Here and There

This year’s winner of the Nobel Peace Prize, Muhammad Yunus, is from Bangladesh. While it’s debatable whether more Americans have heard of Bangladesh or microcredit, Mr. Yunus is a deserving recipient of the esteemed award.

Before I go into this too far, I should say my grasp of any economics, from the personal to the micro and macro levels, is scant. My financial plan works something like this: get money, spend money, repeat cycle. But over the last few years, through various amateur attempts, I’ve come to understand a little more.

That said, microcredit is an idea, revolutionary at its inception, that works to bring some sense of fairness to poor people the world over. With financial security comes peace, so the logic goes.

The idea was codified and defined at the Microcredit Summit, February 2-4, 1997 thusly: programmes [that] extend small loans to very poor people for self-employment projects that generate income, allowing them to care for themselves and their families.

Obviously poor people, the prevailing conventional wisdom has gone, lack the resources that would make them eligible or attractive for such a leg up. The cycle of poverty was therefore doomed to perpetuity.

What’s the incentive of giving money to poor people? Surely it can’t be pure altruism. Altruism has never turned a profit.

Indirect benefits include: more people working, paying taxes, spending money to buy things, raising healthy, happy families. Direct benefits include: well, other than hoping for voluminous amounts of low-interest loans (that are ostensibly paid back in a reasonably timely manner), there don’t appear to be any for lenders, other than the “rising tide” theory of economics.

Yunus’s Grameen Bank has been engaged in microcredit lending for a little over 30 years. It has also branched out into other forms of poverty alleviation programs, such as housing loans, savings, and venture capital. Estimates state that the bank has given out roughly $5 billion in loans to more than 4 million people.
At a time in history as war-torn as the present, with nearly all work undertaken to counter the bloodshed obscured and undermined, it makes sense that the peace prize be given to a pioneer for seeking to end poverty. Sure, war and terrorism are not black and white ideas, but increased economic opportunity could work wonders toward building a more just, tolerant, and peaceful world.

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