Thursday, June 5, 2008

1st Post and Some Yunus

Hello and Welcome! This is the first post of my new blog whereby I will be discussing topics of interest on a global scale. First up, Muhammad Yunus' "Creating a World Without Poverty". Now I am not done with it yet, but nonetheless, it has made me think of so many issues that I simply had to write about it!

In Yunus' sophomore book, he discusses his reasoning in creating Grameen Bank. Yunus argues that NGOs, charities, governmental organizations, and traditional businesses, what he calls PMBs cannot aptly meet the idea of ending poverty and creating sustainability because of their very structure. Instead, he calls for a fulfillment of the missing parts of capitalism, Social Business. Yunus then continues to define social business and all of its applications, all in all filling out approximately 50 pages, with almost 200 left to go.

Yunus' argument is very valid, NGOs simply lack usually structure and adaptability, charities need to always be searching for more funding, governmental organizations are inefficient due to their bureaucratic nature, and traditional businesses need to maximize profit. All very true and pointed out in Dr. Yunus' book.

Social business, again as Yunus points out, seems to be the perfect match. Social businesses are identical to traditional businesses except that they search not to maximize profits so they can consider themselves a success, but instead so they can expand their lines and produce more net benefit for whatever area they are attempting to aid. Take this example:

An organization is founded to provide clean, cheap energy to developing countries so that they may better advance technologically via industrialization. As such, they have found their place in the market, just like a traditional business. But, instead of increasing their price, they keep it high enough to cover their costs, but low enough so their market may be satisfied. Yunus stated that their could easily be competition and that it would be encouraged. There would be investors, etc. Simply, they would not get any revenue outside of what they initially put into the company.

Now I believe that this is a great idea, but I wonder about its viability in poorer areas of more developed countries. Take Grameen Bank for example, what is its viability in a poorer area like Harlem, inner city LA, or the Lower 9th Ward. They claim a 97.8% repayment rate in rural villages in Bangladesh, but is this viable for poor areas of the 1st World, or semi-developed countries?

1 comment:

Bev said...

Wow Tomas,
I love your new blog. Very insightful! Auntie Bev