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People have free will to accept the terms of the loans or not. The only penalty for default appear to be you not be able to get additional cash.

The rates that micro-loans charge are due to the high transaction cost of a small sum (http://www.kiva.org/about/microfinance#6._Why_are...
I agree that 36% per week sounds too high (sounds too high, but I just don't know). Perhaps I should sign up to get money and see how much they are.
Perhaps the solution is to reduce the transaction cost with some sort of a social networking bank.

In my opinion the agrarian lifestyle for the billions of people that are living today is not possible.
Hell is paved with good intentions.

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I would add another thought to the issue of ways to avoid a money-based economy. Not only are developing countries more likely to have an agrarian base, but those in a culture of poverty (for want of a better term) are more likely to barter services: share some bananas with a teen who lends his brawn to a big task; fix a large meal after the neighboring farmers help clear a piece of land or grind grain in large family mortars, etc. It’s this bartering system that tends to keep the desperately poor from falling off the end of extreme poverty.

In terms of money, one system that does work here is the “sòl”, something generally used by those with a more regular income. A group of close friends or families each contribute to a common pot of money that one member receives each week. This allows the equivalent of a microloan without interest. When a family lives in poverty, they face a daily, even hourly, tradeoff with priority needs; thus “robbing Peter to pay Paul” is the modus operandi. For that reason something like a “sòl” works well since it removes a piece of income from this cycle and allows a family to pay for something very important, such as a child’s school fees, or the purchase of an income-producing item such as a pig or a goat. One generally does not get greatly ahead, but it is a hedge against abject poverty.

The problem is, however, that in a culture of poverty, the wealth of a single person or family is discouraged by the group. Any person or family with a little more is called upon to share with the others with less. In Haïti that is often avoided by storing any extra income in the construction of a more substantial home. In that way they remove their small profit from the cultural obligation to share it with extended family members or friends.

Encouraging the traditional ways does make sense; but it will be very difficult given the tremendous influx of Western thinking and values. It can be done, just like we’ve had to do by encouraging women to return to breastfeeding after artificial infant formulas killed countless numbers of small children through the use of unclean water and hyper dilution; but it will take some time. Perhaps this proverb best fits the issue, “Piti piti zwazò ap fè nich li” (little by little the bird builds its nest). Little by little those in poverty will first stabilize and then pull out, together.

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Seriously though – look at the people in charge of the Worldbank – McNamara, Wolfowitz – the same men who advocate bombing the 3rd world into submission.

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The story that made me seek out microfinance as a direct, effective, way to help someone “pull themselves up by the bootstraps” was actually of a small farmer that received a microfinance loan to purchase a pedal-powered water pump with which to draw up water to irrigate. What would you make of that kind of scenario? He was staying in his homeland, but would be able to provide for his family with a more stable supply of food, and would be able to sell or store any surplus.

Additionally, I wonder what you all think of Oxfam?

Americans, or many of us, do want good things to happen for everyone in the world. Giving money directly from our pockets is evidence of that. It is *not* sustainable to try to give the rest of the world our standard of living, and that is a problem not all of us yet realize, but some of us think that we could give the developing world new & sustainable technologies (even without gadgetry as evidenced by Punpun) and thereby satisfy our consciences that we of the developed world are neither keeping others in the dark, nor expanding our wasteful ways/technologies.

Besides, isn’t there much more of a problem with the Big Finance? The IMF, and the World Bank, and such?

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You ask, “May be its time to ask them what do they want?”
Well, what they want is a low-interest loan.
Kiva says their loans are lower interest than the banks, and far lower than the local moneylenders. If they are charging 32% per week, I think the news reports are all serious misrepresentations. Or perhaps the 32%-per-week loan was NOT one of the micro-loans we hear about at all?

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I do relate to the western world’s ideal of the ‘poor third world countries’ ~ they just need what we have MONEY ~ and then they’ll be all happy families ~ WRONG! Look at our modern world, more money than we can shake a stick at but we are a depressed society in the main, more money less time, more friends less love, bla bla. I liked seeing tribal peoples like the Aborigines and KhoiSan living in their own home environment without our interference of ‘modern infrastructure’ and alcohol living on the land at peace with the world around them ~ from that I see we have a lot to learn. Our judgement of it being too hard, they must want what we want but ultimately in so many cases all I see is destitution. May be its time to ask them what do they want?

I want for all the people’s of the world to have a beautiful life full of everything that makes life good and how you get there is ultimately your own call.

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I guess the point of the above long, rambling, not well formulated paragraph is: as a question of function vs. form– there are plenty of arguments regarding faults of the function of microloans (default, lack of support to the lendee, unfair interest, etc.); however you were critical of the form of microloans (more reliance on money economy). In a rural environment your arguments make perfect sense (the introduction of microloans brings in an ‘outside element’ that ultimately results in the sale of goods/services, which wasn’t their previously.) However, in an urban environment, I don’t quite follow– as it seems that microloans (speaking “form”) offer a degree of greater freedom from multinational enterprises.

On another note, as we are being critical of microloans, I would urge you to think about how they are different/similar to different “grants” you (and others) have applied for or received to work on an individualized project/ideas. The clear difference is certainly a loan vs. grant, i.e. thing need to be “paid back”. But there certainly are similarities and while being critical of microloans, I think you too must be critical of all philanthropic grants to ‘educated do-gooders,’ as many of the same arguments about self-reliance and capitalism, and the money economy can apply.

As always, I appreciate your thoughfulness of issues and ideas, and ability to “mull over and think with things” without quickly defending, arguing, and replying. It is a very good quality in you. Have a very Merry Christmas! I will make a snow angel for you!

-Beth

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