Geek Heresy (11 page)

The broader lesson applies well beyond education and summarizes what we’ve seen so far. A government without genuine motivation to eradicate corruption will not become more accountable through new technologies of transparency. A health-care system with a shortage of well-trained doctors and nurses won’t find its medical needs met with electronic medical records. A country unwilling to address the social underpinnings of inequality won’t see an end to inequities regardless of how much new low-cost technology it produces. In general, technology results in positive outcomes only where positive, capable human forces are already in place.

In
Chapter 6
, I’ll show how all of this offers guidance for the best use of technology, but for now, let me mention that the Law of Amplification’s predictive power is one of its strengths as a theory. Want to know where free speech is most likely to thrive online? It will be where it thrives offline. Want to know when new technology will actually cut costs? It will be when management is focused on cost control. Want to
know how to ensure that your children will learn productively on an iPad? It will be if they have good learning habits independent of the tools at their disposal and adult guardians monitoring proper use.

Whither the Unintended Consequences?

Some people might protest that technology outcomes are fundamentally unpredictable because of unintended consequences. They’d be right up to a point, but only up to a point. Nothing I’ve said so far says that human history is more predictable just because it involves technology. Who knew in 2010 that the Middle East would be transformed by popular uprisings, with or without Facebook? People are complicated and hard to predict; adding technology doesn’t change that.

But where social situations are well understood, some technology outcomes can be predicted, and even partial or imperfect knowledge is valuable. Most of us consult weather reports even though we know they’re sometimes wrong. Any information that is better than a random guess is still useful. Similarly, superintendents can act on predictions that educational technologies will help good schools but not struggling ones, even if borderline cases are harder to assess.

In addition, whether a consequence is unintended often is in the eye of the beholder. Officials at the US Department of Defense or the National Science Foundation who sponsored precursors of the Internet probably didn’t mean to pave the way for either mass electronic commerce or the global proliferation of cat videos. So it could be said that those outcomes were unintended. But websites don’t just build themselves. Everything online is someone’s intent acted out, even if those contributions weren’t foretold by Internet founders. More often than not, the unintended consequences of technology spring from someone else’s unpredictability. One man’s unintended consequence is another man’s mission.

But what about cases in which a technological result was absolutely impossible to foresee? Pure examples are hard to find, because technological skeptics have vivid imaginations about what can go wrong.
But for the sake of argument, consider teenage texting. It seems unlikely that either the engineers behind the SMS text-messaging standard or the parents who welcomed mobile phones into their households imagined that their children would one day send thousands of text messages a month. Yet, on average, American teens send and receive 60 texts a day, or 4 per waking hour. One 13-year-old girl in California exchanged 14,528 texts in a month, which comes to about 1 every 3 minutes, 24 hours a day.
³³
So obsessive texting could be considered an unintended consequence of mobile-phone proliferation.
³⁴
But now that we know about it, it’s no longer unintended. It’s up to adults – as parents and consumers, as voters and citizens, as nuclear families or as collective communities – to decide whether this consequence is desirable, and, if not, to curtail it. To do nothing is to be complicit in – to passively intend – the undesired outcome. In the long run, there are no unintended consequences.
³⁵

Deus in Machina

The Law of Amplification explains how technology can be both good and bad, and how its effect is ultimately up to individuals and societies. The law’s corollaries dispel myths about technology’s inherent powers, whether to lower costs, improve organizations, or decrease inequality.

Amplification also pegs the responsibility for technology’s impact squarely on us. Techno-utopians see a world where technology saves us from ourselves. Cyber-skeptics imagine our creations running rampant. And contextualists often sound like apologists for luck. All of these views, however, smack of humanity’s naïve youth, when we thought our lot was up to the Fates, to nature, or to God. Both excessive faith in and frantic fear of technology are regressions to childhood, denials of human responsibility. In our post-existential adulthood, shouldn’t we own our destinies?

To adapt Jean-Paul Sartre, technology is nothing else but what we make of it.
³⁶
And as Sartre noted, that responsibility is both a blessing and a curse – on the one hand, we
can
decide what to do with technology; on the other hand, we
must
decide what to do.

CHAPTER 4

Shrink-Wrapped Quick Fixes

Technology as an Exemplar of the Packaged Intervention

O
ver the years, I’ve given a lot of talks about digital technology’s limited impact on social causes, and I’ve heard a range of reactions. Tech champions respond with hostility or begrudging resignation. Those tired of the hype offer commiseration. And another group of people say they agree, but not with respect to electronics. They say they’ve had similar experiences in nontechnology projects.

Amplification, it turns out, applies more broadly. Digital technologies are just an extreme example of what could be called the
packaged intervention
– any technology, idea, policy, or other easily replicable partial solution meant to address a social problem.
¹
Like technologies, they’re expected to cause large-scale social change in and of themselves. But they don’t, and understanding why provides further insight into the Law of Amplification.

The Technology of Microcredit

A good example of a packaged intervention is microcredit. Small-scale lending to poor borrowers, also called microlending or microfinance,
is one of the few ideas in poverty alleviation to have attained global reach. There is no end to the tales of $100 loans transforming the lives of low-income households. Muhammad Yunus, the grand patriarch of modern microfinance, likes to tell one such anecdote. He once made a personal loan of $27 distributed among forty-two villagers in Bangladesh. Some of them needed the tiniest bit of cash to buy materials to make bamboo stools. They could pay back the loan and still earn a profit. “I had never heard of anyone suffering for the lack of
twenty-two cents
,” Yunus wrote.
²

That was 1976. In the decades since, microcredit has grown into a titan of social programs. It was boosted by the tireless evangelism of advocates like Yunus, who has said that “the purpose of microcredit is to eliminate poverty in the shortest possible time frame.”
³
According to proponents, loans allow households to apply existing skills to build up small businesses – microenterprises – and climb out of poverty on their own. Microcredit is supposed to increase incomes, empower women, and enhance health and education outcomes for children. It’s been said that lives are “transformed by microfinance,” and that microcredit “revolutionized global anti-poverty efforts.”
⁴
Today there are as many as 180 million microcredit borrowers worldwide.
⁵
The United Nations declared 2005 the International Year of Microcredit. In 2006, Yunus won the Nobel Peace Prize.

But, as even advocates concede, credit is not a panacea. Some microfinance organizations prioritize growth and profit. From there, it’s a slippery slope to abuse. One of the most controversial lenders is Compartamos Banco in Mexico, which started as a nonprofit but reconfigured itself as a for-profit bank so that it could raise commercial capital. In 2007, after demonstrating an incredible average return of 53 percent over seven years, the bank raised $467 million in an initial public offering (IPO).
⁶
Of course, to provide such a high rate of return, Compartamos charges even higher interest rates to its borrowers. Many of its loans have an annual percentage rate (APR) of over 100 percent – well above what is allowed by state usury laws in America, and much higher than US credit-card rates, which rarely go above 30 percent.

Eight months after the IPO,
Bloomberg Businessweek
tracked down a woman named Eva Yanet Hernández Caballero, who appears in Compartamos’s promotional materials as a success story. To purchase material for a sock-knitting business in 2001, Hernández had taken out loans of up to $1,800 with an APR of 105 percent. When her customers fell behind on their payments, though, she fell behind on hers. Hernández was thrown out of her borrowing circle and disqualified for further loans. She said her family was “barely afloat,” even as her photo contributed to the bank’s glow. Compartamos claimed that interest rates must rise in order to cover costs and attract investors. But with some of its early investors walking away with hundreds of millions of dollars while people such as Hernández struggle, it’s hard to interpret their work as anything other than profit-seeking.
⁷
In a
New York Times
op-ed, Yunus, whose Grameen Bank charges only 20 percent interest and refinances loans on favorable terms when borrowers can’t make payments, blasted Compartamos: “Commercialization has been a terrible wrong turn for microfinance. . . . Poverty should be eradicated, not seen as a money-making opportunity.”
⁸

Profits might be forgivable if borrowers always benefited. Recent research, though, tempers microlending hype. For one thing, microcredit is usually just one of many credit options. One insightful set of studies based on financial diaries of households in Bangladesh, India, and South Africa shows how poor families adroitly juggle informal loans, savings, and insurance.
⁹
And, contrary to common claims, borrowers don’t all build businesses. More often, loans are used to pay off other debts or to absorb financial shocks. For instance, people borrow for medical crises in a kind of post-hoc insurance called “consumption smoothing.” In other words, sometimes microcredit is less about moving out of poverty and more about basic survival.

Leading development economists have also cast doubt on microcredit as a path out of poverty.
¹⁰
One of them is my friend Dean Karlan, a Yale economist whose work takes him on regular odysseys around the globe. (His youngest daughter had a platinum frequent flyer card when she was eight years old.) Karlan and a colleague, Jonathan Zinman, found mixed results with small loans in South Africa and the
Philippines. On the positive side, among moderately poor adults in South Africa living on $6 per day, borrowers were more likely to end up with jobs, more likely to rise above the poverty line, and less likely to experience hunger in the family.
¹¹
So far, so good. But in the Philippines, loans made to active microentrepreneurs “did not generate bigger businesses, higher income, and higher subjective well-being, but rather led to stronger risk management, fewer businesses, and lower subjective well-being.”
¹²
And in a study of Compartamos Banco with colleague Manuela Angelucci, they concluded, “On average, businesses do not become more profitable and income does not increase, but people are better able to manage debt without selling assets, women gain more power in the household, and happiness increases.”
¹³
In other words, microcredit offers some benefits, but it isn’t a cure-all for poverty.

These results caused a commotion in the world of microfinance. They disputed the claims of revolutionary, life-transforming outcomes. The findings on the whole favored microcredit, but not overwhelmingly, and they were interpreted as lukewarm. Another group of researchers who found similar results put a provocative question mark in their paper’s title: “The Miracle of Microfinance?”
¹⁴
The industry took a defensive crouch, and supporters of small loans hit back with real-life rags-to-middle-class stories and accusations that the investigators only looked at short-term impacts.

For now, something of a truce prevails. Both sides agree that microcredit can be helpful, that the more extreme claims are overblown, and that more research is needed.

An Economic Trojan Horse?

Credit can be good or bad wherever you are in the world. In the United States in 2006, for example, there were two credit cards for every person, and the average card carried $4,800 in debt.
¹⁵
Median household debt was around $70,000, and the personal savings rate hit –1.1 percent, the minus sign denoting that Americans were spending more than they were earning.
¹⁶
Much of this debt was in the form of subprime home
mortgages. Banks marketed them aggressively to homebuyers as affordable loans, then repackaged them as opaque, high-interest securities for investors. Mass defaults on the mortgages have been widely cited as the trigger of the 2007–2008 financial crisis from which the global economy is still reeling.
¹⁷
Credit, clearly, is a powerful but dangerous instrument. Making it more available doesn’t always lead to good outcomes.