David: From Beggar to Entrepreuneur; B. A. Johnson

I paused. Third-World cities are crowded with hungry children, many of them orphans, as families migrate to the cities in hopes of finding the employment that simply isn't avail able. When I turned around and saw him, I faced a boy of about ten or eleven years, with black hair and a tom T-shirt. He walked toward me, and his eyes fairly flashed with intelligence Mr. Johnson is chairman of Four Seasons International Corporation (Raleigh, North Carolina), an international business consulting firm. He has had 18 years of experi ence in developing countries. and the wariness that only the "street-wise" seem to acquire-a special toughness that is their very defense against the hustlers, the petty thieves, and the unprincipled. "You're chubbier than I am!" I answered him, smiling. "Yeah, well, it works on most tourists," he said lamentedly. "Ah, but I'm not a tourist!" I thought I had him. "I know. There's something about you. . . ." The street wisdom again? "Well, thanks anyway. Basta luego."

"I was just looking for a tamale and some good Peruvian coffee," I said in a loud voice as he turned away from me. "You know any good places?" His eyes smiled back, and he approached me briskly. "Amigo! I know the best tamales in all of Lima!" I believed him. And he was right. At a tiny, rundown tamale stand only a few kilometers from the crystalline glamor· of the Sheraton, we stood and ate hot tamales wrapped in comhusks. And drank coffee. I had seen suffering children all over the world, for years. I always had given them money, but what was it about this boy that told me there was something extra-perhaps something even redeeming? At this point, it was only a vague feeling. "Senor," he said suddenly to me, "you like Peruvian wine?" Peru makes one of the best rose wines in the world.

"You're too young to like wine," I said gruffly. At least I thought I had said it gruffly. But his eyes twinkled: ,,Ah, senor, can one ever be too young to love the nectar of the gods?" Then I knew what had captured me: not just his obvious intelli gence' but his passion and love for life. Despite the horrors of daily living on the streets-and off his wits-and despite the taunts of other children striving like him to eke out a bare sub sistence, this boy had risen above them by seeing beauty where they saw terror, and by seeing hope where they saw only despair. I was hooked. "~Como se llama Usted?" 1 asked him, for it had just occurred to me that we didn't even know each other's names. I continued to ad dress him in the polite rather than the familiar form used normally when talking with children. This he clearly was not accustomed to, and he responded enthusiastically . You've recognized my dignity, he seemed to be saying in return.

"David!" he answered with gusto. "l.Y Usted?" David. The slayer of Goliath. He who rose to greatness out of his love for his own people. I tried to shake off what was clearly only a ro mantic image of a small street orphan in the modem-day backstreets of a developing city. "Bruce!" 1 answered back. But I knew he was not going to be able to pronounce it without considerable difficulty. I was taken aback when he modified it so quickly to suit his Spanish and his own sense of propriety: "Ah, Senor Bruce!" he said with satisfac tion, pronouncing the Scottish name BROO say. I was quite used to this variation by adults, but had never heard a child adopt the name so readily. I was pleased. He was licking the cornhusk wrappers of his tamale, and I took the hint to order him an other. He beamed. "David," I began, "What do you want to do? How do you want to live?" He obviously was not in school but, 1 was to learn later, he had taught himself to read phonetically, and was the proud owner of two bedraggled copies of Miguel de Unamuno' s novels, as well as an even more dog-eared paperback Spanish-En glish dictionary.

He stared straight into my eyes as he an405 swered with resolution I had never heard in any child. "I want to have my own shoeshine busi ness." "Really?' ' "Really!" A fierce determination under scored his answer-not arrogance, just the plain determination of someone who knew what he wanted and knew somehow that he would get it. How could anyone fail to be moved by this little boy's confidence and pre cocity? Shoeshining is an occupation of thousands of young boys throughout the developing coun tries of Latin America, Africa, and the Middle East. Most of them use cheap polish and no skill in their craft, but it struck me at once that here might be an exception. "David, going into business entails capital, and I know you know the meaning of that word. Have you any money at all?" He reached into the side pocket of his tat tered and filthy jeans, and withdrew a small bundle of 500-soles banknotes. Altogether, he had the equivalent of nine dollars. "Where did you get this?" It was a good deal of money for a small boy in Peru to have.

"I saved it from turistas." 1 believed him. Tourists-especially American tourists-typi cally have hearts of gold, and beggar children know this only too well. The next question was easy. "David, I believe you. And I believe that you're serious about wanting your own busi ness. I'll tell you what." His big eyes were fixed on mine, unmoving. "I'll be your venture capitalist, and I'll explain what that means. It means that I'm willing to provide the rest of the money you need for your venture, but only if you're willing to share part of· your earnings with me: If I'm going to invest in you, I de serve a return on my investment. Fair?" I had expected him by this time to look puz zled. I should have known better. "But capitalism is evil-it's what makes us starve!" he spit back. It really wasn't sur prising. Throughout the Third World, this time-worn cliche is being bandied about by so ciologists and academics at an alarming rate.

Now 1 was confronted by an inordinately sensi tive and capable little boy who did not have the tools with which to refute something that I sus406 THE FREEMAN. NOVEMBER 1987 pected he knew, inside, was false. ,'David, in the years before your new Presi dent, did you live better or worse than you do now?" "Things were not good before President Be launde," he replied. "My friends have told me bad things. ' '* "Exactly. And that was because your friends were not allowed to practice what they wanted to do, and they were not allowed to keep what they had earned by their own hands. Right now in Peru, anyone in the country can make a living any way he sees fit, just so long as he doesn't break the law." He nodded. "David, I just paid this lady for some tamales and some coffee. Now, she's a capitalist because she's in business for herself. But when I paid her, who benefited?' , He paused ,a minute. "Well, I guess both of you did!" He knew he was right. His eyes showed me that he was beginning to catch on to an idea he had only felt before.

"Exactly! Now, what if she had wanted 1,000 soles for a tamale, rather than only 25?" "Hey, amigo, you would have been a real gringo turista if you had paid that price!" He was genuinely excited, and it was contagious; two other customers at the tamale stand were watching us now, smiling. "Yes, I would have been just that. But more likely, I would have refused to buy them from her, right?" He nodded again, enthusiastically. "In a business transaction, the price of any thing is determined not by what you want to charge, but by what the customer is willing to pay. In other words, the market reflects fair ness, just so long as no one is allowed to get away with fraud." "Well, amigo, there's a lot of jerks in this * Peru, under Mr. Garcia's administration today, is suffering once again the impoverishing effects of socialist policies. As Mi chael Novak remarks in his new book, Will It Liberate? Questions About Liberation Theology: "In Peru, the liberal activist Hernando de Soto has pointed out that state regulation almost totally strangles the economic liberties ofthe lower classes. Some 2.5 million street vendors, artisans, and manufacturers work without legal protection because they cannot cut through governmental red tape. Ninety-five percent of Lima's public transportation (buses and taxis) are run by this illegal 'informal sector.' Forty-three percent of all Peruvian housing built during the past 30 years has been built informally.

Sixty percent of Lima's food is distributed informally. To build homes requires 7 to 14 years to receive government authorization. It can take 289 days to form a legal corporation, and the cost in bribes, government fees, and foregone income is five times the average worker's annual earnings, some $8,700 [US]." town, and they rip off everyone. . . ." I inter rupted him. "There's a fine line, David, between fraud and just foolhardy buying habits. If you get me to pay you, say, 100,000 soles in advance for a car, and then deliver me an old horse, that's fraud. But if I willingly walk up and buy your horse, after looking it over, even though I might know that neither the horse nor the price are such a good deal, then I'm just plain stupid. In other words, it's my responsibility to look after myself, not yours and not President Be launde's. " "Okay. Bueno. So how much am I going to charge?" Smart kid, but moving in the fast lane before he's learned to drive, I thought to my self, amused.

"What's the going price for a shoeshine in Lima?" I asked. "I guess 275 soles," he answered quickly. About 65 cents. "And do you think you'll be as good as the other boys in Lima? Remember, they're your competitors. ' , "I'm better!" he shouted. "I'm better than all of them!" He believed that, and so did I, because enthusiasm is the father of excellence. "Now that's the spirit! Okay. So why don't you do this: offer a better service, and try charging just a few soles more for it. If you're really that good, people will pay for the differ ence, quite happily." "Really?' , I ruffed his hair. "Really!" I put my arm on his shoulder and pulled him back into the lane. "So let's go and get your equipment, " I said. It was like suggesting a glass of water to a parched desert hiker. As I had expected, young David had picked out his equipment weeks before, in hopes that he might somehow be able to buy it soon. In a small, dingy, general-goods store, we found a shoe shine box, well used . We then went around the comer to a shoe repair shop to find the polish, brushes, and rags he needed. Alto gether, the total came to about $18.00. (Shoe polish is imported from North America, and goes for a very steep price, after customs duties are added.) So David was in debt for $9.00.

DAVID: FROM BEGGAR TO ENTREPRENEUR 407 Now it was my turn to be eager. Where had he decided to set up shop? "At the Plaza San Martin!" He responded. "What? Along with twenty other shoeshine boys?" It was time for a little marketing lesson. "Yeah, but I'm better, remember?" ,'And those twenty competitors already have their steady customers. So how are you going to break into a market that's already filled?" I tried to be firm without sounding disappointed in him.' "Esta bien. But where can I go, where there's lots of people?" He was sincere in his concern. Plaza San Martin was one of the cen tral hub areas of Lima. "The Sheraton Hotel, David." 1 handed the shoe box over to him. "That's where there are busloads of turistas with big hearts and lots of dusty, dirty shoes!" He was ,grinning broadly now. "Ay, gringos!" I wasn't sure I liked his enthusiasm this time. On our way to the Sheraton, we discussed the fact that there were already a few boys shining shoes near the front door of the hotel.

"But there aren't twenty of them, are there?" We talked about fairness, and about com peting without harming the other boys. Their skills should be the only standard by which they will win business. Besides, I urged him, sometimes there will be more turistas outside than he could handle, so sharing the business was in the best interest of everyone. He ac cepted this, but grudgingly. Moments after arriving at the Sheraton he popped the question that I had completely over looked. "Hey, Senor Bruce-how much do you get from me? Half?" I paused to study this young entrepreneur with the stained jeans. "One per cent," I an swered. He stared back. "How much is that?" I had forgotten that his education was sparse. "That means I get one sole out of every hundred you collect," I answered. He beamed. "You are a gringo, amigo!" Five minutes later, 1 had talked an unsus pecting British tourist into stepping outside for the best shoeshine of his life. "Oh~ really now," he had objected, "I don't at all take to David these little urchins rubbing cordovan polish all over my slacks, you know, what?"

Yes, I knew. But, a few minutes later, he acquiesced, probably out of intrigue for this strange Yank who was so taken with the little enterprise. We approached David with some trepida tion. After ascertaining that the hesitant British gentleman spoke only tourist Spanish ("How much is that in real money, por favor?") I looked sternly at my young charge. "David, if you use the wrong color or get one smitch of polish on this man's slacks, I'll chase you all the way over the Andes into Ecuador!" He knew I meant it, but he was amused nonetheless. His brown eyes said, "Okay, boss!" My own eyes said, "Maybe I'd better go up to my room until this is all over and done with.... " David went to work with a ferocity and steadiness that was intoxicating. I decided I didn't need to disappear, after all. Even the British gentleman was taken aback by the skill that this little boy was displaying-snapping his polish cloth about with the same panache as Jascha Heifetz wielded a bow. Moments later, 408 THE FREEMAN. NOVEMBER 1987 it looked as if David had created a new pair of shoes. I was visibly relieved. So, I could tell, was his first customer.

"That is a smashing job, young man!" said the man. David looked at me, puzzled. "jFantas tico!" I flashed back. He grinned proudly. "How much do I owe you?" David, of course, knew the words "how much," prob ably in more languages than Berlitz. He looked at me. I turned both palms up, to signify that it was his decision completely. I only hoped that he had done a minute's thinking about what we had discussed that afternoon. He had. "Trescientos soles, por favor, Senor!" I smiled. Three hundred soles-three and a half cents above the competition, for a job worth much more. The British tourist dug into his pocket and withdrew a 500-soles note. "This is for an out standing job!" he said, handing it to an over whelmed David. "And I've got a few others in my group who I'll send out to you later this afternoon. Cheers!" Cheers, indeed! Here before me stood a young man with tears in his eyes, staring hard at the first money he had ever earned in his life. I knew the feeling, and you know it, too.

I winked at him, and turned on my heel to go back into the Sheraton-this time to stay. I returned to my room on the sixteenth floor, and began to write reports associated with my own employment. But from time to time I peered over the balcony of my room, only to see young David slaying the Goliath of compe tition he never feared, and only once did I see him without a customer. I laughed as I watched him develop a style that never failed to hook a passerby: He would bow stiffly to them, and say in an unhalting voice, "Senor, I am zee BEST!" A few hours later, after sunset, my phone rang. It was the concierge in the lobby. They had, he said, caught a little street urchin trying to sneak up the elevators to my room, but before they threw him out they felt they should call me, because he kept threatening them that I would "chase them over the Andes" if indeed they threw him out. "Senor," I said as formally as I could, ac centing every syllable, and carefully trilling every "r," "That young street urchin is my business partner. Send him up at once!" I· couldn't see David's face, of course, but I could picture him drawing himself up to his full four-foot height, dusting off his shoe box, and marching smugly to the elevators.

When I opened my door, he held out his hands. They were piled high with 1DO-soles coins, atop a stack of 500-soles notes. I was astonished. "I don't know how much is yours, Senor Bruce, but I must pay you," he said quite seri ously. We counted the money. He had earned enough to pay back my $9.00 investment, and to pay me my return of 1 per cent, which itself amounted to 12 soles, or 2.7 cents. He was left, at the end of his first day, with the equivalent of $2.70. But he knew that from here on he was going to make a good deal of money, now that his initial debt had been paid off in full. As he turned to leave, he extended his small, polish-covered hand. "Senor," he said softly, "Someday I will have enough money to come see you in America!" I gripped his hand firmly. "David, that's a wonderful thing to say. But there's plenty of time for that. You've got a lot to give to Peru!" A few moments of silence passed before he looked up at me. "I will give it," he said, and I released his hand.

He stopped and turned back on his way down the hall. I thrust out my hand, with my thumb pointed firmly upwards. "jArrfba!" I shouted down the hall. Upwards! "jArrfba!" he shouted back, arching his free arm into the air. Then we both laughed, for dangling precariously from his blackened thumb was a polish cloth. D 409 "Insider Trading": The Moral Issue by Ridgway K. Foley, Jr. S abena Dowd, an engineer for Super Soft ware, overhears a conversation during a morning elevator ride to her office on the 38th floor of the New Market Building. She observes the two passengers leave the elevator on the 27th floor. She knows-as does anyone who can and will read the building directory that the 27th floor is the exclusive domain of Reuben & Rotten, investment bankers reputed to specialize in acquisitions, mergers, lever aged buyouts, and other common financial market activities. Sabena also recognizes one of her departing fellow passengers as Richard Rotten, a partner whose visage has appeared on several recent occasions in both the social and the financial pages of local publications. Nei ther Mr. Rotten nor his companion make any attempt to hide or disguise their discussion from others in the car; indeed, they take no no tice of anyone else.