Key text:(in reference to Muhammad Yunus) You know, father of the microloan. Won the Nobel Peace Prize. He figured out if you made credit-as little as $100-available to impoverished women, they could become self-sustaining entrepreneurs! Do you realize we could be lifting 3,000,000 families out of poverty with what we spend here in Iraq in a single day?
If giving people money en masse can cure poverty, don’t you think we (or someone else) would’ve done this years ago? It doesn’t work! Anybody that has ever taken Economics knows this! But that doesn’t stop Gary from spreading his propaganda now does it?
I won’t bore you with all the different ways it won’t work so I’ll just touch on the Law of Diminishing Returns. “According to this relationship, in a production system with fixed and variable inputs (say factory size and labor), beyond some point, each additional unit of variable input yields less and less additional output. Conversely, producing one more unit of output costs more and more in variable inputs.”
In plain english, if you take a remote village here in Alaska for example and give a $100 loan to one person then it might work. But $100 each to a dozen people wouldn’t work as well. You’d need to increase the amount of money for each extra person. Why? Lets look at it this way: If one person got $100 and they buy some clothes to resell to the rest of the town they might make a profit. But if you did this to say, half the city, could each one of them open a clothing store? No. People would only buy a limited amount of clothing in any given time period and profits would fall drastically. Even if they each created a store with a different product it still wouldn’t work. It’s sort of like playing Monopoly at home. It won’t take long before the less successful ones lose their money and the better ones get the money. Then you’re back to square one. Wealth is accumulated in a small group, again.
Still skeptical? Fine, I’ve got proof. Yes, the real life kind too! Ever hear of the Alaska Permanent Fund? Each year the State of Alaska shares with the eligible residents a portion of the oil revenue/earnings from investments with the revenue. Last year each eligible resident got $1106.96 Yup, over one thousand dollars for each eligible person in the state! So my family of five got over 55 hundred smackaroos. Cool, eh?
So where am I going with this? Well, if all it takes is $100 and you can be a “self-sustaining entrepreneurs”, then why do we still have so much poverty in this state? And this isn’t “Credit” or some loan. Nope. It’s cash to spend any way you please. And most people spend their kids money as well! And to top it off, we get this EVERY YEAR!!!! In 2000, our payment was $1963.86 for each eligible resident too! So why do we still have poverty? Check that Law of Diminishing Returns out again.
Bottom line is Gary Trudeau is misleading you. If you think just giving/loaning people money can cure poverty then go the the back of the class or better yet, take an economics course or two.
From the 2004 US Census: Among places of a similar size, the poverty rates ranged from 7.4 percent for Anchorage, Alaska…. And it gets worse outside of Anchorage too.
$100 Credit cures poverty, eh Gary? Stick to humor and lay off the propaganda.
Note: He did qualify his statements with “as little as”, “they could” and “we could be lifting…” so he does have some room to wiggle out of his misleading tripe. But tell me this Gary, if you know so much about this, why qualify your statements? If you feel that strong about something and wish to inform people about such an important topic, why not print facts and not qualified statements? Dropping names and saying ” Won Nobel Peace Prize” doesn’t impress me without facts nor does it make your propaganda legitimate.