city, and the big society. We have to bring the skills from the city to support the big society vision. I think there is something potentially really transformative. If you ring-fence the big society and keep it away from capitalism, I think it is just going to be a small experiment that is not going to go very far…the government has to think how it will work interacting with the big society. Should you be actually ring fencing parts of government departmental budgets?

I wonder what Phillip thinks about capitalism… I have been reading ‘Red Tory’ and one of the examples he gives for his vision is micro-finance… By the way of investing in micro-finance as a commercial product. Which I think is a great story as micro-finance started out as charity but has becomes a full, proper business. You actually have micro-finance banks raising money on the global capital market, which of course, is all this capital sloshing around which can then be financing the poor. It’s easy to bash capitalism but actually it has enormous potential to do good.

When you talk to leading CEO’s they really do get it. They are serious about giving back to society. A lot of people like to dismiss this as ‘capitalism is just evil.’ I don’t think that is true. If you meet these people they are passionate and committed. They see that you cannot separate the fortune of their company from the fortunes of the rest of society. The two are linked. Companies have to do well by doing good. That is what good capitalism is about. That is what people who hate capitalism do not want to see.

Why do you think people are so wary of capitalism?

We take what capitalism gives us for granted. What changed my mind about capitalism was living in Poland. One of the blinding conversions I had in Poland, was actually that I learned to love McDonalds. When I arrived in Warsaw there was no McDonalds, but there was a local version called Hamburger Max. Their largest burger was a ‘Big Max’. Just a rip off of McDonalds. The food was terrible, it was expensive and the toilets were disgusting. McDonalds came in, I am not saying it is the greatest food, but it was clean and it was inexpensive. You knew what you were getting. It changed the way people invested in Poland. They were providing a very valuable service. I am not saying feed your children McDonalds three times a day. I am not advocating that. But these businesses that are often seen as the bad face of capitalism. They add value and change the economy.

What do you think about Globalisation?

I am very pro. In a country like Poland, it was globalization that helped them make their economic reforms such as success. The thing about globalisation and trade is that it is win-win. The one thing that most economists agree on is free trade. Economists are usually miserable people. They say you can only have one thing if you don’t have something else. Trade is the one thing in economics that is definitely win-win. The power of that to transform is so powerful. A lot of the anti- globalisation lobby is, I think sometimes it’s a rage against change and sometimes its anti corporate mentality and they do not see the opportunity. 
I sometimes want to cry when I see what Rowan Williams, the Archbishop of Canterbury, says about trade. He is hugely influential. He has these articles written, presumably by Christian Aid that is all sort of anti trade. It is really bad.

Do you think people ever change their mind?

You have to remember that people are tribal, However, we have access to so much information now that people will have the knowledge to change their mind. I would really worry if I was running a large charity these days. I would worry about the hold on my membership. People have so much access to information.

Do you think George Osborne will be a good chancellor?

I think the six billion cut was a mistake. Interest rates are still basically at zero. What that means it that the economy is on life support. We are hopeful that it is actually starting to recover. The first quarter growth figures are at 0.3%. 
There are signs of recovery, but we won’t know that. By the end of this financial year, debt to national income will be 70%; the USA will be 80%.Greece is way over 100% Therefore UK debt it manageable. I don’t think we have to make cuts to re-assure the market. There is no way to know for certain, but I would err on the side of caution. I can see why Osborne did it. It is probably necessary, because if you are campaigning on the back of it, when you come into power you have to say; ‘Look, we found six billion pounds’. It was political necessary but economically unnecessary. Low marks so far but for understandable reasons.

Will the economy get worse?

If you are on a tracker mortgage, during the course of the recession you will have been better off. When we start to see more of those job cuts coming through, particularly in the public sector, unemployment it not going to come down very quickly. What has happened in this recession is that firms have not been so quick to get rid of staff so quickly, but that also means they are unlikely to start hiring quickly. 
Unemployment will not come down for a few years. What we will get is a loss of social welfare for ordinary people. I think we are not out of the woods yet. Do I think there is another meltdown coming? There is always a risk but I can’t see something particularly looming. Even without another meltdown it is going to feel really bad.

I came across a quote recently by Margaret Thatcher. It said: ‘The problem with socialism is that other people’s money runs out.’ My friend, Nick’s, comment on this was: ‘ The problem of capitalism is that the money to bail the banker’s runs out.’ Who is right?

It is all about other people’s money. I think we have forgotten about this. That the money the bankers are playing with is actually our money. Our money invested in pension funds, invested in savings. That money is actually being kept by mutual funds, and pension funds and they are the people who were most asleep at the wheel. 
Who are the most short-term investors in the markets? The pension and mutual funds. Were they challenging the boards of the banks, the finance houses, when our money was being spent on exorbitant bonuses? They weren’t. That is one of the things that we do in the new book, ‘The Road From Ruin’. Democracy works because we have a competent citizenry of educated people who are willing to challenge, and want their voice to be heard. 
The democracy of the market needs the same things. We have become better informed consumers, using fair trade, ethical products. Etc, but we are still very dumb investors. Do we ever ask how our pension funds are used? How our savings are invested? No. We don’t do that about government money. Or any other money. 
We have to take responsibility on how our money is being spent. Is it any wonder? We have to take responsibility on how capitalism runs.

You mentioned Thatcher. The thing about the Thatcher period was how economically incompetent it was. It is very strange, overly dogmatic. It was just bad economic management. So many ideas were pushing in the right direction, but where badly implemented. It is a very odd paradox about the Thatcher period in that it was almost, not an economic project. The way they just mismanaged and engineered a recession in the early 80’s was pure incompetence. In the way it was implemented, and then the 1987 bust and the recession that came that was caused by Nigel Lawson.

Thatcherism was such a political project. There was something vicious about it. As it was one half of a nation declaring war on another part of the nation. I personally cannot forgive. There was so much unnecessary damage done to our country. In the name of war on our own society. That did so much damage to so many communities. That it was not governing in the best interests of the country. I think Cameron failing to win a majority is still in that legacy. The fact that they did not win any more seats in Scotland. That is the legacy of the pain that they inflicted.

[CB: I still hate Margaret Thatcher. I don’t think Scotland will ever forgive her. ]

The Cameron generation is actually a reversion to the norm of conservatism. Thatcherism was a deviation. They still have problems convincing large chunks of the country that that change has really happened. And that has been the big problem they have had. That whole nasty party thing is the legacy of that era.

Do you think the coalition will last?

Yes. I think the coalition will last five years. It has to, but they will be so welded together they will have to be one party.

What’s next? 
The Road to Ruin is coming out in the autumn. We are also working on a new book. I will see what comes along. I love being a writer.

Michael Green is an independent writer and consultant, based in London.
Michael has worked in aid and development for nearly twenty years. He was a senior official in the British Government where he worked on international finance, managed UK aid to Russia and Ukraine, served three Secretaries of State as head of the communications department at the Department for International Development, and oversaw £100 million annual funding to nonprofits. It was through his role in government that he saw the rising influence of the philanthrocapitalists in the fight against poverty.
An economist by training, as a graduate of the University of Oxford, Michael taught economics at Warsaw University in the early 1990s under a Soros-funded programme. During his time in Poland, Michael was also a freelance journalist working for, among others, Polish Radio and the Economist.

Other quotes by Michael.
The joy of capitalism if the joy of destruction.
VAT was such an elegant tax. Economists love it, because it is so easy to collect. It is almost self policing. Clean and simple tax.