3 ms·

The whole microloan program has been hyped for over a decade now, but as this story shows, the outcome more often than not has been more like mafia loansharking

The whole microloan program has been hyped for over a decade now, but as this story shows, the outcome more often than not has been more like mafia loansharking than actual economic development under the entrepreneurial free-market model. This can be explained via the notion that "enterpreneurs without lawyers end up getting screwed over more often than not" and the people who get these microloans just can't afford to hire lawyers to protect themselves. While it's a right-wing trope, the microloan program has been heavily promoted by the likes of the Soros-Omidyar crowd, with the typical humanitarian patina covering what's really just predatory capitalism: "We have seen what microloans can do at the individual level and are excited about bringing that same opportunity to small and medium businesses," said Jim Bunch, Director of Investments at Omidyar Network. Here's another expository write-up of the phenomenon, in Cambodia. Looks very similar to India, Mexico, etc. https://www.aljazeera.com/economy/2019/8/6/cambodias-micro-loans-a-form-of-predatory-lending https://www.aljazeera.com/economy/2019/8/6/cambodias-micro-l... [edit] for more on background on this global trend and its origins (2007) > "Microcredit is the newest silver bullet for alleviating poverty. Wealthy philanthropists such as financier George Soros and eBay co-founder Pierre Omidyar are pledging hundreds of millions of dollars to the microcredit movement. Global commercial banks, such as Citigroup Inc. and Deutsche Bank AG, are establishing microfinance funds. Even people with just a few dollars to spare are going to microcredit Web sites and, with a click of the mouse, lending money to rice farmers in Ecuador and auto mechanics in Togo... Wealthy philanthropists, banks, and online donors aren’t the only ones fascinated with microcredit. The United Nations designated 2005 as the International Year of Microcredit..." https://ssir.org/articles/entry/microfinance_misses_its_mark https://ssir.org/articles/entry/microfinance_misses_its_mark

AlbertCory 4y ago
Whatever else it is, it isn't new. The Grameen Bank in Bangladesh was first publicized in the West 20 years ago. It also isn't "predatory capitalism." Rather, it's NGO-ism. It's charitable donations from liberal-minded people that drive it.
- photochemsyn 4y ago
  Every time I hear these notions of well-meaning billionaire philanthropists set on making the world a better place, I'm unavoidably reminded of this short passage in Conrad's Heart of Darkness: > "It appeared, however, I was also one of the Workers, with a capital—you know. Something like an emissary of light, something like a lower sort of apostle. There had been a lot of such rot let loose in print and talk just about that time, and the excellent woman, living right in the rush of all that humbug, got carried off her feet. She talked about ‘weaning those ignorant millions from their horrid ways,’ till, upon my word, she made me quite uncomfortable. I ventured to hint that the Company was run for profit." If it was real philanthropy, the model would be one of no-strings-attached grants, delivered via a competitive process open to people in disadvantaged communities - not a model based on loans which must be repayed with interest, with collection agencies lurking in the background to go after defaulters in this manner. This is why people are better off cutting deals with the hard-nosed businesspeople who spell out risks and conditions upfront, rather than the liberal do-gooder snake-oil merchants with their ulterior motives.
  - AlbertCory 4y ago
    I'm reminded of Mrs. Jellyby in Bleak House, myself, but yeah. The original idea of Grameen Bank was a circle of poor people (all women, usually) who jointly promise to each other to repay the loans. The fact that it's a loan, your friends are monitoring you, and you have to pay it back means that you have to take it seriously. It was hard to argue with that, 20 years ago. Over time, though, it's morphed into "Big Western philanthropic institution sweeps in, spends 24 hours, leaves, and writes a check. Then the locals hire more staff and buy another SUV."
deleted 4y ago
[deleted]
unknownaccount 4y ago
The micro loan system works fine in USA & countries that actually enforce laws against extortion. I’ve gotten close to 0% interest rate instant loans for $100- $200 with Dave, Earnin, and MoneyLion. Been in the red for many months and never received even 1 threatening phone call, text, or letter. These apps saved me in a pinch and had seemingly no downside.

AlbertCory 4y ago

Whatever else it is, it isn't new. The Grameen Bank in Bangladesh was first publicized in the West 20 years ago. It also isn't "predatory capitalism." Rather, it's NGO-ism. It's charitable donations from liberal-minded people that drive it.

photochemsyn 4y ago
Every time I hear these notions of well-meaning billionaire philanthropists set on making the world a better place, I'm unavoidably reminded of this short passage in Conrad's Heart of Darkness: > "It appeared, however, I was also one of the Workers, with a capital—you know. Something like an emissary of light, something like a lower sort of apostle. There had been a lot of such rot let loose in print and talk just about that time, and the excellent woman, living right in the rush of all that humbug, got carried off her feet. She talked about ‘weaning those ignorant millions from their horrid ways,’ till, upon my word, she made me quite uncomfortable. I ventured to hint that the Company was run for profit." If it was real philanthropy, the model would be one of no-strings-attached grants, delivered via a competitive process open to people in disadvantaged communities - not a model based on loans which must be repayed with interest, with collection agencies lurking in the background to go after defaulters in this manner. This is why people are better off cutting deals with the hard-nosed businesspeople who spell out risks and conditions upfront, rather than the liberal do-gooder snake-oil merchants with their ulterior motives.
- AlbertCory 4y ago
  I'm reminded of Mrs. Jellyby in Bleak House, myself, but yeah. The original idea of Grameen Bank was a circle of poor people (all women, usually) who jointly promise to each other to repay the loans. The fact that it's a loan, your friends are monitoring you, and you have to pay it back means that you have to take it seriously. It was hard to argue with that, 20 years ago. Over time, though, it's morphed into "Big Western philanthropic institution sweeps in, spends 24 hours, leaves, and writes a check. Then the locals hire more staff and buy another SUV."

deleted 4y ago

[deleted]

unknownaccount 4y ago

The micro loan system works fine in USA & countries that actually enforce laws against extortion. I’ve gotten close to 0% interest rate instant loans for $100- $200 with Dave, Earnin, and MoneyLion. Been in the red for many months and never received even 1 threatening phone call, text, or letter. These apps saved me in a pinch and had seemingly no downside.