Saturday, December 01, 2007

The Grameen disaster relief system

Important because Grameen Bank founder Muhammad Yunus won a nobel prize: from 1999 in the wake of a monsoon hitting Bangladesh:

"In the aftermath of the floods we estimate that we'll need $100 million immediately, not for Grameen's survival, as your report says, but for assisting in the survival of Grameen borrowers who are badly hit by the flood. For Grameen a natural disaster is a challenge, and an opportunity to demonstrate how effective microcredit system is in helping affected people back on their feet. "

In other words, according to Grameen, the way to get poor Bangladeshis on their feet after devastating floods is to give them little loans so they can weave baskets to sell at their now demolished village markets.

And Grameen wants to help inner cities in the U.S. and Europe by applying its microcredit model there. What better place to start than New Orleans, where the entrepreneurial spirit of thousands of people whose homes were destroyed by Katrina can be unleashed by giving them a few bucks and sending them to an arts and crafts store?*

Grameen has some strange supporters, or at least savvy people who realize, as this "Left Business Observer" article points out, that all may not be what it seems. The Cato institute, the pro-freemarket anti-government libertarian think tank in Washington DC, that wants to literally eliminate all taxes and non-private ways of improving society, doesn't have a fundamental objection to the Grameen Bank's notion that microcredit order to make poor people a way to advance economic development.

They just question why if the bank is so successful does the U.S. need to keep pumping money into it.

*Bill Clinton tried something not quite as absurd with his "Enterprise Zones" project for inner cities, which was very similar to NAFTA in that it advocated getting rid of regulations and government red tape in order to make it easier for people to start businesses. Have you heard anything about Clinton's "Enterprise Zones" since? I think you have your answer right there.

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