Micro Lending?

[EnderIII]

Any one know how effective something like this is?

Kiva Micro Lender (http://www.kiva.org/app.php)

It seems like a good idea, but i just don't know enough about this sort of thing and I thought some people with econ background or otherwise thought about things like this might have some insight.

Brief summary for lazy linkless folks: is lending small amounts of money to various people around the world a good thing to do? Repayment rate is very high (over 99% i think). You don't earn interest on your loan, but some middle institution will (although Kiva monitors these lenders to ensure that rates are reasonable). This might be changed in the future to encourage further particpation.

My thought is that if this is a good thing, it would be pretty easy to occasionally skim some interest off of paypal and do something good. Especially since its a loan, all you are likely to lose is the interest you would have earned. Any thoughts?

[PairTheBoard]

I think it's a great idea. It's a kind of capital-charity as I see it. It requires people to donate their time, or take very low pay, for acting as the Loan Officers. But it's not just giving money away. It's suppying Capital to people who will make good use of it. I think what it amounts to is the reestablishment of the economic Base for primitive undeveloped economies. It's that Economic Base that gets wiped out when more advanced "imperialist" type Economic forces swoop in on underdeveloped ones.

Natural market forces wipe out something right now, which may have hidden long term value for the overall market. Once wiped out, the market cannot easily restore them without a charity component to get them restarted. It's a little like destruction of an ecosystem causing extinction of rare species which have no value at the time but which somewhere down the road may prove very valuable. Unfortunately, once extinct, the species is gone.

PairTheBoard

[borisp]

[ QUOTE ]
I think it's a great idea. It's a kind of capital-charity as I see it. It requires people to donate their time, or take very low pay, for acting as the Loan Officers. But it's not just giving money away. It's suppying Capital to people who will make good use of it. I think what it amounts to is the reestablishment of the economic Base for primitive undeveloped economies. It's that Economic Base that gets wiped out when more advanced "imperialist" type Economic forces swoop in on underdeveloped ones.

Natural market forces wipe out something right now, which may have hidden long term value for the overall market. Once wiped out, the market cannot easily restore them without a charity component to get them restarted. It's a little like destruction of an ecosystem causing extinction of rare species which have no value at the time but which somewhere down the road may prove very valuable. Unfortunately, once extinct, the species is gone.

PairTheBoard

[/ QUOTE ]
Absolutely...a bit like a catalyst for a chemical reaction, a program like this lowers the "activation energy" for potentially beneficial contributions.

But is there any risk of scam beyond the usual risk involved with lending? I poked around the site, and it seems legit, but then again that is the hallmark of a good scam...not trying to be cynical here, just realistic.

[PairTheBoard]

[ QUOTE ]
[ QUOTE ]
I think it's a great idea. It's a kind of capital-charity as I see it. It requires people to donate their time, or take very low pay, for acting as the Loan Officers. But it's not just giving money away. It's suppying Capital to people who will make good use of it. I think what it amounts to is the reestablishment of the economic Base for primitive undeveloped economies. It's that Economic Base that gets wiped out when more advanced "imperialist" type Economic forces swoop in on underdeveloped ones.

Natural market forces wipe out something right now, which may have hidden long term value for the overall market. Once wiped out, the market cannot easily restore them without a charity component to get them restarted. It's a little like destruction of an ecosystem causing extinction of rare species which have no value at the time but which somewhere down the road may prove very valuable. Unfortunately, once extinct, the species is gone.

PairTheBoard

[/ QUOTE ]
Absolutely...a bit like a catalyst for a chemical reaction, a program like this lowers the "activation energy" for potentially beneficial contributions.

But is there any risk of scam beyond the usual risk involved with lending? I poked around the site, and it seems legit, but then again that is the hallmark of a good scam...not trying to be cynical here, just realistic.

[/ QUOTE ]

Yea. It's vulnerable to corruption. Another reason why it's difficult for it to happen naturally. Corruption kills it. A big component of the Charity aspect is Integrity. A good Loan Officer is normally getting paid as much for his Integrity as for his business sense.

From what I understand, the guy that started doing this put up his own money. He had already made a fortune as a venture capitalist.

PairTheBoard

[EnderIII]

Thanks for the responses. This seems like confirmation of my initial intuiton (but more explicitly stated), and with the added benefit of giving me some cautious skepticism to balance out my naive optimism. I often fail to see opportunites for being devious. Even so, I think its still worth a shot.

[BCPVP]

This article (http://www.mises.org/freemarket_detail.asp?control=215&sortorder=articl edate) isn't so enthusiastic about micro-credit.

[WhoIam]

[ QUOTE ]
This article (http://www.mises.org/freemarket_detail.asp?control=215&sortorder=articl edate) isn't so enthusiastic about micro-credit.

[/ QUOTE ]
That article is 12 years old and only talks about one guy.