Re[2]: Underlying philosophy of Microfinance

Regarding the "purposefully guide(ing) and determine(ing) by people" of markets.
A rather Orwellian notion. Aside from Fed Chairman Greespan, I think that
there are few people, elite or not, that can guide the global or national
markets. (Presuming that by market we are discussing the US or global economy.)
Investors, no matter how large or small are most often motivated by their
bottom line. Controlling or guiding a market would be analogous to trying to
move a beach, with a broom. You might be able to move parts, but natural forces
will put the sand where it wants to.

NJ



____________________Reply Separator____________________
Subject: Re: Underlying philosophy of Microfinance
Author: Holland6@aol.com
Date: 3/2/99 10:45 AM

In a message dated 3/1/99 9:15:04 PM Eastern Standard Time,
SteelE01@newschool.edu writes:

<< Do you think the underlying philosophy of microenterprise development
is the cause of poverty primarily due to market failures such as denial
of credit & savings (no collateral or lack of human capital) not
structural problems (like discrimination, sexism, and other forms of
systematic oppression)?

Thank you for your help!
Take care,
Eric >>

I'd have to say it would be both, although more clear meanings of the terms
"market failures" and "systematic oppression" must be defined. "Market
failures" sounds too much like an invisible force that cannot be controlled.
Rather, markets are purposefully guided and determined by people--often elite
investors--who make investment decisions based on perceived risks and
opportunities. Often, risk measurements are quite subjective. It depends on
who sets the risk parameters and what type of return one is seeking (social,
financial, or both).

"Systematic oppression" sounds a lot like a conspiracy theory is at work,
which it may be (after all, the U.S. engaged in a civil war over the
oppressive system of slavery). But because systematic oppression is harder to
prove than the subjective decisions of one person, reliable data sources must
be used.

Here in the U.S. public data disclosed by financial institutions showed that
many banks and thrifts were systematically redlining poor and minority
communities. I'm specifically talking about the Home Mortgage Disclosure Act
(HMDA) which requires financial institutions to disclose where they make home
mortgage loans, by census tract, to whom, by race, income, and gender of
applicant, and what type of mortgage loan. Through HMDA and the Community
Reinvestment Act (CRA), community based organizations have been able to make a
strong case for bank redlining in low-income and minority neighborhoods. The
results have been increased bank lending and participation in underserved
neighborhoods.

But HMDA and CRA helped identify one specific problem--lack of bank investment
in underserved communities--and does not offer specific solutions, i.e. jobs,
credit, skills development, and technical assistance. Those solutions are
still being worked out by the multitude of organizations and institutions
working daily in poor communities.
-Dan Holland
holland6@aol.com


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