Saturday, May 15, 2010

Muhammad Yunus at Rice University: Genius, Yes, But...

What an intelligent student body, selecting this brilliant economist as their graduation speaker.

I have always believed poverty is a cultural choice at least, but not necessarily an individual's choice. In a culture of wealth accumulation such as that of the USA, poverty is a lifestyle choice, similar to choosing between a marina community or a golf development.

Prices are the same around the world. I thought the extreme poor required superhuman powers to survive on $1000 a year or less, with a family of 8. I admire the extreme poor for skills I do not have and am unlikely to be able to learn. For example, in a Third World country, people went to the bathroom in latrines. I just could not. I held it in until I could reach the lobby bathroom of the local Holiday Inn.

That being said, Dr. Yunus came up with a simple idea. It is counter-intuive until it works well and for a long time. That is the nature of genius.

Points Made

For an effective business model, take each point in the business model of banks and do the opposite.

Lend to the poor.

No collateral.

No contract with illiterate people.

No lawyers.

Lend to females, not males only as the banks do.

Find beggars and propose adding value to their visits to homes, for example, sell something small, such as cookies, toys, trinkets. The beggars then learn market stratification learning the best homes for begging, and the best homes for selling.

Next, offer the children of beggars tuition loans. He has produced 10's of 1000's of professionals that way.

Point Not Made

That female who buys a sewing machine with the $12 lent to her, starts to make clothing. She may end up earning $1000 a year. That then makes her the wealthiest, cash engorged person in the village. She may hire people, and begin to have influence. The bosses running that village then visit her because she may end up taking their power away. They offer her to end her business or to be driven out or killed. She will likely stop, and that explains why the village is poor. It may be that poverty is a lifestyle choice not just in the USA, but also in Bangla Desh, because it promotes power interests.

No comments:

Post a Comment