Friday Goat

To make up for not having one last week, here's three.

It's like a peanut butter sandwich of goats!

Proverbs

Kiva's Twitter is in large part a proverb-sharing device.  There's too much inspiration and too little Don Rickles for my taste, but that seems to be how people communicate in this milieu.

They evidently aren't getting these things off the top of their head, because they want you to contribute.  Here's a form.

I've already offered my contribution:

"I teach the truth to the youth.  I say, 'Hey youth, here's the truth.'  Then I start wearing bulletproof."
-Ol' Dirty Bastard

App!

Now you fancy types with your high-falutin iPhones never have to be away from Kiva.  Here's the Kiva Alerts app.  It is, and I quote, "a super quick application that allows you to check the latest loan requests on Kiva.org. Loan requests on Kiva.org get fulfilled very quickly and we update open loan requests every few minutes so that you can find the loans of your interest quickly as they appear."

So there you go.  My phone can't handle something like this, but maybe you'll enjoy it.

I'm typing this on a Tandy.

Relevant to My Interest

LiveMint had a comment about the main microfinance issue of the day: interest rates.

Microfinance proponents such as Grameen Bank founder Muhammad Yunus have objected to these high rates. But Yunus’ formula of a less than 10% interest rate spread for an MFI to be in the green zone of socioeconomic acceptability has had few takers other than Grameen itself. Mexico’s Banco Compartamos, for instance, has made its fortunes charging rates in excess of 85%.

85%!  You can see why some people have an issue with this.  I'm not talking about dumb guys like "Vincent Van Noir" from the other day, because I don't care what they think.  More like this guy, who's not dumb.

In fact, Yunus’ formula loses out for its poor practicality. Large numbers of very small loans demand high rates, and artificially lowering rates may disincentivize MFIs from expanding their reach to the very poor.

This analysis pretty much matches where I think I'm at on this issue.  Microfinance institutions are charging high interest because they need to make money.  When you have small-dollar, short-term loans, high rates are the only way to do that.  A lot of the opposition to this system seems to come from people who have a reflexive distrust of the profit motive.  I don't.

Here's an opposing view.

Outpacing, Outsourcing

Julia's outpacing me to an embarrassing degree.  A really embarrassing degree, actually.  But it's not a contest, right?  RIGHT?!

I haven't watched this yet, but it might be interesting.  How about you watch it first and let me know if I should bother.

Misleading

Is Kiva actually misleading?  Here's another disillusionment victim who thinks so.  And once you get past the fact that this thing is on a site that's about 60% web ads, and the fact that they split up a 492-word piece into two pages so you have to look at all the ads twice, there's still not much of a point.

I was watching one of my favorite channels recently, USA...

Wait, what?  Do people keep lists of their favorite channels?  And if they do, don't they have the sense to keep that fact to themselves?

...when the commercial for Character Approval came on. This is USA's program to honor innovators, artists, and anyone who is trying to bring fresh ideas to the world. I like the idea of this program but I think USA should be a little more careful about who they claim to be a character. 

Well, yeah.  They might find themselves sliding down peoples' favorite channels lists.  I mean, not mine.  After Silk Stalkings, they can do whatever they want and still make my top five.  But other peoples'. (By the way, when I copy/pasted that bit of concentrated inanity, it stuck a damn web ad in my blog.  So we know this guy's doing it for the right reasons at least.)

My introduction to Kiva.org was made via the USA channel...

I'm starting to feel sorry for this guy.  He can't believe the USA channel would do this to him.  It's just heartbreaking.  Although he is pretending his name's "Vincent Van Noir," so maybe I don't feel sorry for him.

...and like many people I thought, "Wow! What a great way to help poor people." [He's a mind-reader, too.] So I went to the Kiva website and started nosing around and quickly became dismayed and angry at what I found. Kiva claims to be a middleman, so to speak, between poor people around the world and lenders. But this is not exactly true.

Vince is actually about to detail in what ways this is exactly true.  Let's watch together.

First, you, give your money to Kiva and then Kiva gives your money to a micro lender. This person or agency then sets up a loan using your money for the intended recipient.

Is there a term for someone who does that?  Taking money from one party and funneling it to another?  Oh yeah - middleman!  I don't know if that's a world record for self-contradiction, but it ain't bad.

Now this loan, because it is a micro loan, charges the recipient as high as 35% interest (Kiva, 2010). 

When you're arguing with someone, and he's making his case so badly that you have to step in and help him, that's a situation where a better man than I am would back off and go do something else.  But I can't possibly be a better man than I am.  Mr. "Van Noir," people aren't so upset about the 35% interest rate.  They're upset about the 60+% interest rates.  I see from your little endnote there that you did scrupulous research, but I can see how you'd miss this.  You'd have to do . . . I don't know, a Google search or something to find that out.  Arcane stuff.

Vinny doesn't mention any of the possible explanations for these interest rates.  I assume that, say, the cost of doing business in countries with a difficult business environment or the short terms of the loans have been considered and rejected so soundly that he didn't feel them worth mentioning.

What really burns me up is that Kiva acts like it is doing the world a service by aiding poor people in climbing out of poverty. Arguably this organization might have helped many of these people with loans but when you have nothing, anything is better (and that 25% interest payment seems alright.) Kiva might think it is helping people but the truth is that the people receiving these loans have to pay back large amounts of interest and the use of micro lending might only be sinking these individuals further into a new form of poverty, known well to many Americans as credit debt.

Those are some pretty bold statements. His idea's about the "truth" of the microfinance is idiosyncratic, at least. Seems like the kind of thing you might want to back up with facts.

Unless, that is, you're a mercenary hack trying to squeeze out (almost) 500 words so that your mercenary hack bosses can coat it in lucrative advertisements and try to trick people into thinking it's worth reading.

Not only are Vin's arguments incoherent, silly, and completely undefended, nothing mentioned in this article is a surprise to anyone who's done even the most cursory investigation of Kiva or microfinance in general, which should be everyone who's committed money to such a project.

A Dissenting Voice

This guy hates Kiva.  Basically it comes down to interest rates and "neoliberalism," and one of those critiques is probably reasonable.

Add to this the fact that there appear to be no controls on interest rates even contemplated, and the fact that the first world neoliberal braintrusts who love this model so much are treating the high interest rates like the dirty little secret of microfinance and hiding it is much as possible, and the disaster that increasing the developing world's dependence on microfinance much more would be becomes all too clear.

It actually is harder to find anything about interest on Kiva's site than I remembered it being.  I'm guessing the vast majority of lenders don't do the scrupulous research that characterizes the typical dude with a blog.  So maybe they are playing that down.

But that's enough to convince me of anything.  I mean, we don't to make the perfect the enemy of the good, if I can be permitted to use a tiresome cliche.  And when it comes to choice between neoliberalism and people who say cusses about neoliberalism, I'm giving benefit of the doubt to the former.

In other news, an odd blog has come to the same conclusion I did: Vittana is a "cool internet site."  I was totally ahead of the curve on this one.