Archive for May, 2009

yunusMicrofinance or microcredit is a pretty cool banking fad that has been growing in Asia and parts of Europe for a while now, going back to the early 80’s.  It has caught on much more after the “founder” of the concept Muhammad Yunus won the Nobel Peace Prize in 2006.  He started Grameen Bank in India and started doling out small loans (around $100 many times) for the poorest of the poor to invest in some money making venture, whether it was to buy material in order to make clothing, or to fund purchases needed for a small store.  His intention was not to create a non-profit, or NGO… but he is also clear that he was not out to make a huge profit either.  The intent was to help the poor get themselves out of poverty.  According to Yunus though, this trait is not shared by all the banks joining the microfinance world:

If you look at agricultural banks, for example, most of the agricultural banks around the world require collateral…. Similarly, savings and loan associations say they do microcredit. Cooperatives say they do microcredit. Those who are giving agricultural loans — commercial banks — are saying they do microcredit. So we need to clarify what microcredit is in its pure form rather than everything else. Microcredit was always given to people for income generating activity. So whatever money you are taking, you are investing it to create an income source for yourself. There are many programs which give loans for buying consumer goods, and they say they are doing microcredit, they are giving money to buy a refrigerator or buy a television. We say, “No, sorry, that’s not microcredit.” So we have to sort this out.

Another aspect that I want to draw attention to — there are many microcredit programs going around advertising themselves saying, “Oh, this is a great opportunity to make money.” And they encourage people who want to make money to join in and do that. Again, we say, “Look, our purpose is not to excite people about making money. Our purpose is to help people get out of poverty. The focus is not on profit making. The focus is on helping people to get out of poverty. Those who are seeing this as an opportunity to make money have to raise their interest rate to the extent that they make a lot of money. The interest rate issue becomes a sensitive one. We are saying interest rates should be kept as low as possible, preferably to cover costs. If you want to make a little profit on top of it, it should be a very modest profit, so that it doesn’t look like this was your intention. Those who are doing that — using microcredit, microfinance, to make a lot of money — we keep saying that this is not microcredit in the sense that we do it. We came here to fight the loan sharks, not become loan sharks ourselves. This is their moving into the direction of loan sharks. We want to disassociate ourselves from them.

He initially tried to act as a mediator between banks and the poor, but the banks felt the credit risk was too high.  So instead Yunus formed his own bank in order to be able to give out loans as he felt.  How did the credit-worthiness problem work out?  Well he has a repayment rate of 99%, and this is out of 8 million customers.  I’d say that’s not bad.  It’s a unique intersection of social concern and market economics.  Check out the video if you have time.  Yunus has some views on globalization that I don’t necessarily agree with, but he certainly is coming from a perspective that I have not experienced so it’s good to hear his thoughts.

Vodpod videos no longer available.

The Economist also has a good short article about how the microfinance world is doing during the economic crisis.  Some are struggling, but Yunus’s group seems to be doing well.

FYI – the post title is meant to be read to the tune of “It’s All About the Benjamins” by P-Diddy (at least that’s how it was in my head).

(by way of Knowledge@Wharton)

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An all digital election in Honolulu did not go as planned apparently.  They had an 83% drop in voters!  The neighborhood board election drew 44,000 voters last year, but this year rang up only 7,300.  This was the United States’ first all-digital election, where people could vote by internet or phone.  Conventional wisdom would hold that making voting easier this way would increase participation not decrease.

The cost of running the digital voting was half the cost of traditional paper ballots and manned polling stations – so both convenience and cost were on the side of the all-digital format.  But alas, the Hawaiians did not find it so convenient, or perhaps trustworthy as the article points out.  An interesting disruption to the idea that new technology will always be better.  I think eventually it will be the way of voting, but perhaps making it all digital in one year was too quick.

HT: Drudge

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One more post from me today.  I love political cartoons (and as always encourage you to check out my favorite, Cox & Forkum), and saw these two today (click on each for larger image):

The critique behind both of these obviously is that credit card companies are taking advantage and mistreating their clients.  While their practices can certainly be nefarious and under-handed, I continue to believe that consumers are responsible for their own lot, and do not need a bailout as they appear to be getting.  I know plenty about credit debt, so trust me that I fall in the category of people who would be classified as victims.  

But this seems to be just another example of what got us into the home mortgage mess (again, a guilty party speaking here).  The thinking that debt is somehow income, or maybe a right that needs to be governed by regulators as congress is doing.  All these burdens congress is adding to credit agencies (listing how long payoff time is, not allowing late fees, etc.) aren’t these all responsibilities of the people who take on debt?

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0409_smartcar01There has been much in the news lately over the Obama administrations proposed changes to CAFE legislation, raising the mpg standards on autos to 35 mpg from the current 27.5 mpg.  This provokes an interesting dilemma though.  The main way to reduce fuel consumption in autos is by making them lighter, and thus smaller.  I’m sure you have all seen the SMART car on the road and been amazed at how tiny it is… and joked about seeing that go head-to-head with a truck.  Well:

Researchers at Harvard University and the Brookings Institution found that, on average, for every 100 pounds shaved off new cars to meet CAFE standards, between 440 and 780 additional people were killed in auto accidents…

In 2002 USA Today estimated “that size and weight reductions of passenger vehicles undertaken to meet current CAFE standards had resulted in more than 46,000 deaths”.  And CEI points out that:

The death rate in minis in multi-vehicle crashes is almost twice as high as that of large cars. And in single-vehicle crashes, where there’s no oversized second vehicle to blame, the difference is even greater: Passengers in minis suffered three times as many deaths as in large cars. 

So what are these deaths a trade-off for?  The argument is to reduce pollution (global warming) and also to reduce our reliance on foreign oil.  The argument for pollution reduction is fairly useful, as any Los Angeleno can attest to, having seen the skies and air quality improve.  The argument for reliance on foreign energy… not so much.  CAFE was first enacted in 1974 during the Carter administration and it’s difficulties with oil from Iran, however:

Since 1974, domestic new car fuel economy has increased 114 percent, and light truck fuel economy has increased 56 percent. Yet over this same period, imported oil has risen from 35 percent of the oil consumed in the U. S. in 1974 to more than 52 percent today [2002].

But even regardless of whether the arguments hold up, there can be a debate about whether human lives are more important than pollution or foreign oil.  Certainly pollution can cause deaths, so a comparison can be made there to see what is the lesser evil.  Reliance on foreign oil has obviously got us entangled in all matter of problems over the years and currently… so can you measure the human lives against those problems?  It’s an interesting dilemma as I said, and one that I don’t claim to have a solid answer for, since there are so many variables.  

One thing is clear though, and it has been stated here a few times, is that legislation almost always has unintended consequences.  It’s one thing if people choose a smaller car to save money and fuel, and put their own safety at risk.  It is another when congress passes mandates to manufacturers that ensures that we ALL will have to drive smaller and more dangerous cars.

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If you read this site, then you know the title is in jest.  However, I am putting a call out to recommendations of books, websites, or any other material that any CAI readers or authors would recommend as being powerful arguments for socialist or socialist-like policies.  The reason for this request is in anticipation of a small group discussion I will be leading for 4 weeks this summer at my church on capitalism and socialism.  

As evidenced on the “pages” of this blog and also in many other outside discussions I have had with people there is considerable support for redistribution of wealth, and socialization of services amongst Christians.  My feelings are opposed to these views, but I am legitimately curious how people (and Christians in particular) come to embrace it.  And I am hoping in the group to have a equal proportion of capitalists and socialists (or whatever the preferred term is) engage in discourse on the pros and cons of each position and also where they fit into a biblical and gospel-oriented framework.  Since I will be moderating the discussion and hope to be as open as possible to the views of others I wanted to delve further into the literature beyond just The Communist Manifestoerr, the parts I have read at least.

Et tu Jesus?

Et tu Jesus?

Thanks for the help dear readers.

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Reader Josh pointed me to this gallup poll that shows for the first time since they began polling this question in 1995, that more Americans are pro-life then pro-choice.

gallup poll

You may know from some of my posts that I am fairly libertarian on drugs, same-sex marriage, and some other views. But on abortion my conservative feelings run deep. So I am glad to see this trend changing, but I am highly curious as to what spurned it? I don’t remember this being a huge issue during the election, and certainly right now the focus of our country seems squarely on the economy.

I wonder if media can take some credit? There is certainly a difference between Cider House Rules and Knocked Up. And apparently we have had a 10-year decline in sexually active teens, that is now leveling off. I doubt that there is a religious bent to these changes, but rather some sort of secular-based change in the culture toward some more conservative-type views.

Very interested in your thoughts.


A point I failed to see in the polling shows that this shift against abortion is all coming from the republican/conservative wing.  Appears the chickens are coming home to roost (is that the expression?):

The source of the shift in abortion views is clear in the Gallup Values and Beliefs survey. The percentage of Republicans (including independents who lean Republican) calling themselves “pro-life” rose by 10 points over the past year, from 60% to 70%, while there has been essentially no change in the views of Democrats and Democratic leaners.

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For your viewing pleasure… hope it’s not too mainstream for all the CAI writers.  Can’t get enough of this band.

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