Thought for the Day

[bcholmes]

To be sure, capitalism is thriving. Businesses continue to grow, global trade is booming, multinational corporations are spreading into markets in the developing world and the former Soviet bloc, and technological advancements continue to multiply. But not everyone is benefiting. Global income distribution tells the story: Ninety-four percent of the world income goes to 40 percent of the people, while the other 60 percent must live on only 6 percent of the world income. Half of the world lives on two dollars a day or less, while almost a billion people live on less than one dollar a day.

Poverty is not distributed evenly around the world; specific regions suffer its worst effects. In sub-Saharan Africa, South Asia, and Latin America, hundreds of millions of poor people struggle for survival. Periodic disasters, such as the 2004 tsunami that devastated regions on the Indian Ocean, continue to kill hundreds of thousands of poor and vulnerable people. The divide between the global North and South -- between the world's riches and the rest -- has widened.

[...]

What is wrong? In a world where the ideology of free enterprise has no real challenger, why have free markets failed so many people? As some nations march toward ever greater prosperity, why has so much of the world been left behind?

The reason is simple. Unfettered markets in their current form are not meant to solve social problems and instead may actually exacerbate poverty, disease, pollution, corruption, crime, and inequality.

— Mohammad Yunis, Creating a World Without Poverty

Also:

Over the years, I have been watching the difference between the business styles of the World Bank and Grameen Bank. Theoretically, we are in the same business -- helping people get out of poverty. But the ways in which we pursue this goal are very different.

Grameen Bank has always believed that if a borrower gets into trouble and cannot pay back her loan, it is our responsibility to help her. If we have a problem with our borrower, we tell ourselves that she is right -- that we must have made some mistake in our policies or in our implementation of those policies. So we go back and fix ourselves. We make our rules very flexible so that they can be adjusted to the requirements of the borrower.

We also encourage our borrowers to make their own decisions about how to use the loans. If a borrower asks a Grameen staff member, "Please tell me what would be a good business idea for me," the staff member is trained to respond this way: "I am sorry, but I am not smart enough to give you a good business idea. Grameen has lots of money, but no business ideas. That's why Grameen has come to you. You have the ideas, we have the money. If Grameen had good business ideas, instead of giving the money to you, it would use the money itself and make more money."

[...]

It is quite different with the World Bank. If you are lucky enough to be funded by them, they give you money. But they also give you ideas, expertise, training, plans, principles, and procedures. Your job is to follow the yellow lines, the green lines, and the red lines -- to read the instructions at each step and obey them precisely. Yet, despite all this supervision, the projects don't always work out as planned. And when this happens, it is the recipient country that usually seems to bear the blame and to suffer the consequences.

Comments

[aquaeri.livejournal.com]

The failure of the free market to provide for the poor exists where the markets are (in fact) not free

This is in fact mathematically proveable not to be true. Truly free markets have as a natural consequence a few rich and a lot of poor. I unfortunately don't have a cite for this - I read about it in I think a chemistry text (as an example of how human intuition about randomness is really lousy). But the computer simulation is simple enough that you can set it up and prove it for yourself.