Banker to the Poor

I just finished a book written by Dr. Muhammad Yunus, titled "Banker to the Poor:  Micro-lending and the Battle Against World Poverty."  Yunus was an economics professor and head of the Economics Department at Chittagong University in Bangladesh before starting Grameen, a bank devoted to providing the poorest of Bangladesh with micro-loans as a way to help the poor lift themselves out of poverty.  As I begin a crash course in learning about economic development and what people have done around the world I found this to be a really interesting book.

Yunus became disenchanted with theoretical economics and decided to spend time directly with the poor to try to figure out how he might be able to truly help the poor, rather than just talking about helping the poor. What he stumbled upon was this idea of making small loans to the poor so they might use that capital to buy the equipment, tools or supplies to start their own business and provide for themselves rather than be dependent on those with capital who tended to take advantage of the poor.

He has some interesting thoughts regarding the Left's ideological position regarding the State being the solution to the poor's plight and also the Right's ideological position of trickle down economics.  I thought I would share some of his thoughts in this post as a way get people thinking about ways to help those in financial need. (In no way does this book attempt to deal with the spiritual, emotional or is it in any way Christian.  But it does raise some very interesting questions and analysis of how to help the poor from a financial and economic perspective.)

"In the United States I saw how the market liberates the individual and allows people to be free to make personal choices.  But the biggest drawback was that the market always pushes things to the side of the powerful.  I thought the poor should be able to take advantage of the system in order to improve their lot.

Grameen is a private-sector self-help bank, and as its members gain personal wealth they acquire water-pumps, latrines, housing, education, access to health care, and so on.

Another way to achieve this is to let business earn profit that is then taxed by the government, and the tax can be used to provide services to the poor.  But in practice it never works that way.  In real life, taxes only pay for a government bureaucracy that collects the tax and provides little or nothing to the poor.  And since most government bureaucracies are not profit motivated, they have little incentive to increase their efficiency.  In fact, they have a disincentive: governments often cannot cut social services without a public outcry, so the behemoth continues, blind and inefficient, year after year.

Poverty is not created by the poor.  It is created by the structures of society and the policies pursued by society.  Change the structure as we are doing in Bangladesh, and you will see that the poor change their own lives.

Somehow we have persuaded ourselves that the capitalist economy must be fueled only by greed.  This has become a self-fulfilling prophecy.  Only the profit maximizers get to play in the marketplace and try their luck.

We can condemn the private sector for all its mistakes, but we cannot justify why we ourselves are not trying to change things, not trying to make things better by participating in the economy."  Pgs 203-206

Please know that I'm not advocating anything here.  Nor am I trying to come up with any solution separate from Biblical principles.  But I think Yunus brings up some interesting things to consider.

"But godliness with contentment is great gain, for we brought nothing into the world, and we cannot take anything out of the world.  But if we have food and clothing, with these we will be content. But those who desire to be rich fall into temptation, into a snare, into many senseless and harmful desires that plunge people into ruin and destruction. For the love of money is a root of all kinds of evils. It is through this craving that some have wandered away from the faith and pierced themselves with many pangs."  I Timothy 6:6-10