What
You're Missing in Our Subscriber-only CounterPunch Newsletter
How to Spot a Police
Spy
Is it the
guy who asks you after the meeting about how the antiwar movement
needs to get "serious" and asks you lots of questions
about terrorism and "fighting back"? Jennifer Van Bergen
reports, first-hand. Part
2 of our series on what really happened on 9/11/2001: the physics
of collapse, and how not to make a "pancake" by Manuel
Garcia, PLUS Engineer Pierre Sprey on why "controlled demolition"
theories are off target.What
you just missed, but can still get, in our last newsletter: Paul
Craig Roberts on the Collapse of America. CounterPunch
Online is read by millions of viewers each month! But remember, we are
funded solely by the subscribers to the print edition
of CounterPunch.
Please support this website by buying a subscription to our newsletter,
which contains fresh material you won't find anywhere else, or
by making a donation towards the cost of this online edition. Remember contributions
are tax-deductible.Click
here to make a donation. If you find our site useful please:Subscribe
Now!
The committee that gave Henry Kissinger
the Nobel peace prize has given it this year to Mohammed Younus,
the economist who put the word "microloan" on the map
with the Grameen Bank in his native land of
Bangladesh. That's progress of a sort. But in terms of hot air,
any sentences linking "peace" with "Henry Kissinger"
aren't immeasurably more vacuous than the notion that microloans
can help--to use the language of the Nobel Committee's citation
"large population groups find ways in which to break out
of poverty."
Throughout the late Eighties
and Nineties, in the verbal currency of first-world do-gooders,
"microloans" became one of those magically fungible
words, embedded in a thousand Foundation and NGO annual reports,
like "sustainable". What could be more virtuous in
terms of prudent philanthropy than giving very small loans to
very poor women? Microloans breath healthful uplift, as divorced
from the sordid world of mega-loans (though not, it turns out,
mega interest rates), as are micro-brews from Budweiser.
The trouble is that microloans
don't make any sort of a macro-difference. They have helped some
poor women, no doubt about it. But in their own way they're a
register of defeat. Back in the early 1970s there were huge plans
afoot to change the entire relationship of the Third to the First
World, to speed Third World economies towards decent living standards
for the many, not just the few. At the United Nations radical
economists were hard at work drafting plans for a New World Economic
Order. All that went out the window and here are the caring classes
thirty years later, hailing microloans.
Microloans are micro-bandaids
in a scale of things today where - to take the example of
India -- well over 100,000 farmers, including a large number
of women, have killed themselves because their federal and state
governments, plus large international institutions, have promoted
the savage priorities of neoliberalism.
As the economist Robert Pollin
put it pithily when I asked him what he thought of the award
to Younus , "Bangladesh and Bolivia are two countries widely
recognized for having the most successful micro credit programs
in the world. They also remain two of the poorest countries
in the world."
In the statistical tables of
human development Bangladesh ranks 139th, worse than India,
with 49.8 per cent of its population of 150 million below the
official poverty line. In the homeland of the Grameen Bank, about
80 per cent of the people live on less than $2 a day. A UN Development
Program study in the early 1990s showed that the total microcredits
in Bangladesh constituted 0.6 per cent of total credit in the
country. Hardly a transformation.
Against this backdrop, what
have microloans achieved? I put the question to P. Sainath, author
of Everybody Loves a Good Drought and India's most outstanding
journalist on rural destitution and the consequences of economic
policy. Yes, he said, microloans can be a legitimate tool in
certain conditions, as long as you don't elevate the tool into
a gigantic weapon. No one was ever liberated by being placed
in debt. That said, a lot of poor women have eased their lives
by using microloans, bypassing bank bureaucracies and money lenders.
But today the World Bank and
the IMF, along with state-owned and commercial banks are diving
into microfinance. The microloan business is fast becoming a
gigantic empire, bringing back into control the very banks and
bureaucracies women have been trying to bypass. Microcredit is
becoming a macro-racket.
Sainath points out that the
interest rates micro-indebted women are paying in India are far
higher than commercial bank lending rates.
"They are paying between
24 and 36 per cent on loans for productive expenditures while
an upper class person can finance the purchase of a Mercedes
at 6 to 8 per cent from the banking system."
The average loan of the Grameen
bank is $130 in Bangladesh, lower in India. Now, the basic
problem of the poor in both countries is landlessness, lack of
assets. In the Indian province of Andhra Pradesh, where there
are thousands of microloan groups, land costs 100,000 rupees
an acre, poor land maybe 60,000 rupees--over $2000. $130 doesn't
buy you the ranch, not even a good cow or buffalo. So how many
poor women have escaped the poverty trap in AP, Sainath asks.
"Try getting an answer."
"With that $130 the most
basic assets do not come to you," Sainath says. "The
amount is tiny. Interest rates are high and the default sanctions
savage. During recent floods in AP, freelance journalists came
to a village where everything had been washed away. The first
people back in were the micro creditors threatening women, demanding
monthly installments from women who had lost everything."
Governments like microloans
because they allow them to abdicate their most basic responsibilities
to poor citizens. Microloans make the market a god.
Let's suppose USAID or some
kindred agency decides to put $10 million into microloans. What
used to be an initiative of a group of women at the village level,
has become a high-profile, international funding activity. Long
before the first rupee is seen by women in a village, NGOs, consultants,
bank managers and their relatives have all taken their cut.
By the time the loan gets to the women in the village the cost
is prohibitive, with the very poor and women of low caste often
excluded. On top of this, some revolving-fund models require
each women to put in a rupee a day. But often women don't have
a rupee a day, so they go to the local moneylender to be able
to repay the microloan.
As Sainath says, microlending
can be a useful tool but it should not be romanticized as some
sort of transformational activity. On that plane it's useless.
By contrast, as Bob Pollin stresses, "the East Asian Tigers,
like South Korea and Taiwan, relied for a generation on massive
publicly-subsidized credit programs to support manufacturing
and exports.
They are now approaching West European living standards. Poor
countries now need to adapt the East Asian macro-credit model
to promote not simply exports, but land reform, marketing cooperatives,
a functioning infrastructure, and most of all, decent jobs."
The trouble with publicly-subsidized
credit programs is that they're public and they're large and
run contrary to the neoliberal creed. That's why Younus got his
Nobel prize, whereas radical land reformers get a bullet in the
back of the head.
Note: A shorter version
of this column ran in the print edition of The Nation that went
to press last Wednesday.
Now
Available
from CounterPunch Books!
The Case
Against Israel
By Michael Neumann
CounterPunch
Speakers Bureau Sick of sit-on-the-Fence speakers, tongue-tied and timid?
CounterPunch Editors Alexander Cockburn and Jeffrey St Clair
are available to speak forcefully on ALL the burning issues,
as are other CounterPunchers seasoned in stump oratory. Call
CounterPunch Speakers Bureau, 1-800-840-3683. Or email beckyg@counterpunch.org.
