Third World Capitalism: What Muhammad Yunus Can Teach Us

Who is Dr. Muhammad Yunus, you may ask? Dr. Yunus is Chairman of Grameen Bank of Bangladesh and winner of the 2006 Nobel Prize for Peace. He and Grameen Bank were awarded the prestigious prize for their efforts to provide microloans or microcredits to poor and impoverished people through out the Third World. What are microloans? There are small short term loans given out to people in hopes of people being able to improve their long term financial situation by investing in small businesses and capital investments. These loans are generally given without any collateral, which amazingly is the reason why we are in the credit mess we are currently in. Yunus has been highly successful at this endeavour, and reports getting 99% of his loans returned in full...a claim that American banks should be envious of.

So what can this teach us in the West, especially in the United States?

First that the credit system is based on mutual responsibility. Yunus has developed an intricate system to provide support and guidance to those that receive these loans (I will not go into further detail about those here, please visit the Grameen Bank website for more information). He has been successful in building relationships with those obtaining loans, which in turn is highly effective in getting loans repaid. In shot, he bases his credit system not on your assets, but on mutual respect. What a concept.

Also, it shows us that there are intelligent, rational ways to confront poverty without government intervention. Sure, some government is necessary, but Yunus is building wealth without goverment. He is actually starting branches in the U.S., because he believes the microcredit concept could even have benefits here in the richest country in the world.

And here is the best part of all: he is getting rich doing it. In 2007, Grameen made around $150 million off of microcredit. Some liberals probably thing he is evil from benefiting from the backs of the poor. They, of course, sit in their Manhattan flats or California mansions while criticizing, while Yunus pours his money back into the company, which helps another generation of poor. By making money, he is making the world a better place; a mutually beneficial path to helping the world's poor.

You go to the Grameen Bank website, you know what they are worried about? Not rampant poverty, although that is their mission. No, they are worried about Mr. Obama's massive stimulus plan and budget, and how we as a country are going to pay for it! They are worried, like much of the world, because they understand that the driving force of world capitalism is the United States.

With this week's rollout of the Toxic Asset plan from our government, it may be time to look at what we are doing right, but more especially, what we are doing wrong in the banking industry. And maybe we should put aside our ego, and look to examples like Grameen to see how to make our financial industry more sound, and possibly more profitable. We must look at the financial sector on a global scale. Allowing more funds to flow to the poorest of the poor in this world likely will have long term benefits both the other countries as well as the United States. And I sometimes wonder if these poor may be holders of credit than our own citizens.