One Red Hot Country Mama!

I am reading the biography of Mohammad Yunus, the father of Micro credit with much interest. At the heart of Micro credit (advancing small loans to people with no credit history or capital) is the idea that the poor can lift themselves out of their own circumstances using entrepreneurship.

This is counter to how some see the poor -  people who do not want to work. Others see the poor as victims of the flaws or inequality in the system – that the poor are especially powerless to change. The approach is then to pump more money into the system to give the poor a chance. Essentially, there are two options – either you go to work for someone or you accept hand-outs. Yunus is putting forward a third option – being self-employed.

In Micro credit programs undertaken in the US for example, Yunus said that there was disincentive to become entrepreneurs from the government in the form of reduction in welfare payments and other welfare benefits. He also says the administrative burden of businesses in the West is high, making it difficult for non-professional to start businesses. Any entrepreneurship programs that do exist, are based on training which he thinks is not necessary

In Canada in particular, I find there is a general distrust of business, and people with conscience want to stay away. He makes an interesting point:

I am not a capitalist in the simplistic left/right sense. But I do believe in the power of the global free-market economy and in using capitalist tools. I believe in the power of the free market and the power of capital in the marketplace. I also believe that providing unemployment benefits is not the best way to address poverty. The able-bodied poor don’t want or need charity. The dole only increases their misery, robs them of incentive and, more important, of self-respect.*

He continues on a justification of using private-sector means to help the poor:

We can condemn the private sector for all its mistakes, but we cannot justify why we ourselves are not trying to change things, not trying to make things better by participating in the economy. The private sector, unlike the government, is open to everyone, even those not interested in making a profit.

The challenge I set before anyone who condemns the private-sector business is this: If you are a socially conscious person, why don’t you run your business in a way that will help achieve social objectives?

I agree with his point. The government is very hierarchical and naturally authoritative, where as entrepreneurship is free and creative.

I am proposing two changes to this basic feature of capitalism. The first change relates to this overblown image of the capitalist entrepreneur. To me, an entrepreneur is not an especially gifted person. I rather take the reverse view. I believe that all human beings are potential entrepreneurs. Some of us get the opportunity to express this talent, but many of us never get the chance because we were made to imagine that an entrepreneur is someone enormously gifted and different from ourselves.

If all of us started to view every single human being, even the barefooted one begging in the street as a potential entrepreneur, man or woman to explore his or her economic potential, the old wall between entrepreneurs and laborers would disappear. It would become a matter of personal choice whether an individual wanted to become an entrepreneur or a wage earner.

Who would have thought… an almost Marxist justification of entrepreneurship. I obviously don’t think that Micro credit and entrepreneurship are the catch-all solutions to global poverty. The political issues such as corruption and wars, environmental issues and system, race and gender inequalities still exist and contribute to the problem. But I find Yunus’s approach a refreshing contribution to solving the poverty problem.

*All references are from pages 205-207 of Banker to the Poor by Muhammad Yunus.