After the Norwegian Nobel prize committee decided to give the United States president Barack Obama the peace price, a president that later came to continue to war in Iraq, and also fund insurgents in Syria, I seriously started to doubt the reasoning skills of the members of this Nobel Prize committee. And after having watched the documentary ‘The Micro Debt’ by Tom Heinemann, I have concluded that the Nobel Prize committee (at least those handing out the peace prize) do not know anything about what it means to create actual peace in this world. Because when they decided to give Muhammad Yunus the peace price, for having founded the Grameen Bank, and invented the concept of micro loans, and for thereby apparently having found a solution to poverty, they were obviously not using basic mathematics to assess the outflows of such loan methods.
Though, before we dive into the basic mathematics of Micro Debt and whether this can be a solution for poverty or not, let me share the story of Muhammad Yunus, his bank, and the stories that has begun to surface about his money lending practices. It begins in 1976 when Yunus (supposedly) found out that small loans could make a disproportionate difference in a poor person’s life. According to Wikipedia, the first loans Yunus gave, made it possible for the borrowers to profit. Yunus business expanded, and by July 2007, his bank had issued around US$6.38 billion to 7.4 million borrowers.
As mentioned above, Yunus was awarded the peace price in 2006 for his efforts to create economic and social development. However after the release of the documentary ‘The Micro Debt’ the Bangladeshi government decided to review Yunus bank, and Yunus himself was removed as Managing Director of his bank. This is not particularly strange considering the claims that are made in the documentary, and the compelling evidence that it presents, that the micro debt is not at all a solution for poverty, but rather a trap, making the large amount of borrowers worse off than before.
Though in this blog I am not going to focus on Yunus and whether the claims made against him are true or not. My focus will instead be the concept of micro credits and whether these loans makes any sense; is it really possible to remove poverty through debt? The Micro Credit concept is not unique to Bangladesh; it has also become popular in South Africa, where it has created the opposite of poverty reduction. The following quote gives a stark description of the situation that unfolded.
”The microcredit-induced problems that emerged in South Africa are two-fold. First, microcredit per se is actually an “anti-developmental” intervention. For one thing, it exists on paper to support the smallest income-generating activities, but in practice is increasingly all about supporting consumption spending. In South Africa, the microcredit movement has created an incredibly risky and expensive way to support the immediate consumption needs of the very poorest.
With few poor individuals possessing a secure income stream that might ensure full repayment of a microloan – unemployment is now higher than it was under apartheid – many of the poorest individuals have been forced to repay their microloan by selling off their household assets, borrowing from friends and family, as well as simply taking out new microloans to repay old ones. For far too many now “financially included” individuals in South Africa, using microcredit to support current spending has been a disastrous and irreversible pathway into chronic poverty.”
Milford Bateman, Microcredit has been a disaster for the poorest in South Africa, http://www.theguardian.com/global-development-professionals-network/2013/nov/19/microcredit-south-africa-loans-disaster (2015-09-25)
Academics and other proponents of the Micro Credit as a way out of poverty makes the assumption that the money lent will be used by the borrower to further his business. This however, is just that, an assumption. Most poor people are just as middle class people, not entrepreneurs, and do not have a very entrepreneurial relationship with money. The loan will be used to buy goods for immediate consumption, and will only serve to put more pressure on the debtor. In worst-case scenario, this will lead the already poor person, to loose the little safety they do have, when they are forced to sell their house to meet interest and installment payments.
Further, those borrowers that are indeed entrepreneurs, and that do invest their money in a business, there is nothing that says that these businesses will be able to profit. Nine out of ten startups fail – and that number will probably be even higher when not only you, but also all of your neighbors, decide to go out on the streets and sell the same thing – which did happen in South Africa.
Then we have the big problem when it comes to Micro Credits, the interest rates. On some of the Micro Loans that interest rate will be at 100 % or more. There is no startup that yields a sufficient profit to cover such a high interest rate. Conveniently for the creditors, most of the debtors are not proficiently literate, and will thus not really understand what they are signing.
Yunus was applauded when he was able to offer loans to poor people that cannot offer any securities in case they would forfeit on their installments. However, to ensure repayment of the loans, Yunus bank have developed a system of “solidarity groups”. It is these small informal groups that together apply for loans and its members act as co-guarantors of repayment and support one another’s efforts at economic self-advancement. Hence Yunus use the psychology of group pressure to ensure that the poor people are sufficiently motivated to pay back their loans. And even though this might seem innocent, in reality it has lead to the most horrific of consequences. One woman that was unable to pay her loan was pressed by her co-guarantors to take up prostitution as a way to meet her installment payment. That woman later poured kerosene on herself, and lit herself on fire. That is the effectiveness of group pressure when survival is in the picture.
What are we then able to conclude from all of this? One thing is clear: We cannot trust academics to know what is right! Even though they have a degree in economics, and even though they have received the Nobel peace price, that does not mean they actually understand how reality operates. Academics have their nose buried in deep books and because of that they will many times miss what is right before their eyes. Hence, we have to educate ourselves, and take responsibility. We cannot rely on a small intellectual elite to know how to solve such things as poverty – this is a problem that involves, and touches all of us, and accordingly it is everyone’s responsibility.
Then, the second thing we can learn: Change cannot come through DEBT. The very reason why we are living in a world where money is increasingly more difficult to obtain is because of DEBT. We live in a debt based system, and this forces us to work more – and even still there will/must be a loser. With debt, someone always loses; someone must be that poor guy that has to pay back the interest.
Real change will come through changing the structural design of the economic system – because only through changing the rules of the game are we removing this incessant fear of survival that is currently holding the entire human race in its grip. That structural change must involve giving all human beings a dignified life, real security, real safety, and easy access to money. This cannot come from debt, as debt is the very instigator of fear, anxiety and stress.
Hence, if you are interested in solving poverty, I suggest that you investigate the Living Income Guaranteed. This is an economical system that will revolutionize the way we think about money – and that is precisely what we need. We need something new, a brand new way of looking at things – a fresh start – free from debt and the old pessimistic ideas that apparently, poverty is unable to be removed from the face of this earth.
For more reading:
Watch the documentary ‘The Micro Debt’
Investigate the Living Income Guaranteed Proposal
This has become the one system that we have come to live by whether one calls it socialism, communism, democracy or any other ideology that we harbor in our minds as a system we submit ourselves to in the belief that one cannot avoid being ruled by it, driven by the fear of ourselves taking responsibility for ourselves as all that is within this existence and standing up for who we are in it and as it.
One must realize that socialism as it is lived as communism is capitalism in disguise, because the focus is on money, on capital, on the survival through money, the imprint of money on the people in similar ways as in ‘free market’ capitalism, with no actual freedom of trade and only the few on top, the 1% pocketing 95% of the profits. Capitalism is a state of being captivated by money expressed by the desire for more stuff or for more profit, more power and control, basically the greed for more. It is the cap of the pyramid where the base is comprised of the natural resources and the human resources – life and resources that have been misappropriated and abused for the very few on top – though with each and everyone focusing on being part of the top, the cap, those being superior over the ones underneath, having it made in acceptance of the disadvantage of others, the abuse of all ‘inferior’, thus each accepts the struggle for superiority on the given terms of capitalism, the competition and fight for survival.
Abuse and suffering is accepted and allowed in every second all over the world on all levels and dimensions, but strangely humanity doesn’t consider changing it. Most support it and will defend it rigorously as if we had been brainwashed into believing we do and will not question capitalism. It is not a natural state as proclaimed by Darwin as the fight for survival of the fittest, which is being put forward and maintained as a justification to one’s resistance to change the system and allow everything as it is – in a ‘don’t worry be happy’ mentality of those that are able to stand in the system in some way or another based on the fear of losing the little one has painstakingly earned or fearing actually having to limit oneself in one’s perceived right to consume because ‘I can afford to’, ‘I worked for it’.
Thus we are willing to accept the majority of the beings on this planet crying out in pain and suffering each second of the day, a second-by-second holocaust for the majority of beings in this existence for our own comfort and the comfort zone of our minds. To be clear: We are actually accepting and allowing mass murder, rape, child abuse, victimization, starvation, animal abuse, deliberate infliction of pain and suffering for the promise of money at the end of the week or month. For printed paper that doesn’t even actually belong to us, as is stated by the banks, the agreed upon value of which can be nullified at any moment. How brainwashed are we? How dumb can we be? How little common sense do we have left, if at all?
There are not many who realize that we’re dealing with a man-made creation which we are able to change so that every one being is considered and taken care of. And even if we do realize it, we have more immediate things to do in the moment, continue with what is due in our jobs, then get groceries, the children, cook, clean and watch the news, sigh, watch a film on TV and go to bed because the job requires you to be fit, and so the whole hamster wheel routine starts all over again till we are simply too mentally and physically tired to consider any other way and ultimately we give up on questioning: Why is it that this extensive crime against Life is being allowed ‘by others’? Everything is fine as long as it doesn’t happen to my family, to myself. Some turn to religion, to some underlying superior plan and rationalize their experience and observations, or do drugs or revert to games, sex and entertainment.
We must see, realize and understand that and how we have detached ourselves from this reality and ourselves. We have allowed ourselves to develop such a mistrust of the physical, of ourselves as the physical because of the identification with emotions and feelings, with energetic experiences – where we no longer comprehend what is actually real, where one is to direct one’s focus and attention to, what is of real significance, substance and value and what is of projective nature and doesn’t hold true because it’s based on fear and becomes the figments and paranoia of and as the mind.
The system is us and we as-it are holding each of us by choice prisoner to it / to ourselves as a system of ‘Life’, ‘Death’ and ‘Struggle’ – that has manifested as capitalism of ‘Grow or Die’. We must understand the brainwashing within the acceptance that suffering is a natural part of life and step out of this mental dysfunction and let go of the concept of ‘having to work for a living’, ‘having the right to work to earn a living’ and instead see that we all have a right for Life, the right of Life, because we are of Life, we are living beings. Our capital is Life, the physical resources – so all will profit in being given an equal and one opportunity to practical physical survival/living in this physical existence. We will manage and live this system through our contribution to make it work for ourselves and for all. We can capitalize on the resources of each human being contributing to life on earth.
So it is pertinent to give to all an equal right to life, which we inherently have, because we are life / of life but what we abdicated our responsibility for, we aren’t standing in self-responsibility for and as ourselves as Life. So we must all commit to a process and standing from survival to living / to Life / as Life and realize that this is something that has actually always been and always will be everyone’s equal right.
A step toward this end is to see, realize and understand one’s own ‘mind-traps’ where one goes into justifications and reasons why a new Economic System will ‘never work’ – where the excuses usually exist around ‘others will deceive’ and ‘what if ‘others won’t work equally’ or ‘what if others use the opportunity to again deceive people’ or ‘I won’t change because others won’t change’, ‘Why me first?’ One must be prepared to see how one deceives oneself and others and see what one allows oneself to be within it, what statement one is making by continuing within the secret mind, inner conversations and backchat, because that is what separates oneself within oneself, from others, the world, reality, existence, Life. It’s a process of aligning oneself with reality and becoming real and making a different statement on who one is, based on the principle of oneness and equality, of giving how one would like to receive, of true care for and consideration of Life and all living beings in this existence.
It is to personally walk through what one perceives as the comforts of capitalism, to understand the fear behind it, wherein one allows oneself to want to hold onto things as a substitute for true ‘comfort’ as and within the physical as what is actually supportive for the body’s well-being. And so to also consider the ones that suffer, to consider walking in their shoes for a one day and within that seeing the reality of capitalism and its outgrowths of debt, poverty, horrible diseases and starvation due to corruption and greed. To then make a stand in saying ‘Stop. To here and no further!’
There is the LIG Living Income Guaranteed platform that incorporates a life manifesto stating the living principles on which a fair system that supports all life equally can be implemented, which one is able to support and make known. It is a step toward equality with respect to one’s financial means in the system as base support to be freed up time-wise to work on aligning oneself with Life and the living principles within and as oneself and within that to speed the process for a complete implementation of the principle of oneness and equality for the best of all in form of a system that forms the structure and mechanisms of providing for all equally pertaining to a fair distribution Earth’s resources and seeing to the point of sustainability and managing added value within a ‘labor system’ that actually respects Life and allows for self-expression instead of abuse.
Benefits and rewards:
People are given enough to live within a system as how it is proposed in Living Income Guaranteed. There will be no need to take on jobs that compromise you as who one is as a human being and in that there is a chance to create jobs that channel one’s self-expression and creativity, that are actually fun to do and open up innovations that are needed for the support of our planet ecologically and for health care and other fields. There would be a rebalancing of the extremes that are now allowed, because the abuse would not have to be carried out to survive due to the inequality. There will be an environment of support where there is no focus on money and survival but on a dignity of life and living. One will work toward the actual profit of a having a clean planet with clean water for all. The statement of value of each Life and living being will be made and eventually lived. Thus from such capitalism life itself will benefit, each human, the animals, nature and the earth – we capitalize on the physical resources to direct this physical existence… the system to the best outcome for all.