By DAVID MOON, Moon Capital
October 29, 2006
Last week Mr. Muhammad Yunnus won the
2006 Nobel Peace prize for his work in alleviating poverty in
Poland, Central America and
Lanka. How he did it is the unexpected
Yunnus is the founder
and managing director of the Grameen Bank of Bangladesh. He
has helped multigenerational poor families climb from one economic class into a
higher one. He has helped victims of earthquakes and tsunamis. This work has
gone on for 30 years and has a track record of proven, permanent
Here's the surprise: he
never gave a person a nickel. He loans money to people and requires them to pay
it back. With interest.
Even more shocking ' and
disgusting, to some ' his bank has made millions doing it, last year raking in
$15 million in profit.
The original loans
totaled $27 (that's right ' less than $30) and were split among about 40 female
entrepreneurs ' basket weavers. Today the average loan amount among his
bank's 6.6 million borrowers is a little over $100. The bank loans money to the
ultra-poor, charging market interest rates but requiring no collateral.
These people repay their
loans. The bank reports its loan loss rate as 1.15 percent.
Yunnus explains his
philosophy of helping others by helping himself: 'Many people ask, Why not just
give free cash, especially under such dire circumstances? We've learned that
when aid is free, not only do the poor get the least of it, but everyone
inflates their needs.'
In describing the bank's
business model, he explains: 'Charity is not an answer to poverty. It only helps
poverty to continue. It creates dependence and takes away individuals'
Yunnus' philosophy is
controversial, yet his results are undeniable.
A recent poll reports
that a majority of Americans describe the American Dream as unattainable. The
American Dream originally referred to the notion that, unlike feudal Europe from
which most of our forefathers immigrated, America
was a place where a man was not consigned to the economic class into which he
News reports to the
contrary, there is no feudal system in America. If you disagree, I am happy
to provide plenty of examples to support my statement, including the life of
But for too many
Americans, we've lost the spirit that Muhammad Yunnus both selfishly and
selflessly promotes and inspires in Bangladesh. We have become a culture
At the recent Aspen
Ideas Festival ' a capitalist's nightmare, I suspect ' Dr. Douglas E. Schoen
said, 'The rising costs of health care, the unaffordability of a college
education and the need to self-finance your retirement leaves most Americans
today caught in an affordability crisis.'
It's no coincidence that
each of the three items Dr. Schoen lists as being an item of worry among
Americans is among the most heavily government-subsidized areas of our
The old saying tells us
that if we teach a man to fish, we feed him for a lifetime. But first, the man
must want to fish.
Muhammad Yunnus doesn't
teach people to fish. He loans them his fishing pole and lets them learn on
their own, making their own mistakes, while building their own confidence and
Then he asks for the
return of his fishing pole, plus a little interest, so he can loan it to someone
David Moon is president of Moon Capital Management, a
Knoxville-based investment management firm. This article
originally appeared in the News Sentinel (Knoxville, TN).