Last spring I was invited by one of my most favorite and inspirational people, Professor Vivyan Adair, to come speak at my alma mater, Hamilton College, about working for social justice. While I was there, she gave me Muhammad Yunus’ Banker to the Poor. I’m ashamed to admit that I just read it but not so ashamed that I won’t share some insights that come out of it.
As background, Yunus is an Nobel Prize winning economist revered as the grandfather of microfinance for his founding of the Grameen Bank in the late 1970s in Bangladesh. Here are some other things you might not have known about Grameen, and microfinance, that make it revolutionary and worth learning more about.
- “What would you do with $100?” is how many of Yunus’ conversations start with poor people around the world. Grameen has built its foundation on the principal that all human beings are born with an innate survival skill and need only credit, not extensive training and hand-holding, to work their way out of poverty. Unlike the American welfare system which - with its oversight, bureaucracy, training, ceilings, etc. - disincentives entrepreneurship and “increases [recipients] misery, robs them of incentive and, more importantly, of self-respect,” the Grameen philosophy is that cash alone provides social capital and is a tool that “unlocks a host of other abilities and allows [the poor] to explore their own potential.”
- Grameen’s goal is essentially to put themselves out of business. Of course they stay open once there are no more poor people to serve as their customers begin to thrive, but they want to make every Grameen Bank branch “poverty-free.” In Bangladesh they define poverty-free using ten specific indicators which I’ve slightly shorted here for simplicity. Every family should have a house with a tin roof, beds, access to safe water and a sanitary latrine, all kids attending school, sufficient warm clothing, mosquito nets, a home vegetable garden, no food shortages, and sufficient income-earning opportunities.
- Contrary to famed economist Milton Friedman’s belief that the social responsibility of business is to increase its profits, Yunus believes that personal gain does not have to be the only fuel for free enterprise. In fact, he argues that social goals can replace greed as motivators and that “government, as we now know it, should pull out of most things except for law enforcement, the justice system, national defense, and foreign policy and let the private sector, a ‘Grameenized private sector,’ a social-consciousness-drive private sector, take over its other functions.”
- The idea that all people are potential entrepreneurs is part of the core Grameen approach despite the fact that it goes against a traditional, dichotomized view of economics that says there are only consumers and laborers. The argument is that this widely held perception neglects the potential and value of self-employed entrepreneurs and stifles creative exploration of human capacity. So, how about taking a minute to explore your own creativity: what would you do with $10,000?