Thursday, June 12, 2008

Making a Difference

A friend found with some surprise that he had some money coming to him: a microloan that he made to someone in Equador had been repaid.

I shrugged, had a look at the website, and ended up making a loan to a blacksmith from Peru. I've read some things about the Grameen Bank and similar projects, and they've always made a lot of sense to me. I've been wrangling with Paypal today anyway to buy a case for the Mininote from eBay, so the website was a convenient way to contribute.

It's $25; the sort of money I might spent in a mediocre night out. For that sum, I get to feel good about myself: I'm making a difference, doing something unequivocally Good, and doing it in the most practical way possible.

This isn't charity, which I vaguely dislike (although I did send money to tsunami victims - because it was conveniently arranged by the Internet banking website). It's providing a loan for entrepreneurs, money they will use to buy materials and tools to improve their ability to do business and provide for themselves - and they'll pay it back after a fixed period. This is not feeding a Third World addiction - it is the bleedingly obvious upside of globalization.

This country has gone from a postsoviet wreck to a Nordic tiger in two decades, ultimately thanks to foreign capital that allowed us to earn good money for hard work. It is the moral obligation of everyone in Estonia, and everyone who has ever received help from others, to support projects like microloans.

Go to, give someone a loan of twenty-five bucks, then come back here and sound off in the comments, so I can tell you how much you rule.


Kristopher said...

The Local Bank (Field Partner) charges 21% per year on average, the website says.

I don't want to pay a local bank that much for carefully vetting and selecting someone who conforms to their risk model (especially since the risk is mainly borne by me, anyway). That goes against my philosophy.

I'll take my chances and pay Western Union 2.5% of $25 to get the money to the person. If I get repaid, great, if not, it's only $25. I don't want some third-world debt collectors making someone's life miserable.

Flasher T said...

The problem with that is a) you don't know that the money is going to someone who needs it and can do something useful with it, and b) you're perpetuating an addiction to charity. The local bank's risk model makes sure that the money goes to someone with a reasonable business case, and the debt collection makes sure they don't take the thousand bucks and buy booze with it.

Mari said...

How much we rule.. Meaning that you rule? Isn't boasting about a supposedly selfless act a tad .. stupid? And condescending?

Admirable modesty.

Flasher T said...

I never said it was selfless (and I've sure as hell never said I was modest). It's an act that betters the world. I do it because I foresee some potential long-term benefits, but mostly because right now I get to feel good about myself. People who do genuinely good things have every right to feel good about themselves, and I make a point out of telling such people that they rule.

So, Mari, whom have you helped today?

Kristopher said...

You do rule. It's certainly better than doing nothing.

An argument that can be made for charity as opposed to Smith's invisible hand, is that I think nuns are pretty smart about human nature, maybe even as savvy as a loan officer, and it's a safe bet they won't buy wordly things with your donation. Though they seem fond of taking field trips...and travelling, hmm.

This Kiva thing gives me hope in another way. If local crafts in Peru can generate a return on capital in excess of the local bank's 21% interest rate, what am I doing here? I might hop on a plane for Lima if things don't work out here in Tallinn and take up some sort of artisanal trade. How hard can it be?

Better yet, if your blacksmith wants to make some stuff for Saaremaa Sepad to get some real dough, that's another possibility.

Kristopher said...

Just read that typical interest rates from traditional lenders in the third world can range from 100-200%. My bad. 20% had me rolling my eyes.

mari said...

I'm less global. Carried 4 litres of lemonade home from the store, for the old lady upstairs. Woman likes her Mõmmi limonaad.

I don't think I particularly rule because of it though.

Kristopher said...

I tithed 10% one year. Never saw the money again.

Jim Hass said...

Good for you Antyx. If the microloan make a difference, you will have bought some good feelings without the hangover. If not, oh well.
The world is full of despirited people with good uses for money. The whole micro bank system tries to asssure the capital is preserved to be used again.

Life without credit and capital can be startlingly awful. The WSJ had an article about a lady who made gravel by smashing rocks together. Every week a rout man would take the gravel away and bring more rocks. There was a market for labor and gravel, but no equipment!
Microbanks provide more than credit to unserved borrowers, they also provide information and support. Anything that can help them without corrupting them deserves all our support.

Andres O said...

Sounds like you might be testing the water to see how impressed people are by your magnanimity, in the same vein that Neil Patrick Harris's character on "How I Met your Mother" picks up a bridesmaid by claiming he's joining the Peace Corps. Or, maybe you are simply performing an act that betters the world. Or both.


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