Friday, June 12, 2009

Micro Economy

I was introduced to someone this week that wanted to know more about microfinance and how to use it. That got me thinking.

Microfinance is an odd misnomer. Microfinance is typically implemented by the ultrarich to work in communities lower down the economic scale. But take a look at the books, charts, and details. Microfinance does not work best in the lowest of the low, the true micro, but in the $1 to $5 a day / person economies, which again looking at the entire world charts and figures are the median majority, nothing really micro about them, they are average and the implementers are in the ultraoversized.

Another aspect is in the average economies is the communities are very interdependent. India has a regular system of clearing out slums and moving the ones housed there to better living conditions. Each time the response is 'you moved me away from my neighbors and my whole world is torn apart.' This is significant, in the average economy a single family does not make a single self sufficient financial unit. The neighbors are part of the financial stability of the family and the individual. These communities take time to rebuild because they are more than just give and take value transaction. They are built on solidarity, trust, love, and all the other emotions of the heart.

So while microfinance is neat an all what is really needed is focus on the matters of the heart, and looking at microfinance that truly works, the money transaction is coupled with education of social issues for change and improvement. The social aspect is more important than the financial aspect. But the average want the opportunity to be above average, the big difference they see is the money. The money is the draw to entice the real change that is needed. Sadly money isolates, and the result is the financially rich become the socially poor. There is a big gap between the average that need to coexist and the financial needs to be independent. That gap is larger than microfinance can handle alone.

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