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It's interesting that people that bettered their lives with that money did so by entrepreneurship or by solving money draining problems(the roofs), which gave t
by gabriel34 13y ago
It's interesting that people that bettered their lives with that money did so by entrepreneurship or by solving money draining problems(the roofs), which gave them long term benefits.
In contrast, I live in Brazil, here we have a governmental handout program which gives sure money every month. People use that money to short term spending, there is not much entrepreneurship or sustainable richness generation among the receivers.
It would APPEAR that one time downfall stimulates wise spending, since that has much more value than "blowing it on booze and cigarettes" or buying a plasma screen.
One should, of course, have in mind that the article seems to only show us a few examples, constituting anecdotal evidence at best, prompting for further studies.
Another thing to consider is if this model is better than microcredit which stimulates entrepreneurship less diffusely and possibly more efficiently in respect to the relation between total program cost versus social betterment.
If on one side we have the fact that microcredit only costs the subsidy to the interest paid the debtor, things such as the metal roofs would not be feasible under such a model and although money would circulate and the entire society would benefit, this program would only be directly beneficial to people who have entrepreneur qualities, effectively creating very distant social classes (which is kind of ironic for a program which aims to distribute wealth). Could such a disparity dissipate over time, or would it evolve to a social abyss?
For every society the answer is probably different and the ideal path probably lies somewhere in the middle. One thing is certain: no matter what route is taken, this certainly shakes things up; and in a stale misery scenery, I can't seem to find a reason for this not to be positive.
My father once said that however bad a social program is, if it betters society it can only be the second worst thing to do, the worst being doing nothing.
- ENOTTY 13y agoDid you read the third and fourth graf of TFA? It appears Mexico gives regular handouts, which still stimulates wise spending. Microcredit was a huge fad a few years ago, but then some studies found that its effectiveness may be suspect and requires more study. See http://en.wikipedia.org/wiki/Impact_of_microcredit http://en.wikipedia.org/wiki/Impact_of_microcredit
- capex 13y agoAt an average of 22.3% annual interest rate, microcredit schemes appear to be a ripoff.
- tehwalrus 13y ago20-25% ain't bad when you don't have good ratings data. Look at Wonga et al in the UK - 4000% was the highest one I think. (they're called "payday" loans - they give you up to £1,000 for up to 30 days. Most people who use them end up in a debt spiral, unsurprisingly.)
- RougeFemme 13y agoI have no data to back this up but. . .when we first started hearing about microcredit, the funds were coming from non- or not-for-profits entities. Then banks saw a huge potential there and jumped in. I think it would be interesting to measure the effectiveness of non- and not-for-profits vs. banks and for-profits.