The Clinton Effect

The former president discusses his philanthropic journey (excerpted from an interview by Jonathan Rauch)

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Click here to hear an audio version of these remarks and watch a slideshow of Clinton's activities around the world.

When I got out of office, I wanted to do something with AIDS. Mandela and I agreed to be the chairs of something called the International AIDS Trust. Keep in mind that this was before the Bush program passed and before the Global Fund had been funded.

So at first the world was still clamoring for more money to deal with HIV and AIDS. Then in 2002, Mandela and I went to Barcelona to close the International AIDS Conference. And there were about 10,000 people there. It was fascinating. We closed the conference and we made an appeal and we talked about what had been done to date.

So at the end of this conference the prime minister of Saint Kitts and Nevis, Denzil Douglas, who was in charge of the eastern Caribbean states’ efforts against HIV and AIDS, came up to me and said, “You know, we don’t have a denial problem, we don’t have a stigma problem. We have a money and an organizational problem.” I said, “Well, Denzil, what do you want me to do about it?” He said, ‘I want you to fix it.’ And I said, ‘OK.’” I really didn’t know what I was saying, but anyway, I thought about this—that it was a money problem and an organizational problem.

I had become more and more interested in that as president and in a totally different context. We began to spend a lot of time working with developing countries, helping them develop systems, legal systems, investment systems. Because I became convinced that development was impeded more by incapacity than corruption. So I was interested in this whole idea, and with what Prime Minister Douglas said, that we had both a money problem and an organizational problem.

I called Ira because we had been friends since the late 60s—he was a year behind me at Oxford—and because he had worked with us on health care and on e-commerce. And so we talked about it. In the beginning, we thought the main thing here is going to be getting the money up, because the Global Fund hadn’t been funded, the Bush money hadn’t passed, we didn’t know what strictures would be on the Bush money. We were just trying to help these people that asked us to help.

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We were first invited to go to work in the Bahamas, which is the wealthiest country in the Caribbean but had the third highest AIDS infection rate after Haiti and the Dominican Republic. So the first week we started this project in the Caribbean we found out the Bahamas were treating as I recall somewhere between five and 700 people, and they were paying $3500 a person for their AIDS medicine. Now: that’s about what the Europeans and the Canadians were paying for the anti-retrovirals made in America.” We pay $10,000 here, and they pay about $3500 for the same. You know how the systems works.

So I figured out they weren’t buying that medicine. They were buying generics, which had a list price of $500. So I called Ira. We talked again. I said, “Look, this doesn’t make any sense. How could these people be paying $3500 for $500 drugs? If we just cut this to $500 they’ll be able to treat not 7 times as many people, because there are some administrative costs involved, but at least six times as many people for the same amount of money. This is immoral.”

So, I said, “Find out what’s going on.” It turned out they were buying through two agents, each of whom was taking a huge markup. So the first week our AIDS project was in place, we got them $500 drugs. That was our first great victory. And it got me to thinking about how once more we had a public goods market that was not only underfinanced, it was disorganized.

And the rest, as you know, is history. Ira went to work on that and we negotiated lower prices and we basically got the whole AIDS medicine market—what we tried to do was to get them to go from what I call a jewelry store model to a grocery store model, from a high-profit, low-volume, uncertain payment business to a low-margin, high-volume, certain payment business.

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I got interested in doing something about climate change. I decided that I at least ought to replace every bulb in my home with a compact fluorescent bulb. So I went down to my local hardware store—Chappaqua, NY, I went to my hardware store. They got a great little hardware store there. And I bought every different kind of shape compact fluorescent bulb I could, different wattages. And I went home. And I have a hundred-and something-year-old farmhouse. It’s like 110 years old. And I found that I couldn’t buy bulbs in my hardware store that would fit half the outlets in my home. So I literally picked up the phone and called Jeff Immelt and I said, “I’m trying to be a good customer. I’m trying to buy American, support GE, I like your eco initiatives. But I can’t fill half these sockets, what am I going to do?” And he said, “Well, make me a bigger market and I’ll make whatever bulbs you want.”

Ironically, about the time I tried to buy the light bulb, I had an interesting conversation with Lee Scott, the chairman of Wal-Mart, because it’s an Arkansas company and I was home one day and I ran into him. And I said, “You guys really ought to get into this clean energy. You’d make a killing. It’d be a great profit center for Wal-Mart and change your whole image.” They are now going to offer for sale in their stores 100 million compact fluorescent bulbs. If their customers buy them and screw them in and use them, they will have the effect of taking 700,000 cars off the road.

So you see where I’m going with this. Wal-Mart’s hardly in the charity business, right? They’re trying to make money. But because they’re so big, if they do this, then all of a sudden my little hardware store in Chappaqua will have more light bulbs to sell. They will organize and expand the public goods market. If you can organize the market, whether you do it with grant funds as we did with the AIDS deal, or with simple consumer transactions, the net effect is the same. The public good is dramatically advanced.

What I long to do is to see this integrated into every philanthropic activity from now on, where it’s appropriate. And do I think other people can do it? I hope and pray they can. I mean, I’m glad we did it and made a unique contribution, and I hope we can keep doing this for the rest of my life. I love this. But the ultimate objective of all philanthropic endeavors should be to work yourself out of a job.

This article available online at:

http://www.theatlantic.com/magazine/archive/2007/09/the-clinton-effect/306214/