[p2p-research] The failure of micro-credit?

Mon Aug 24 16:59:44 CEST 2009

Sam,

If you hear of such an investment plan offered by anyone, I'd like to check
it out.

I agree with your points totally.  The Yale study has left me shaken a bit
though.  They were not unclear as to their conclusions.  I believe these
things help real people which is my own big motivator.  If I don't get the
moral sense of helping and contributing, I might as well go plunder.  If
that makes me "compensated" then so be it.

I can now imagine the down a doctor would have after prescribing something
that seems to help for years only to have a scientist publish a paper saying
it was detrimental.

If it is wrong in not being as good as other solutions, we need to speed
those other solutions to deployment.

I never think of taking back my money that I lend.  My own goal is to keep
piling up more lending to help more people.  I'm sure there are those who do
it as a business, but frankly, buying a bond is less risky and probably
returns as much or more given currency losses, etc.  Most bankers don't
think of Bangladesh, Mexico or Tanzania as first line risks. I can attest
the returns are not superior.

Ryan

On Mon, Aug 24, 2009 at 9:01 AM, Samuel Rose <samuel.rose at gmail.com> wrote:

> On Mon, Aug 24, 2009 at 9:41 AM, Ryan Lanham<rlanham1963 at gmail.com> wrote:
> > Michel,
> >
> > I concur with all you say...could have written it.  I too am puzzled by
> > Sam's response but it is consistent with the Yale research.  I am
> currently
> > scratching my head hoping Grameen and the now thousands of other
> > microfinance organizations step up to respond.  It is a profound
> challenge.
> > I spend a portion of almost every day making microfinance loans.  It
> would
> > hurt deeply to find such work is not only not helpful, but is indeed
> > hurtful.  I find it hard to believe...along lines you suggest, but that
> is
> > the current and loudest research finding on the topic from a top scholar
> and
> > a respected institution.
> >
> > I literally don't know how to respond.  I have traded messages with
> Africans
> > who have found their loans to be transformative...the possibility to
> thrive
> > and get out of poverty.  How can this be?
> >
> > Ryan
>
>
>
> My response was actually a bit off-topic to the issue Ryan raised of
> whether microfinance loans are currently actually helping people.
>
>
> I am, and have been for a few years,  just trying to advocate for
> other possible methods to solving problems beyond lending and credit.
> I am not 100% against loans, and am in fact have paid off many loans
> in my lifetime. Plus, I have lent money via microcredit systems
> myself.
>
> My response was not meant to condemn the practice of microfinance. I
> can imagine that at least thousands of people have genuinely benefited
> from micro loans.
>
> My standing question is more like: why don't people see these
> countries and people as worth actually investing in? Not investment by
> way of lending, but investment by way of creating localized funds.
> These funds could be owned and controlled by the local people. The
> funds could also issue shares that anyone world wide could purchase.
> The fund entity could also issue one or more local currencies. it
> could also become a service that collects and disseminates data about
> conditions, financial and otherwise, in a local area. (this is similar
> to the solari model)
>
> All of that being said, microcredit is probably the easiest system to
> start right away in some of these places. I can definitely see how
> many people can benefit from micro credit. Ryan, if you have received
> confirmation from individuals that loans have truly helped them, then
> it is possible that micro lending helps some, but possibly has
> negative side affects in some cases. This would seem normal really.
> Most patterns for solving problems will need to be adjusted for local
> conditions.
>
> So, perhaps what I am saying is that, depending on what they goals
> are, micro credit should not always be looked at as the "solution"
> when the need for money is involved. My focus may also be more US
> centric. In the US, so many people are so far into unsustainable
> depbt, that most alternative finance solutions completely avoid the
> concept of lending and debt.
>
>
>
>
>
>
>
>
>
>
>
>
>
> >
> > On Sun, Aug 23, 2009 at 9:28 PM, Michel Bauwens <michelsub2004 at gmail.com
> >
> > wrote:
> >>
> >> hi Sam,
> >>
> >> I'm puzzled by your 'total' opposition to credit. Even most monetary
> >> reformers/transformers recognize the difference between turnover credit,
> and
> >> investment credit. They usually say the problem is that contemporary
> money
> >> conflates them, and that a proper separation is better. In fact, people
> like
> >> Thomas Greco advocate, convincingly that a mutual credit clearing system
> >> would be much superior to the current money system.
> >>
> >> I don't think the bangladeshi women would have access to any pools in
> the
> >> first place ... However, they could issue their own currency/credit
> clearing
> >> system for their own exchanges, bypassing the need for 'bank's and
> >> debt-based money.
> >>
> >> I've never seen microfinance as a panacea, but from the documentaries I
> >> have seen, there is a huge boost in the dignity and collective identity
> of
> >> those particpating, at least in the good schemes. Isn't the problem that
> >> microfinance has become commercial, with outfits such as in mexico now
> >> asking interest that is even higher than normal banks?
> >>
> >> Michel
> >>
> >> On Sun, Aug 23, 2009 at 11:32 PM, Samuel Rose <samuel.rose at gmail.com>
> >> wrote:
> >>>
> >>> Ryan wrote:
> >>>
> >>> >Date: Sun, 23 Aug 2009 11:11:47 -0500
> >>> >From: Ryan Lanham <rlanham1963 at gmail.com>
> >>> >Subject: [p2p-research] The failure of micro-credit?
> >>> >To: Peer-To-Peer Research List <p2presearch at listcultures.org>
> >>> >Message-ID:
> >>>        <9134ad230908230911l2d535155n36ee5bef301a8934 at mail.gmail.com
> >>> >>
> >>> Content-Type: text/plain; charset="iso-8859-1"
> >>>
> >>> >Editorial note:  I am big advocate for micro-credit.  I am saddened by
> >>> > this
> >>> >study, but cannot disprove its findings. One big P2P ideas seems
> >>> > inherently
> >>> >flawed.
> >>>
> >>>
> >>> > >
> http://www.3quarksdaily.com/3quarksdaily/2009/08/does-microlending-really-help-the-poor.html
> >>>
> >>> >Ryan
> >>>
> >>> I have to agree with this. All the way back in 2005-2006 when
> >>> BarCampBank http://www.barcampbank.org project first really took off,
> >>> I was one of the only people advocating against debt-creating
> >>> mechanisms (like micro lending).
> >>>
> >>> Resource pooling, coupled with targeted investment are the way to go,
> >>> if money is to be involved. A pool of money could be created, which
> >>> could then pay out when projects meet and sustain a criteria that is
> >>> defined by the investing group. This is similar to C.A. Fitts "solari"
> >>> model. The investing group could work this similar to "bounties". Or,
> >>> could take a different approach with impoverished people and lower the
> >>> barrier to encourage community cooperation towards co-creation of
> >>> local basic needs infrastructure.
> >>>
> >>> _______________________________________________
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> >>
> >>
> >>
> >> --
> >> Work: http://en.wikipedia.org/wiki/Dhurakij_Pundit_University -
> Research:
> >> http://www.dpu.ac.th/dpuic/info/Research.html - Think thank:
> >> http://www.asianforesightinstitute.org/index.php/eng/The-AFI
> >>
> >> P2P Foundation: http://p2pfoundation.net  -
> http://blog.p2pfoundation.net
> >>
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> >>
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> >>
> >>
> >>
> >>
> >>
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> >
> >
>
>
>
> --
> --
> Sam Rose
> Social Synergy
> Tel:+1(517) 639-1552
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>
> "The universe is not required to be in perfect harmony with human
> ambition." - Carl Sagan
>
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