Maybe you've seen the ads on Hulu of President Clinton touting this non-profit Kiva website that makes it possible for firstworlders to make microloans to borrowers in the developing world. It's also something that's been cycling through the google ads on this site. Not totally surprisingly, I actually have a big problem with this crap.

To begin with I don't trust Kiva because they go to great lengths to hide the fact that the borrowers are charged interest, and interest at high rates, on the money lent. The rates charged on the money lent is not listed anywhere on the site, and you have to dig into their "what is microfinance" FAQ to get the following bit of neoliberal nonsense What Kiva ignores, and frankly I think this is powerfully deceitful, is that 1: the money is being originated for free through charitable lenders and paypal so there are no costs for the money. 2: the risk of default is born by the charitalbe lender, so there is no cost for default. Therefore the only costs are transaction costs, the money that kiva employees and their partners draw. In otherwords the overhead. As a charitable organization, they should not be passing their overhead on to the people they are helping at usurious rates upwards of 36%, which is the only number I could find on the site. It's worth noting that Kiva's response on this is quoting the neo-liberal think tank Consultative Group to Assist the Poor. CGAPs core mission statement is that the access to capital in the form of debt and insurance is vital to improving the lives of people living in poverty.

This is a microlevel version of the theories of liberalization of credit adopted by the World Bank and International Monetary Fund in the eighties and nineties that ended up bankrupting Argentina and funneling development money to corrupt dictators in Africa like Idi Amin all the while talking those same dictators to privatize and sell off state owned industries to multinational corporations as part of the terms for the development aid. But there are people with a better understanding of global capital than I have who can tell you all about why the World Bank and IMF's neoliberal aid policies have ended up crippling the countries that they were supposed to be aiding with mountains of debt. What matters here is that it appears to be happening in the third world with microfinance as well. Why this is surprising to anyone is beyond me.

We have had, in our own liberalizing economy, over the last thirty years our own version of micro lending at usurious interest rates, and it hasn't helped. Of course here, we didn't call it microfinance and hail it as a way for the poor to bootstrap their way into a higher standard of living. No. Here we call it payday lending, and it's widely recognized as a great and immoral scam that financial reformers all over the country have been trying to rein in for the better part of two decades now. And so it should be no surprise that the patterns in payday lending that make it vicious and parasitic are now starting to appear in microlending as well. Among the worst practices are the flat rate calculations that conceal actual APRs (a practice that is mostly illegal for payday lenders in the US because it is so deceptive), and the issuance of loans to pay for essentials rather than to invest in production capacity, which in essence converts the interest on a loan from the cost of expansion of a single persons business to a pure suck on a poor family's already limited income. Add to this the fact that there appear to be no controls on interest rates even contemplated, and the fact that the first world neoliberal braintrusts who love this model so much are treating the high interest rates like the dirty little secret of microfinance and hiding it is much as possible, and the disaster that increasing the developing world's dependence on microfinance much more would be becomes all too clear.

As for Bill Clinton, well, revisionism aside it's important not to forget that he's the son of a bitch that gutted our own social safety net in the nineties with his disastrous "bi-partisan" welfare "reforms." The fact that he looks on the privatization of international development as a good thing is not unsurprising. Which is not to say that I think Bill Clinton is a bad person. But it's important to remember who the members of the new left are, and to identify the character of the policies they support. Because when they inevitably prove to be enormous failures those of us who are paying attention and aren't so stupid as to look to private enterprise as anything other than the voracious amoral cannibalistic monster that it is, we need to be able to say "I told you so" in the most forceful voice possible in order to win the argument about how to go about rebuilding our financial and regulatory institutions in the wake of the coming catastrophes.