The concept that the benefits of high economic growth will trickle down to lift the poor of the BRICS countries out of poverty has not worked, as the money making machine that is the foundation of economic relations is designed to funnel cash to the few rich rather than the mass of poor, Nobel Peace Prize winner Muhammad Yunus, told The BRICS Post in an exclusive interview on the sidelines of the Seventh Astana Economic Forum in Kazakhstan.
“There is a fundamental flaw in the system as it makes the pursuit of money the be-all and end-all. It makes money, not people, the centre of its value system. Money is inherently neither good nor bad, but it is the pursuit of money that can lead to corruption and moral compromises. Trickle down was supposed to work, but without the redistribution of income via taxes and social grants such as the Familia Bolsa in Brazil or the child support grants in South Africa, income inequality would be far worse. Those support programmes have a place, but they are mere palliatives. What we need is to create social businesses that provide jobs and income in a sustainable way,” he said.
Yunus is a Bangladeshi social entrepreneur, banker, economist and civil society leader who was awarded the 2006 Nobel Peace Prize for founding the Grameen Bank and pioneering the concepts of microcredit and microfinance to those that traditional banks deemed not credit-worthy. The microloans are not intended to help families survive until the next payday, but rather to fund entrepreneurs who create businesses and thereby employment.
Yunus was at pains to stress that these loans are not interest-free, a common misconception when the media writes about the Grameen Bank and its various international offshoots.
“The whole idea is that the business has to be sustainable, so it needs to cover both its cost of capital and the cost of the staff and infrastructure. As a rule of thumb that means the cost of capital and a margin of ten per cent. In Bangladesh we charge 20 per cent. Grant money is appreciated as seed money, but in order to be sustainable and replicable, we need to be self-funding over time,” he said.
Complete story at - Trickle down has not worked to lift BRICS poor out of poverty | The BRICS Post
“There is a fundamental flaw in the system as it makes the pursuit of money the be-all and end-all. It makes money, not people, the centre of its value system. Money is inherently neither good nor bad, but it is the pursuit of money that can lead to corruption and moral compromises. Trickle down was supposed to work, but without the redistribution of income via taxes and social grants such as the Familia Bolsa in Brazil or the child support grants in South Africa, income inequality would be far worse. Those support programmes have a place, but they are mere palliatives. What we need is to create social businesses that provide jobs and income in a sustainable way,” he said.
Yunus is a Bangladeshi social entrepreneur, banker, economist and civil society leader who was awarded the 2006 Nobel Peace Prize for founding the Grameen Bank and pioneering the concepts of microcredit and microfinance to those that traditional banks deemed not credit-worthy. The microloans are not intended to help families survive until the next payday, but rather to fund entrepreneurs who create businesses and thereby employment.
Yunus was at pains to stress that these loans are not interest-free, a common misconception when the media writes about the Grameen Bank and its various international offshoots.
“The whole idea is that the business has to be sustainable, so it needs to cover both its cost of capital and the cost of the staff and infrastructure. As a rule of thumb that means the cost of capital and a margin of ten per cent. In Bangladesh we charge 20 per cent. Grant money is appreciated as seed money, but in order to be sustainable and replicable, we need to be self-funding over time,” he said.
Complete story at - Trickle down has not worked to lift BRICS poor out of poverty | The BRICS Post
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