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Source link: http://archive.mises.org/5861/microcredit-or-macrowelfare-the-myth-of-grameen/

Microcredit or Macrowelfare: The Myth of Grameen

November 8, 2006 by

Pundits left, right, and center appear to love the Nobel Prize winning bank and its founder. The literature on Grameen is an echo chamber of hurrahs. Not even the Nobel Committee bother looking more deeply. Actually a closer look at this institution shows not a success but precisely the sort of flop you might expect from a government-subsidized program that is predicated on the view that money alone is the answer to poverty. What Bangladesh needs is not more personal indebtedness but radical economic reform. FULL ARTICLE

{ 66 comments }

Purba Negoro May 1, 2008 at 2:43 pm

And what of Christians like myself?
Careful your Islamo-phobic bigotry is showing.

Ironic that America wages its’ corporate wars on oil-rich Muslim lands, but remains chummy to the vile Fascist Wahabbist nation that gave birth to the terrorists of 9-11.
Not to mention CIA asset “Tim Osman”, aka Osama bin Laden.

Purba Negoro May 5, 2008 at 12:22 pm

You’ve still not given any proof on how Grameen is ‘myth’ nor how any proof on how Mises’ laissez-faire or even Freidman economics reduces/ eradicates poverty.
Is the casual reader so underestimated that your assertions without corroboration/support are to taken as fact- rather than the subjective opinions they remain to be?

Upen Singh January 4, 2009 at 11:15 pm

Mr. Tucker,

Pls get some international experience…go live in a poor country..perhaps that would expand your thinking and add significantly to your intelligence that you seriously lack.

newson January 5, 2009 at 12:55 am

that’s right, jeffrey. put on a burlap bag, eat dahl bat and you too will achieve supreme wisdom.

mr singh,
you should spend some time in a rich country that you may understand better the origins of wealth, and then bring back this knowledge for your own people’s betterment.

Upen Singh January 7, 2009 at 7:57 pm

Newson, FYI: I am from the USA…do you think it was wrong for you to assume that I don’t live in a rich country because of my name? :)

slapp2000 March 14, 2009 at 8:16 am

@ Purba Negoro since when did an Indo coolie have the gall to himself a Christian?

newson March 14, 2009 at 8:35 am

upen singh:
what? i thought jeffrey tucker was a bangladeshi! my error.

purba Negoro May 28, 2009 at 5:04 am

@ slapp:
Since the Western had the gall to kiss our hand and kneel in humble obeisance.
Coolies are Chinese the word is taken directly from Cantonese ku-li.
Furthermore- impressed labour was the domain of the Colonials

lalayang July 22, 2009 at 4:13 pm

Not sure I buy into some of the criticisms in the article:

1, the parallel between payday loan in US city and loans in 3rd world countries is perhaps off the mark. In the US, except for illegals, most inner city residents do not have proper access to liquidity facility either due to lack of knowledge or inability to wait for proper loan approval as they live hand to mouth. They might be priced out of the market, but subprime lending (and therefore liquidity at a price) does exist. What Grameen bank accomplished is being the sole liquidity facility for some of the entrepreneurs in 3rd world countries who would not have gotten a credit line, for the lack of such service. In short, he put a price on something previously unable to be priced by local traditional lenders.

2. It is hard to generalize that using peer pressure as part of the tactics of enhancing repayment is necessarily undesirable. Unless certain moral/legal line is crossed, how is that significantly less desirable from maintaining credit bureaus, keep tabs on repayment behavior and doling out penalty rates when necessary (we have given up a bit of privacy for viable pricing of personal credit)? you don’t get something for nothing. Clearly we need some sort of enforcement of repayment here to ensure business continuity and what other schemes could be more efficient?

Priyanka July 26, 2009 at 1:15 pm

It is because of people like you and those who have commented saying ‘Thank You for this incredibly interesting article’, that very few visionary people like Dr.Yunus have been able to come up with viable and innovative economic solutions to the widespread poverty in the so called ‘third world’ countries.
It is because of ignorant writers like you, who sit in their comfortable homes in the states and elsewhere, that the Nobel Prize Committee’s credibility’s going down.
If you can’t make a difference, at least don’t go about writing such articles full of lies about those who have the courage to defy age old rules and create new ones, that have actually worked in favor of the most underpriveleged.

I suggest you read Dr.Yunus’ ‘Banker to the Poor’. Also, a visit to the Indian subcontinent’s poorest regions would do you good.

Then, if you publish another article like this, I will consider even thinking about your views.

Arjan July 26, 2009 at 1:16 pm

It is because of people like you and those who have commented saying ‘Thank You for this incredibly interesting article’, that very few visionary people like Dr.Yunus have been able to come up with viable and innovative economic solutions to the widespread poverty in the so called ‘third world’ countries.
It is because of ignorant writers like you, who sit in their comfortable homes in the states and elsewhere, that the Nobel Prize Committee’s credibility’s going down.
If you can’t make a difference, at least don’t go about writing such articles full of lies about those who have the courage to defy age old rules and create new ones, that have actually worked in favor of the most underpriveleged.

I suggest you read Dr.Yunus’ ‘Banker to the Poor’. Also, a visit to the Indian subcontinent’s poorest regions would do you good.

Then, if you publish another article like this, I will consider even thinking about your views.

Purba Negoro October 27, 2009 at 12:36 am

Priyanka, Arjan & Lalayang. Superb points.
The Jews and the Americans have done comparatively extremely little to alleviate the crushing poverty of the world’s brown majority.
Now the bulk of the world’s population is suffering economic disaster, class descent, a greater poverty class and renewed fame and disease all due to greedy New York Jews and their US political whores : Greenspan, Bernanke, Goldman Sachs, Bernie Madoff, Bank of Israel and other filthy Yiddish mafioso. Not to mention Oppenheimer, Rio Tinto, Monsanto, Rothschilds and de Beers.
The developing world will never forget the usury, greed and exploitation of the Jew- esepcially under colonialism and their finance of rape, pillage, murder, loot and slavery.
Their comeuppance is nigh and none will shed a tear at their just desserts

newson October 27, 2009 at 1:03 am

…inane and antisemitic at the same time. some lovely fellow-travellers grameen has got.

G November 23, 2009 at 1:08 pm

Firstly, most of you are idiots. Purba Negoro, although you make some good points that I agree with, please get off the ganja!

Secondly, after sifting through the mess that is this forum to find this motherfucker Jeffery Tucker’s responses, I have stumbled upon his three points of rebuttal:

1) If Yunus is engaged in enterprise, what is the source of the market failure that caused (and continues to cause) mainline banks to overlook the profitable opportunities for lending to the poor;

- Mainline banks do not lend to the poor because they do not believe it is worth the hassle. Poor people, especially in developing countries are very hard to track (due to lack of formal documents), do not have access to collateral, and are not good/trustworthy/reliable customers. Also, poor countries are entirely class-based societies, where poor people (the sort that Grameen counts as borrowers) wont be allowed into formal banks simply because of their status.

2) if Yunus is really engaged in market-based entrepreneurship, why the history of dependency on government grants and loans?

Yunus started Grameen by paying US$27 to some 42 women in a village in rural Chittagong. Also, in order to start any business, one needs venture capital. Given that his idea was radical, and was directed towards helping the poor, it is only natural that he would approach the UN and other foundations for capital. Remember – microfinance is a social enterprise, not a capitalist one!

and 3) why are we under the impression that advances on money that needs to be paid back at high interest (by US standards) are the key to making the poor better off?

At the risk of repeating other people’s points, let me point out that you have never visited India or Bangladesh or any Third-world nation, or spoken to any poor people living in inner-city US. Let me explain what a “loan-shark” is for your convenience A loan shark is a person or body that offers unsecured loans at high interest rates to individuals, often backed by blackmail or threats of violence. Loan sharks and “money lenders” are commonplace all over Bangladesh, India, everywhere in Asia, and even in American cities. What Yunus essentially did was create another avenue for the poor to borrow from, so that they avoid the violence and extremely unreasonable interest rates. He gave the poor people another choice. At the same time, because he is running an enterprise, he needs to stay sustainable.

Do the math – if you lend $100 to 500 people at 5% interest rates (over the year), how much ROI (return on investment) do you make?

$2500. Now imagine your costs – you have to train, hire and run a business that operates in the harshest conditions.

Now, say you raise this interest rate to 10%. This is still quite reasonable for the borrower (10 dollars interest as opposed to 5 dollars), but your ROI will double! Now that is smart business.

Grameen never charged interest rates over 25%.

GET YOUR FACTS RIGHT YOU PIECE OF SHIT!

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Reis August 22, 2011 at 2:59 pm

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