In an exclusive excerpt from Creating a World Without Poverty, Nobel Peace Prize winner Muhammad Yunus offers three simple solutions for helping the least fortunate.
The granting of the Nobel Prize to Grameen Bank did a lot to focus the world’s attention on microfinance as a tool for alleviating global poverty, and it is encouraging to see so many countries adopting microfinance at the local and national levels. But in other ways, the last two years have been difficult
The problems began with soaring food and oil prices. By the fall of 2008, the world economy appeared to be crumbling, with the most formidable pillars of the strongest economies on the verge of collapse and stock markets around the world plummeting.
This financial crisis offers an interesting illustration of the social failings of the existing capitalist system. Credit markets were originally created to serve human needs—to provide business people with capital to start or expand companies and to enable families to buy homes. In return for these services, bankers and other lenders earned a reasonable profit. Everyone benefited. In recent years, however, the credit markets have been distorted by a relative handful of individuals and companies with a different goal in mind—to earn unrealistically high rates of return through clever feats of financial engineering. They repackaged mortgages and other loans into sophisticated instruments whose risk level and other characteristics were hidden or disguised. Then they sold or resold these instruments, earning a slice of profit on each transaction. All the while, investors eagerly bid up the prices, scrambling for unsustainable growth and gambling that the underlying weakness of the system would never come to light. The result was to convert traditional capitalism into what many have described as “casino capitalism,” marked by irresponsibility and limitless greed.
It has been disheartening to see many of the world’s poorest falling back toward poverty just when we thought the planet was ready for a big step forward.
With the collapse of the housing market in the United States, the whole house of cards is falling apart. Millions of people around the world who did nothing wrong are suffering. And the worst effects, as usual, will be felt by the poor. As economies falter, as government budgets collapse, and as contributions to charities and NGOs dwindle, efforts to help the poor will diminish. With the slowing down of economies everywhere, the poor will lose their jobs and income from self-employment.
It has been disheartening to see many of the world’s poorest falling back toward poverty just when we thought the planet was ready for a big step forward. We had thought food shortages were a thing of the past, but now they are back – not due to any lack of productive capacity on the part of the world’s farmers, and certainly not due to lack of effort by the poor themselves, but largely because of forces that could have been averted—the financial crisis and the world’s failure to pay enough attention to the need to improve agricultural technology to increase yields. We have to focus our attention at the global level to tackle this great new challenge to the world’s poorest.
For poor people, daily food—just staples, not “luxury” items like meat or fish—can consume as much as two-thirds of their income. The current food crisis means that achieving many of the Millennium Development Goals will become an even greater challenge. We need a comprehensive global plan to ensure that things do not become any worse and reverse decades of economic progress.
How do we change this? Where do we begin? Three basic interventions can make a big difference in the existing system ...
... Read More: The Daily Beast
Credits: Muhammad Yunus
Photo: Steve McDonald
Posted by: Andreea Hirica
On: Contagious Ideas
