Is Microfinancing/microcredit a scam?
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  Is Microfinancing/microcredit a scam?
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Author Topic: Is Microfinancing/microcredit a scam?  (Read 1087 times)
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CrabCake
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« on: February 18, 2017, 02:13:41 PM »

This is beloved by the liberal elite (E.g. your Gates, Clintons etc) and is normally sold as a sort of cure all for the developing and rural worlds, especially for the lot of women; who will be able to use these loans to become entrepreneurs or whatever. Does it actually work?
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Antonio the Sixth
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« Reply #1 on: February 18, 2017, 03:18:14 PM »

I've seen evidence that it's actually made matters worse for impoverished communities. I don't know enough to pass definitive judgment, but I'm at best skeptical.
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DC Al Fine
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« Reply #2 on: February 18, 2017, 05:40:02 PM »

I've seen evidence that it's actually made matters worse for impoverished communities. I don't know enough to pass definitive judgment, but I'm at best skeptical.

Can you elaborate?
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Antonio the Sixth
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« Reply #3 on: February 18, 2017, 05:43:12 PM »

I've seen evidence that it's actually made matters worse for impoverished communities. I don't know enough to pass definitive judgment, but I'm at best skeptical.

Can you elaborate?

The main thing that changed my mind was a Jacobin article, so I don't expect you to agree with most of their points, but I think it's a worthwhile read nonetheless.
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Associate Justice PiT
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« Reply #4 on: February 18, 2017, 06:48:05 PM »

     I don't know much about it, but I would expect a plan to help the impoverished become entrepreneurs would leave a lot of problems in its wake. Enterprises often fail, and those who lack resources to fall back on would struggle to deal with the failure of the enterprise. Granted, the issue is probably lessened in the third world where people can't expect a steady income anyway.
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True Federalist (진정한 연방 주의자)
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« Reply #5 on: February 20, 2017, 03:51:53 AM »

It's not the panacea it's often been portrayed as.  As with many things, when done right, it's a benefit; when done wrong, it's a detriment. It's being touted as a panacea led to its overuse, and thus to the problems outlined in the article Antonio linked.  Where the limiting factor for microcapitalism is a lack of access to credit, it can be a benefit, but with all the get-rich-quick hucksters that flowed into the field, even that is problematic now.
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Devout Centrist
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« Reply #6 on: February 21, 2017, 01:06:29 AM »

It's not a silver bullet. Obviously you need property rights in place, proper infrastructure to get goods to market, and a legal system that enforces the law to adequately have a framework for transactions. Microfinancing helps on the local level because these factors are in place in some form or another, however rudimentary. But in places that lack the above, they do sh*t to actually help people. You have to start with basics before moving on up.

What poorer countries need is relentless focusing on the things I listed above, education, and infrastructure. People like Gates and the UN should work on curable diseases, sanitation, and possible democratization where possible. And they do, of course. Rightly so, in fact.
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Shadows
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« Reply #7 on: March 03, 2017, 02:13:48 AM »

No. But it is not ideal, it is kind of a necessity because there are institutional voids. On an idea basis, this wouldn't be required. Yea, but as countries tend to grow & especially the poor lot, this would start to become more irrelevant !
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