Sunday, December 16, 2007

Population Density

There is a lot of discussion these days regarding resource utilization by the human race and sustainable consumption. Jared Diamond wrote a book related to this called Collapse in which he explores the reasons some societies succeed and others fail. Reading this made me think about how many people could be sustained on earth on an on going basis and not exhaust our resources.

To start with let me say I have no idea. Also, there are a lot of factors which should be dealt with to make an accurate prediction of a sustainable world population level for humans and I’m not sure such a thing is even possible. But out of curiosity I thought it would be interesting to compare some population levels just to get a feel for whether or not there is any hope for us at current population levels.

First let’s look at Easter Island. It’s a tiny Island in the South Pacific about 63 square miles in area and 100s of miles from anything else except water. To put that in context that’s about twice as large as Manhattan. This is the Island where the funky statues where built that are featured in movies and cartoons that have scenes on remote tropical islands. At one point Easter Island supported a relatively successful society that was able to be productive and innovative enough to produce big funky statues. Eventually they chopped down all their trees (primary natural resource) and their society and population collapsed. Some folks estimate that the high water mark for Easter Island population was around 20,000. (I think others think it could have been higher.) That’s a population density of 122 people per km2. So, 122 people per km2 might be too many to sustain; at least on a small island with limited access to resources not immediately on the island. (Note the parallel between Easter Island and Earth in general.)

Next let’s look at Haiti. This is another island nation one could argue has failed as a society. It is not as remote or small as Easter Island. It has a population of around 9 million and about 316 people per km2. So, I guess 316 people per km2 is too many to sustain.

Interestingly the UK, yet another Island nation only with several hundred years of relative success, has about 256 km2. Hmm. Maybe the world could support this level of population density. Of course one might argue that part of the reason that the UK can support that level of population is because they use a lot of resources from other locals. For the world, we have not figured out a means of harvesting resources out side of our “little” ball. So we may not want to just assume the 256 km2 is a sustainable population level.

Now for the United States. The United States has about 33 people per km2. Much lower than any of the other societies noted and even though the U. S. is highly integrated with the World economy as is United Kingdom and we have a lot of issues we seem to be humming along pretty well and it would seem that we could sustain our society for some time as long as we solved some problems like securing sustainable fuel sources and global warming and fixing unsustainable entitlement programs like Social Security in its current form. So, our world might not be able to sustain 100, 200, or 300 plus people per km2. But maybe 33 people per km2 is doable.

Finally, the whole world has about 45 people per km2. Now this is a ridiculously simplistic analysis if it can even be considered analysis but the conclusion I draw from this is that our current population is not at such a level that we are destined to a major failure. If it where above like 100 km2 then I think you could say we are definitely in trouble. But our current population might be manageable. We probably don’t want to have it grow a whole lot and we do have big problems to solve but there is still hope that the world population can survive and thrive at current levels.,_Iowa

Sunday, December 9, 2007


Football and Volleyball have taken me away from my blog but I’m back. At least for now.

The following is the Nicene Creed

We believe in one God the Father Almighty, Maker of heaven and earth, and of all things visible and invisible.

And in one Lord Jesus Christ, the only-begotten Son of God, begotten of the Father before all worlds, God of God, Light of Light, Very God of Very God, begotten, not made, being of one substance with the Father by whom all things were made; who for us men, and for our salvation, came down from heaven, and was incarnate by the Holy Spirit of the Virgin Mary, and was made man, and was crucified also for us under Pontius Pilate. He suffered and was buried, and the third day he rose again according to the Scriptures, and ascended into heaven, and sitteth on the right hand of the Father. And he shall come again with glory to judge both the quick and the dead, whose kingdom shall have no end.

And we believe in the Holy Spirit, the Lord and Giver of Life, who proceedeth from the Father and the Son, who with the Father and the Son together is worshipped and glorified, who spoke by the prophets. And we believe one holy catholic and apostolic Church. We acknowledge one baptism for the remission of sins. And we look for the resurrection of the dead, and the life of the world to come. Amen.

Below is a quote from Milton Friedman

A liberal is fundamentally fearful of concentrated power. His objective is to preserve the maximum degree of freedom for each individual separately that is compatible with one man’s freedom not interfering with other men’s freedom. He believes that this objective requires that power be dispersed. He is suspicious of assigning to government any functions that can be performed through the market, both because this substitutes coercion for voluntary co-operation in the area in question and because, by giving government an increased role, it threatens freedom in other areas.

From Capitalism and Freedom, Milton Freidman page 39

I consider myself to be a Christian but at some levels I find it easier to whole heartedly endorse the quote by Milton Freidman than I do the Nicene creed.

What do others think? Is Milton Freidman’s statement of belief more meaningful more worthy of adherence than the Nicene creed? Why or why not?

Sunday, July 29, 2007

Partition Iraq

I believe that the best way to bring peace and stability to Iraq may be to partition it into three separate countries.

Consider the parallels between the former Yugoslavia and Iraq. Yugoslavia was made up of a variety of ethnic and religious groups including Catholic, Orthodox, Muslim, Serb, Croat, Albanian, etc. Iraq is of course made up primarily of Kurds, Sunnis, and Shiites. Both in recent times where held together by totalitarian regimes. Both during their history for various political reasons have had their ethnic groups intermixed. And both after a disruption in the status quo devolved into horrible ethnic violence.

For now the nations and provinces of the former Yugoslavia are in relative peace. After trying to hold Yugoslavia together for years the outside brokers decided implement a plan of breaking it up into smaller countries and semiautonomous regions in an orderly fashion and for now there is relative peace in this part of the world.

Facilitating an orderly partitioning of Iraq may be the best option for peace there as well.

Some arguments against this:

1 - Many people would be forced to give up there homes and move. This is already happening at a rate of about 50,000 per month at gun point and with no compensation for the loss of people’s homes and property. If this were handled in an orderly fashion people could be compensated for the home’s they are leaving and that money could be used to help them get started in more friendly environs.

2 – One of our allies, Turkey, is against it. We should never take lightly the concerns of allies. At the same time our leaders should consider all options and if Turkey is the only reason we would not do what might be the best thing to solve the problems in Iraq, I think we would all agree that Turkey’s concerns should not stop us.

More research and thought should be given before implementing a plan like this. It may not be the right answer. However, it is an option that deserves serious consideration and we should challenge our leaders to consider this as perhaps the best way to work out of the Iraq situation.

Thursday, July 12, 2007

More on Immigration

At least two items should be addressed in new immigration policy.

First, we need to make it easer for workers (not free loaders or criminals) to come to America to work legally. WHY: Our economy needs the workers.

We have around 5 million unemployed. With between 8 and 20 million illegal immigrants guessed to be in the country we definitely don’t have the legal workers to fill those gaps. So, we need a policy in place that allows all the workers coming to America to fill jobs to do so legally with out a lot of hassles.

Second, all new legal worker immigrants should be on a path to citizenship involving learning English and our constitution and history. This will insure that our citizens continue to value freedom, democracy, and the rule of law. Learning of English will allow them to more easily assimilate into our society and will insure that we continue to be a single language society. This path to citizenship should not take more than 2 to 5 years. Anyone not willing to embrace core American values and become citizens should go back home and make room for someone who is. WHY: As we all know the baby boomers are nearing retirement and as a percentage we will have fewer people working as compared to those in retirement than we have had historically. This is a problem for funding social security. Having a robust immigration program leading to new citizens who have bought into the American values can help address some looming fiscal issues and insure America stays strong for years to come.

Two Side Notes:

Securing the Boarders: Once we have a rationalized (or as we are rationalizing) immigration policy which allows the workers we need to come here legally we should make sure the borders are secure. So, that the criminal element does not enter our country.

Amnesty: If someone is in our country illegally they should not get a free pass. They should have to pay a fine of some sort or do community service. Once they have paid their fine they should be allowed to participate in the legal work program that leads to citizenship.

Tuesday, July 10, 2007

God and Addiction

God doesn’t care about addiction it self. He is not concerned abut the drinking or gambling or eating or smoking or drugs and the abuse of these things that comes with addiction. What he cares about is the damage our fixation on these things does to our relationships when we are addicted to them. For example: if my gambling addiction causes me to loose money so that I don’t have the money to take my kid to the baseball game or my wife out to eat, then I am not loving the way I should. This is the real big deal with God. (Love thy neighbor as they self.) This damage to the important relationship is what God does not like. He doesn’t mind so much if we enjoy gambling once in a while but he doesn’t like it if it damages our relationships. The danger can be even more subtle but just as damaging. You may have won money but if you stayed up so late you decided to sleep in instead of taking you son fishing, then you are still impacting your relationship. Or if you spend so much time fishing that you don’t have time to take your daughter to the movies, then fishing could be the problem. Anything that puts our important relationships at risk God hates.

Sunday, June 17, 2007

Social Security and Immigration

We have all heard that our social security system is at risk of collapsing. As the baby boomers move into retirement we predict that the then current work force will not generate enough revenue to fund the program. Part of the solution to this problem could be to bring in a lot of new workers who through their work could help to fully fund social security. How convenient for us (the U. S.) then that we have a ton of people who want to come to our country to work. I think we need to do three things if we want immigration to be one of the effective tools for baling out social security and to help our economy thrive.

First we need to make it easy for workers to come to our country and participate in our economy legally. We need to create policies and staff them that allow good hard working people to participate in our economy when there is a need. If workers are allowed to participate in our economy legally (rather than illegally as so many do today) it is more likely that part of their wages will go to funding social security rather than the immigrants receiving “under the table” wages that don’t contribute to the system.

Second, Workers should be willing to commit to our Country. That is, if they want to benefit from our great economy they should fully commit to our county by becoming citizens with in a reasonable amount of time. Say 3 to 5 years. We want to avoid bringing folks to our country who can then develop valuable skills, make a quick buck and then head back to their countries of origin. Rather, we should want them to commit to our country and continue to use the skills they develop here to continue to build our country and fund our government and its institutions.

Lastly, many of our new workers do not come from a back ground of freedom, democracy, and the rule of law. We need to insure our immigration policies are designed to instill these principles into the new workers. All new workers should be required to learn and understand our history and the constitution with its bill of rights. This will insure as that as the make up of our country changes through immigration it will not loose the core principles of freedom, democracy, and the rule of law that have allowed our nation to thrive.

The make up of our nation is changing and will continue to change through immigration. The question is can we manage this change in such a way that our current institutions (like social security) benefit from it and we keep the core principles of nation in tact.

Interesting Related Articles:

Sunday, June 3, 2007

Thoughts on Immigration

I am for finding a mechanism for providing those hard workers here illegally now to quickly and simply achieve legal status which works toward citizenship and requires some basic level of English language capability. I believe that these workers should commit to becoming citizens with all the rights, privileges and responsibilities associated. If a person is not willing to commit to this, they should go back to their home country. This will create an additional administrative burden for the government. However, I have not heard a proposed solution that does not create an additional burden.

Now I have some comments on the latest fad for how to deal with the illegal immigration problem. Crack down on the employers of illegal aliens.

If we crack down on the employers of the illegal immigrants, they will stop employing illegal aliens and theoretically the illegal aliens will just leave because they can’t find a job in the U. S. anymore. If we were able to cut off demand for illegal workers by throwing enough employers in jail that all employers of illegal workers would fire all to their illegal employees, I think the following would happen.

First, most would leave because on the whole they are good people here to provide a better life for their family. Since that would no longer be possible they would go back to Mexico or what ever country they came from and make the best of it. As for the rest, well as in any community there is probably a small percentage that as long as they have a job they are likely to stay out of trouble. But without a job they may be willing to steal or do other illegal things in order to make a living. In short, I think we would be likely to loose the “good” folks that are just here to work hard and better their family and keep the less scrupulous folks that are willing to turn to less ethical ways of generating income.

Let’s turn our attention to economic impact. I hear that there are from 7 to 20 million folks hear illegally. The most common number I hear is 12 million. For the purpose of this thought let’s go with the 12 million. Our current employment is around 135 million ( ). That means that if all of the illegal work force gets let go we will loose around 8.9% of our work force. Now this would not happen but if all of our currently unemployed (4.5% ) took those newly open jobs around half of the jobs would go unfilled.

Let’s take this a step closer to home. I live in Central Iowa. My guess is that most illegal aliens in Central Iowa are either working in meat processing plants or construction. What would the impacts be of eliminating half or so of the illegal work force in the meat processing industry? Retail prices of meat products would likely go up as supply would drop precipitously as the capacity to produce meat products would drop. Also for a short time livestock prices for farmers would likely fall because the processors would buy less because they would not have as much capacity to process the livestock. In the long run the processing facilities would likely move to Mexico. Retail prices would likely remain slightly higher than they are now to compensate for the added transportation costs associated with processing beef, pork, and poultry. Also food safety would likely suffer because Mexican processing standards are probably lower than the U. S. standards although that may be debatable.

My point is that many have the feeling that having all these people here from Latin America is bad. It is not bad it is good. What is bad is that we have laws and policies that make coming here legally prohibitive for good hard working people. Any policy or proposal designed to have all the illegal workers leave is not grounded in reality and does not make economic sense. What makes sense is to implement policy that makes in possible for workers in demand by our economy to have a way to legally work and move toward citizenship in our great country.

Monday, May 21, 2007

A Bike

I heard about this from Marc Epner who works for Kronos. A company that makes employee time management software. Marc is one of their sales people.

Marc recently told me about a team work activity they did at Kronos recently that I thought was really cool.

The Kronos sales team was assembled for a typical sales meeting I believe in Chicago. One afternoon was dedicated to a team work exercise. The employee’s were divided into teams of five. There were one hundred teams and each team was given a box with a number on it. In the box the teams found bicycle parts and some assembly instruction. Each team had 2 hours to do the best job of putting the bike together.

About an hour into the exercise the doors of the hall they were in opened and one hundred underprivileged kids from Joliet walked in. Each was carrying a sign with a number on it corresponding to one of the bikes. These were kids from poor families that can not afford to get their kids bikes.

It was announced that each child was to get one of the bikes and the kids were to find the team that was working on the bike that had their number on it.

Once the teams met the kids who were going to get their bike their attitude changed completely. Before they where trying to be the fastest and were trying to keep what they had learned a secret from the other teams. Once the learned about the kids they started sharing between teams. So, they could all make sure that they got the best bike possible for their kid. They consulted with the kids to find out exactly what they wanted for their bike.

Their attitude be came one of service instead of competition.

Marc said that afterward almost everyone was overcome with emotion and he wasn’t sure but thought it might have been a life changing experience. Some kids who needed bikes got them and hopefully the employees learned to be better team players.

Think of how much more productive we might be if we always kept an attitude of service.

Sunday, May 20, 2007


I heard this on NPR.

Moses, Jesus, and an old man with a beard were playing golf. They came up to the 13th hole and there was a huge pond just in front of the green.

Moses teed off and sure enough his ball went right into the pond. He huffed and walked down to the pond and held his golf club up and the waters parted. He walked up to the ball and made a beautiful chip shot right on to the green.

Jesus was next and sure enough when he teed off his ball went right into the pond. He rolled his eyes and shook his head and headed down to the pond. When he got there we walked on top of the water and sure enough the ball rose to the top and he too made a beautiful chip shot right on to the green.

Finally the old man with the beard teed off. His ball went way off course. In fact if flew clear off the golf course. A bus happened to be passing and the ball bounced of the bus back onto the fairway and bounced twice and landed on a Lilly Pad in the middle of the pond. A frog hopped on the Lilly Pad picked up the ball and started to hop from Pad to Pad across the pond when an eagle swooped down and scooped up the frog and started to fly away, the ball still in the frog’s mouth. Finally, when the eagle, frog in tow, was over the green, the frog spit out the ball. It bounced on the green once and landed right in the cup.

At this point Moses leaned over to Jesus and said “I hate playing with your Dad.”

I believe this and many other good jokes can be found in the following book.

Monday, April 30, 2007

Let’s Buy a Micro Finance Institute

I’d like to get 10 people who are all interested in investing $11,000 each to buy a partial interest in a Micro Finance Institution. $100,000 to actually invest and $10,000 for administration and any operating costs. Anybody interested?

Sunday, April 15, 2007

The Operational Side of Micro Finance

I thought this was interesting. This individual helps to run a community in Uganda that engages in small manufacturing and Micro Finance. It gives a feel for what types of cultural issues must be over come to make Micro Loans work.

Interview with Grace from LiA

Tuesday, April 10, 2007

Tiny loans can make a big difference.

Here are some interesting facts and conclusions regarding Micro Finance as it operates in Bolivia.

Bolivia has a population of a little less than 9 million. In 2005 around 480,000 Bolivians received micro loans. That means that about 5% of the population is taking advantage of micro credit.

It is interesting to note that there are 25.5 million small businesses in America. That would imply that 8.5% of Americans own their own business. Given the nature of a developing economy the potential for small businesses in Bolivia would be at least 10%. Perhaps higher. That means the Bolivia has the potential to at least double its current Micro Credit focused on small business. Not to mention opportunities for mortgages etc.

Total Micro Loan values in Bolivia for 2005 were $550 million. Total estimate Gross Domestic Product was $9.9 billion. That is, Micro loans make up 5.56% of Bolivia GDP. 12.4% of the GDP is made up of investment. (Compare this to the US which is 16.6%.) Assuming that the Micro Loans constitute a form of business investment, almost half of Bolivia’s investment is made up of micro loans.

Between 2004 and 2005 the growth of Micro Finance loans in Bolivia equated to 1.7% of GDP. With an estimated growth total rate of 3.3% Micro Loans are driving half of Bolivia’s economic growth.

Additionally, this is growth that benefits the average person on the street. Unlike growth that comes from things like price increases of natural resources which typically benefit a few people in the society who control those resources.

The statistics for these notes come from the following Web Sites.

Wednesday, March 28, 2007

Cash Flows

Here is an attempt to illustrate how a single loan from a micro finance institution to a micro entrepreneur can have a pervasive and positive impact on a community.

Let’s say that the Good News Micro Finance Institute loans $400 to Oloput who has a business making chairs. Oloput takes $200 and buys wood for making chairs from Akish. Akish takes $50 of this to make a partial loan payment back to Good News, pays his two workers Barok and Kofi $25 each, spends $25 on tuition to the Golden Apples school for his daughters to go to school and pays Oloput $25 for a chair. So he can sit in his house and feel like a big shot because he has 2 workers he can boss around and can send his kids to school and afford a nice chair. Barok and Kofi each use their wages to buy groceries from Marci who runs a small grocery store. Marci take the $50 and makes a loan payment of $25 to Good News. She also spends $25 on tuition to Golden Apples to send her daughters to school. Golden Apples takes the money they receive and pay the teacher Rondi her $25 salary and pay Marci $25 for groceries for school lunches. Marci takes this $25 and deposits it in her savings account at Good News.

Now back to Oloput. He took the other $200 and bought a miter saw from Ray a hardware and tool distributor. Ray pays $100 of this to Black and Decker to restock the miter saw and pays $50 to Good News as a loan payment and $50 as a savings deposit. Black and Decker uses its $100 to pay back a loan from a commercial bank which in turn uses half of that to make a loan to Good News. So they have more money to lend to micro entrepreneurs.

So in a few days the one $400 loan to Oloput generated the following cash inflows:

Oloput: $425 in loan and cash for chair.

Akish: $200 proceeds from sale of wood.

Barok: $25 wages

Kofi: $25 wages

Marci: $75 in grocery sales

Golden Apples: $50 in tuition payments.

Rondi: $25 in teacher salary.

Ray: $200 for sale of miter saw.

Black and Decker: $100 for sale of miter saw.

Comercial Bank: $100 in loan payment.

Good News: $275 in loan payments, commercial loans, and deposits.

For a total of $1,500 in cash inflows off of one loan.

Tuesday, March 6, 2007

Random Thought

I believe some day we will arrive at something call I call economic equilibrium. A time when pretty much every one every where will have an opportunity to participate in a robust and dynamic economy similar to the U. S. or Japan, or Sweden. A time when there will not be whole countries where just about everyone is dirt poor.

I hope it happens in our life time. But it raises a question. Today us rich folks in the rich countries benefit from the very poor folks who make our clothes for a few dollars a day. What will happen when we are participating in the more advanced and successful economic system? Who will make the clothes? So, everyone can have lots of inexpensive and fashionable clothes?

Here is a wild theory. We will genetically engineer primates. So, they have the dexterity and intelligence to make the clothes and be willing to do it for very little compensation. Bioclothingmachines.

Sunday, February 25, 2007

Thoughts on Peter Singer's Book

“Writings on an Ethical Life” is an anthology of excerpts, essays, and articles by Peter Singer on a variety of ethical questions. I don’t recommend this book as I fundamentally disagree with many of the basic assumptions and conclusions of Dr. Singer. However, I must say that he clearly states his assumptions and then explores the implications of these with incredible intellectual integrity. My next few posts will be some truly half baked reflections on my reading of this book.

The first thing I want to say is very weak on my part because I remember reading this but I couldn’t actually find it anywhere in the highlights I made in the book when I read it. I don’t want to reread it. So, I’m going to have to depend on memory. Somewhere in there he discussed the impact of one’s belief in evolution verses creation. He indicated that one’s belief in either of these will likely significantly impact one’s ethical views. I think this is a really good point. However, he went on to say that as far as he knows all truly intellectual individuals that are affiliated with our academic institutions don’t believe in creation. They believe in evolution and because of this he did not feel the need to address the implications a creationist view has on ethics. This is the one area where I felt he lacked integrity. Basically he is saying that because the people in his club, the academic crowd, don’t believe in creation it is not a legitimate point of view with out taking the time to defend that position.

As someone who believes in creation, this, I feel, is one of the fundamental flaws in his system of ethics.

Wednesday, February 21, 2007

Wonder Extended

Okay, I’ve been a bad blogger. I was out of town and I haven’t kept things up to date. I don’t have anything too great to post at this time but I thought I would jump on the “Wonder” band wagon from Mythic Reality a few weeks back. This weekend I was at the Mall of America at the Rain Forest CafĂ©. We sat right next to this waterfall fountain thing that had a giant statue of Atlas holding up the world. There were lights and waterfalls and lots of water shooting around. A little girl maybe three years old walked up with her grandma. The little girl squeezed past our table as grandma gave her permission and watched. The girl got as close as she could and took it all in. She looked up at the statue and all around at the lights and water fall. She shifted over to get a better view. She was awestruck and quietly soaked in all the sensations. After a few minutes she went back and took her grandma’s hand and they walked away.

It was a joy to me to watch another person look at a new part of the world for her with so much wonder.

Friday, February 9, 2007

History of Micro Finance – Grameen Bank

Mohammed Yunis, the 2006 winner of the Nobel Peace Prize, as a young economics professor in the mid 70s was the Head of the Rural Economics Program at the University of Chittagong in Bangladesh. During that time the country was going through a famine. He found this quite frustrating as after all of his education he had no tools that enabled him to help solve the situation.

He went out and made a list of all the very poor people he knew. He had 42 people on his list and after talking to them he determined that for all of them put together they needed a total of $27 to improve their situation. So he loaned them each the money they needed out of his own pocket. They each paid the money back and improved their life.

One person was a lady who made bamboo chairs. She did not have the few cents needed to buy the materials to make her chairs each day. So she borrowed the money from a money lender who required that she sell her chairs to him at a drastic discount to the market. This kept her in a poverty trap of never being able earn enough money to buy her own materials and sell her chairs at market price and thus earn a much more livable wage. Dr. Yunis loaned her the money to buy the materials herself and from the profits she made by selling her chairs at the market price she was able to pay back her loan and break out of the poverty trap.

This was the beginning of GRAMEEN BANK which was founded by Dr. Yunis.

Based on the information I have the bank has had a total of 6.61 million borrowers 97 per cent of which are women. The bank has 2,226 branches. It works in 71,371 villages with a total staff of 18,795. The amount of loans disbursed by Grameen Bank, since inception, is US$ 5.72 billion. $ 5.07 billion has been repaid. Currently they have outstanding loans of $ 457.52 million

You can get more information about Grameen Bank at

Friday, February 2, 2007

History of Micro Finance – ACCION

Founded in 1961 by Joseph Blatchford, Accion is the oldest Micro Finance organization in the Western Hemisphere. Joseph was a young man who wanted to help Latin American Urban poor by implementing various infrastructure projects. He worked on projects like installing electricity and sewer lines, starting training and nutrition programs, and building schools and community centers.

According to former ACCION director Terry Holcombe, in the 1970s the Accion team made this observation. "We began to sense that a school or a water system didn't necessarily have long-term impact. We were simply reorganizing the resources that a community already had within it, rather than increasing their resources."

They also observed two phenomena: First, Most Urban Poor worked at Micro enterprises making products like belts or selling food items. Second, most credit they obtained came from loan sharks at rates as high as 10% per day.

In 1973 Accion began to experiment in small loans at reasonable interest rates to people in Latin America. This experiment was successful and their program grew In the 1980s they began to tap into commercial credit and established Bancosol in Bolivia. Bancosol was the first commercial bank dedicated to lending to micro enterprises.

Today Accion works in Latin America, Africa, Central Asia and the US. In 2005 Accion partners served more than 1.88 million active borrowers. Since 1996 these partners have loaned $9.4 billion to more than 3.97 million people.

Accion provides excellent opportunities to participate in Micro Finance as a lender/donor. You can make contributions as they are a non-profit. Also, you can make loans to Accion and earn a little interest.

You can learn more about Accion and its history at their web site.

Saturday, January 27, 2007

Our Errand

You are not here merely to make a living. You are here in order to enable the world to live more amply, with greater vision, with a finer spirit of hope and achievement. You are here to enrich the world, and you impoverish yourself if you forget the errand. (Truman)

Monday, January 22, 2007

How Micro Finance Works

In my previous post I introduced the concept of Micro Credit or lending. I'd like to expand on that here.

There are many models for Micro Lending around the world. However, probably the most common is group lending. Poor entrepreneurs in developing countries don’t have collateral to put against a loan. So, instead Micro Finance Institutions organize their borrowers into small groups of 5 or ten borrowers. The borrowers in the group help to guarantee each others loans. If one of the borrowers does not pay back their part of the loan, the entire group will not be able to get another loan even if the rest pay theirs back. This puts peer pressure on the entire group to be responsible for paying back their loan.

Typically Micro Finance organizations do not set up an office where people come and talk to the loan officer about getting loans. The loan officers go out into the field and meet the borrowers in group meetings in their homes. They may have weekly or biweekly meetings with each group where they discuss business plans and collect payments or savings deposits. As this would indicate, payments are made regularly and often. Not monthly as is typical in the US.

Many Micro Finance Institutions offer business training, savings as indicated above, as well as money transfer products, and some offer insurance products.

All these products are great but the product that fuels the development opportunity is access to credit for the poor. These loans give small entrepreneurs the opportunity to buy a cow or goat to provide milk which they can sell in the market. Or to provide materials for making a product like belts or furniture. Or to purchase inventory for their small shops.

Tuesday, January 16, 2007

More on Systemic Need

I believe that all peoples and societies everywhere have the capacity to excel and thrive when it comes to generating economic value. Stated negatively I don’t believe that there are some groups of people who lack individuals with the innate talents needed to generate wealth as society as a whole. That is, under developed countries have just as many people per capita with the talents and aptitudes needed do drive economic success as developed countries.

For example some of the human aptitudes for affecting economic growth are leadership, the ability to organize, analyzing, working well with people, and being competitive. There are of course many others. If you took a random selection of say 1,000 people from the U. S., another set of 1,000 from Laos, another from Nigeria, and another from El Salvador you would find that roughly the same percentage of people in each group has strong leadership aptitude, and roughly the same percentage of people in each group has an aptitude for organizational skills, and so forth.

This thought just reiterates that for most people in underdeveloped countries the problem is not with the individuals in the society but rather how the society is organized. It is not set up to leverage the talents innate in the given society. If we want to help people in these situations we don’t need to send them aid (the solution for acute aid). Rather, it makes more sense to assist in fixing the system. So, the society does a better job of leveraging the innate aggregate talents of its society.

One might propose many approaches to changing the system from military coups and interventions to install new governments to various macro economic policy changes.
I would like to suggest one a little less radical but empowering. In developed countries most people have easy access to credit for things like home mortgages, school loans, and the financing of business ventures. Traditionally in most developing countries poor people have do not have this same access to credit and when they do it is at exorbitant interest rates from loan sharks. Micro Credit is a means to provide very poor people with small loans they can use to expand their small business ventures and improve their lives.

Thursday, January 11, 2007

Human Economic Need

Human economic need (by which I mean the lack of the ability to successfully feed, house, and clothe oneself and those one loves and is responsible for and to advance their wealth) can be categorized into three types. These categories are acute need, personal need, and systemic need.

Acute Need:

This is human need that is born out of some type of catastrophe. A flood has wiped away a person or family’s or community’s home(s) and their means of producing food. Under normal circumstances they get along just fine but something has happened that in the short term puts them at a distinct disadvantage. People in this situation need help. They need to have others come to their aid on a temporary basis to provide them with food, water, shelter and clothing until they can get back on their feet.

Personal Need:

Not put too delicately, this is need that arises because of a gap in individual competency. An individual may be blind or have a mental handicap which inhibits their ability to generate economic value and provide for their needs. As an example, in America many homeless have mental illness which is the main reason for their poverty. This need is best addressed by family support and special accommodations and programs supported by their society.

Systemic need:

This need occurs when the way in which a society organizes itself does not promote but rather discourages economic prosperity. Examples of this may be a land ruled by an extreme communist regime or a corrupt dictator or government that siphons off resources for the elite. People can not provide for their own needs or improve their lot because their societal system prevents them from doing so. There is nothing wrong with the individuals that prevent their success. There is no calamity that has wrecked their system of commerce. They are just stuck in a system that makes it difficult if not impossible to escape poverty.