Max Borders: The profiteer of peace

WASHINGTON (Map, News) - Just when you thought you’d heard the last prediction that Bono was going to get his Nobel laurels for wanting really, really badly to help the world’s poorest people, a man who actually helped them is taking home the prize. And the best part of it is he’s making money in the process.

Ever heard of “microfinance”? Mohammed Yunus is founder of the Grameen Bank, an organization that gives out tiny loans to poor people in the developing world. Since these poor people rarely have titled property against which to mortgage their enterprises, the Grameen Bank relies on social forces within village communities to ensure the loans are paid back. And that’s the genius of his model. Yunus figured out how to leverage basic human characteristics in the absence of physical collateral — characteristics such as trust, entrepreneurial spirit and community.

Now when I say “enterprises” I might be talking about a fish stall or fruit kiosk in the local market. But these businesses are the very stuff of survival for people whose average per capita income could be $1,000 a year. It’s even less than that in Yunus’s native country of Bangladesh. So part of the man’s genius came simply in understanding that handouts are the seeds of dependency, while loans can be the seeds of dignity. But this isn’t the only reasons Yunus deserves the prize.

Yunus is also a problem-solver of the highest order. And the problems of the developing world run deep.

Consider, for example, the institutions you and I take for granted — private property rights, a robust system of banking, the rule of law, and an independent judiciary to settle our disputes.

People in the developing world have none of these. They live in societies where the most basic security functions must be gained through bribes most can’t afford to pay. The predatory leaders of these regimes keep their people in penury while using foreign aid donations to stay in power.

Such backward economic systems are the rule, not the exception. In fact, the world’s rich nations are in the minority.

So how in the world is one supposed to start any sort of business in the 80 percent of the world in which these conditions are the norm?

Yunus helped people figure out a way. He helped them to be successful despite the corruption all around them.

“Every single individual on Earth has both the potential and the right to live a decent life. Across cultures and civilizations, Yunus and Grameen Bank have shown that even the poorest of the poor can work to bring about their own development,” said the Nobel Committee in its citation of Yunus.

Of course, giant international aid organizations such as the World Bank have spent 50-plus years drizzling money on poor countries from 30,000 feet, as if a garden is supposed to just sprout from sand and salt.

Yunus did something they couldn’t: He helped them grow from the bottom up, not the top down. One man did more good for the poor than an army of bureaucrats at the World Bank. And it didn’t take 50 years, either.

That said, it’s going to take much more than what microfinance organizations can do to help the poorest countries fully develop. Their institutions are bankrupt (if they exist), their systems are backward and their leaders are corrupt.

According to the 2006 Economic Freedom of the World Index, the most impoverished countries in the world happen also to score poorly on the four major components of economic freedom, that is: government consumption as percentage of total consumption; legal structures and the security of property rights; access to sound money; and freedom to trade internationally. These are the “institutions” I mentioned before-and there is more than a direct correlation between poverty and low scores in these areas. In short, the freer the country, the better of it is economically.

I know Yunus would agree. Indeed, the genius of his work is that he has found a way for poor people to thrive despite the horrible regimes they live in. And for that, he deserves not only to win the Nobel Prize, but to make a profit.

Max Borders is a writer living in Arlington.

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