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Every life counts. But I feel like this is only showing one side of the issue. Capital is distilled, economic trust. All human beings deserve a baseline level o

Every life counts. But I feel like this is only showing one side of the issue. Capital is distilled, economic trust. All human beings deserve a baseline level of trust. As such, access to capital is a human right. Without some form of trust extended to those in poverty (through capital lending or otherwise) how could they ever emerge from their poverty? I hope this does not sound too callous. Every single suicide is a tragedy. But only 70 of 14,364 suicides were related to microloans -- only half a percent. 70 suicides represents only one millionth of Andhra Pradesh's population, a state with an infant mortality rate of 5.2%. If the actions of those 70 suicides merely improve infant mortality by even one percent for one percent of the population, microfinance will have paid itself back for the health of families several fold -- and for the families who strove and succeeded, not those who, by their own actions, created a situation they did not have the willpower to escape. 1.2 million people a year are killed by automobiles -- and yet they have given us tremendous freedom. The solution to the problem of automobile deaths is not an outright ban, but infrastructure, norms, and education -- which can drop deaths from nearly than 80 per annum per 100,000 inhabitants in Iraq and Iran to over 50 in South Africa to less than 5 in Canada, Australia and Argentina. Though hundreds die from general anaesthesia each year, its positive impact on medicine and surgery has been tremendous. The solution to these deaths is not a ban, but improved education, environmental support, and systematic changes in health care (see for example: http://www.theatlantic.com/magazine/archive/2009/09/how-american-health-care-killed-my-father/7617/ http://www.theatlantic.com/magazine/archive/2009/09/how-amer...) Access to capital -- and more generally, access to trust, is a powerful force. Wielded properly, it is can be a tremendously powerful tool for good -- but also for harm. I hope that these revelations will be a learning experience, and force us to think more deeply about how to connect with the impoverished. Clearly, access to capital alone is not enough to enable the ascension from poverty. But in many cases, it is a limiting factor. We must not retract willingness to lending of capital -- our trust in a whole class of impoverished people -- as a result of these early mistakes.

edge17 16y ago
Capital - assets available for use in the production of further assets http://www.google.com/search?hl=en&source=hp&biw=1209&bih=617&q=define%3A+capital&aq=f&aqi=g10&aql=&oq=&gs_rfai= http://www.google.com/search?hl=en&source=hp&biw=120... Baseline level of trust = 100% risk 100% risk = 0% return 0% return = Charity That's not to say charity doesn't have a place in the world. But the conversation about microfinance is about empowering individuals, and you don't empower individuals by writing them a blank check. You empower them by helping them overcome difficulties (i.e. paying back loans that may or may not be favorable to them). To touch a little more on the suicides, these loans are often structured such that 3 or 4 people are cosigned. So if I can't pay, the other cosigners have to pay. Social pressures can make people do extreme things. When the article says stuff like Shobha, head of several groups of women borrowers, was being pressured to pay interest on her 12,000 rupee ($265) loan. Lenders also were demanding that she cover for the other women, even though the state had restricted microfinance activities two weeks earlier, Bloomberg Markets magazine reports in its February issue. The don't point out that that's the kind of agreement she signed up for. There's no collateral, so the social pressure is intended to serve as the incentive to repay. Of course this has consequences. To draw a parallel, think about social pressures in an enclosed environment where people are counting on you, like the office or high school.
- DaniFong 16y ago
  Why would a baseline level of trust equate to 100% risk?
  - edge17 16y ago
    How else would you be all-inclusive? If interest rate is a measure of risk, i.e. the riskier the individual the higher the interest rate, then the most untrustworthy person can only get a loan, or access to capital, at the highest possible interest rate and at the greatest possible risk. The greatest possible risk is the situation in which the loaning party never gets their money back. If the baseline is to include everyone, it means you have to include the situation of greatest possible risk, i.e. hand out cash to someone you know won't pay it back. Intent to pay back is well and good, but risk profiling exists for a reason and microfinancing is a banking practice aimed at empowerment. Aid, on the other hand, engenders the notion of giving and not asking for anything back. Microfinance loans are not intended to be aid.
    - DaniFong 16y ago
      To me, baseline trust means that if they squander their first access to capital they do not gain access again. Such a lending strategy would not raise this issue.

edge17 16y ago

Capital - assets available for use in the production of further assets http://www.google.com/search?hl=en&source=hp&biw=1209&bih=617&q=define%3A+capital&aq=f&aqi=g10&aql=&oq=&gs_rfai= http://www.google.com/search?hl=en&source=hp&biw=120... Baseline level of trust = 100% risk 100% risk = 0% return 0% return = Charity That's not to say charity doesn't have a place in the world. But the conversation about microfinance is about empowering individuals, and you don't empower individuals by writing them a blank check. You empower them by helping them overcome difficulties (i.e. paying back loans that may or may not be favorable to them). To touch a little more on the suicides, these loans are often structured such that 3 or 4 people are cosigned. So if I can't pay, the other cosigners have to pay. Social pressures can make people do extreme things. When the article says stuff like Shobha, head of several groups of women borrowers, was being pressured to pay interest on her 12,000 rupee ($265) loan. Lenders also were demanding that she cover for the other women, even though the state had restricted microfinance activities two weeks earlier, Bloomberg Markets magazine reports in its February issue. The don't point out that that's the kind of agreement she signed up for. There's no collateral, so the social pressure is intended to serve as the incentive to repay. Of course this has consequences. To draw a parallel, think about social pressures in an enclosed environment where people are counting on you, like the office or high school.

DaniFong 16y ago
Why would a baseline level of trust equate to 100% risk?
- edge17 16y ago
  How else would you be all-inclusive? If interest rate is a measure of risk, i.e. the riskier the individual the higher the interest rate, then the most untrustworthy person can only get a loan, or access to capital, at the highest possible interest rate and at the greatest possible risk. The greatest possible risk is the situation in which the loaning party never gets their money back. If the baseline is to include everyone, it means you have to include the situation of greatest possible risk, i.e. hand out cash to someone you know won't pay it back. Intent to pay back is well and good, but risk profiling exists for a reason and microfinancing is a banking practice aimed at empowerment. Aid, on the other hand, engenders the notion of giving and not asking for anything back. Microfinance loans are not intended to be aid.
  - DaniFong 16y ago
    To me, baseline trust means that if they squander their first access to capital they do not gain access again. Such a lending strategy would not raise this issue.