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FDL Book Salon: Creating A World Without Poverty

creating_a_world_without_poverty.jpg[Please join me in welcoming Muhammad Yunus, founder of the Grameen Bank and winner of the 2006 Nobel Peace Prize. Please stay on topic on the comments and be polite. Off-topic conversations should be taken to the prior thread. Thank you! — CHS]

A child does not select the family into which he or she is born. Some are born into families of comfort, some to great wealth, but some to families who struggle every single day with poverty. The child doesn’t ask for this as a start in life — to be so far behind where so many others have begun. And each time we turn away from this, thinking that it isn’t our problem or that it is just the way things are, we potentially sentence that child to an endless cycle of poverty for all the generations that follow.

One fifth of the world’s people — 1.3 billion people worldwide (YouTube) — subsist on less than $1 a day, according to Grameen Foundation figures. Living on less than the change rattling around in your pocket or your purse today, most likely. But what if the key to solving the crushing problem of poverty is something as simple as investment and capital expenses designed to benefit the communities that need them most?

In his latest book,Creating A World Without Poverty, Nobel Peace Prize winner Muhammad Yunus proposes a new paradigm for economic business models that takes the concept of charity forward into a self-sustaining, beneficial commercial enterprise whose purpose is not monetary profit so much as enabling those currently living in poverty to lift themselves up onto their own feet. From his book:

…if you spend enough time living among the poor, you discover that their poverty arises from the fact that they cannot retain the genuine results of their labor. And the reason for this is clear: They have no control over capital. The poor work for the benefit of someone else who controls the capital. It may be moneylenders like those who exploited the poor people of Jobra, where I began my work. It may be landlords, factory owners, or agents who recruit poor people for work under conditions of near-slavery. What they have in common is the ability to steal the productive labor of the poor for their own benefit.

And why is this the case? Because the poor do not inherit any capital, nor does anyone in the conventional system provide them with access to capital or credit. The world has been made to believe that the poor are not credit-worthy. I’ve become convinced that changing this assumption is the necessary first step to relieving the poverty problem.

…Giving the poor credit and letting them enjoy the fruits of their labor — often for the first time in their lives — helps to create a situation in which they may start feeling the need for training, begin looking for it…[t]hese are conditions in which training can be truly meaningful and effective.

The repayment rate at the Grameen Bank is 98.6%. This is far higher than the usual rate of repayment in traditional, secured credit loans. And that extraordinary repayment level comes from a number of factors, including the social structure that Grameen puts into place for borrowers which gives them a network of community support as they push forward with a business idea or improvement in their lives. When people believe in themselves and their abilities, and have the courage to take that leap toward something better, the potential can be limitless given an opportunity to prove themselves.

When you have worked with the poor in any profession, you begin to see several constants, the most crushing of which is the hopelessness of people who must struggle daily to simply put food on their tables and a roof over their head. Some measure of respect, for themselves or from someone else, can make such an enormous difference in terms of perspective and hope.

A social business is something that can tangibly benefit an entire community, whether through affordable health care where there was none before or early childhood nutrition for the vulnerable, or any number of potential business concepts which target a fundamental community need and lift up the lives of the poor from desperate and destitute to lives with a little more hope. A social business is a hybrid of sorts between a charity and a capitalist business, run not simply to give a hand-out, but more to give a hand up through providing a good or service that is a benefit, but also creating community jobs. Again, from his book:

…when you invest in a social business, you get your money back and retain the ownership of a company that supports itself through earned income. So individual contributions, especially from affluent people who want to help improve the world, will be a major source of funding of social business.

As can be endowments and other foundations who look to maximize the return on their donations. This goes beyond the concept of social entrepreneurship, where a social benefit is part of the draw for a traditional profit maximizing company (such as an organic farm or a solar panel company, as examples) where the primary goal of the social business is to better the community. When you think about the potential areas for a social business applications in a community, the possibilities are endless.

However, the laws under which businesses operate will need to be modified in most places to allow for this type of social investment: instead of shareholder profit maximization, the goal of a social business is to maximize community benefit while earning just enough to sustain the enterprise with perhaps a little extra to work toward future goals of additional benefit in the community.

This is a revolutionary construct in terms of potential benefits. It attempts to replace the usual paradigm of charity donations for which there was no return other than good works.

In a social business, because it is based on a commercially viable model (albeit one in which profit maximization is not the foremost concern), the initial investment capital is returned to be used again and again in other potential social ventures. I find this fascinating in its limitless potential, and yet question how viable this might be under current conditions in the richer nations of the world, and given so much indifference toward the plight of the poorest peoples among us. There is a tension between human nature and our better natures, and it is a big question in my mind as to which will win out.

But all it can take is one dream. And someone willing to take that to the public in a plea for something better…for all of us.

Muhammad Yunus has taken that even further by making it possible for so many of the poor to make their own dreams a reality through microcredit. With the next wave of social business, this may go further still…to Create A World Without Poverty. And, with that, I welcome Muhammad Yunus and your questions and comments.

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Christy Hardin Smith

Christy Hardin Smith

Christy is a "recovering" attorney, who earned her undergraduate degree at Smith College, in American Studies and Government, concentrating in American Foreign Policy. She then went on to graduate studies at the University of Pennsylvania in the field of political science and international relations/security studies, before attending law school at the College of Law at West Virginia University, where she was Associate Editor of the Law Review. Christy was a partner in her own firm for several years, where she practiced in a number of areas including criminal defense, child abuse and neglect representation, domestic law, civil litigation, and she was an attorney for a small municipality, before switching hats to become a state prosecutor. Christy has extensive trial experience, and has worked for years both in and out of the court system to improve the lives of at risk children.

Email: reddhedd AT firedoglake DOT com

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