Everyone can contribute and everyone will benefit.
A catchphrase I’ve used for years in answer to a huge range of situations is “it’s a distribution problem”.
In fact I say this enough to be a bit of a bore certain people who are close to me. “There’s enough food in the world for everyone – it’s a distribution problem; if medical research was funded by a non-profit global organization, there would be no issues with pharmaceutical patents and there’d be medicine for everyone – it’s a distribution problem; we’ve got crumbling roads and bridges with nobody to fix them, but there are prisons full of people wouldn’t have ended up there if they had been employed — it’s a distribution problem.”
I believe that many of these distribution problems will resolve themselves eventually as technologies (like crowdsourcing and data visualization) start to provide us with new forms of information that we can use as a basis for our decisions. Hans Rosling’s work is an excellent example and I love to promote it.
So, thinking of redistribution supported by technology, I can get very excited by ideas like microlending, and in my own small way I do contribute. It’s something I believe can work. E.g.
The entrepreneur who needs a loan describes his or her situation/background online, and potential lenders look to find a good match. Online tools like PayPal make it possible for individual lenders to contribute very small amounts which, when combined, can fulfill the requirements of the entrepreneur. Administrative details, including how the lenders get paid, are automated. It would be difficult to imagine this level of personal connection without a sophisticated technology but now that such technology is commonplace, the potential is amazing.
Whether the lender and borrowers are in vastly different parts of the world, or living around the corner from each other, it’s about sharing stories and connecting to form a partnership and redistribute a bit of wealth. All this can be done (more or less) without much of a “middleman” and the lender is not investing in a “stock” or a “mutual fund” but rather in a person who has a believable plan.
I’ll mention that I’ve read some recent negative stories about microlending and I get the sense that some of these are based on a paternalistic point of view… that credit is good for some but not all. Usually this is said by someone who lives in a home that they could never have bought without a mortgage and who have achieved business success could not have been attained without credit being available when they needed it.
However it does seem true that abuses, such as high interest rates and mismanagement, have led to hardship for some borrowers. I don’t believe this means the concept can’t work but certainly it needs monitoring.
And, some accusations may be shown to be false:
My next blog post will be about a local community example of microlending.