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Friday, July 20, 2007

The Power Of Micro-Finance

Micro Finance may be the second most powerful idea in the world.

In microfinance a poor person stuck in an exploited position is assisted in starting her own business. An example is a mother that has a job building brooms, someone drops off a few sticks, some straw, and a bit of string. A day or two latter they pick up the brooms and pay a piece work price for the completed work, a price not quite enough to feed a family.

Enter micro-finance. A very small loan is made, usually just a few dollars, to the mother to buy a small supply of sticks, string and straw. She can now sell completed brooms in a competitive market, making enough to feed her family, grow her business, and pay back the loan. The loans are almost always paid back. The repaid loan is recycled to another poor person trapped at the bottom of society.

The first and most familiar micro-finance venture is The Grameen Bank that was soon followed by The Grameen Foundation, Kiva, and other groups. These are actually micro-venture capital teams financing micro-entrepreneurs. As the Grameen Foundation says about themselves on their website:

"With tiny loans, financial services and technology, we help the poor, mostly women, start self-sustaining businesses to escape poverty. Founded in 1997 by a group of friends who were inspired by the work of Grameen Bank in Bangladesh, our global network of micro-finance partners reaches over 3.6 million families in 22 countries."
The small businesses created are what capitalism once was, before governments and special interests united to control markets and centralize power. That is what makes micro-finance so powerful. Because the loan makes families self-sufficient -- it is an exciting form of giving that multiplies results and keeps giving.

These results are achieved by ignoring the dire warnings of bureaucrats and academics that view the countless poor as a drain on the world and civilization. Their talk is filled with images of mouths to be feed, housing required, waste that needs to be managed.

In reality the poor can be the worlds salvation - they are minds needing to create, desires for themselves and their families that strive to be satisfied.

They want a better world, if we but provide tools and get out of the way, they will make our world better also.

While academics write position papers that are only read by those academics that already agree with them; The Grameen Bank, The Grameen foundation, and other similar outreaches are helping large numbers of people isolated by their societies.

This is real progress. Each of those helped by micro-finance are also examples to the many around them of what can be accomplished using individualistic and personal commerce. All manner of government and non-government organizations have for decades flown to their location in chartered jets and driven around in air conditioned cars offering help - and overall life just got worse. They also know that corporations backed by government programs offer limited routes to escape from poverty.

With micro-finance however they have discovered a first step to independence, a small and personal business.

Education, corporations, governments, unions; in fact all bureaucracies are already under pressure from technological solutions. In another type of pressure, micro-financed individuals are also discovering they no longer need listen and hope at empty promises from politicos that live well while they starve.

The world is changing. The old industrial age middle class is shrinking even as the individualistic knowledge workers of netcohort are rising. For the first time in centuries there is also hope for the poor in badly governed countries. Micro-finance lifts them and offers positive direction as no promised socialist paradise ever did.

These once totally downtrodden poor, and their billions of brethren, can provide a foundation for the sweeping changes of the emerging netcohort age. Their lives will be better, our lives will also improve with each innovation and business they create.

The American dream of upward mobility, equality of opportunity rather than equality of position, may be re-born on a world wide scale. Imagine billions of people that are not motivated by promises to pull down those above them but instead seek opportunity for their own ascension. A powerful picture, and since it is happening first at the poorest levels that have been so cavalierly treated - it is off the radar of self-centered world leaders.

By the time all are aware of a groundswell of historic capitalism, it will already be a powerful force within societal structures. Micro-finance is a remarkably efficient way to assist the poor in helping all of us.

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Anonymous Anonymous said...

This comment has been removed by a blog administrator.

5:32 AM  
Anonymous Doug said...

I like the vision you are conveying here. I think it's really important for people to be at least theoretically self-sufficient (i.e. they can support themselves financially, specifically by starting their own business). I'm trying to nurture a similar ideal on my blog as well.

8:10 AM  

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