I feel that a winner of the Nobel Peace Prize is always best understood in the context of the fire that was originally lit under them. No person or organization wins a Peace Prize unless they are driven to conquer forces that would cause most to throw their hands up and walk away out of sheer helplessness. In the case of this year’s winner, Muhammad Yunus, it was the famine of 1974 that snapped his world into focus:
There was a shortage of food in 1974 throughout the world. However, unlike some other countries that suffered from food scarcity, the situation in Bangladesh was rooted in the historic evolution of the society and others germinated from poor management of the food distribution system in the face of severe floods. After 1971, the majority of the Bangladesh population experienced a drastic drop in their standard of living mainly due to major disruptions in economy and society caused by the war of liberation. The damage caused by the war was colossal. According to the United Nations, the material damage amounted to about $1.2 billion, consisting of loss of fixed physical assets (particularly in the transportation system), damage to agricultural potential, and rehabilitation requirements. The task of rehabilitating returning refugees and other floating population was accomplished early but general economic activities could not be restored to a normal level even two years after independence. Consequently, economic activity lagged behind the levels achieved in prewar years. The downward spiral of real income and unemployment continued. The worst victims of this process were industrial workers, small peasants, agricultural labourers and low paid fixed-income earning groups. [Link]
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p designtimesp=”25891″>It makes sense that many of the winners of this prize have had a Siddhartha Gautama-like moment when the veil was lifted from their normal view of a situation and they began to see the reality of what was always in front of them, subsequently finding it unacceptable to carry on any longer in the same manner:
When Yunus saw the disaster’s crippling effect during a university field trip, he felt that classroom economic theories were simply not doing enough to address the needs of those living in desperate poverty.
Soon after, Yunus handed out loans as small as $27 to a group of women in a village near the southern port city of Chittagong. His plan was simple: give the poorest of the poor money to begin income-generating projects that will help them support themselves. Yunus said he was convinced that people could take care of themselves, if they had just a little help. [Link]
And here, in my opinion, is the most important quality, not only in someone who has won the Peace Prize, but in people that are behind almost every great endeavor:
“While others talk, he acts. Prof Yunus has proved that poverty can be conquered,” says Thorat, chairman of the National Bank for Agriculture and Rural Development.
The banking community in India salutes Yunus because he has proved that the poor can organise themselves; save and, most important, are bankable. [Link]
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p>In interviews today Yunus has been stressing how important women are to the success of microlending. You can almost always count on a woman to repay a loan in full and to make their lives and the lives of their families better through the loan. When I worked in Delhi this was common knowledge among the NGOs that worked with slum residents. The men usually drank or smoked the money away while the women flourished. That’s not to say of course that you shouldn’t lend money to men.
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p>Let’s not forget either that Yunus did not win this prize alone but shares it with all the dedicated people who work at the Grameen Bank which he founded:
The Grameen Bank, once dubbed the “barefoot bank,” can no longer be described in quaint terms. With more than 1,050 branch offices that serve 35,000 villages and two million customers, 94 percent of them women, Grameen is the largest rural lender in Bangladesh, and the proportion of its loans that are repaid, 97 percent, is comparable to the repayment rate at Chase Manhattan Bank. Last year, after eighteen years of making small loans, Grameen had disbursed more than $1 billion; at the present rate the bank will cross the $2 billion mark sometime next year. “It’s like McDonald’s,” Yunus says. “People know the quality of our service. Our job at head office is to make sure it doesn’t deteriorate in any corner of the country…”To qualify for a loan, a villager must demonstrate that her family assets fall below the bank’s threshold. She will not be required to put up collateral; instead she must join a five-member group and a forty-member center and attend a meeting every week, and she must assume responsibility for the loans of her group’s members. This is crucial, because it is the group–not the bank–that initially evaluates loan proposals. Defaulters spoil things for everybody else, so group members choose their partners wisely.[Link]
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p>NPR’s archives actually have two stories about microlending that are particularly worth listening to. One recent one serves as a good primer for those of you wondering how microcredit works. The second is a story from six years ago about how microcredit was working out in Bangladesh.
Finally, I’d like if some of you could revisit my post on microlending from a few months back. Unfortunately I posted it on the same day as the Mumbai train blasts and so it went largely ignored. Maybe some of you are excited and feel proud that a desi has won this award today. Excitement and pride don’t go very far however. Instead of sitting on the sidelines why don’t you make a loan yourself. If they give out Peace Prizes for it you got to figure it is worth it. Plus, as you will see in my old post, it will make you feel like a bad-ass.
No, no, it is so much more than McDonalds!
Loans and Oxfam gifts of goats, cows and donkeys are great Xmas gifts, I’m thinking of getting either/or for people this December 🙂
I know, I couldn’t believe the Mickey D’s analogy either. You have to remember though that in South Asia they have doormen at McDonalds 🙂
Love it. That sums it up.
Whats up with all the Mickey-D haterade?
Ronald McDonald is cool, so is Yunus.
Hehe, you have to wonder what Kissinger’s Buddha-like moment was… 😉
Touché 🙂
For those who are interested, here is a lecture by Dr. Yunus @ MIT from last year.
jor-el?
..And you can watch Yunus himself make a presentation to the Haas School of Business, U. C. Berkeley here.
..and here’s an academic paper by a Prof from Haas on Microfinance and related health benefits.
You’re totally right, Abhi. I made that small loan some months ago and I totally felt like a bad ass. Your discussion of how important women are to this operation is especially pertinant given recent discussion of what men can do to further women’s causes (sounds bizarre reading that aloud because, after all, shouldn’t a woman’s cause be everyone’s cause?). I think developing ideas like this will, in the long run, be much more effective than getting a bunch of men to participate in demonstrations organized by women.
Once again my lack of spelling skills comes to light. I meant “pertinent.”
KXB’s linked article in the news section (about the plan to raze Bombay slums and build homes for the poor with a part of it) made me think about this whole microlending thing. Would it be better to give create some kind of loan scheme the poor could take part of to rebuild the slums themselves instead of this large plan? Does anyone think it will work?
I remembered your post, abhi……no, really. I did.
Maybe this
A NYTimes article talking about a similar program and its problems in Hyderabad in India. A post with some relevant links.
One point made is that there is not much shortage of people donating money for these kinds of loans but there is a big shortage of people that are willing to almost settle in rural areas to manage loans (atleast in Bangladesh).
That’s a problem in any rural aid program, no matter the country. Do you know if anyone has tried training locals to have at least basic money management/distribution skills? Does one absolutely need a college education to pull it off? As one who knows nothing about finance, I’m assuming the answer is “yes, you moron,” but I thought I’d ask anyway.
If micro finance make a difference, then can we say lack of capital is one of the primary challenges of development in third world countries? Does that mean that returns for capital invested elsewhere in these countries are higher? I would think that is the case only in some rapidly developing cases.
To me it sounds like, in very poor countries this helps mainly because its a working financial mechanism in a market where there is none or atleast none that is efficient. Which means creating efficient markets will help solve poverty more than aid.
Also, I am curious about the predominant role of women in this. Does this somehow mean that women are more likely to have better judgement and fiscal discipline? Or is it just that women can keep other women in line, but neither men or women can keep men in line 🙂
Sriram,
Sure, there is a problem for people to work in rural areas. However, there is a management institute in India dedicated to rural management, something similar to IIMs. There is also an instutite opened as an offshoot to the white revolution in India.
Another similar story to Grameen Bank is the white (milk/ diary) revolution in India – the Amul story which is also women centered.
My salute to Muhammad Yunus and his people. Amazing.
Also, I am curious about the predominant role of women in this. Does this somehow mean that women are more likely to have better judgement and fiscal discipline? Or is it just that women can keep other women in line, but neither men or women can keep men in line 🙂
:). women and men both have have to worry about the family, but guys seem to take the easy way out by drowning sorrows in booze or investing in high risk/high reward schemes (There are so many ponzi/pyramid schemes in rural India) where as rural women tend to be more practical because they have to put food on the plates for the children when men are passed out on the streets.
As a guy I am offended by that. But as a feminist, I will shut up.
Strictly tongue-in-cheek, an excerpt from an essay by Bertrand Russell:
“I remember once going to a place where they kept a number of pedigree bulls, and what made a bull illustrious was the milk-giving qualities of his female ancestors. But if bulls had drawn up the pedigrees they would have been very different. Nothing would have been said about the female ancestors, except that they were docile and virtuous, whereas the male ancestors would have been celebrated for their supremacy in battle. In the case of cattle we can take a disinterested view of the relative merits of the sexes, but in the case of our own species we find this more difficult.”
It’s an under-discussed subject. Not unlike why males make up most of the prison populaton. I think the study of IQ distributions help explain it and make for a good analogy. Although the average IQ’s between men and women are the same, the ditribution is different. Men go to the extremes while women cluster around the mean. (I’m going on memory so hopfully razib doesn’t swoop in and whack me.)
So if you’re lending money you’d rather give it to the group that has less defaulters. But if you’re an investor, inveating in men would make sense since the high-achievers would make up for the alcohalics. I always thought it curious that there were so few women participating it the IT revolution since so much of it is anti-corporate in culture. Yet IT, Biotech, VC look even more like a gay happy hour compared to tradional corporate america.
Larry Summers tryed to start a convo on this in reagrds to the sciences, but he hit a 3rd rail.
I’m also very apt to argue cultural factors at work. For whatever set of reasons, women in these cultures keep their promises better than men. In the West, there’s an entire set of conventions (Honor, A Man Is His Word, The Bread Winner, My Credit Score, My Resume, Making more $$$ than the Joneses, etc.) that drive men towards responsible behavior w.r.t. keeping forward commitments & $$$… for whatever set of reasons, these don’t appear to apply as much to the men in Grameen areas.
And, I agree, while we happily take advantage of the assymetry in cases like Grameen bank, there’s a deep seated PC-related reluctance to dive much deeper into the “why?” (in part because it would certainly invite a Larry Summer’s like uproar if we found cases where the assymetry went against women)
Actually, I suspect women keep their promises better than men all over the world.
Perhaps, but enough to warrant a 90+% delta in loan grants?
Along with Kiva, there’s also Global Giving: http://www.globalgiving.com/
I don’t this has been mentioned yet in this thread (my apologies if I’m blind) but the current issue of The Economist doesn’t seem too pleased with this year’s Peace Prize awarding: here
Hey Abhi,
what’s up with the photo in your post? Is that meant to be symbolic of your stance on where Yunus stands…just a one-dimensional picture being ‘carried’ by a white man aka the MAN…as a cheap exotic photograph of ‘the other’ bought on a package tour to the motherland…no photo of Yunus himself…
And to have Yunus’s hands raised in that stereotypical Eastern gesture, as if in helplessness, while some old European professor literally ‘holds him up’ in support… it just speaks tragic tragic postcolonial volumes that my bleeding heart just can’t get over…
even the placement of their heads is symbolic…old white haired male on top, winner of the actual prize perpetually subjugated at the bottom.
The typical gentleman’s club backdrop behind them cements the power dynamic with the chandelier and old bookshelf in the background…I just can’t take it!
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Sorry have just been recently over-exposed to postcolonial theory by people burdened with too much white liberal guilt and needed to mock/vent.
Oxfam’s running a major campaign to get people to give animals, which I think was covered in a similar post. I dunno about in the US but here people feel more comfortable about giving something rather than dealing with money/donations. Cows, donkeys and goats for Christmas…and no mad rush buying commercial crap in the uber-depressing setting of a mall during the holidays! I’m sold.
I think Tear Fund Micro Enterprise also helps people set up small businesses with interest free loans.
giving schmiving:
–David Rieff
Big ups to Yunus though. It’s largely because of him and his popularity that microfinance has a chapter in econ textbooks. Nevermind the Economists frothiness as noted by No Desh- poverty is violent in its very nature.
The picture is one of Nobel Committtee chairman Ole Danbolt Mjoes unveiling Yunus. The Norwegians are the ones who decide who is worthy so I felt this was appropriate. Also the commitee is known for expressing its political views in its choice of the Peace and Literature prizes. I liked that he was holding Yunus’ picture almost like a sign you’d find at a protest.
I liked that he was holding Yunus’ picture almost like a sign you’d find at a protest.
Is that meant to be symbolic of your stance on where Yunus stands…just a one-dimensional picture being ‘carried’ by a white man aka the MAN…as a cheap exotic photograph of ‘the other’ bought on a package tour to the motherland…no photo of Yunus himself…
No one can fault this board for over-analysis, can they? Are we rapidly turning into irrational conspiracy theorists? It’s always some sinister plot of the white man against us brownz.
Isn’t it an artistic director’s job to publish a picture that isn’t just a boring head shot? As bloggers we have to be writers, editors, and artistic directors all at once. We have to say a lot in a minimum amount of space. I usually put some thought into my post titles and the pictures I use for this very reason.
Now you sound like a victim.
There’s also Heifer.
And yes, the name makes me laugh. My humor gene has not progressed beyond that of a twelve year old boy.
Abhi (and DesiDawg)
The over-analysis of the pic was meant to be a joke…was trying to find a MoorNam equivalent of crazy left-wing white-man hater to mock but it was late and I was tired…
so yeah obv. not a vg joke…sigh. I thought it was really great of those Norwegians to highlight the POVERTY is a PEACE issue.
Grameen style of Micro credit with as high as 20% interest will never eradicate poverty but it will create an illusion as if poverty been eliminated and Bangladeshi poor women are the prove of it. Almost all of Grameen’s interest borrower members are still under poverty line. I wonder how Dr. Younus dreams of sending poverty to museum while his bank members sink and suffocate with high interest loans. I sometime wonder and search answer of what is the basic difference between a pay day lender and Grameen Bank, are not both are Loan Sharks? I my self working for so called social enterprise micro finance lender for about year in Bangladesh can testify these micro credit does help poor to feel a bit empowered before the hard reality of repayment weekly meeting comes to his face and have to make a payment in a week of taking interest while not making a single penny generated. Peer pressure some time is unbearable and humiliating to commit suicide.