The Microcapitalism Meme Is Spreading

Yahoo hosted yet another interesting non-Internet-related speaking event today (three days after some congressional staffers visited, a week after Freakonomics, and three weeks after the Governator). Berkeley's Eric Brewer was a co-founder of Yahoo's Inktomi search engine, and spoke about Technology and Infrastructure For Emerging Regions. It's nice to see a Berkeley professor echoing Hernando De Soto's market-oriented analysis of dead capital -- third-world capital like squatter's land that cannot be borrowed against because the legal system doesn't recognize title to it. Being a technologist and not an economist, Brewer however did botch the definition of a public good. Economists define it as a non-rival non-excludable good that benefits almost everyone in a polity. But Brewer described a public good as "things financed by taxes", and gave education as an example. Education is in fact far from being a pure public good, since the positive externalities of education (the benefit to the rest of the economy) pale in comparison to the positive internalities (the benefits to the student). Despite this mistake, Brewer's talk (and recent paper) is full of good examples of how microcapitalism is better than philanthropy at helping the developing world.