Nobel Peace Prize Winner Yunus was principal technical advisor to a project I undertook to establish a microcredit program at the Agency for International Development in 1987. We worked together for a few years (1985 - 1990 and since), and Yunus on several occasions, stayed in my house in Gaithersburg, when he was visiting Washington DC. I was delighted to learn that he has finally won the international acclaim that his extraordinary achievement has long deserved. But it should have been Economics and Peace. If ever a man deserved a double from the Nobel Committee it is Dr. Muhammad Yunus, professor of economics, Chittagong University, founder and Managing Director of the Grameen Bank, Bangladesh and of the Grameen Trust. (Grameen = village, rural).

The Grameen Bank in Bangladesh is the most successful human endeavor in existence. Working in the poorest country in the world (in 1974 a famine killed more than a million people in Bangladesh) and with no more than $27, Yunus created a miracle. Astonishing ingenuity, combined with radical faith in his fellow human beings led him to an economic discovery that could rightly be considered the exact opposite of economics as we know it.

Yunus’s microcredit bank turns economics on its head. On many occasions he said that the way he designed microcredit was to look at the way commercial banks operate, and endeavor to do the precise opposite. The first three times I heard him say this, I thought he was joking - but Yunus is too skilled an orator to ever repeat a joke, and examining his microcredit system in this light, the implications of this statement are profound. Where banks make loans exclusively (in Bangladesh) to rich men, Yunus loaned only to the very poorest women.

Where banks require collateral, thus ensuring that those who have the most, can borrow the most, Yunus required poverty as the entry point to microcredit, and all loans are made on the basis of trust, there is NO LEGAL INSTRUMENT between the bank and the borrower. This trust is invariably repaid in the form of very high repayment rates – 97% and better is common. That’s on time loan repayments, folks, actual default rates in Grameen Bank are less than half of one percent. (Yunus has branches of Grameen that have been at 100% since the day they opened) No commercial bank in the world can match that statistic.

Grameen bank borrowers, many of whom had literally never handled money before taking out their first loan - often less than ten, and, on at least one occasion, less than two dollars, repay in fifty weekly installments. All financial transactions are carried out in public meetings attended by all of the other members. Just get your head round that. And compare it to the way that economic transactions are carried out in our system. And I defy you to figure out a way to use such a system, with public accountability, to accumulate the wherewithal to carry out an event like 911. It cannot be done.

Microcredit loans promote cooperation rather than competition. Loans are made to the individual borrowers in groups of five. And each member of the group must agree that in the event one member of her group is unable to repay her loan then the rest of the group will cover her debt. In this way the success of each is important to all, and the group members eagerly trade with each other, and carefully supervise each individual loan request. Loans are approved by the group, that is by the borrowers, NOT by the bank. Consider. In our system, everything that exists, is there because it has been approved by a Bank. And the bigger and more substantial a thing it is, the more banks are involved in it’s form and function. Achieving it’s ultimate expression in say, the military-industrial complex, or the system of commercialized medicine, or the War on Drugs, or 911 depending on your point of view.

In the microcredit program, all loans are approved by the borrowers, who, at least in the early years of microcredit development, are young mothers. Young mothers tend to have very pronounced ideas about what constitutes a safe and comfortable place to live. Ideas that start with a decent supply of fresh organic produce (food, we used to call it), clean water, access to primary health care, decent schools, sufficient clothing, proper sanitation, and functional and affordable housing. Microcredit provides the means by which all these things are attained. SO while it is not in and of itself a panacea, microcredit provides both the means and the organizational framework which allows for the spontaneous creation, by the participants, of the things they themselves see as needed.

Yunus designed microcredit in such a way as to be replicable. He did this because there were a very large number of very poor people throughout Bangladesh, and so he had to set up a program which trained the staff - generally University Graduates (i.e. males from better off families) in supervising an average of 400 individual borrowers, at their entry level position. He had to design the training program to overcome the contempt that many well off people are taught to have for poor people. Again this contempt is what might be considered a negative externality of our economic system, which values competition as a driving force, and needs an underclass of disgustingly impoverished and pathetic individuals for everyone to fear falling into if they fail to do their master’s bidding (i.e. get a job and pay taxes). So the training program at Grameen successfully de-programs even the arrogant ignorant wankers that are sometimes the product of the education system (your own children, and your good self excepted, of course).

Yunus turns this raw material into expertise, through a self-replicating training program - as the bank grows it produces more trained staff (about 2/3 of those who start, don’t finish the two year program, so its no cakewalk) as a by product, or co-incident with the expansion of the Bank into new areas of operation new staff are trained. Note that the training is the opposite of the training received by persons entering a traditional bank. In Grameen one begins by discovering that your role is subordinate to that of the poorest person in the community, and once this lesson has been learned, a life of service becomes possible, which is, according to the participants in the Grameen Bank staff, its own reward.

Every new participant is another family that, through the self directed, activity of it’s female head of household is empowered to provide for itself a decent, and steadily improving standard of living. The men of those families are also empowered through the more informal system of loans taken out on their behalf, by their wives. The nature of this relationship is such, that even in a rather primitive and ignorant population such as one found among poor people in Bangladesh (and just about everywhere else) abuse of women immediately and precipitously declines. And, because microcredit directly addresses the two preconditions (grinding poverty, and female empowerment) for achieving a reduction in the birth-rate, a sustainable population - surely the single most important goal of humanity - is achieved without the need for the mass exterminations curretly favored by the Malthusian secret government.

Yunus deliberately halted the growth of Grameen Bank in Bangladesh in order to demonstrate that the Grameen Bank was capable of funding its day to day operations from current activity and new capital was needed exclusively for growth. For three years a team of World Bank staff poured over the books and examined every transaction down to the minutest detail, and in the end were obliged to conclude that Grameen Bank was “viable and worthwhile”. And also to break precedent by providing a two million dollar grant (the first and only such transaction in World Bank history) which can properly be seen as payment for the gross inconvenience of that three year inquisition imposition. And also as an expression of the continuing, and ferociously succesful work of RESULTS in promoting microcredit development worldwide.

Prior to stopping the growth of Grameen Bank, the Bank had been growing at an annual rate of 100% - doubling insize every year. In one more year Yunus would have been in every single village in Bangladesh. So Yunus stopped expanding in Bangladesh, and threw his energies into the Grameen Trust, an organization designed to bring this technology to communities around the world.

So they gave Yunus the Peace prize, because they could not give him economics. Don’t look too close folks. You might notice that this idea now serves 100 million families -- that’s from a standing start in 1976. It generates sufficient wealth to eradicate poverty and cover it’s own operating costs, and is growing very fast worldwide. It grows best where poverty is most severe. It is ecologically, economically, socially and culturally sustainable, it is at it’s heart cooperative and non-violent in nature. It currently serves 100 million of what were demonstrably the poorest families in the world before they entered the program. And it is growing at more than 30% annually. You do the math.

Q: Which comes first, the year that half of the world’s population is engaged in microcredit based economic activity (2012), or the date by which the Nobel Prize committee grows some balls?

I was legislative director of RESULTS for three years (from 1987 - 1989). Alex Counts (President of Grameen Foundation) was my assistant, when he was an intern from Cornel University, and Sam Harris, now Executive Director of the Microcredit Summit, was my partner, and nominally my boss, though the microcredit project was mine, and a RESULTS/Grameen project from inception to 1990 when I passed the program over to these two gentlemen, in whose hands, as you can see from their respective web-sites, microcredit continued to flourish.

RESULTS http://www.results.org/website/article.asp?id=19
Grameen Foundation http://www.grameenfoundation.org/
Microcredit Summit http://www.microcreditsummit.org/