How Helpful is Microfinance?

Microfinance is lauded by some as a silver bullet which will rescue poor societies by allowing people to pull themselves up by their bootstraps, through providing financial services, training, and small loans to poor entrepreneurs. When microfinance is at its best, this is exactly what it does. It provides the means for people to provide for their families, save money, and improve their living situations. It avoids some of the problems of the traditional aid models, such as relying on corrupt governments, skewing local markets, and building dependence among the poor. Microfinance banks have typically targeted women, which has resulted in more freedom and empowerment for them; loans reduce the vulnerability of the poor during crises like sickness and drought. Repayment rates are typically high, and World Vision has reported increases in health and education, as families with loans are able to afford better living conditions and school fees.

But it comes with problems of its own. One obvious one is that microfinance, like any other tool, can be mishandled. It is not free from problems such as fraud, usury, and human error, just like other banks. Anthony mentions wealth disparity as a problem that might arise; to be frank, the real problem is nearly the opposite of this. The fact is that microfinance does little to help the poorest of the poor. They are usually trapped in subsistence activities, and if their loan does not help them grow their income beyond the interest rates, they will be worse off in the end. Most people in the developing world are not true entrepreneurs who have a visionary idea which can turn into profit and jobs for their community; 90% of these populations would be most benefited by a factory moving to their area and providing jobs. The International Labor Organization says that “nothing is more fundamental to poverty reduction than employment.”

So if a micro-entrepreneur is able to use a loan and develop a business where he can employ 100 people in his community, that will be far better than those 100 people getting their own loans to fund subsistence activities. The factory is able to access economies of scale and increase productivity; 100 women with their own sewing business simply crowd the market.

So to answer your question, in 10-20 years the criticism of microfinance will be that it wasn't able to deliver on the promise of curing poverty. It still is a good idea, and still helps millions of people around the world to provide for their families and defend against crises. But large-scale enterprises intensive in labor, public or private, will go much farther towards pulling societies out of poverty.

Microfinance, A Downside?

Microfinance in Africa!

Tim, I have a question for ya:

Since 1961 when US AID was started there have been many criticism--it is used for political purposes, through inflated costs most of the reward goes to the contractors supplying the food, the aid is used by the receiving nation as a means of control, and perhaps the most important--it doesn't do much to end poverty. So, while there may be good intention of giving people in refugee camps bags of rice it can become a means of engendering poverty and empowering those who control the aid.

Along comes micro finance and on the surface it avoids many of these faults. But here lies my question; in 10-20 years what will be the criticism of micro-fiance?

How about disparity? While some people receive funding it may be so concentrated and so powerful that those who receive funding become the future business owners and those who don't are left out to dry. So while some people have raised themselves out of poverty it has done little or nothing to decrease the gap between the rich and the poor.

Another idea is that instead of fostering business growth it creates an all powerful microfinance loan operation where the only success in a town flows from those who microloan. The poverty declines, but instead of being at the mercy of colonialism they're at the mercy of banks that become too big to fail. (had to say it)

I'm interested to see what your thoughts are out in the field. Hope you're enjoying the beach in Kenya!

-Anthony

Crisis of Capitol

Tim! I'd like to get your feedback on this guy!

The Direction of Life

Though I fully expect to get back into the swing of bashing extremists (both on the right and left) I am curious to get your feedback on this article on finding direction in life.

http://hbr.org/2010/07/how-will-you-measure-your-life/ar/1

Re: Horowitz

Thanks for that well-thought out response. I'll let you have the last word there, and we can discuss something else.

Also, I wasn't thinking I had won the argument, but I was on the brink of posting something else offensive, as that seems to be the easiest way to get you to post. :)

A Response about extremist ideas

Tim you have done an excellent job distilling my argument:

1. (some) Arabs, angered over Israel’s injustices, incorrectly associate all Jews and all Americans with support for these injustices, and as a result direct their hatred and violence towards these groups
2. Horowitz makes the same incorrect association by assuming that all people who fail to condemn terrorist organizations like Hamas and Hezbollah are in league with the terrorists.
3. Therefore, just as terrorist organizations are wrong to target all Jews and Americans, Horowitz is wrong to condemn all those who are unwilling condemn Hamas and Hezbollah as terrorist.

Tim, although you have many great--albeit contentious--points none of them really attack the root of my argument.

First, you state that Harowitz' arguments are different because the root cause of Muslim extremism is theological--rather than political. First, I don't see how the motivation behind Muslim extremism has anything to do with how Harowitz systematically targets all who do not condemn H&H. Though I enjoyed your ancillary historical comment--it offers little insight into this argument.

Also--on this note--I do not believe the theological foundation behind this conflict is as important as generally assumed. There are a handful of violent Koran passages always paraded out to demonize all Muslims, but I've read enough of the Old T. to know cherry picking passages can go both ways.

Second, the irrationality of their motives is relevant only as it demonstrates how anger toward a policy an action can spiral toward anger toward a people group or a continent.

The other issue in your second response, if I understand your argument correctly, was; this woman is a terrorist sympathizer--There is no need for further argument. While it may be the end of the argument if we lived in a world where Tim's justice is perfect and swift, I believe this point is not the end of the argument, but the beginning. I will never agree that aiding or supporting terrorism is legitimate or should be considered lightly, but an unwillingness to condemn H&H is different than buying bomb material. This is the distinction that I believe Horowitz, and you, would be unwilling to admit--Though I will need more convincing to agree with you.

Fourth- how does Horowitz demonstrate anger towards the Middle East?--ok, He may toe the line, however it is not his actions--but his logic that I am attacking, and I do believe his logic engenders hatred toward Arab people.

Fifth- do you have an historical example of a ‘better relationship’ between a Muslim nation resulting in less violence?--Does this justify a race to the bottom?

To conclude, You concluded, 'I posted the video on YouTube because it demonstrates that even well-off Americans in higher education are not free from extremist philosophies'. This I would firmly agree with. Both Horowitz and this girl demonstrate how the extremist ideas--namely irrational hatred--are present in higher education.

Also--I enjoyed the article you posted and I will respond to it soon. I wanted to respond to this argument because I know my absence of a response will be interpreted as a victory from your end. Sorry my responses take so long--but it takes longer to respond when you don't rely on canned arguments ;) jk.

Horowitz Did Us A Favor

If I understand Anthony’s arguments, he is saying that

1. (some) Arabs, angered over Israel’s injustices, incorrectly associate all Jews and all Americans with support for these injustices, and as a result direct their hatred and violence towards these groups
2. Horowitz makes the same incorrect association by assuming that all people who fail to condemn terrorist organizations like Hamas and Hezbollah are in league with the terrorists.
3. Therefore, just as terrorist organizations are wrong to target all Jews and Americans, Horowitz is wrong to associate terrorist sympathizers with terrorist organizations.

I’ll try to outline my problems with this:

First, the root cause of Muslim extremist violence towards Jews and Christians isn’t Israel, it’s theology. The Barbary war in the Mediterranean exemplifies this- during the prelude to the war, John Adams and Thomas Jefferson met with an ambassador from Tripoli in London, who told them “it was written in the Koran, that all Nations who should not have acknowledged their authority were sinners, that it was their right and duty to make war upon whoever they could find and to make Slaves of all they could take as prisoners, and that every [Muslim] who should be slain in battle was sure to go to Paradise.” The 1797 treaty emphasized this, as the American diplomats were careful to emphasize that the USA was not, in fact, a strictly ‘Christian’ nation, hoping to get better terms.

Second, the irrationality of their motives is irrelevant. For the young lady in the video, it is likely that she is influenced by the situation in Israel, as she was sporting a PLO scarf. But she not only failed to condemn Hamas and Hezbollah, she expressed support for their stated goal of killing all Jews. The fact that her reasoning may be faulty (i.e., all Jews support Israel’s injustices, which Anthony assumed was her reasoning) doesn’t change the fact that she is a terrorist sympathizer. (Anthony- would you say that some terrorist action against Israel is legitimate?)

Third, as for MSA’s relationship with the Muslim Brotherhood, I don’t know and I don’t care. I believe this was Horowitz’s point in changing the question on her- even if there is no official relationship between MSA and the Brotherhood, they share the same ideology.

Fourth- how does Horowitz demonstrate anger towards the Middle East?

Fifth- do you have an historical example of a ‘better relationship’ between a Muslim nation resulting in less violence?

Sixth- “But can we win this complex war by being more extreme and having large bullets, or do we win by rising above these irrational arguments of hatred?” My point exactly. The fact that we see their arguments as irrational is immaterial- and they don’t care if we’re persuaded by their logic.

Seventh- Your p.s.s.- There is no evidence of Horowitz hating all Arabs, and if he did, I would gladly condemn that sentiment.

To conclude, I posted the video on YouTube because it demonstrates that even well-off Americans in higher education are not free from extremist philosophies, and I was impressed with the way that Horowitz turned the question back on the girl. She was arguing that the MSA has no connections with extremist groups, and by the end admitted that she wanted the killing of all Jews.

Horowitz’s question didn’t pose a fallacy- either you oppose the extremism of groups like Hamas, or you support them. You write tongue-in-cheek “Do you condemn Hezebolla? Do you Hate Hamas? Because if you don't you're a terrorist and should be targeted as one,” but this makes sense to me. If you are unwilling to condemn a terrorist organization (and remember- she went beyond this, to express support), you are at least a sympathizer.