Thank you Milford, your scepticism remains as refreshing as ever; please keep it coming, in as many words as you find necessary. Malcolm
Sent: Monday, December 12, 2016 11:38 AM
Subject: [MFP] Re: BRAC featured in the Guardian
Hi Jami
I'm not as sure as Malcolm, or the LSE people, that the BRAC-TUP program has any real net positive impact, so I'd be really careful in singing its praises. As we know, myths and legends about positive impact once spun have a habit of hanging around for a very long time no matter how many times they are shown to be false!
I have been looking at these BRAC type of programs as part of an edited book project on microcredit and financial inclusion I'm in the process of finalising for UNCTAD, and almost all of the nice things said about them simply do not add up when you look closer. Providing the poor with additional assets free of charge must have an immediate positive impact of sorts on the poverty of clients. So nothing really surprising about this, just as paying low-income staff in the USA higher wages, for instance, would help these individuals to lift themselves out of poverty, such as through supplying themselves with more milk or meat or whatever. Giving a bundle of assets to the poor seems fine, but are we really saying anything much about addressing global poverty? Unless its part of a major redistribution of wealth, I don't think so.
For me what is more important are the longer-term petty entrepreneurship-driven benefits claimed for the wider community, which I think are entirely moot. Above all, the crucial issue of displacement seems to be ignored in so many of them – instead there seems to be a belief in Says Law, that any number of poor people driven to selling goods in their community to escape poverty will nevertheless always find sufficient buyers at the prevailing (pre-intervention) market price, so that they do OK and non-clients will never be made worse off. Says Law is, of course, a famous fallacy. So far as I can see, the LSE evaluators do not centrally factor in the impact on local prices or reduced turnover on non-clients struggling to work in the same sector as the program clients, which might mean (and usually does elsewhere…..) that these non-clients are made worse off, which means that overall the NET impact of the scheme at the community level might be negative. But, also interestingly, the Morduch paper referred to in the Guardian article does use an analysis based on the recognition of there being serious negative displacement impacts - the first I have seen I think from mainstream researchers-cum-microcredit advocates – and, as a result, they go on to claim that there is really no net impact from the scheme.
We really must be very careful when advocating for the flooding of poor communities with an additional supply of simple items and services, but where there is no commensurate increase in local purchasing power, because this form of artificially stimulated hyper-competition can so often makes things much worse for the poor. Such hyper-competitive local economies are emerging everywhere around the developing world but, as Mike Davis once said, they represent not a route out of poverty so much as simply the ugliest manifestation of global poverty. Check out my paper here on why a massive microcredit-supported expansion in petty entrepreneurial activity in South Africa after 1994 helped to create not a miracle for the very poorest, but a disaster:
Cheers
Milford
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Posted by: "Malcolm Harper" <malcolm.harper@btinternet.com>
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