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PAUL CRAIG ROBERTS ON HOW THE 'FREE TRADE' CASE FOR OFFSHORING AMERICA'S JOBS HAS COME UNGLUED Roberts on the sensational exposure of the faked "gains" and phantom stats of the free traders. Who was America's most anti-imperialist president? Try Grover Cleveland! JoAnn Wypijewski on the unlikely hero of Hawai'i's restoration movement. Alexander Cockburn reports on evangelical Christians in crisis amid fresh onslaughts by forces of darkness. The Warbler's Parable: Rosa Miriam Elizalde on the black-masked visitors to Cuba defying the US economic blockade.
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Today's Stories June 25, 2007 Jennifer
Loewenstein June 23 / 24, 2007 Alexander
Cockburn Jeff
Taylor Oren
Ben-Dor Gary
Leupp Robert
Fisk David
Rosen Russell
Mokhiber Alison
Weir Robert
Fantina D.
K. Wilson Nicole
Colson Stephen
Soldz, Steven Reisner and Brad Olson Dave
Lindorff Benjamin
Dangl Michael
Dickinson Poets'
Basement Website
of the Weekend
June 22, 2007 Andy
Worthington Sherwood
Ross Eliana
Monteforte Robert
Weissman Richard
Rhames Christopher
Brauchli Ramzy
Baroud Ehud
Krinis, David Shulman and Neve Gordon David
Michael Green Kathryn
Webber Website
of the Day
June 21, 2007 Peter
Linebaugh Natsu
Saito Ron
Jacobs Saree
Makdisi John
Stauber Scott
Liebertz Tom
Clifford Robert
Jensen Michael
J. Smith Jeb
Sprague Website
of the Day
Omar
Barghouti Andy
Worthington Margaret
Kimberley Robert
Weissman Russell
D. Hoffman Rannie
Amiri Stephen
Lendman Dave
Lindorff David
Swanson Anne
Dachel Website
of the Day
June 19, 2007 Ralph
Nader Dr.
Shepherd Bliss Bill
and Kathleen Christison Jeff
Leys Dave
Zirin Chris
Floyd Ben
Terrall Anthony
Papa VIPS Linda Flores Website
of the Day
John
Ross Paul
Craig Roberts Martha
Rosenberg Norman
Solomon Don
Santina Isabella
Kenfield James
Brooks Eva
Liddell Sam
Husseini Akiva
Eldar Website
of the Day
Alexander
Cockburn John
Halle Robert
Fisk Andy
Worthington Uri
Avnery Fred
Gardner Saul
Landau P.
Sainath Missy
Comley Beattie Alan
Gregory Walter
Brasch Website
of the Weekend
June 15, 2007 Alan
Farago Andy
Worthington Michael
Simmons Franklin
Lamb Gary
Leupp John
Ross Website
of the Day
June 14, 2007 Michael
Donnelly
Faisal
Kutty Harry
Browne Charles
Jonkel Steven
Higgs Bruce
Dixon Bruce
K. Gagnon
Website
of the Day June 13, 2007 Glen Ford Marjorie Cohn Bill Christison Charles Jonkel Silvia Cattori Richard Gott Firmin DeBrabander William S. Lind Keith Rosenthal Website of the Day June 12, 2007 Jeffrey St.
Clair Paul Craig
Roberts P. Sainath Ralph Nader Omar Waraich Dave Lindorff Harvey Wasserman Malini Johar
Schueller Ramzy Baroud Website of
the Day
June 11, 2007 Patrick Cockburn Paul Craig
Roberts Uri Avnery Norman Solomon Eva Liddell Rannie Amiri Rachel Voss Christopher
Brauchli D. K. Wilson Website of
the Day
Alexander Cockburn George Ciccariello-Maher Saul Landau Robert Fisk Brian Cloughley Ron Jacobs Ward Boston Conn Hallinan Leonard Peltier Lawrence Davidson John Ross Kate Allan Fred Gardner Stephen Fleischman Monica Benderman Geoff Bailey Missy Beattie Patrick Dyer Tim Lengerich James Irani
Gary Leupp Michael Tillery Michael Simmons Poets' Basement Website of the Weekend
June 8, 2007 Serge Halimi Patrick Cockburn Jeffrey St. Clair
Paul Craig Roberts William Blum Joshua Frank Lance Selfa Dave Lindorff Lawrence Ferlinghetti Website of the Day
Marjorie Cohn Soldz, Reisner
and Olson: Soldz, Reisner
Paul Craig Roberts Bill Quigley Silvia Cattori Carl G. Estabrook Ellen Taylor Corporate Crime
Reporter Brenda Norrell D. K. Wilson Kevin Zeese Website of
the Day
Alain Gresh Gary Leupp Steven Sherman Bruce Dixon Corporate Crime Reporter Brian M. Downing Ron Jacobs George Bisharat Nicole Colson Bruce K. Gagnon Website of the Day
June 5, 2007 Michael Neumann Jonathan Cook David Vest Robert Fantina Hoffman, Parsneau and Chowdhury John V. Walsh Richard Cretan Adam Engel William S. Lind Myles Hoenig Jim Minick Website of
the Day
Nizar Latif Diana Johnstone Gregory Wilpert Paul Watson Susan Rosenthal,
MD Richard Ward Eva Liddell Zahi Khouri Evelyn Pringle China Hand Karyn Strickler Website of the Day
June 2 / 3, 2007 Alexander Cockburn Marc Levy Martin Smith Diana Johnstone John Ross Uri Avnery Sunsara Taylor Richard Neville P. Sainath Missy Comley
Beattie Nisrine Abiad Rannie Amiri Margot Pepper Eric Stewart Ralph Nader Dan Bacher Shaun Harkin Richard Rhames Frederick Hudson Poets' Basement Website of the Weekend
Dave Marsh Saul Landau David Phinney Robert Jensen Stanley Heller Yifat Susskind Robert Weissman Paul Buchheit William S.
Lind Sherwood Ross Stephen Lendman Website of the Day
Robert Bryce Patrick Cockburn Gary Leupp Kathy Kelly Marjorie Cohn Chris Kutalik
Corporate Crime Reporter Dave Lindorff Website of the Day
May 30, 2007 James Ridgeway Franklin Lamb Terrence E. Paupp Uri Avnery Alan Maass Rock and Rap
Confidential Ralph Nader Nirmal Ghosh Jean Daniels Tom Barry Website of the Day
Stephen Soldz Eliza Ernshire Ron Jacobs Dave Lindorff Evelyn Pringle Mike Whitney David Swanson John Holt Cynthia McKinney Martha Rosenberg Website of the Day
Bill Quigley Col. Dan Smith Cindy Sheehan Dr. Susan Block Jeeni Criscenzo Douglas Valentine Website of the Day 
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June 25, 2007 Possibilities and False HopesThe Realities of MicrolendingBy ROBERT POLLIN How effective is micro credit as a poverty-fighting tool? In 1976, Muhammad Yunus, the 2006 Nobel Peace Prize winner, launched the pioneering institution in the field, the Grameen Bank in Bangladesh. The industry's growth has been explosive since Grameen opened its doors. According to a recent story in The Economist, "there are now some 10,000 microfinance institutions lending an average of less than $300 to 40 million poor borrowers worldwide." These institutions have made important advances relative to the array of moneylenders and pawnbrokers that had previously controlled the provisioning of banking services to the world's poor. At the same time, considered on its own, Grameen-style initiatives have limited capacity to fight global poverty, especially when placed in a policy setting dominated by neoliberalism. Neoliberalism became the ascendant economic model throughout the developing world in the late 1970s, at roughly the same time that the Grameen Bank began operations. The main tenets of neoliberalism include macroeconomic policies focused on eliminating inflation rather than expanding job opportunities; cutting government subsidies -- including credit subsidies -- and related systems of support for domestic businesses, including micro enterprises; and opening domestic markets to imports, multinational investors and speculative financiers. These policies in developing countries have produced slower economic growth, increasing inequality, and no progress in reducing poverty -- that is, an insurmountable headwind countering the efforts of the Grameen Bank and its confederates.
Regardless of the larger policy issues, the Grameen model has made undeniable contributions in bringing financial services to poor people. The first contribution is the simple recognition that credit and related services -- including bank accounts and insurance policies -- can be important resources for advancing the well being of the poor, just as they are with everyone else. The second is in targeting women as loan recipients, empowering the women within their families and helping them to sustain their home-based micro enterprises. Grameen's most important advance
has been to develop an alternative to traditional collateral
as a basis for lending to the poor. Under a traditional system,
you can't obtain a loan until you have sufficient assets to surrender
to the bank, moneylender, or pawnbroker in the event that you
fail to make Counteracting these positive innovations, the average lending rates by Grameen and other micro finance institutions far exceed standard measures of affordability. Real annual interest rates (i.e. after controlling for inflation) on group loans range between 30-50%, according to a 2004 survey in Microbanking Bulletin. These rates are perhaps lower than what moneylenders typically charge, but remain punishingly high. Imagine a working class family in the U.S. taking out a $100,000 mortgage to purchase a home, then having to pay $30-50,000 per year in interest alone in order to keep their home. Defenders of such arrangements in the micro finance world contend that, accounting for the risks to the lender, these rates are appropriate; and that anything less will not attract profit-seeking bankers into this market. According to this approach, micro finance can only reach its full global potential -- lifting out of poverty the more than 1 billion people of the world now living on roughly $1/day -- if it can attract profit-seekers into the business, not just aid agencies and private do-gooders. In addition, the Grameen Bank has long prided itself on maintaining repayment rates as high as 95%. However, the accuracy of these figures have been disputed, including in a careful Wall Street Journal report in 2001. Some observers contend that, in fact, Grameen allows distressed borrowers to roll over or stretch out their repayments rather than declaring them in default. This may well be the most effective and humane approach under the circumstances. But again, it is clearly inconsistent with the hard-nosed business model supported by an increasing share of micro finance enthusiasts.
But whether the credit terms are low or high, micro enterprises run by poor people cannot be broadly successful simply because they have increased opportunities to borrow money. For large numbers of micro enterprises to be successful, they also need access to decent roads and affordable means of moving their products to markets. They need marketing support to reach customers. They need a vibrant, well-functioning domestic market itself that encompasses enough people with enough money to buy what these enterprises have to sell. Finally, micro businesses benefit greatly from an expanding supply of decent wage-paying jobs in their local economies. This is the single best way of maintaining a vibrant domestic market. In addition, when the wage-paying job market is strong, it means that the number of people trying to survive as micro entrepreneurs falls. This reduces competition among micro businesses and thereby improves the chances that any given micro enterprise will succeed. These additional measures for supporting micro enterprises -- a decent transportation infrastructure, support in marketing the products of micro enterprises, a high level of domestic demand, and an abundance of decent wage-earning jobs -- have all been closely associated with what used to be termed the "developmental state" economic model. Different versions of the developmental state model -- including state socialism, import-substituting industrialization, and the East Asian state-directed economies -- prevailed in developing countries for the first 30 years after World War II, before these models were overtaken by neoliberalism. Each of these developmental state models encountered serious problems. But on balance they all achieved successes in promoting economic growth and greater equality. This is in contrast with the neoliberal record of declining average growth rates and rising inequality. One of the key institutions of the developmental state model that was largely dismantled under neoliberalism is the state-directed development bank. State-directed development banks provided cheap, long-term credit for domestic businesses that enabled these businesses to develop their productive and marketing capabilities at a sustainable pace. The MIT development economist Alice Amsden concludes in her major study The Rise of the Rest: Challenges to the West from Late-Industrializing Economies: "From the viewpoint of long-term capital supply for public and private investment, development bankswere of overwhelming importance." Amsden documents this in the cases of Mexico, Chile, Korea, Brazil, and Indonesia. Amsden also points out that the government's role in providing subsidized long-term credit was substantial even in developing countries where development banks themselves were of relatively minor importance. These cases included Malaysia, Thailand, Taiwan, and Turkey. It is true that, in the countries that Amsden cites, the subsidized credit went to large-scale enterprises focused on breaking into export markets. But the general approach can also be adapted to dramatically expand the availability of affordable credit to small and micro enterprises producing primarily for domestic markets.
A good case study of how this might be done is Kenya, where, under the auspices of the International Poverty Centre of the UN Development Program, two colleagues and I are working on an "employment-targeted" development model that gives prominence to issues of credit access for the poor. At present, Kenya already has a widespread system of micro-finance institutions in place. Its commercial banking system is also generally well-developed. Despite this, Kenyan farmers, small formal businesses and informal micro enterprises are starved for credit. This is because commercial banks do not generally lend to these sectors while the micro finance institutions themselves do not have sufficient resources to provide large-scale funds. The solution seems straightforward: to bring into much closer alliance the formal commercial banking system and the micro-finance institutions. Our proposal is to inject a major pool of subsidized credit equal to roughly 20% of total private investment in Kenya. These funds would be made available to commercial banks on condition that they in turn make loans to the microfinance institutions. The micro-lenders will be far more adept than the traditional commercial banks at making loans to small businesses, informal enterprises, and agricultural small holders. We propose that government guarantees be set at 75% of the total amount of loans that commercial banks make to microfinance institutions. This will enable interest rates to fall dramatically -- specifically by the amount at which the loan is being guaranteed and the bank's risk is correspondingly reduced. This means that, with a 75% government loan guarantee, if the market rate for a micro-credit loan was 40%, the subsidized rate would be 10%. This would make the loan affordable for borrowers while still maintaining market incentives for lenders. The creative methods of establishing eligibility for loans pioneered by the Grameen Bank could be applied effectively within this framework. Even assuming default rates on these guaranteed loans as high as 30%, the total cost to the Kenyan government of paying off the guaranteed portion of the loans to creditors would be no more than about 5% of its total fiscal budget. This is a relatively small price for creating credit access for the poor throughout the country at interest rates 75% below market rates. This example suggests that the way to realize the promise of micro credit is to embed the best features of the model within a broader developmental strategy for promoting growth, decent employment, and poverty reduction. Operating within the context of a neoliberal policy framework, micro credit initiatives will continue to face overwhelming obstacles in fighting global poverty. Robert Pollin is professor of economic and founding co-director of the Political Economy Research Institute at the University of Massachuesetts-Amherst. His groundbreaking book, Contours of Descent: US Economic Fractures and the Landscape of Global Austerity, has just be released in paperback by Verso with a new afterward. A recent interview with Pollin can be read at the PERI site. This essay was originally published
by Foreign Policy in Focus.  |
CounterPunch Books of the Crossroads: HOW THE IRISH INVENTED SLANG By Daniel Cassidy  Click Here to Buy! How the Press Failed The Gang's All Here: Judy Miller, Bob Woodward, Rupert Murdoch, Bill O'Reilly...End Times Leaves No Reputation Unstained!  Buy End Times Now! CounterPunch Books! Saul Landau's Bush and Botox World with a Foreword by Gore Vidal  Click Here to Order!  Michael Neumann's Devastating Rebuttal of Alan Dershowitz Grand Theft Pentagon: Tales of Greed and Profiteering in the War on Terror by Jeffrey St. Clair           The Occupation by Patrick Cockburn   Humanitarian Imperialism By Jean Bricmont               CITY BEAUTIFUL By Tennessee Reed        Bruce Springsteen On Tour By Dave Marsh                   |
