Costly Collaboration

Of all the economic principles and notions I have studied, the concept of transaction costs has helped me the most in my own effort to reconcile the tension between business pursuits and humanitarian goals.  Transactions between individuals and groups are not costless.  My collaborations with folks in Indonesian villages are certainly not costless.  In fact, the costs of transacting in those environments are substantial.  Why else would the average investor ignore opportunities?

Each transaction must be carefully scrutinized.  We need to consider the search costs, the information costs, the bargaining costs, the monitoring costs and the enforcement costs of every sort of collaboration.  Of course, those costs would be very small if people were always honest, transparent, forthcoming, compliant, faithful, cooperative, congenial, etc.  But because people are not that way, business pursuits will be costly.  The humanitarian response is not just to bear the costs of collaboration but to impart education and training to such an extent that transaction costs are reduced.  When the humanitarian effort is successful, business pursuits yield a favorable return, investment in the area increases, new local jobs are created and the lives of villagers improve.

Java Bite dried mangos result from painstaking efforts to educate and train village residents.  

It's business.  

But it's not business as usual.