Thursday, December 30, 2010

Microlending Abuse

Microfinance has apparently been good for many people, but for others it has been a disaster.

More than 70 people committed suicide in the state from March 1 to Nov. 19 to escape payments or end the agonies their debt had triggered, according to the Society for Elimination of Rural Poverty, a government agency that compiled the data on the microfinance-related deaths from police and press reports.

This quote was a bit of a jaw-dropper.
“If you can’t profit off the poor, it means that no companies will service the poor -- and then they will be worse off than earlier.”

I get the sentiment, but it's still seems a cruel thing.

Here is a recent paper arguing that the best way to help many poor people is international migration.
In addition to estimating per-capita income gains of 30-40%, we find that participating in [New Zealand's seasonal migration program] leads to greater subjective well-being, more durable asset purchases, housing improvements, and in Tonga, a large increase in secondary schooling. Moreover, as a recent evaluation by New Zealand’s labor department found, these gains came with minimal displacement of native workers, and overstay rates of less than 1%.

This is very interesting and I hope more groups exploring the poverty problem take a look at it.

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