F.A. Hayek and Vietnamese Traffic

As part of my reading for the free market internship program I was in this summer, I had to read the essay Rinkonomics: A Window on Spontaneous Order by Daniel B. Klein, which can be found here. When I got to Vietnam I realized how similar the traffic situation was here to the roller rink situation he described.

Vietnamese traffic is, at first glance, chaotic. There are few traffic lights and no stop signs. To make matters even more complicated, at least 90% of motorists are on motorbikes. Americans, who are used to a very structured traffic system, cannot understand why there are not massive collisions and bodies flying everywhere.

The reason may be best attributed to the Spontaneous Order theory, supported by F.A. Hayek and the Austrian School Economists. Hayek said “A spontaneous order is a system which has developed not through the central direction or patronage of one or a few individuals but through the unintended consequences of the decisions of myriad individuals each pursuing their own interests through voluntary exchange, cooperation, and trial and error.”

Even though it seems like the chaos would result in many accidents, it does not because all motorists are pursuing their own self interest; Everyone wants to get where they have to go but no one wants to get injured.

It seems to me that while I do see many accidents, there are really no more than I see on a daily basis in big American cities. This is despite the fact that the traffic here is generally motorbikes which are certainly more prone to accidents than cars are, if for no other reason than they must be balanced and do not stop nearly as easily. However people go about their daily lives with relatively few problems.

Hayek himself noted that the market does occasionally fail. Hayek’s answer for why the market fails, was outside influences. These include increases in the money supply causing artificially low prices and interest rates, as well as regulations that also cause prices to be artificially high or low (ie farm subsidies).

The Vietnamese traffic equivalent to government intervention and regulations, are the western influenced roads and traffic signals. The majority of crashes occur on major roads, and those with stop signs and traffic lights. A common time for these accidents to occur on roads with traffic signals, is when people simply ignore stop signs or go early on a green and late on a red.

What happens on roads without traffic signals, is that everyone slows down and weaves their way through the traffic coming from the other directions and a spontaneous order, like Hayek described, emerges that allows for minimal accidents. Those who do not adapt to this order crash, or in business terms, fail.

On western style roads, with predetermined turning points, much like the “Michigan Left” this system also fails quite often. I was a victim of this regulation. Normally making a left hand turn involves inching through on coming traffic, which is watching for such activity (looking out for their own interest) and swerve or slow down to avoid you, and then making the turn. As I was heading down a major road, traffic was flowing in a prescribed direction and places to turn were clearly marked. A man attempted to make an illegal left hand turn and I hit him, causing me more damage than him. Had the road been a normal Vietnamese road, I would likely have been vigilant of the intersection and known to look for anyone trying to make a left hand turn through the middle of traffic, but because of the regulations, I did not.

Risk also plays a vital role in the order of things. In business, making risky loans, making risky investments, or consistently breaching contracts, often results in failure. Here racing, taking turns too fast, or my favorite, texting while driving your motorbike, will result in a crash… or someone (ie George) getting pissed at your stupidity and knocking you into a parked taxi.

To be fair there are often things that happen, just as in a true free market economy, that also cause crashes, or failure other than regulation. The dog incident described in Getting Into Accidents, is one of those things. Though it could be argued that I should have been aware that hitting a dog with a motorbike is not like hitting a dog with a car, part of the trial and error process Hayek mentioned. This process has indeed made me a better driver, having now gone a month without an accident. However, regulation of Vietnamese traffic, just as in economics, has done much more harm than good.

Global Volunteer Network and why you shouldn’t join it or give it any money

Today I noticed that one of my facebook friends, who is pretty much just that, a facebook friend, not even an acquaintance, had posted photos of Indonesia, where she has been living since graduating in 2007. They looked pretty cool so I checked them out. I noticed one of the photos was of a classroom, so I figured she was an English teacher. I checked out her profile a little more and found out this was indeed the case, except that she was a VOLUNTEER English teacher, I am not sure what NGO (non governmental organization for those who don’t know) she is working for but she was a member of the group for the NGO “Global Volunteer Network” (It is impossible for her to be in this program as they do not have placements in Indonesia)

George has told me about these things and he has a love hate relationship with them. On one hand he hates them because they make you pay a ton of money to VOLUNTEER to teach and the owners of the NGO get rich off of your money, plus the money from donors, in this case Bill Gates is the largest donor. George loves them because he wants to open a school one day and cut expenses by having an NGO like this provide him with what is basically slave labor.

In general I hate NGO’s because not only are they filled with stupid liberals who don’t know how to do anything, but also because, especially in Africa, they often make things worse. All the while the people at the top of these things who pretend to be doing all this great stuff for humanity, are more often than not living high on the hog at the expense of those they are trying to “help”. George says that there is one NGO very similar to this that he has heard of where the owners are billionaires.

The scheme works like this, they provide you with a “job” housing, and some food, you pay for the rest, your airline ticket, extra meals, EVERYTHING. On their end they charge you WAY more than the cost of living and then pocket your money.

So when I saw that this facebook friend was supporting this organization I decided to look them up and see if they were up to the same thing, sure enough they were indeed. I found their page and under recent news it was announced that they had contributed $5000 to one of their sites, an orphanage, in Vietnam. Naturally I wanted to know more about the program in Vietnam. What I found out was almost appalling. The cost of volunteering for one month was nearly $1000. I asked George what living costs would be and he said, given what they were providing, no more than $250. So where exactly does the other $750 go? Remember this group is funded by Bill Gates and numerous other big donors, yet $5000 was all they gave to the orphanage in Vietnam, and that is only $500 more than what they net in a month with the 5-6 volunteers they have at the center, why is the orphanage not getting THAT every month no matter what?

There were several sites available to teach at, one being the orphanage. The others however were schools where kids pay to go. The amount of hours the volunteers work are slightly more than what George has now, and he makes nearly $1,500 a month. So now the school makes money because they don’t have to pay their teachers and the people who own the school, which in many cases is the NGO itself, get rich in the process. Even if the NGO does not own the school they get money from whoever does to find volunteers. Furthermore the site says that “As placements are not well resourced, you may like to bring items with you to help you with the activities you will be taking part in.” and the $1000 a month you are already paying, $750 of which basically disappears, is not nearly enough to cover basic supplies? I’m sorry but that is a crock of shit.

People, especially those “looking to help” are way too gullible. Hardly any of the foreign aid money or supplies we give to Africa actually helps the people there. In many cases, such as with clothing donations, it is simply stolen and sold for a 100% profit. In other cases, free food gives farmers an incentive not to farm, and that hurts the world. Most of the world’s food shortages have been caused by failed government policies and foreign aid, not weather.

Looking back through the “news” section of their website, there are listings of what money they have given and to whom. I can count a little more than $60,000 since December. In 2006 it was reported that they placed 2000 volunteers. That number has probably gone up but for sake of argument let’s say it has not. Now let’s say they make an average of $500 a month per volunteer, not including the money they save from having to pay them. That is $1 MILLION a month! So if they made $3,000,000 in the last three months why did they only give away $60,000? This is not counting the money that they receive from donors like Bill Gates, just the money they make off of volunteers.

So for anyone who is considering working for one of these things, please take the time to realize that your goodwill is being used for huge financial gain and you are getting a really raw deal. Teaching English here in Vietnam, or elsewhere in the third world, is a way to make a living but not a way to get rich, though you just might if you open a school yourself. In the end someone is making money so it might as well be you, as opposed to some jackass with an NGO.