Introduction

“Banker for the Poor” and 2006 Nobel Peace Prize winner Muhammed Yunus, believes that credit should be a human right. Although his success with the Grameen Bank in Bangladesh shows the effectiveness of helping people out of poverty through the use of micro credit, many conventional banks as well traditional economists find this idea troubling. This paper will argue that access to credit should be a human right because, as illustrated through his and many other micro credit programs, it makes possible so many other human rights listed in the UN Universal Declaration of Human Rights which, as of now, are just words on a paper for billions of people.

A Realist’s View on the Universal Declaration of Human Rights

All human beings have the right to education, property, employment, rest and leisure, standard of living adequate for the health and well being including food, clothing, housing, medical care and necessary social care. These rights granted by the governments of the world following World War II are at this time just words on a paper. Over fifty years later nearly half of the world lives below the poverty line and many of these rights that their governments promised have yet to become a reality. If legal realism asks what do organizations do rather than what they say, it is clear that the governments of the world are either not concerned about the world’s poorest or have yet to find a way to effectively fulfill the promises made decades ago.

Credit

The idea that credit is a human right is based on the premise that credit can give rise to many of the rights cited above providing an effective self sustaining path out of poverty. It is not a human right, but rather the key human right. The ability to obtain credit allows for many of you to sit in your seat here at Columbia Law School. For many, paying $40,000 (or at least some of it) a year in undergraduate education plus nearly $60,000 at law school up front would make education prohibitive. Paying nearly half a million dollars for a decent house would also be impossible for an overwhelming majority of the population. Credit allows for upward social mobility by taking a chance on the potential of individuals.

The upward social mobility that we experience through school loans and mortgages are being used to transform lives in the parts of the world that experience the most destitute of poverty through micro credit.

Micro Credit In Developing Nations

Micro Credit is based on the idea that a dollar can circulate a community several times adding value to each individual each time it passes through their hands. It is a business model based on social development rather than profit maximization. While Yunus’ approach was to create a bank owned by those to whom it lent money, modern examples have incorporated technology to make the possibilities of micro lending much more powerful. Kiva.org connects stories of entrepreneurs throughout the world to potential lenders, cutting out the middlemen of profit maximizing lenders whose interest rates trap and cripple many of the world’s poorest and corrupt governments who either attached harmful conditions to the money lent to nations or the borrowers who did not put the money into the hands of its citizens. At this site an individual can lend $50 and along with several other lenders to a mother allowing her to buy a chicken. That $50 will be repaid plus interest and potentially the money repaid can be given to another borrower. Meanwhile, the mother can now sell some eggs at the market and/or allow a new chicken born. Potentially, the mother can soon open a chicken farm through another loan.

A Realist’s View on Micro Credit

Although detractors believed that lending to the poor wouldn’t work because a) the borrowers could not pay it back, b) they lacked the imagination and drive to be successful entrepreneurs or c) it would not bring any great improvements, the Grameen Bank in Bangladesh has had incredible success. Over 98% of borrowers pay back their loans showing that everyone as the talent to be an entrepreneur and over half of the people who participate in the micro lending find themselves out of poverty within five years of the original loan. Traditional bankers and economists continue to believe their theories and assert that the poorest should or could not be given credit. Even in the face of what is actually happening on the ground, detractors rely on theories and do not focus on what these micro credit organizations are actually doing. A thorough investigation of the facts show that their theories’ concerning the world’s poorest is not correct. Grameen Bank has created an organization that is actively changing the lives of millions of people while ivory towerites continue to believe what they read rather than what they see. A realist looking to eradicate poverty would abandon ineffective theories in support of the overwhelming successes that have been shown.

A world with micro credit

All of the benefits conferred by micro credit, including the millions of families for which it has provided education, property, and increased standard of living show that if a realist approach with regards to providing the rights that the UN as conferred is taken then the key right to be granted is a right to credit. A world with micro credit entitles each human being to financial services that allow for the individual to create through his own genius and creativity many of the rights that the world has agreed are important. These new businesses and opportunities have a legacy effect allowing children to be healthier, go to school and contribute positively to society. The model built by Yunus has been modified to fit other nations but a fundamental right to credit will put pressure on nations to seriously invest in the potential of its citizens in their ability to provide for themselves where the nation cannot.

• There are two ways in which this promising paper can be much improved. First, you consume too much of your space and attention on mere descriptive matter. You could link from one of your introductory sentences to any one of a hundred concise explanations of the Grameen Bank's flavor of micro-lending written by capable journalistic explainers at the time of the Nobel Award, replacing sentences of yours that presently consume almost a quarter of your available space. You could then concentrate your attention on amplifying your argument about credit as a human right, which is the actual theme of your paper and which you do a comparatively weak job presenting in the present draft, largely because you don't have the space to make real, complex arguments or to meet any of the obvious objections. Strengthening your central arguments, which is the second and more important of the routes to improvement, will mean confronting questions from the simplest "Why is credit a human right but not money?" to the more complicated "Suppose, as many observers believe, Grameen Bank microlending worked for localized rather than universal reasons--for example, because the tightly-knit social structures within which potential borrowers were linked provided peer pressure to repay and active supervision of the borrower. Is microcredit then a human right where and because it works, or still a human right even where and when it doesn't?"

-- BetreGizaw - 18 Feb 2008