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Phil Knight Wants to Solve Poverty

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So Phil Knight wants to solve poverty, among other problems in global society.

Philip H. Knight, the co-founder and chairman of Nike Inc., said on Monday that he had pledged to give Stanford University $400 million to recruit graduate students around the globe to address society’s most intractable problems, including poverty and climate change.

The gift to the new Knight-Hennessy Scholars Program, which is modeled on the Rhodes scholarships, matches one of the largest individual donations ever to a university, the $400 million that John A. Paulson, the hedge fund tycoon, gave to Harvard last year to improve its engineering school. The Stanford project is meant to improve the world.

“This is using education to benefit mankind and I think it really could be transformative,” Mr. Knight said in a phone interview. “I jumped on it right away.”

Leaving out the fact that giving $400 million to one of the world’s richest institutions is a terrible way to solve any kind of problem except perhaps your own tax bill, I wonder if Phil Knight could do anything else to solve poverty? Like stop exploiting workers in low-wage sweatshops? Maybe?

But the reality is that the long-term exploitation of people at very low wages is completely OK with Americans and their companies in ways that other forms of oppression are not. See Nike distancing itself from the homophobe Manny Pacquiao, rightfully damning one horrible thing while completely embracing another because it creates profit.

Moas couldn’t square Nike’s seemingly PR-oriented move with its actions, which include a history of sweatshop production, slave wages and child labor practices in Southeast Asian countries.

“So Nike is pro-gay and anti-gay comments are unacceptable to them?” Moas asked in an email to investors Thursday morning. “That is great, but their use of sweatshops is okay? I guess people being abused in sweatshops can’t boycott because they have no money to pay $100 for a $5 pair of shoes.”

“Nike pays Kevin Durant $300,000,000 and LeBron James $500,000,000,” wrote Moas. “The 100,000 workers in Indonesia at the Nike sweatshop get paid $3 a day. Nike’s market cap is now $99 billion. They could take 3% of their $3 billion profit and double the salaries of the 100,000 Indonesian workers.”

Nike has been criticized over the years for its outsourced labor practices, but has tried to re-shape its image in recent years.

A Nike spokesperson told Benzinga the company had no comment on the matter at time of publishing.

That half-billion deal with LeBron is a real thing too.

And while most of the talk about Nike and sweastshops in 2016 is about how it is better than any other companies at controlling its supply chain, thanks to the terrible publicity it received in the 1990s over its Indonesian contractors, the reality is that these are still very poor people. If Phil Knight wants to solve poverty, how about making sure the people assembling his shoes receive a quality wage that raises standards throughout the industry and allows the creation of a Vietnamese or Indonesian middle class, not to mention the potential of making some of these shoes in the United States and recreating an American middle class? That would go a whole lot further to poverty alleviation than giving a bunch of money to Stanford.

Also, this.

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  • Nobdy

    Why are you giving away good advice like “If you want to decrease global poverty you should pay your workers more” on some piddly free blog instead of peddling it to Phil Knight? You could get at least a couple hundred thousand for it, hell Knight probably has that much in the cushions of his couch!

    You’re a better scholar than you are a capitalist.

    • MoMetaBlues

      Capitalism is the efficient allocation of capital to produce the answer you want to hear, from the kind of people you want to hear it from.

      • Brett

        You’re joking, but it’s true. Otherwise there wouldn’t be a million self-help and life coach businesses out there.

  • advocatethis

    Since Nike itself is unmoved by any complaints about the treatment of its workers, maybe it’s time to take the complaints to Durant and James and Jordan and the others who are getting richer off of the overseas sweatshops. It may well be that money is all that moves these people, but I’d like to think that they want people to think of them as decent people. Maybe getting some of the dirt to rub off of Nike on to them will help make a small difference.

    • Captain Oblivious

      Jordan’s been through this before. There was a big blow-up some years ago about how Air Jordans were being made by slave labor. He didn’t do a damned thing except mutter approved PR talking points. It was one of the incidents that prompted Nike to at least partially clean up their act, but it wasn’t because of anything Jordan did or said.

  • Captain Oblivious

    Phil Knight is a Joe Paterno denier.

    Also, too: Rory McIlroy ($200m) and the est. $20m a year Tiger gets from Nike for not playing.

    • DrDick

      He is the modern incarnation of Andrew Carnegy or Cecil Rhodes, using a piddling donation to a wealthy elite university to wash the blood off his hands. Like McBeth, he will find that spot does not wash off.

      • Hogan

        When Birnam Wood comes to Beaverton.

  • Brett

    Knight isn’t the CEO at Nike anymore, so that window has unfortunately closed.

    What would be more useful would be if he gave $1000 to 400,000 poor people, or $100 to 4 million poor people in poor countries. Or if he wants to do something here, he could donate it to food banks – the Utah Food Bank supposedly gets around $7 of food for every $1 in monetary donations. Think of the leverage if that ratio holds true elsewhere, Phil Knight! You could be leveraging your $400 million donation into $2.8 billion worth of food assistance!

    Has Stanford said whether they’re going to name a building after him or not? I think John Paulson may have gotten that from Harvard.

    • I’d be shocked if Knight doesn’t have a building already named for him at Stanford. He has like 5 or 6 named for him and his family at Oregon and he gives just as much to Stanford. Of course it’s easier to buy influence at Oregon.

      • Brett

        It’s almost like “what’s the point?”. If you get a building named after you just because of a large donation, they’re probably just going to rename it after you’re dead and the next big donor comes around (unless your family is still rich and donating money to the college, like with the Eccles family here in Utah).

        Phil Knight would have gotten more for his vanity if he’d built a giant 100-foot statue of himself holding a pair of shoes. At least that would be a potential tourist attraction.

        • Hogan

          We’ve been through a few rounds of that here. Suck it, Founding Father James Logan! One of Ron Perelman’s exes wants your spot!

        • AMK

          Buildings? There are plenty of schools that would just rename themselves “Knight University” for $400 million.

          • Brett

            “Knight College”. “Knight U”. “Knight University” is kind of a cool name for a university – I’m surprised it isn’t already taken.

        • burritoboy

          These types of gifts only occur after years (sometimes decades) of negotiations. If Knight wants buildings named after him until the heat-death of the universe, it’s in the agreement.

          • AMK

            I would love to be a fly on the wall in those negotiations.

            “Yes Mr. Knight, we’d be happy to sign the contract saying your children’s children will have guaranteed spots at Stanford through the 10th generation. But we have checked with our legal office several times, and there is unfortunately no way for us to force the students on financial aid to stitch up basketballs part-time.”

    • PotemkinMetropolitanRegion

      The entire business school is named after him.

      Having spent some time at Stanford, I wonder if there could be a brain drain problem: I imagine it would be tempting to stay in the Bay Area with your fancy Stanford MBA/JD/M.Eng./MD and make a ton of money rather than return to your home country.

    • Phil Perspective

      Knight isn’t the CEO at Nike anymore, so that window has unfortunately closed.

      Just because Knight is no longer the CEO doesn’t mean he’s powerless at Nike.

      • trollhattan

        Will speculate he’s a significant shareholder and as such, has a wee bit of pull.

        Admit I thought the endorsement deal numbers were off by a factor of 10. Mind=boggled. And to think they can probably get like amounts from Gatorade or whomever. Talk about your 0.01%.

        • AMK

          The difference is that Lebron James and the like pay income taxes on their millions in endorsement money, while Phil Knight doesn’t on his billions in Nike Shares

  • Manju

    If Phil Knight wants to solve poverty, how about making sure the people assembling his shoes receive a quality wage that raises standards throughout the industry and allows the creation of a Vietnamese or Indonesian middle class,

    But that is precisely what is happening:

    …wherever the new export industries have grown, there has been measurable improvement in the lives of ordinary people. Partly this is because a growing industry must offer a somewhat higher wage than workers could get elsewhere in order to get them to move. More importantly, however, the growth of manufacturing–and of the penumbra of other jobs that the new export sector creates–has a ripple effect throughout the economy. The pressure on the land becomes less intense, so rural wages rise; the pool of unemployed urban dwellers always anxious for work shrinks, so factories start to compete with each other for workers, and urban wages also begin to rise. Where the process has gone on long enough–say, in South Korea or Taiwan–average wages start to approach what an American teen-ager can earn at McDonald’s. And eventually people are no longer eager to live on garbage dumps. (Smokey Mountain persisted because the Philippines, until recently, did not share in the export-led growth of its neighbors. Jobs that pay better than scavenging are still few and far between.)

    http://www.slate.com/articles/business/the_dismal_science/1997/03/in_praise_of_cheap_labor.single.html

    • wengler

      Are you really referencing a Krugman article from 19 years ago?

      • Manju

        Yes, because he’s reiterated this recently and its not an issue that’s in dispute among economists…even among folks like Stigliz.

        (The dispute is over the effect offshoring has wages of low-skilled workers in the high-skilled nation)

    • Who cares what Paul Krugman said in 1997? It’s also irrelevant to the question of whether Nike could pay workers more.

      The idea that bringing up Krugman as some kind of trump card, as Manju and others like to do, is utterly laughable.

      • Manju

        Who cares what Paul Krugman said in 1997?

        2013:

        It remains true that given their low productivity, countries like Bangladesh can’t be competitive with advanced countries unless they pay their workers much less, and provide much worse working conditions too. The Bangladeshi apparel industry is going to consist of what we would consider sweatshops, or it won’t exist at all. And Bangladesh, in particular, really really needs its apparel industry; it’s pretty much the only thing keeping its economy afloat.

        Now, that’s how you try to improve the lives of the worlds poor.

        I understand its more ideologically comfortable for you to do this while pretending that offshoring isn’t actually lifting the world’s poorest people out of poverty, but it’s also comforting for some people to believe that tax cuts pay for themselves.

        http://krugman.blogs.nytimes.com/2013/07/08/safer-sweatshops/?_r=0

        • Once again, I don’t consider Paul Krugman the trump card you do.

          Second, you can feel nice and comfortable thinking you are right without caring about the consequences. What I am saying is that Phil Knight could pay these workers far more without significantly raising the price of the product. But you see opposed to that because you read Paul Krugman once.

          • DrDick

            And Krugman does not in fact even address this issue. He has also backed off on his support for “free trade” agreements and does not support TPP for some of the same kinds of reasons you object to it.

          • Manju

            What I am saying is that Phil Knight could pay these workers far more without significantly raising the price of the product.

            “…those jobs wouldn’t exist if the wages were much higher: the same factors that make poor countries poor — low productivity, bad infrastructure, general social disorganization — mean that such countries can compete on world markets only if they pay wages much lower than those paid in the West.”

            – Paul Krugman

            • Linnaeus

              In that column you linked, Krugman also says this:

              The most sophisticated answer was that the [antiglobalization]movement doesn’t want to stop exports — it just wants better working conditions and higher wages.

              But it’s not a serious position.Third-world countries desperately need their export industries — they cannot retreat to an imaginary rural Arcadia. They can’t have those export industries unless they are allowed to sell goods produced under conditions that Westerners find appalling, by workers who receive very low wages. And that’s a fact the anti-globalization activists refuse to accept.

              Fast forward to 2013 (which you also linked above) and Krugman’s changed his tune a bit. Now it’s okay to introduce some measures to make industries in poorer countries safer, because things are different now. Which, to me, raises some interesting questions:

              If free trade orthodoxy requires that a nation maintain its comparative advantage through poor working conditions and low wages, at what point is it okay to improve those conditions? How will we know when that point has arrived?

              One answer to this question that I often hear is that at some point the workers of the poorer country will at some point be in a position to expect and demand better conditions.

              But that raises a few more questions in my mind. If poor working conditions as an important element of comparative advantage holds as a general principle, then it doesn’t really matter whether it’s the citizens of a developing country or foreigners who are agitating for better conditions – the effect on comparative advantage of successful efforts to bring about better conditions would be the same. If that effect is an erosion of comparative advantage, then the conclusion that one could draw from that is that movements to improve the conditions of workers in developing countries should not just be opposed, but crushed, because they threaten the prosperity of those nations. Which in turn has some, ah, troubling implications.

              • DrDick
              • Manju

                If free trade orthodoxy requires that a nation maintain its comparative advantage through poor working conditions and low wages, at what point is it okay to improve those conditions?

                It doesn’t require this. As the process goes on the wages increase, a middle class is born, and a high-skilled nation with higher productivity, a better infrastructure, and more social organization emerges. Thus they are no longer so dependent on

                See my first quote from Krugman and his reference to South Korea. The point is that this process (of the worlds poor rising out of poverty, of the creation of middle class in poor nations, etc) has already begun. For the first time in human history, income inequality betweenthe west and the rest of the world is shrinking…in part b/c of the very forces Erik is condemning.

                • The capitalists couldn’t ask for a better friend than you. You don’t critique them at all–to you, the capitalists are in fact the world’s saviors. I’m curious about the implications of this. Since they are clearly moral knights, leading the world out of poverty thanks to their beneficent actions, should we follow their lead on domestic policies? Is there anything they can’t do wrong?

                  Also, I challenge you to make a comment about economics without a reference to St. Krugman.

                • DrDick

                  I am coming to the inescapable conclusion that Manju’s family is in the sweatshop business somewhere in South Asia. Otherwise, he works much too hard at trying to rationalize and justify the inexcusable. The only people who really benefit from the current situation are the multinational corporations and the owners of the factories producing these goods.

                • joe from Lowell

                  As the process goes on the wages increase, a middle class is born, and a high-skilled nation with higher productivity, a better infrastructure, and more social organization emerges.

                  These happy things only happen when there is a force other than the market that makes them happen. Unions, responsible governments, something. None of those things are the inevitable outgrowth of industrial capitalism itself.

                  Yes, you need the industrial capitalism to make them happen, but it’s not sufficient.

                • LFC

                  Don’t have time to engage this now, but I’d note Krugman is making some assumptions, notably about the relations betw productivity, wages, and development, that I wd be inclined to at least pause on before accepting. Sorry can’t say more at the moment.

                • Manju

                  The only people who really benefit from the current situation are the multinational corporations and the owners of the factories producing these goods.

                  While fat-cat capitalists might benefit from globalization, the biggest beneficiaries are, yes, Third World workers.

                  – Paul Krugman

                • Manju

                  Also, I challenge you to make a comment about economics without a reference to St. Krugman.

                  Well Ta-Nehisi Coates says Paul Krugman sees The Truth so I think that ends this debate.

            • Bill Murray

              where is having your resources extracted by richer countries that set up an elite to keep you in your place on Krugman’s list of reasons countries are poor?

  • brugroffil

    Leaving out the fact that giving $400 million to one of the world’s richest institutions is a terrible way to solve any kind of problem except perhaps your own tax bill,

    That’s still preferable to the Gates-style “set up and run your own institution guided solely by your own ideology,” no?

    • nixnutz

      No, I don’t think so. Maybe if the Gates Foundation only did the education stuff, but $28B much of which goes to non-useless interventions in health and poverty (not saying there’s not plenty of room to criticize on practical grounds rather than ideological) is better than giving to a private university that’s already super-wealthy.

      • brugroffil

        Yeah, wait, I completely misread what he was doing. I guess I assumed based on the radio piece I heard earlier that he was giving $400M to some institution based at Stanford that already does work along these lines, not that he’s giving Stanford $400M to…recruit people? I’d imagine Stanford isn’t wanting for qualified applicants.

  • wengler

    Is this the part of the story where the criminal makes partial restitution and then is canonized by the other criminals?

  • JustRuss

    When Oregon had a ballot measure to raise taxes a few years ago Phil threw a hissy fit and threatened to leave the state and take Nike with him. I don’t believe solving the problems of the toiling masses is high on his agenda.

  • UserGoogol

    In principle I don’t think it’s especially wrong to figure out how to solve poverty while continuing to cause it. Poverty is a social problem, not an individual problem. All Nike can do is solve poverty for the people who work for Nike, which is a drop in the bucket. That would still be the right thing to do, but we can’t expect people to always do the right thing, and I don’t think there’s anything hypocritical about trying to solve a social problem while actively preventing its solution for a small subset of the problem for personal gain.

    Of course, the fact that what he’s doing won’t do much to help poverty is… an additional minus.

    • Nike is not a drop in the bucket. Nike could have a huge impact on raising wages around the world by significantly raising the wages of the workers making its products. The example alone would be gigantic and put a tremendous amount of pressure on other companies.

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