What do you think of Dr. Muhammad Yunus' vision for eliminating homelessness and poverty?

It’s just a formal way of doing what many of us do every day. We loan money to people we know, and they pay us back when they can. It does nothing toward eliminating homelessness and poverty.

My husband and I are currently assisting 10 people (all family members) who are either unemployed, on disability, or working parttime. They pay us whenever they can, either with money they earn or work credit. We fired our lawn maintenance and our pool cleaner.

I love the idea of microfinancing. I think individuals can make things happen with limited resources that put larger companies to shame. It’s a great idea and an extremely noble cause.

But as a method of truly eliminating poverty and homelessness, it’s limited to those that are just lacking an opportunity. They need to have all the other pieces; intelligence, drive, an idea, and a market. You can reduce poverty and homelessness, but it’s unrealistic to eliminate it through providing opportunities.

I think there would be a lot more people who are just lacking that opportunity in third world countries than there are here in the US, so there is plenty of good to do. But I would imagine there is a segment of the population that isn’t that different from the homeless and poor in the US.

After talking to quite a few folks struggling to get by, the sad truth is that some of them (not all) don’t have the basics needed to succeed in that way. I don’t know how to say it more kindly, but a portion simply were not born with the gifts many of us have. They need more than just the opportunity to create their own business. They need help.

Are there solutions so that they don’t have to live their life as they do? Absolutely, and hopefully those mixed with providing opportunity to those who can take advantage of it will one day give everyone the basics needed to live happily. But I think saying that microfinancing will “totally eradicate” poverty is overstating the impact, perhaps intentionally.

That said, it’s an amazing way that people lucky enough to have plenty can make a lifelong difference in the lives of a whole community.

I am basically in agreement with @funkdaddy. My wife was the first person who ever explained the concept to me, and I’ve thought it was brilliant ever since. I don’t believe that there is any single solution to homelessness and poverty. It is a problem that will require many different approaches to solve completely. By making as many people as we can self-sustaining, however, we significantly reduce the charity burden.

People have criticized microfinancing efforts for not creating wealth, but I think that it has benefits that go beyond numbers. When people have economic status, they have social and political status. Even if they are not wealthy, the fact that microfinancing makes people part of the economy makes them harder to abuse or ignore. Again, it’s not a panacea for all social and political problems, but every little bit counts.

I wonder who the customers of those small businesses are going to be.

When you’re very poor, all your resources go toward immediate survival. You can’t plan for the future until you’ve taken care of your survival needs for today and tomorrow, and seemingly small setbacks can create huge problems that keep you from getting ahead.

(Example- say you’re a waiter and you get appendicitis. When you have a lower income, rent, food, and other necessities are a higher proportion of your income. It’s harder to set aside savings and you may be living paycheck to paycheck, which means you can’t afford to miss any work. Your job doesn’t provide health insurance or paid sick leave, so you can’t afford to take the day off, never mind the doctor visit. Missed work probably means not paying the rent, and hospital care comes straight out of pocket. A major illness leaves you with huge debts and employment gaps that prevent you from finding work again.)

There are plenty of other scenarios that can really f**k you up if you’re very poor. Many poor people are just one missed paycheck or misfortune away from homelessness or worse, because they can’t afford to opt into the safety nets that work for everyone else. If you’re living paycheck to paycheck, logically you know that it’s smart to buy health insurance, homeowner’s insurance, or full-coverage car insurance, but that money has to go toward basics like food and bus fare to work.

This program won’t work for everyone, because not everyone is smart and self-motivated. But for a decent number of people, it will really help.

I love giving Kiva loans. I feel like I can actually see my funds making a difference. I don’t know if it will change the world or eradicate poverty, but I’m sure it makes a difference in the life of the person who receives it, and if one person is helped it’s a good thing.

It won’t totally eliminate poverty and homelessness because the mentally ill are not cared for. But I love the idea of microbanks. They have an excellent track record of repayment on the loans.

Ayn Rand would not object to any of that as long as it was voluntary, and not born of a feeling of guilt.

@YARNLADY We can look at areas where this has been applied and see that is is in fact lifting people out of poverty where the poverty had existed for thousands of years. We’ve had family lending with us since the invention of money, and it has never done so.

@funkdaddy I don’t believe Dr. Yunus was trying to say that microfinancing alone will eliminate poverty. Rather, I think his vision is that if you take a community that’s mired in generational abject poverty and give the most talented and motivated people in it the means to do something worthwhile with their talents, they then lift others around them by improving conditions and providing jobs and perhaps most importantly, by showing their neighbors that something better is possible.

@SavoirFaire Exactly. Onle of the old standbys of those that profit from the status quo is that whatever idea you might care to mention to improve things won’t solve the entire problem all by itself. We’ve used that flawed “logic” now for 32 years to shoot down every idea for doing something meaningful about the skyrocketing US National Debt. And as long as we continue to listen to that mantra, the debt will just keep climbing till we go bankrupt.

@ragingloli You needn’t worry about who they will be. You rather can look at who they are. This isn’t some pie-in-the-sky fantasy. It was started in 1983 and it’s working Dr. Yunus won the Nobel Peace Prize in 2006 for the impact it had in Bangladesh and other third-world areas.

@Haleth Thanks you. Great answer.

@Judi Thanks. Kiva is making a difference, and it also gives a good return on investment for those who are fortunate enough to put some money into it. A way to help the poor and profit from it. What’s not to love?

@marinelife True, but if a community can sufficiently better itself, then it can begin to care for its own mentally ill and handicapped.

@josie Wehn we can do something so simple to help people pull themselves up by their bootstraps, and when we can even earn a profit for ourselves doing it, should we not feel guilt if we refuse. What do we say to our children when they tour the homelessness museum and ask us how we could have let that happen?

@ETpro e don’t and w have the means. The will has to exist too.

@marinelife Yes, but the will exists much more strongly in communities outside of the US than it does in communities within the US. Many of the places helped by microfinancing still have a strong enough sense of community that they are willing to help everyone.

What ever happened to the case against Yunus for allegedly misappropriating funds or embezzling funds? Didn’t he get banned from a banking board or something?

@bkcunningham – they seem to be possibly unfounded, probably politically motivated, and ongoing – source with other sources cited

Thank you @funkdaddy.

@bkcunningham And regardless, it wouldn’t say anything about the general idea (assuming we don’t let ourselves get distracted).

You call it poisoning the well when I ask a question to learn more about the subject being discussed, fine. Call it what you want. I asked a legitimate question. Got an excellent answer and continuted following. What do you call your comment?

@bkcunningham I can’t analyze @SavoirFaire‘s heart, but in reading his response, I did not interpret it to be an accusation that you were poisoning the well. I took him at his word when he said, ”...[I]t wouldn’t say anything about the general idea (assuming we don’t let ourselves get distracted.” Even a flawed man can have a valid idea. The op was about the idea, not the man originating it. So while I think from my own reading that @funkdaddy is right, it doesn’t really have a bearing on the question at hand whether Dr. Yunus is guilty, or corrupt officials in Bangladesh are trying to destroy him to preserve their own good thing.

Point taken, @ETpro. Thank you.

@bkcunningham Just to follow up, I wasn’t trying to accuse you of anything. I was simply pointing out that we need to keep the idea separate from the man.

Thanks, @SavoirFaire. Good point.

The illusion of Poverty Reduction

@monorob An interesting article, for sure. If someone doesn’t support markets in the first place, then they won’t like the kind of aid that microfinance gives to the poor. That’s certainly a fair point. The author of the linked article (Milford Bateman) and the scholars he cites (Lamia Karim and Lesley Gill) support socialist solutions over market solutions. As such, we should not expect them to like microfinancing. No matter what its results might be, they object to the method itself. We need to take a fairly specific set of political goals for granted, however, if we are to join in with Bateman et al. in declaring microfinance to be a failure.

Something Bateman misses, though, is that using microfinancing as part of an overall solution doesn’t rule out other things being used as part of the overall solution as well. The author mentions progressive taxation as one possible alternative. But why not think of all these things as supplementing one another, rather than as alternatives? The answer in this case is that Bateman has long viewed economics as a struggle between monolithic extremes. I, however, reject the value of such ideological purity. A series of small improvements seem to me more likely to succeed than a single policy meant to address all issues at once. A complex solution for a complex problem.

@monorob I roundly reject any criticism of solutions where the core complaint is the “This one thing won’t solve the entire problem all by itself.” There are problems that don’t have a single-answer solution. Paying off the US national debt is a good example. We keep doing NOTHING about it because every time one party suggests a move that will help, the other party complains that the suggestion falls far short of solving the entire $15 trillion problem overnight. If we’d been implementing every good idea that was floated since 1980 when Reagan started the National Debt spiraling out of control, we’d already have it to a minuscule percentage of our GDP instead of watching it close in on 100% of GDP.

World poverty is an even more complex problem than the US debt. And it’s true that micro-finance alone is not the the single solution. But it’s a step in the right direction. Enough steps, and you’re there.