While I find the discussion you seem to want to have on inequality, or even the one Chuck Waterfield would like to have on an objection to markets interesting - even if I entirely disagree with your characterization of the past two decades, this isn't the point. I think that product pricing should be transparent and that regulation to require it may in some cases even be necessary.
That's *not* however, the issue being put forward. Mr. Waterfield has been quite clear that his objection is on the profitability of firms like Compartamos - seeing excessive profits as irresponsible. So to reapproach this slightly differently -
(1) Do you agree that "usurious rates" necessarily result in "excess profits"?
(2) If yes, why then are many microfinance institutions unable to achieve "excess profits" in the same pricing environment?
(3) Are high interest rates incompatible with helping the poor? (as noted, empirically, the data suggests that it isn't)
(4) If they are, then why the criticism specifically on Compartamos when others are as guilty and even more so in the not for profit space? (And if I may ask this question to Calvin Miller as well)
The fact interest rates *have* fallen despite being high suggests that markets and competition *is* working. At the very least, the growth of Compartamos and the fact that they have continued to attract repeat clients suggests that their service offerings are in the very least, better than what existed previously. But this brings us to your first point - your analogy that arguments like this could be likened to heroin. While I recognize that it was in part facetious, I'm not sure I see the analogy.
With heroin you at least get a high. With a microfinance? A loan structured in relationship with your ability to pay weekly or monthly payments doesn't seem nearly as enjoyable but...
(1) Are these loans somehow more addictive but somehow oddly sustainable (perhaps more so than heroin)?
(2) Is the claim that loans as provided specifically by Compartamos are somehow less useful because of the institutional level of profits?
(3) Why do clients choose Compartamos over others?
(4) Are clients unable to differentiate between costs despite having multiple loans from different MFIs - *and* despite taking these loans repeatedly?
The arguments here to justify the attacks on Compartamos frankly seem like a shell game. While the attacks are directly on Compartamos because of the profits they are able to achieve, the serious allegations that are inferred on the lack of transparency and manipulation seem to have little to do with Compartamos or are in the very least issues that are broadly applicable to not for profits as well in the same markets.
Clement
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Posted by: clementwan@yahoo.com
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