In past years, Nobel prizes have been awarded for the gaming theory that is at the heart of spectrum auctions and even for sophisticated transistor technology used in cell phones.
This year the Nobel Peace Prize went to a man whose economic-but really humanitarian-genius is putting cell phones in the hands of poor Bangladesh people otherwise without a prayer of ever making a phone call or making a go of it at life itself.
Big things start small. For Bangladeshi economist Muhamad Yunus, it was one idea and a world of difference.
It’s the story of how Yunus and his inspired creation of the Grameen Bank took a compassionately minimalist-but really classical economic and capitalistic-approach to business development and job creation in his poverty-stricken land. Yunus offered micro-loans to his country’s poor, believing even a crumb of credit-small enough to be repaid-might be just enough to leverage the skill, determination and entrepreneurial savvy in Bangladesh.
Some Bangladesh citizens have used the loans-said to average $200 and usually repaid-to buy cell phones. Some cell phones were then employed as indispensable tools in various business ventures, no different from their application in industrialized nations. Other borrowers, though, bought cell phones and effectively became village communications carriers.
The interest on the loans is said to be higher than that charged by banks and other institutions, but then the poor of Bangladesh cannot get to first base with established financial institutions in their homeland.
Enter Yunus.
“Lasting peace cannot be achieved unless large population groups find ways in which to break out of poverty. Micro-credit is one such means. Development from below also serves to advance democracy and human rights,” stated the Norwegian Nobel Committee in Oslo. “Loans to poor people without any financial security had appeared to be an impossible idea. From modest beginnings three decades ago, Yunus has, first and foremost through Grameen Bank, developed micro-credit into an ever more important instrument in the struggle against poverty. Every single individual on Earth has both the potential and the right to live a decent life. Across cultures and civilizations, Yunus and Grameen Bank have shown that even the poorest of the poor can work to bring about their own development.”
A tipping point? I kind of doubt it. Bangladesh is not apt to break free anytime soon from economic, political or human squalor. But Yunus has helped improve the lot of many in his country. Perhaps there’s a bigger lesson here-one for poor and rich nations alike. Ideas-even unconventional ones-have the power to change things for the better. It should not take crises or desperate times to animate policymakers to think outside the box. I bet Yunus and GMU’s Tom Hazlett could hammer out a universal service fix in a weekend’s time.
