Economist Muhammad Yunus accepted the Nobel Peace Prize on Sunday for his breakthrough program to lift the poor through tiny loans, saying he hoped the award would inspire “bold initiatives” to eradicate a problem at the root of terrorism.
Yunus, a 66-year-old Bangladeshi, shared the award with his Grameen Bank, which for more than two decades has helped impoverished people start businesses by providing small, usually unsecured loans known as microcredit.
“We must address the root causes of terrorism to end it for all time,” Yunus told hundreds of guests at City Hall in Oslo, Norway. “I believe putting resources into improving the lives of poor people is a better strategy than spending it on guns.”
Economics winner Edmund S. Phelps was cited for research into the relationship between inflation and unemployment, giving governments better tools to formulate economic policy.
We have previously blogged about microfinance loans and the Grameen Bank. (See: Fighting Poverty $1 At A Time.) In addition to the above article, you can check out the Grameen Foundation Website.
I see the greatest aspect of the microcredit philosophy as the fact that it helps people help themselves. With just a small loan, the Grameen Bank enables its clients to permanently escape poverty through their own businesses and labor. This works much more effectively (and cheaply) than other methods which involve just throwing money and food at the problem. In fact, just dumping food into these malnurished communities often hurts them, because it undermines the local markets. In contrast, microloans stimulate the economies of these places by giving these underprivileged people the opportunity to help themselves and develop their businesses.
What do you think?
The Grameen bank is a good thing in my opinion, but not perfect. The Grameen bank gives microcredit loans to women in particular…women are supposedly the ‘carriers of morality in the human race’ and are held to higher stricter moral standards than their male counterparts. In the parts of the world in which the Grameen bank operates, women can easily bring shame to a family by exhibiting any act that is ‘immoral’. Not paying back a loan to the Grameen bank is immoral (so says the Grameen Bank). This system has the potential to be abused by the husbands of these women…they may force their wives to go get the loans (these communities are extremely patriarchal so wives are expected to follow husbands orders). If the loans are not repaid, the women are subject to much scrutiny as they’ve not lived up to their high moral standards. I think they systems used to keep track of the money (guilt, pressure, etc) do not have the best psychological effects on the women, but I suppose given the framework in which this system operates, it is the best way…(for the time being).