Yesterday, we left off with my assertion that because there is no mechanism that delivers relevant information to pro-life investors about which PHCs generate a strong ROI (lives saved from abortion), and which PHCs don’t, there is too much money flowing to PHCs that aren’t effective, and too little money flowing to PHCs that are effective.
From an industry perspective, we could say that available philanthropic capital is severely misallocated.
One of the effects of that, which we will cover today, is that capital misallocation can lead to creating overcapacity of supply – meaning supply of something significantly in excess of what is actually demanded.
Too Much of a Good Thing
Historically, one of the most reliable offenders of misallocating capital in a way that leads to oversupply is the government.
Our own federal government wins many prizes in this category, but one government that sticks out in my mind as an expert at misallocating capital is China.
Economists visiting China often comment that the government has built massive highways that more or less go untraveled, and along those highways the government has built large apartment complexes that are more or less vacant.
Interestingly, highways and apartment buildings are, in and of themselves, good things.
But even good things created in an amount well beyond the demand for those things, end up being bad things because the capital invested to create them could have been allocated elsewhere to more productive uses.
“If you build it, they will come,” is not good economic policy.
How does this apply to Pregnancy Help Centers?
We Outnumber Our Enemy!
You will often hear touted from leaders in the Pro-Life Movement that there are 3,000 to 4,000 pro-life pregnancy centers across the country, outnumbering Planned Parenthood locations by 4 to 1.
Sounds pretty great, right?
It’s not.
What’s left out of that number is context.
Specifically, many of those 3,000 to 4,000 are in low population rural communities where demand for abortion is low.
That is a problem because, in general, demand for abortion in terms of numbers tends to follow population.
And about 250 million Americans out of our total population of 330 million, live in or around urban areas.
More than 75% of the U.S. population lives on just 3% of our country’s total land area. (Source: https://en.wikipedia.org/wiki/Demographics_of_the_United_States#Population_centers)
Strategically, it makes sense to concentrate investments in Pregnancy Help Centers in areas where demand for abortion is highest: in high population urban areas.
Tragically, much of the philanthropic capital that flows into the Pro-Life Business Industry is misallocated to funding PHCs that are in low population areas where demand for abortion is low.
Taking a Page Out of Your Opponent’s Playbook
Equally tragic is that Planned Parenthood is, once again, ahead of the Pro-Life Business Industry in terms of recognizing that it is both more efficient, and effective, to have a significant operating presence in the urban centers than it is to disperse operating capital in both urban and rural areas.
Planned Parenthood continues to close facilities in low population areas, and build high capacity mega-facilities in urban areas.
It is concentrating resources in areas where the demand for abortion is greatest.
That is smart business.
Unfortunately, every time Planned Parenthood closes a facility in a low population area, leaders in the Pro-Life Movement shout “Victory!”
No. Victory is the Pro-Life Business Industry winning the market share battle against Planned Parenthood, which we aren’t winning.
At least, not yet.
The Pro-Life Business Industry would be wise to take a page out of Planned Parenthood’s strategic playbook and reallocate significant capital to developing the competitiveness of PHCs in urban areas.
More tomorrow…
Regards,
Brett