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Something is wrong when a few individuals are able to appropriate wealth equivalent to that of a micronation, dole it out in $50 dribs and drabs to the deserving poor, and then collect interest. Sounds too much like Marie Antoinette also in style this year. sized business owner. You are stuck being a teeny business owner forever, and here’s why. Let’s zoom in on, say, rural Guyana, an unfortunate former English colony on the north coast of South America, where a group of about five women stands in a sand pit outside a village. Between them, they have a couple of five-foot-square tattered screens tacked to wood frames and propped up with sticks. It is about one hundred degrees, and the women don’t have much food or water because it no longer rains when it should. They do have a shovel or two with splintered handles and loose, rusty blades. Using this equipment, they are mining for gold. They spell each other pitching sand at the screens. The sand itself goes through the screens and the small gold nuggets drop to the ground. Once a week, a man comes out in a truck and buys the gold crumbs for a pittance. A $100 loan is going to get the women some new shovels and screensit may help them through a couple of bad weeks when one or two of them are sickbut it’s not going to get them out of the pit. Microcredit doesn’t train you to do anything else or even to do what you’re doing more efficiently. It smoothes over the rough spots in what you’re already doing. Grameen pro vides no services: no marketing help, no education or training, no infrastructure. Why not? Because that stuff costs real money. This is not to say that the Grameen method is worthlessonly that it is a stopgap measure, useful until real change comes about. Mr. Yunus fully deserves recognition for helping a lot of people live a little more comfortably. The harm comes when the idea of microcredit is misapplied and appropriated as a panacea by those who ought to be responsible for really reducing poverty like the World Bank and the world’s rich. Predictably, this is exactly what has happened. As rich people became aware that you could lend to poor people and they would pay you back at high interest rates, they became increasingly interested in Grameen. You could almost hear their mental calculations, as the slot machines in their heads turned up matching fruits. The obvious question formed: If poor people pay back their loans, why not make money from them? This is a fashion whose time has come: If microcredit works, why not microfinance? Just think of it! We could make bigger fortunes than we already have! After all, poor people are used to paying exceedingly high interest rates. Why should they pay them to tacky middlemen in beat-up trucks when they could pay usurious interest directly to People Like Us? Jackpot! Half a billion people with $100 loans, paying annual interest atsay-50 percent. Admittedly, these are cocktail napkin calculations, but this looks like a pantload of money to me. It’s not surprising that one of the advocates of microfinance is Pierre Omidyar, founder of eBay. This is a man who figured out that the rubbish in your attic is worth something and, using info tech, turned it into money. When he took eBay public, he got $10 billion. The Internet and information technology generally are turning up great huge pots of money that were previously unreachable. Loans to the poor were not, shall we say, interesting 10 years ago because we couldn’t keep track of themthe paperwork alone was worth more than the loan. But with lowcost high tech, we can now keep Miss Lakshmi and her depressing cousin, Miss Vandaniya, in our sights all week long. We can even pay some poor people to keep track of the rest of them by giving them cell phones. Whoops, ‘scuse me. Lending them cell phones. According to the New Yorker, Stanley Fisher, former continued on page 29 NOVEMBER 17, 2006 THE TEXAS OBSERVER 19