Dead Pledge

What is a dead pledge?

Well, that is the literal translation of the word mortgage:

1390, from O.Fr. morgage (13c.), mort gaige, lit. "dead pledge" (replaced in modern Fr. by hypothèque), from mort "dead" + gage "pledge;" so called because the deal dies either when the debt is paid or when payment fails. O.Fr. mort is from V.L. *mortus "dead," from L. mortuus, pp. of mori "to die" (see mortal). The verb is first attested 1467.

The term comes from the Old French "dead pledge," and apparently meaning that the pledge ends (dies) either when the obligation is fulfilled or the property is taken through foreclosure:

Coke, Edward. Commentaries on the Laws of England. “[I]f he doth not pay, then the Land which is put in pledge upon condition for the payment of the money, is taken from him for ever, and so dead to him upon condition, &c. And if he doth pay the money, then the pledge is dead as to the Tenant”

Now you know...

A lovely thing, etymology

CC - Previous Thread

The speech by Bill Gates I just posted has started up a discussion between prominent economists about the viability of CSR programs for the long-term future. Fascinating stuff, and eventually what I might like to do with my career down the road. I've talked about what I'd (eventually) like to do on this blog, and these activities aren't mutually exclusive. They can be thought of as different sides of the same thing.

The book is being edited by Conor Clarke and former Slate editor Michael Kinsley.

Check it out - http://www.creativecapitalismblog.com

Creative Capitalism

Prepared remarks delivered at the World Economic Forum, January 24, 2008, in Davos, Switzerland.

by Bill Gates

Thank you for that welcome and for the privilege of speaking at this forum.

This is the last time I will come to Davos as a full-time employee of Microsoft.

Some of us are lucky enough to arrive at moments in life where we can pause, reflect on our work, and say: “This is great. It’s fun, exciting, and useful – I could do this forever.”

But the passing of time forces each of us to take stock and ask: What have I accomplished so far? What do I still want to accomplish?

Thirty years, twenty years, ten years ago, my focus was totally on how the magic of software could change the world.

I believed that breakthroughs in technology could solve the key problems. And they do – increasingly – for billions of people.

But breakthroughs change lives only where people can afford to buy them – only where there is economic demand.

And economic demand is not the same as economic need.

There are billions of people who need the great inventions of the computer age, and many more basic needs as well. But they have no way of expressing their needs in ways that matter to markets. So they go without.

If we are going to have a serious chance of changing their lives, we will need another level of innovation. Not just technology innovation – we need system innovation. That’s what I want to discuss with you here in Davos today.

Let me begin by expressing a view that might not be widely shared.

The world is getting better.

In significant and far-reaching ways, the world is a better place to live than it has ever been.

Consider the status of women and minorities in society – virtually any society – compared to any time in the past.

Consider that life expectancy has nearly doubled in the past 100 years.

Consider governance – the number of people today who vote in elections, express their views, and enjoy economic freedom compared to any time in the past.

In these crucial areas, the world is getting better.

These improvements have been matched, and in some cases triggered, by advances in science, technology, and medicine. They have brought us to a high point in human welfare. We are at the start of a technology-driven revolution in what people will be able to do for one another. In the coming decades, we will have astonishing new abilities to diagnose illness, heal disease, educate the world’s children, create opportunities for the poor, and harness the world’s brightest minds to solve our most difficult problems.

This is how I see the world, and it should make one thing clear: I am an optimist.

But I am an impatient optimist.

The world is getting better, but it?(tm)s not getting better fast enough, and it’s not getting better for everyone.

The great advances in the world have often aggravated the inequities in the world. The least needy see the most improvement, and the most needy see the least – in particular the billion people who live on less than a dollar a day.

There are roughly a billion people in the world who don’t get enough food, who don’t have clean drinking water, who don’t have electricity, the things that we take for granted.

Diseases like malaria that kill over a million people a year get far less attention than drugs to help with baldness.

Not only do these people miss the benefits of the global economy – they will suffer from the negative effects of economic growth they missed out on. Climate change will have the biggest effect on people who have done the least to cause it.

Why do people benefit in inverse proportion to their need?

Market incentives make that happen.

In a system of pure capitalism, as people’s wealth rises, the financial incentive to serve them rises. As their wealth falls, the financial incentive to serve them falls – until it becomes zero. We have to find a way to make the aspects of capitalism that serve wealthier people serve poorer people as well.

The genius of capitalism lies in its ability to make self-interest serve the wider interest. The potential of a big financial return for innovation unleashes a broad set of talented people in pursuit of many different discoveries. This system driven by self-interest is responsible for the great innovations that have improved the lives of billions.

But to harness this power so it benefits everyone – we need to refine the system.

As I see it, there are two great forces of human nature: self-interest, and caring for others. Capitalism harnesses self-interest in helpful and sustainable ways, but only on behalf of those who can pay. Philanthropy and government aid channel our caring for those who can’t pay, but the resources run out before they meet the need. But to provide rapid improvement for the poor we need a system that draws in innovators and businesses in a far better way than we do today.

Such a system would have a twin mission: making profits and also improving lives for those who don’t fully benefit from market forces. To make the system sustainable, we need to use profit incentives whenever we can.

At the same time, profits are not always possible when business tries to serve the very poor. In such cases, there needs to be another market-based incentive – and that incentive is recognition. Recognition enhances a company’s reputation and appeals to customers; above all, it attracts good people to the organization. As such, recognition triggers a market-based reward for good behavior. In markets where profits are not possible, recognition is a proxy; where profits are possible, recognition is an added incentive.

The challenge is to design a system where market incentives, including profits and recognition, drive the change.

I like to call this new system creative capitalism – an approach where governments, businesses, and nonprofits work together to stretch the reach of market forces so that more people can make a profit, or gain recognition, doing work that eases the world’s inequities.

Some people might object to this kind of “market-based social change” – arguing that if we combine sentiment with self-interest, we will not expand the reach of the market, but reduce it. Yet Adam Smith – the father of capitalism and the author of Wealth of Nations, who believed strongly in the value of self-interest for society – opened his first book with the following lines:

“How selfish soever man may be supposed, there are evidently some principles in his nature, which interest him in the fortunes of others, and render their happiness necessary to him, though he derives nothing from it, except the pleasure of seeing it.”

Creative capitalism takes this interest in the fortunes of others and ties it to our interest in our own fortunes – in ways that help advance both. This hybrid engine of self-interest and concern for others serves a much wider circle of people than can be reached by self-interest or caring alone.

My thinking on this subject has been influenced by many different experiences, including our work at Microsoft to address inequity.

For the past 20 years, Microsoft has used corporate philanthropy as a way to bring technology to people who don’t have access. We’ve donated more than $3 billion in cash and software to try to bridge the digital divide, and that will continue.

But our greatest impact is not just free or inexpensive software by itself, but rather when we show how to use technology to create solutions. And we’re committed to bring more of that expertise to the table. Our product and business groups throughout the world, and some of our very best minds at our research lab in India, are working on new products, technologies, and business models that can make computing more accessible and more affordable. In one case, we’re developing a text-free interface that will enable illiterate or semi-literate people to use a PC instantly, with minimal training or assistance. In another we’re looking at how wireless technology, together with software, can avoid the expensive connectivity costs that stand in the way of computing access in rural areas. We’re thinking in a much more focused way about the problems that the poorest people face, and giving our most innovative thinkers the time and resources to come up with solutions.

This kind of creative capitalism matches business expertise with needs in the developing world to find markets that are already there, but are untapped. Sometimes market forces fail to make an impact in developing countries not because there’s no demand, or because money is lacking, but because we don?(tm)t spend enough time studying the needs and limits of that market.

This point was made eloquently in C.K. Prahalad’s book The Fortune at the Bottom of the Pyramid, and that’s had a huge influence on companies in terms of stretching the profit motive through special innovation.

When the World Health Organization tried to expand vaccination for meningitis in Africa, it didn’t go straight to a vaccine manufacturer. It first went to Africa to learn what people could pay. They found out that if they wanted mothers to get this vaccine for their babies, it had to be priced under 50 cents a dose. Then they challenged the partners to meet this price, and, in fact, Serum Institute in India found a new way to make the vaccine for 40 cents each. They company agreed to supply 250 million doses to distribute through public health systems over the next decade, and they are free to sell it directly to the private sector too.

In another case, a Dutch company, which holds the rights to a cholera vaccine, retains the rights in the developed world, but shares those rights with manufacturers in developing countries. The result is a cholera vaccine made in Vietnam that costs less than $1 a dose – and that includes delivery and the costs of an immunization campaign. There are a number of industries that can take advantage of this kind of tiered pricing to offer valuable medicine and technology to low-income people.

These projects are just a hint of what we could accomplish if people who are experts on the needs in the developing world would meet several times a year with scientists at software or drug companies and help them try to find poor world applications for their best ideas.

Another approach to creative capitalism includes a direct role for governments. Of course, governments do a great deal to help the poor in ways that go far beyond nurturing markets: they fund research, subsidize health care, build schools and hospitals. But some of the highest-leverage work that government can do is to set policy and disburse funds in ways that create market incentives for business activity that improves the lives of the poor.

Under a law signed by President Bush last year, any drug company that develops a new treatment for a neglected disease like malaria or TB can get priority review from the Food and Drug Administration for another product they’ve made. If you develop a new drug for malaria, your profitable cholesterol-lowering drug could go on the market a year earlier. This priority review could be worth hundreds of millions of dollars.

Another approach to creative capitalism is simply to help businesses in the poor world reach markets in the rich world. Tomorrow morning I will announce a partnership that gives African farmers access to the premium coffee market, with the goal of doubling their income from their coffee crops. This project will help African farmers produce high-quality coffee and connect them to companies that want to buy it. That will help lift them, their families, and their communities out of poverty.

Finally, one of the most inventive forms of creative capitalism involves someone we all know very well.

A few years ago, I was sitting in a bar here in Davos with Bono. After Asia and most of Europe and Africa had gone to bed, he was on fire, talking about how we could get a percentage of each purchase from civic-minded companies to help change the world. He kept calling people, waking them up, and handing me the phone. His projections were a little enthusiastic at first – but his principle was right. If you give people a chance to associate themselves with a cause they care about – they will pay more, and that premium can make an impact. That was how the RED Campaign was born, here in Davos.

RED products are available from companies like Gap, Motorola, and Armani. Just this week, Dell and Microsoft joined the cause. Over the last year and a half, RED has generated $50 million for the Global Fund to Fight AIDS, TB, and Malaria. As a result, nearly 2 million people in Africa are receiving life-saving drugs today.

What unifies all forms of creative capitalism is that they?(tm)re market-driven efforts to bring solutions we take for granted to people who can’t get them. As we refine and improve this approach, there is every reason to believe these engines of change will become larger, stronger, and more efficient.

There is a growing understanding around the world that when change is driven by market-based incentives, you have a sustainable plan for change – because profits and recognition are renewable resources. Klaus Schwab runs a foundation that assists social entrepreneurs around the world, men and women who turn their ideas for improving lives into affordable goods or services. President Clinton demonstrates the unique role that a non-profit can play as a deal-maker between rich world producers and poor world consumers. The magazine Fast Company gives awards for what they call Social Capitalism.

These are not a few isolated stories; this is a world-wide movement, and we all have the ability and the responsibility to accelerate it.

I’d like to ask everyone here – whether you’re in business, government or the non-profit world – to take on a project of creative capitalism in the coming year. It doesn’t have to be a new project; you could take an existing project, and see where you might stretch the reach of market forces to help push things forward. When you award foreign aid, when you make charitable gifts, when you try to change the world – can you also find ways to put the power of market forces behind the effort to help the poor?

I hope corporations will consider dedicating a percentage of your top innovators’ time to issues that could help people left out of the global economy. This kind of contribution is much more powerful than simply giving away cash, or offering your employees time off to volunteer. It is a focused use of what your company does best. It is a great form of creative capitalism, because it takes the brainpower that makes life better for the richest, and dedicates it to improving the lives of everyone else.

There are a number of pharmaceutical companies – GlaxoSmithKline in particular – that are putting their top innovators to work on new approaches to help the poor. Other companies are doing the same – in food, technology, cell phones. If we could take the leaders in these areas as models, and get the rest to match them, we could make a dramatic impact against the world’s inequities.

Finally, I hope that the great thinkers here will dedicate some time to finding ways for businesses, governments, NGOs, and the media to create measures of what companies are doing to use their power and intelligence to serve a wider circle of people. This kind of information is an important element of creative capitalism. It can turn good works into recognition, and ensure that recognition brings market-based rewards to businesses that do the most work to serve the most people.

We are living in a phenomenal age. If we can spend the early decades of the 21st century finding approaches that meet the needs of the poor in ways that generate profits and recognition for business, we will have found a sustainable way to reduce poverty in the world. This task is open-ended. It can never be finished. But a passionate effort to answer this challenge will help change the world.

Stockholm. December 10, 1950

William Faulkner's acceptance speech for the Nobel:

I feel that this award was not made to me as a man, but to my work — a life’s work in the agony and sweat of the human spirit, not for glory and least of all for profit, but to create out of the materials of the human spirit something which did not exist before. So this award is only mine in trust. It will not be difficult to find a dedication for the money part of it commensurate with the purpose and significance of its origin. But I would like to do the same with the acclaim too, by using this moment as a pinnacle from which I might be listened to by the young men and women already dedicated to the same anguish and travail, among whom is already that one who will some day stand here where I am standing.

Our tragedy today is a general and universal physical fear so long sustained by now that we can even bear it. There are no longer problems of the spirit. There is only the question: When will I be blown up? Because of this, the young man or woman writing today has forgotten the problems of the human heart in conflict with itself which alone can make good writing because only that is worth writing about, worth the agony and the sweat.

He must learn them again. He must teach himself that the basest of all things is to be afraid; and, teaching himself that, forget it forever, leaving no room in his workshop for anything but the old verities and truths of the heart, the old universal truths lacking which any story is ephemeral and doomed — love and honor and pity and pride and compassion and sacrifice. Until he does so, he labors under a curse. He writes not of love but of lust, of defeats in which nobody loses anything of value, of victories without hope and, worst of all, without pity or compassion. His griefs grieve on no universal bones, leaving no scars. He writes not of the heart but of the glands.

Until he relearns these things, he will write as though he stood among and watched the end of man. I decline to accept the end of man. It is easy enough to say that man is immortal simply because he will endure: that when the last ding-dong of doom has clanged and faded from the last worthless rock hanging tideless in the last red and dying evening, that even then there will still be one more sound: that of his puny inexhaustible voice, still talking. I refuse to accept this. I believe that man will not merely endure: he will prevail. He is immortal, not because he alone among creatures has an inexhaustible voice, but because he has a soul, a spirit capable of compassion and sacrifice and endurance. The poet’s, the writer’s, duty is to write about these things. It is his privilege to help man endure by lifting his heart, by reminding him of the courage and honor and hope and pride and compassion and pity and sacrifice which have been the glory of his past. The poet’s voice need not merely be the record of man, it can be one of the props, the pillars to help him endure and prevail.

Sunday Mornings with Gram

When I got myself a factory job,
I ran an old machine
And I bought a little cottage
in a neighborhood serene
And every night when I'd come home
with every muscle sore
She'd drag me through the streets of Baltimore

Well I did my best to bring her back
to what she used to be
Then I soon learned she loved those bright lights
more than she loved me
Now I'm a going back on that same train
that brought me here before
While my baby walks the streets of Baltimore

The Shaded Lanes

Nabakov, speech at Wellesley in 1946:

The more things we know the better equipped we are to understand any one thing and it is a burning pity that our lives are not long enough and not sufficiently free of annoying obstacles, to study all things with the same care and depth as the one we now devote to some favorite subject or period. And yet there is a semblance of consolation within this dismal state of affairs: in the same way as the whole universe may be completely reciprocated in the structure of an atom, . . . an intelligent and assiduous student [may] find a small replica of all knowledge in a subject he has chosen for his special research. . . . and if, upon choosing your subject, you try diligently to find out about it, if you allow yourself to be lured into the shaded lanes that lead from the main road you have chosen to the lovely and little known nooks of special knowledge, if you lovingly finger the links of the many chains that connect your subject to the past and the future and if by luck you hit upon some scrap of knowledge referring to your subject that has not yet become common knowledge, then will you know the true felicity of the great adventure of learning....

Jacinto Requena, September 1985.

One day I asked him where he'd been. He told me that he'd traveled along a river that connects Mexico and Central America. As far as I know, there is no such river. But he told me he'd traveled along this river and that now he could say he knew its twists and tributaries. A river of trees or a river of sand or a river of trees that in certain stretches became a river of sand. A constant flow of people without work, of the poor and starving, drugs and suffering. A river of clouds he'd sailed on for twelve months, where he'd found countless islands and outposts, although not all the islands were settled, and sometimes he thought he'd stay and live on one of them forever or that he'd die there.

Of all the islands he'd visited, two stood out. The island of the past, he said, where the only time was past time and the inhabitants were bored and more or less happy, but where the weight of illusion was so great that the island sank a little deeper into the river every day. And the island of the future, where the only time was the future, and the inhabitants were planners and strivers, such strivers, said Ulises, that they were likely to end up devouring each other.