Microcredit: The Good, The Bad and The Ugly

Insightful piece by David Korten on the hijacking of microcredit, and interesting comparisons with what has happened to banking in the 'developed' world...

Excerpt from YES! Magazine, 19 January 2011

'...Once praised as a universal panacea, microlenders are now being widely attacked as predatory loan sharks. In December 2010, Sheik Hasina Wazed, the prime minister of Bangladesh and former microcredit advocate, accused microcredit programs of “sucking blood from the poor in the name of poverty alleviation.”

What happened?

It turns out there are two very different models of microcredit. As Muhammad Yunus, winner of the 2006 Nobel Prize, point ed out in his January 15, 2011 New York Times op-ed, one type of microcredit program is designed to serve the poor; another to maximize financial returns to program managers and Wall Street investors...

Microcredit programs seeking to replicate the Grameen model have spread rapidly across the globe. Most, however, replicate only the loan feature. Few provide their members with depository services or replicate the Grameen Bank’s other defining features, though these features are central to its commitment to community wealth building.

The microcredit experience brings to light a larger principle: the institutional structure of a financial system determines where money flows and who benefits. In short, structure determines purpose.

The transformation of microcredit institutions from a model that serves communities to a model that is “sucking blood from the poor in the name of poverty alleviation” mirrors a similar transformation of the U.S. banking system, which occurred through the process of banking deregulation that began in the United States in 1970s.

Throughout the 1940s, 50s, and 60s the United States had a system oflocally owned and strictly regulated community banks, mutual savings and loans, and credit unions, many of them organized on a cooperative ownership model much like the Grameen Bank. They were organized and managed to serve the financial needs of the communities in which they were located and kept money flowing within the community in service to community needs.

Banking deregulation over the past 30 years led to a wave of banking mergers and acquisitions that created too-big-to-fail Wall Street banks devoted to maximizing financial returns to Wall Street bankers and financiers. Rather than supporting local wealth creation, the system now sucks money and real resources out of the community. Both the microcredit experience and the aftermath of the 2008 Wall Street financial crash vividly reveal that the values and interests of Wall Street stand in fundamental opposition to those of Main Street.

Financial institutions can serve communities in pursuit of a better life for all or they can serve global markets to maximize financial returns to Wall Street bankers and financiers. They cannot serve both.The world does not need more predatory lenders in service to Wall Street. We all need more local, cooperatively owned community banks on the model of Grameen.'

Earth Smarts - Essential Ecoliteracy

Sourced from Earth Smarts, January 2011

'Earth smarts, or essential ecoliteracy, is like street smarts writ large - it helps individuals and communities to survive and thrive in the world. Essential ecoliteracy is an education construct that is:

• theoretically sound
• apolitical
• flexible enough to be useful across different cultures and ecosystems
• flexible enough to encourage teacher localization and creativity
• focused enough to be practical in modern, standards-based classrooms

Essential ecoliteracy answers the question: What set of qualities do we need to justly maintain, or improve, our quality of life beyond the short term?

This is important for a couple big reasons. For starters, many societies live in unsustainable ways, which threatens their wellbeing, as well as that of other people and species. Over the course of human history, many such societies have collapsed, often disastrously. But earth smarts is also important because we are realizing that the world changes, sometimes quite rapidly, and we need to be able to adapt to those changes to maintain our quality of life.

So it doesn't really matter if you are conservative (I want to keep what I have),progressive (I want to change things for the better) or something in between - achieving essential ecoliteracy, having "earth smarts", will help you and your community keep or improve your quality of life in a fair and just way.

But what does a modern individual or community need to know? What skills do we need in an increasingly crowded, urban and technological world? Essential ecoliteracy emerged from an extensive, transdisciplinary literature analysis, with a focus on educational goals that are achievable.

1. Concepts (Knowledge, Content)

Basic Thermodynamics

Especially an understanding of the second law (entropy).

Ecological Principles

A holistic understanding of some of the key concepts of ecological science, including energy flow, biogeochemical cycling, population dynamics and food webs.

Historical Ecology

A general understanding of the complex interactions between people and their environment, including a sense of historical time and human history that examines some of the successes and failures of societies to adapt to their environments. Also includes concepts such as ecojustice, pollution and health, and the precautionary principal, as well as ecological economics, focusing on environmental services, resource management and use of the commons. An important theme is understanding that human/environment interaction works in both directions; we don't just react and adapt to the environment, we can actively change it (deliberately or not, for better and worse).

Essential Biology

Including a sense of time over evolutionary scales, an understanding of evolutionary processes, and an appreciation for both the unity and diversity of life.

Essential Earth Science

A sense of geological time, as well as a general understanding of key earth processes including plate tectonics, oceans, the water cycle and climate, weather, and the atmosphere.

2. Competencies (Skills, Abilities)

Self-Regulation/Adaptability

Perhaps the most important competency, this gathers a number of learning skills and attitudes. Change is inevitable, and adapting to change is necessary to maintaining quality of life. From an educational perspective, self-regulation can be considered as lifelong learning.

Community Skills

To meet the considerable challenges we face, we need to work well together. Community skills include democratic participation, argumentation, collaboration and collective intelligence, practical ethics, communication, conflict resolution and the ability to consider multiple perspectives and stakeholders. The specifics of these skills will vary considerably across cultures.

Scientific Reasoning

When done right, science is very effective at identifying problems and finding solutions. Not everyone needs to be a scientist, but we all benefit from some science-based skills and attitudes. They include an understanding of the nature of science, as a process and a way of thinking, as well as critical thinking skills, a realistic sense of scientific uncertainty, open-minded skepticism, creativity and investigation skills.

Systems Thinking

Linear and static thinking continue to lead us into trouble. Our societies and environments are complex systems, and to better understand them we need to nurture systems thinking, including connections & interactions, risk, consequences & implications, complexity and change.

3. Values (Ethics)

Moral Development

Sustaining your quality of life without needlessly diminishing that of others requires moral development. We need to move from the preconventional dualism of children to higher stages that incorporate commitment with uncertainty.

Respect for "Other..."

Justice and wellbeing for all requires us to respect others. What's more, we have learned from engineers and ecologists that diverse systems are more resilient, so biological and cultural diversity is important.

Justice

Earth smarts is based upon justice as fairness. As the world's most intelligent and influential species, we need to balance the tension between the rights of individuals and our responsibilities to our communities. This is a complex moral issue - there isn't a "right" way to do it, and societies can and do approach it differently.

Cultures

There is no "right" way to live - enabling a diversity of cultures allows us to learn from the social structures and experiences of others, and makes us more resilient to change. Note this is not relativism - some societies are decidedly more sustainable, and have higher wellbeing, than others.

Organisms

Biodiversity is a storehouse of information with both intrinsic and extrinsic value - we need to stop shortsightedly diminishing it.

Ecosystems

Simply preserving genetic information isn't enough - species are constantly adapting to their environments, and we need to nurture both.

Generations

We need to respect the wisdom of previous generations and the potential of future ones - our wellbeing must not needlessly jeopardize that of our grandchildren.

4. Sense of Place (Awareness, Affect, Emotions)

Awareness of Local Community incl Issues

In our mobile, technological societies, people can be amazingly ignorant of their local environment; such ignorance is not bliss, and often contributes to needlessly unsustainable lifestyles.

Awareness of Global Community incl Issues

Even the best local knowledge is no longer adequate in the face of global environmental change and threats.

Emotional Bond/Biophilia/Sensitivity

Whatever you call it, an attachment to the land is important - we need to care about our homes and surroundings. This connection may be some combination of spiritual, religious and aesthetic factors, and culture obviously plays a huge role. Many modern education systems do not address this well at all, sealing children in "safe", sterile classrooms for their entire development.

Self-Efficacy

Fatalism can be detrimental to our wellbeing - people need to understand they can, and do, have an effect on their environments. Knowing that, we can work to minimize our negative effects, and encourage positive ones.'

Food Crisis as World's Soil 'Vanishes in 60 Years'

...but we can innovate? Right? Use technology? Who needs soil anyway?

Excerpt from The Telegraph, 21 January 2011

'Fertile soil is being lost faster than it can be replenished and will eventually lead to the “topsoil bank” becoming empty, an Australian conference heard.

Chronic soil mismanagement and over farming causing erosion, climate change and increasing populations were to blame for the dramatic global decline in suitable farming soil, scientists said.

An estimated 75 billion tonnes of soil is lost annually with more than 80 per cent of the world's farming land "moderately or severely eroded", the Carbon Farming conference heard.

A University of Sydney study, presented to the conference, found soil is being lost in China 57 times faster than it can be replaced through natural processes.

In Europe that figure is 17 times, in America 10 times while five times as much soil is being lost in Australia...

Latest forecasts predict the world's population will grow from 6.8 billion to more than 9 billion by 2050, placing even further pressure on food production and farming.

The world last year faced a cereal crisis as wheat stocks dropped to a 30-year low after demand for wheat and rice outstripped supply for the past six out of the previous seven years.

This resulted in grain prices rocketing, which sparked civil unrest in many countries...'

Climate Change Growing Risk For Insurers: Industry

Excerpt from Planet Ark, 20 January 2011

'Insurers are struggling to assess the risks from climate change, industry officials say, with the floods in Australia and Brazil highlighting the potential losses from greater extremes of weather.

Scientists say a warmer world will cause more intense drought, floods, cyclones as well as rising sea levels and the insurance industry says the number of weather-related disasters has already soared over the past several decades.

Adding to the risks is a growing human population, more people moving into cities, particularly in Asia, and more property in the path of increasingly volatile weather.

This makes it harder to tease out a direct climate change link in ever rising losses, experts say. Lack of long-term weather data in some parts of the world is also clouding the picture.

Another problem is the narrow time horizon insurers typically focus on. Reinsurers, for instance, renew their contracts annually based on past losses, meaning they aren't so concerned about trends decades in the future.

"There is still a fair amount of uncertainly as to climate change and the attribution of climate change to natural events or man-made and therefore it has not translated yet into the pricing," Yves Guerard, secretary-general of the Ottawa-based International Actuarial Association, told Reuters...

Rapidly growing megacities were a major concern for the market, he said, pointing to UN data showing 231 million people living in cities in Asia in 1950. By 2050, that figure is forecast to grow to nearly 3.5 billion."

Increased exposures with megacities coming up, low insurance penetration and key exposures being in emerging markets where most of the insurance growth has been happening. That's a time bomb," said Jan Mumenthaler, head of the International Finance Corporation's insurance services group.

In Australia, rising coastal urbanization and a rapidly expanding mining sector means a growing risk of weather-related insurance losses. The government has said the floods since last month are expected to be the nation's costliest natural disaster, with damage and reconstruction estimates between $5 billion and $20 billion...

Munich Re says the number of weather-related natural catastrophes has more than doubled since 1980.

Overall losses from weather-related natural catastrophes rose by a factor of 3 in the period 1980-2009, taking inflation into account, while insured losses from such events increased by a factor of about 4 during the same period. Total insured losses from natural disasters in 2010 was $37 billion, it says...'

Shot Across the Climate Change Bow

...a taste of what partial inundation of a major capital city looks like...what we can't tell from the photos is what it feels like.

Sourced from the Australian Broadcasting Corporation, 17 January 2011

'High-resolution aerial photos taken over Brisbane last week have revealed the scale of devastation across dozens of suburbs and tens of thousands of homes and businesses.

The aerial photos of the Brisbane floods were taken in flyovers on January 13 and January 14.

Hover over each photo to view the devastation caused by flooding.'

Riverside (Brisbane CBD): before flood

Riverside (Brisbane CBD): during flood

Rocklea: before flood

Rocklea: during flood

Fairfield: before flood

Fairfield: during flood

Why Food Security Must Be Viewed as a Strategic Threat - British MP

Laura Sandys is a Conservative MP for South Thanet

Reposted in full from The Ecologist, 18th January, 2011

With cheap food pricing, over-reliance on imports, and the pressures of a growing population, the UK's food security is set to rise up the national agenda. The Coalition Government must be prepared for the challenges aheadFor too long we have been avoiding one of the biggest threats to this country’s domestic security – food. Deluded by cheap food prices, importing over 50 per cent of what is on our supermarket shelves, and dismissing the calls from UK farmers and fishermen to focus more on national food production; food insecurity is an issue set to rise up the national agenda. It is time that Government understood and prepared for the challenge ahead.

I am pleased that our Government scientists are taking the issue of food security seriously with the future launch of the Foresight Report on Global Food and Farming Futures. Following a 20 per cent drop in Britain’s food self sufficiency over 10 years, the report will constitute an important and timely step in addressing the threat to Britain’s food security. Only last week, the UN’s Food and Agricultural Organisation reported record food price hikes of 4.2 per cent - double the national wage increase.

Food is a truly globalised business – a fact which enhances Britain’s vulnerability given its reliance on food imports. Events in recent weeks will undoubtedly be reflected in our pockets. Australia – the fourth largest producer of wheat – has lost tons of its crops in floods; conflict in the Ivory Coast has limited cocoa exports; and poor harvests due to La Nina have reduced global food supplies. Such events reflect in world food prices and result in greater unpredictability in securing food staples.

A new era of trade protectionism in food could well be on the horizon - not for economic gain, but to ensure domestic stability. Policy makers have perhaps lost sight of the domestic, regional and international tensions that could arise should access to food be curtailed. Only last week, the rising price of onions resulted in India banning exports to Pakistan which worsened tensions with its neighbour. On Friday, the world witnessed Tunisia’s people overturn their President as a peak in global food prices contributed to national unrest. Whitehall must take heed of these international lessons and prepare.

But just how vulnerable is the UK, and how should we go about securing our future food supply? We must assess the risk – a risk that is growing and will only accelerate exponentially due to a global population reaching 9 billion by 2050. Further, over 25 per cent of the world’s productive land will be lost due to rising sea levels and desertification. The government should halt development on grade one agricultural land – the means and resources for food production must be regarded as a national priority.

There is also a role for our defence capacity in safeguarding Britain’s food security. Policy makers must carefully consider what threats might arise due to resource scarcity. Piracy is one. Last year alone, pirates abducted 217 merchant ships. Even the British Chamber of Shipping has stated: 'Climate change and scarcity of resources will bring unknown and destabilising influences at sea – as we all fight for vanishing resources.'

Although it is presently the Horn of Africa that is blighted by pirates, if food is to become a more valued commodity and energy costs are to increase, piracy could soon plague other major trade routes.

Special Forces with specialist knowledge could provide logistical assistance to support our vessels transporting vital food supplies. Our aircraft carriers and frigates could assist Britain’s food importing vessels by protecting from the threats of piracy and keeping trade routes open.

But some of the answers also lie closer to home. We must rethink the way we use food. I was recently part of a TV programme that highlighted that up to 30 per cent of food – good food – is thrown away every year. Supermarkets reject fruit and vegetables that do not fit their so called 'aesthetic standards'; sell by dates encourage us at home to throw away food that is perfectly fresh; and meat cuts such as offal are discarded as we have forgotten how to eat or cook them. In my constituency of Thanet, fishermen are compelled to discard 50 per cent of their catch due to an outmoded quota system.

A further step towards greater food security is needed to develop and invest in world class food production technologies. Food production will - and must - become one of Britain’s industries of the future. Schools must encourage the young to look at the food and agricultural sector as exciting and offering challenging futures, and universities must take steps to draw together the best brains and resources to address the challenge of dealing with food security.Up until rationing was lifted after the war, food security was regarded as a strategic issue for Government. It is important that food inflation and scarcity are understood throughout Whitehall and that the warnings of our leading scientists are heard.'