A Critique of Yunus and His Micro-Finance

0:00The way I see matters, there are two teams out there. There's us and them. And what does the us team, the libertarian team believe in? The non-aggression axiom and private property rights based on homesteading. What does the other team believe in? The other team believes in coercion, violence, smashing innocent people, stealing from them, robbing them, Ordering Them Around. The other team has got several subsections. The main subsection is socialism and fascism. They're both on the same team. What does socialism believe in? Well, one definition of socialism is government ownership of the means of production. And we have the USSR. The other means, facade of private property, as in the Nazi or the Fascist Society. But the state orders everyone around. You know, what's-his-name used to say, there's not a dime's worth of difference between them. I think the governor of Alabama, George Wallace. Well, there's not a dime's worth of difference as far as I'm concerned between international socialism, the Soviet kind, and national socialism, the German kind.

1:21They're both bad guys, and we, if we want to be libertarians, are honor-bound and duty-bound Okay, so how do we look at Eunice? Who is Eunice? Eunice is a complex thing, because in some sense he's on the other team, but in another sense he's not really violating any libertarian laws. Let me try to explain that. Well, a platonic unis isn't anyway. The actual unis does. The actual unis takes money from governments and uses it to engage in microfinance. What's microfinance? You go to the third world country and you give small loans, a hundred bucks, a hundred and fifty bucks, to women, mainly women in these third world countries, and they set up a business.

2:15Now, it's sort of complicated because I am on record as saying it's okay to take government money, a la Ragnar Danischkold, redistributing from government to us guys. And I conclude that it's only legitimate for libertarians to do it. It's only legitimate for a libertarian to use the government roads or for a libertarian to be a professor in a state school. But that's a different paper and it's worthy of its own. So I am against him for taking government money, not because there's something intrinsically wrong with taking government money, but he shouldn't be doing it because he's on the other team, at least according to libertarian laws, I see it. He's also a feminist, you know, that the market is inherently anti-feminist, it's sexist, and the women are deprecated, well in many of those societies they are deprecated in a way that they're not here in an improper way.

3:11So he's, but he's really a socialist, and I don't mean in the voluntary socialist sense of from each according to his ability and to each according to his need, whereby the kibbutz and the monastery and the family is a socialist institution, but they're voluntary socialist institutions. He's not a socialist in that sense, which is certainly compatible with our team, but he's a socialist in the bad sense. You know, capitalism is evil and the fact that we're not giving microfinances and market failure, and what he's doing is coming with all sorts of bells and whistles and promoting socialism. But we could take a platonic eunus or a platonic microfinance shorn of all these problems and let's just say that he didn't take government money and he wasn't, well, I can't say he's not promoting communism, but let's say he wasn't acting incompatibly with libertarian law at all. Let's stipulate that just for argument's sake. A little bit background the reason I got into this is two of our very good students at Loyola

4:11University New Orleans are hopped up on this they're really into microfinance so much so they went over to where was it Bangladesh or somewhere and they showed a they gave a presentation and at the end of the presentation there were the two of them and Eunice's got his arms around them and they're all smiling and if I had a you know a tomato or something I were thrown it at the screen because Fair Trade Coffee This is a leftist thing against free trade.

5:02Can we really on our team support fair trade coffee? It seems problematic. Let me make a distinction. The distinction is, is it compatible with libertarian law to have fair trade coffee? Sure it is. So on the one hand we have, is it compatible with libertarian law? On the other hand is, will it promote libertarianism? A very, very different question. And not only Do I want things that are compatible with libertarianism, but I also want things that promote libertarianism. And my claim is that microfinance is compatible with, but does not promote, and therefore we should not root for. Doesn't mean I want to prohibit it by law. There are a lot of things I don't like that I don't want to prohibit by law. Rap music, I don't like, but I don't want to prohibit it by law.

5:52Take another one. There's this thing, the Jitney, the Institute for Justice does yeoman work. People want to drive around and put a little sign up and say, you know, we'll drive you around on this street. Jitneys, free market jitneys, fine. But suppose you had a lefty jitney and it said, capitalism sucks, promote socialism, this is the people's transportation. Would we put them in jail for that? No. We would support keeping them out of jail because they're doing nothing incompatible with libertarian law. But would we be on their side? Would we promote them? Would we take pictures of us smiling together arm in arm with them? Not if we want to promote liberty. So there's a very important distinction between promoting liberty and being compatible with liberty. And this is something that I can't get anyone at my school to see the difference.

6:47My colleagues in the economics department, most of the students that we're trying to get to promote liberty, many of them whom are here, I think we have 13 students from Loyola at this event, and most of them are weak on this, so I'm trying to convert them back to the one true faith on this. Take another case. There's this thing called the Provo White Bicycle Scheme. What's the Provo White Bicycle Scheme? You buy 10,000 white bicycles that are distinguished because they're painted white. And you put little signs that capitalism is evil and socialism is the way to go. And these are people's bicycles. And the idea is everyone should just ride them around and then leave them there out of under the rain. And people should just ride bicycles like that.

7:32that we should sort of have socialist bicycles in that sense, in a sense that is not incompatible with libertarianism, but is this something that we support on the grounds of promoting liberty? Well, I don't think so. My strategic sense is that this would be a horrendous, gigantic mistake. Another example is there was this movie where the guy played this little horn and he went dead. Does anyone know the movie? I should have got the movie down before but I took my notes, I don't remember it. He turns into another body and now he's in the body of a big businessman and he has this thing, buy my tuna even though it costs ten cents more Again, just one more example of a lefty kind of a thing that is compatible with libertarianism, but is not promoting libertarianism, or affirmative action.

8:37Another lefty kind of a thing that we have to have affirmative action. Well, coercive affirmative action is incompatible, but voluntary affirmative action is compatible with libertarianism, but does it promote libertarianism? I think, I think not. Take one more example. Another example of a student of mine who got involved in unionism. We have to promote unionism. The tomato pickers were being exploited by the bosses. We had bossism. And I said, well, you know, this isn't really on our side promoting unionism. He said, well, it's voluntary unionism. And, and again, you can have voluntary unionism. Freedom is a complex thing that not all unions are incompatible with the libertarian theory.

9:24I mean, as long as they limit themselves to a mass quit, it's fine. And that's this kind of a union according to the student of mine. But again, it's not really our issue. Let me give you two cases where it really was our issue and how we distinguished properly from the lefties with whom we were making common cause. One was the war in Vietnam. And we libertarians were as much against the war in Vietnam as the lefties were. And I remember one lefty parade where there were millions of lefties, you know, war, U.S. out of Vietnam, capitalism is evil, you know, the usual combination of things. And our group had a thing, U.S. out of the Bronx, which is, you know, sort of uniquely libertarian.

10:13So I don't mind cooperating with these people. I certainly don't mind taking over their activities. But as long as we remain true to our principles. Another one was I was involved when I first met Murray in this thing called the Peace and Freedom Party. The Peace and Freedom Party had three caucuses. One was the Progressive Labor, the Maoists. Another was the Trotskyites. And then we had a Libertarian Caucus. And we were in the Peace and Freedom Party. and We Kept Our Own Identity and there's nothing wrong with that.

10:53So, how could we react with regard to microfinance in this regard? Well, we could start our own microfinance thing. I'm not against microfinance, per se, if we had a libertarian slant on it. on it. And it certainly wouldn't include smashing capitalism. But if we said, well, bank regulations are illicit. And the reason we don't have microfinance as part of the market, the reason the lack of microfinance is not a market failure is because of the government limitations on entry into banking. In order to become a licensed bank, you have to go through all sorts of of Hoops, and the microfinance people are not allowed to go over those hoops. So if we had a free market microfinance, there's nothing in it intrinsically that I would oppose on the grounds of promoting liberty. But if we just go and join them and don't distinguish ourselves from them, as these two kids did not distinguish themselves from them, then I see a problem with that. Right now at Loyola University, New Orleans, we have a microfinance

12:02This is a microfinance initiative. Does this microfinance initiative distinguish itself from the Eunice type? No. It's just, you know, microfinance. Now, if they said something like free enterprise microfinance or capitalist microfinance or something in any way to distinguish ussens from themens, given that ussens are the good guys and we want to promote our team, but they don't do that. They just sort of say, well, microfinance is great. Well, what microfinance means in the view of most people is unis and opposition to free enterprise and opposition to markets. What about curing poverty in the third world? Will microfinance do it? Now I'm getting a little bit off this topic. I'm now addressing a positive claim, not a normative claim, before I was doing normative and strategy.

12:50Well, to me, to be an entrepreneur is a matter of specialization and division of labor. Not everyone can be an entrepreneur. The way to be an entrepreneur in the free enterprise system is you just spend a little less than you earn and now the difference is your savings and you invest it and you become an entrepreneur. In other words, there's nothing, even in a semi-free country such as the United States, there's nothing preventing self-microfinance. The best way to help poverty in the third world, though, I don't think is really with microfinance. If that's your goal, this is not a good means toward it, even though it's compatible with libertarianism. The best way is to, well, not to promote sweatshops, but at least to defend sweatshops against attacks by the left who hate sweatshops.

13:38What's her name? Gifford, Gifford's wife, Emily Lou Gifford, something like that? Kathy Lee Gifford, she's my gal. She goes over there and she sets up a shop in Bangladesh and she pays 50 cents an hour and everyone says, oh, 50 cents an hour, that's despicable. But they're getting 10 cents an hour and it's like quintuple what the salary is there. She has to pay more otherwise she's not going to get a labor force. What would be the leftist view toward sweatshops? Well, I don't have to answer that question in a group such as this. We all know what the leftist view is toward sweatshops. Smash The same people who are supporting microfinance are opposing sweatshops and opening up industries and maybe getting rid of tariffs.

14:26Do these guys, do these microfinance types want to get rid of tariffs? No. Whenever we have these free trade things like in Seattle or somewhere, all the lefties are running rampage. No, we have to have fair trade. We can't have free trade. So in aligning ourselves with these guys, we're aligning ourselves with people who oppose free trade, who oppose sweatshops, who oppose multinational corporations. That's their team. And I'll be damned if I'll be happy with our best students joining the other team. We want to keep them on our team. Rah-rah, our team.