“There are some problems that we can solve. But we have to be pragmatic about it and figure out what is actually working and what is not.”
Dean Karlan is President of Innovations for Poverty Action, a non-profit organization that creates and evaluates solutions to social and development problems, and works to scale-up successful ideas through implementation and dissemination to policymakers, practitioners, investors and donors. He is a Professor of Economics at Yale University.
Economic commentator and author Tim Harford presented a creative, challenging perspective on financial systems, drawing upon examples from oil rig explosions to nuclear disasters to make his point. He believes that by studying the triggers of major engineering accidents, we can draw lessons on how to help prevent crises in the financial world.
It’s not every day that a president comes to Maine. Ólafur Grímsson, Iceland’s fifth and current president, gave a much-anticipated talk on Iceland’s challenges since its economic collapse in October of 2008. Shortly thereafter after, two consecutive volcano eruptions stalled international air traffic, spewed tons of ash into the air and generally wrought additional mayhem to an already belabored country. “Despite all our technological innovation,” says Grímsson, “we learned we are not masters of our universe.”
Vijay Anand wants to eliminate corruption. That’s why he co-founded the 5th Pillar, an organization dedicated to providing citizens with the tools to fight corruption. He’s also launched one of India’s most successful anti-corruption campaigns with the Zero Rupee Note, a bill that looks like currency but allows citizens to refuse bribery without fear.
When you look at the sheer volume of wealth controlled by the top 1 percent in this country, it’s tempting to see our growing inequality as a quintessentially American achievement—we started way behind the pack, but now we’re doing inequality on a world-class level. And it looks as if we’ll be building on this achievement for years to come, because what made it possible is self-reinforcing. Wealth begets power, which begets more wealth. During the savings-and-loan scandal of the 1980s—a scandal whose dimensions, by today’s standards, seem almost quaint—the banker Charles Keating was asked by a congressional committee whether the $1.5 million he had spread among a few key elected officials could actually buy influence. “I certainly hope so,” he replied. The Supreme Court, in its recent Citizens United case, has enshrined the right of corporations to buy government, by removing limitations on campaign spending. The personal and the political are today in perfect alignment. Virtually all U.S. senators, and most of the representatives in the House, are members of the top 1 percent when they arrive, are kept in office by money from the top 1 percent, and know that if they serve the top 1 percent well they will be rewarded by the top 1 percent when they leave office. By and large, the key executive-branch policymakers on trade and economic policy also come from the top 1 percent. When pharmaceutical companies receive a trillion-dollar gift—through legislation prohibiting the government, the largest buyer of drugs, from bargaining over price—it should not come as cause for wonder. It should not make jaws drop that a tax bill cannot emerge from Congress unless big tax cuts are put in place for the wealthy. Given the power of the top 1 percent, this is the way you would expect the system to work.
America’s inequality distorts our society in every conceivable way. There is, for one thing, a well-documented lifestyle effect—people outside the top 1 percent increasingly live beyond their means. Trickle-down economics may be a chimera, but trickle-down behaviorism is very real. Inequality massively distorts our foreign policy. The top 1 percent rarely serve in the military—the reality is that the “all-volunteer” army does not pay enough to attract their sons and daughters, and patriotism goes only so far. Plus, the wealthiest class feels no pinch from higher taxes when the nation goes to war: borrowed money will pay for all that. Foreign policy, by definition, is about the balancing of national interests and national resources. With the top 1 percent in charge, and paying no price, the notion of balance and restraint goes out the window. There is no limit to the adventures we can undertake; corporations and contractors stand only to gain. The rules of economic globalization are likewise designed to benefit the rich: they encourage competition among countries forbusiness, which drives down taxes on corporations, weakens health and environmental protections, and undermines what used to be viewed as the “core” labor rights, which include the right to collective bargaining. Imagine what the world might look like if the rules were designed instead to encourage competition among countries for workers.Governments would compete in providing economic security, low taxes on ordinary wage earners, good education, and a clean environment—things workers care about. But the top 1 percent don’t need to care.
"We assume the poor cannot have a financial life. We’ve discovered the exact opposite is true…when you have less money, you have to manage what you have that much more carefully." - Daryl Collins on $2 a day living
How to scale successful programs is one of the main challenges in efforts to reduce poverty around the world. Microcredit provides a telling illustration: it is perhaps the most innovative anti-poverty program of this generation —providing access to credit to poor people who before its arrival could only get a loan from the loan shark at extortionate rates of interest.
Microcredit has acquired scale fast. Some 150 million people benefit from microloans. It has worked so well that for-profit lenders have jumped into micro lending as a great new business opportunity. This is perhaps a good thing. If nothing else, it proves that financial services firms could profitably serve poor under-financed populations. But while for-profit micro lending could benefit hundreds of millions of credit-hungry poor people in many small ways, it could become as exploitative as the loan shark on the corner.
Kiva’s mission is to connect people, through lending, for the sake of alleviating poverty.
Kiva empowers individuals to lend to an entrepreneur across the globe. By combining microfinance with the internet, Kiva is creating a global community of people connected through lending.
Kiva was born of the following beliefs:
- People are by nature generous, and will help others if given the opportunity to do so in a transparent, accountable way.
- The poor are highly motivated and can be very successful when given an opportunity.
- By connecting people we can create relationships beyond financial transactions, and build a global community expressing support and encouragement of one another.
- Dignity: Kiva encourages partnership relationships as opposed to benefactor relationships. Partnership relationships are characterized by mutual dignity and respect.
- Accountability: Loans encourage more accountability than donations where repayment is not expected.
- Transparency: The Kiva website is an open platform where communication can flow freely around the world.
As of November 2009, Kiva has facilitated over $100 million in loans.
It’s exciting to see Kiva here, and thriving.
In 2007, Jessica Flannery, co-founder of Kiva.org, the first peer-to-peer microloan website, showed us how the Internet can facilitate meaningful, positive connections between lenders and entrepreneurs in the developing world and even help us all become microfinanciers.