Re: The Myth of Microloans

On Sat, 21 Oct 2006 21:12:15 -0700, "Steven L. Robinson"
<srobin21@xxxxxxxxxxx> wrote:

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

Such exorbitant rates effectively guarantee that most micro-debtors
who do not default will become permanent debt slaves.

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.

No. The basic problem is that land rent is a very large fraction of
of GDP in both countries, and it is effectively all siphoned off and
pocketed by a wealthy, idle, privileged landowning caste rather than
being recovered for the purposes and benefit of the public that
creates it. People in Singapore and HK are also "landless" (land in
both places is publicly owned, and leased to private users), but
because much of the rent is recovered for public use, poverty in both
places has declined dramatically over the last several decades, even
as production and median assets have soared.

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.

AND THEY __** ALSO **__ RECOVERED FAR MORE LAND RENT FOR PUBLIC
PURPOSES than any of the hundred poorest countries, though not as much
as Singapore and HK.

But of course, all who do not refuse outright to know such facts must
somehow be prevented from learning them. Relentlessly talking up
microloans is a good way to do that.

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."

No. Most of all, land reform. Decent jobs can only come when workers
are not effectively enslaved by landowners.

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.

Bingo. The one thing that always works is the one thing that
landowners pay their private armies of thugs and assassins to stop.

Funny how those who profess to advocate freedom and human rights (but
rarely mention any rights other than the property "rights" of the
owners of government-enforced privileges such as land titles, patents
and copyrights) find it so easy to ignore a vast and ancient evil, the
greatest evil in the history of the world, an evil that causes a
Holocaust worth of injustice, tyranny, robbery, suffering, slavery,
starvation and premature death EVERY YEAR.

-- Roy L
.