My last post pointed out how Progressives want us to hate PayDay Lenders. What is funny is that change minded individuals have started to embrace and idea called micro-loans. In the 1990s, the United Nations finally came to grips with the fact that the big loans made to third world governments and to big businesses wanting to exploit resources in the third world made things worse for the people living in the third world. The United Nations and World Bank had made gigantic loans to governments on projects that effectively displaced the people they claimed to be helping. The big loans ended up feeding corruption, increasing the gap between the rich and poor. Even worse, the big loans saddled future generations with onerous debts.
Conversely, entrepreneurs and well meaning NGOs found out that making small loans to small community minded businesses end up having a very profound positive effect. Best yet, a lower percentage of the microloans go into default than the big loans from big banks with big government consent and security.
The United Nations is now ringing the bells of MicroCredit. They even declare 2005 as the Year of Microcredit. Much of the worldwide economic boom of the last 6 years is a direct result of the explosion of microcredit.
As with all things, MicroCredit is likely to be overdone. The first microcredit loans by Grameen Bank came from a good lender to good borrowers. This universal declaration of the goodness of Microloans is likely to attract sharks wanting to lend at absurd rates to subprime borrowers.
It is interesting that local progressives are systematically slamming all the doors that provide credit to the poor in our local communities in the United States, while progressives on the international scene have figured out that George Bailey (It's A Wonderful Life reference) style banks working within a community to help it thrive lead to true, sustainable progress.