Yep -- all those microlenders that Tom Friedman loved so much and that everyone was showering with Nobel prizes?
They were just loan sharks.
... Backed by international venture capital and private equity! Shazam!
India Microcredit Faces Collapse From Defaults
The region’s crisis is likely to reverberate around the globe. Initially the work of nonprofit groups, the tiny loans to the poor known as microcredit once seemed a promising path out of poverty for millions. In recent years, foundations, venture capitalists and the World Bank have used India as a petri dish for similar for-profit “social enterprises” that seek to make money while filling a social need. Like-minded industries have sprung up in Africa, Latin America and other parts of Asia.
Mr. Akula said that his company had reduced its interest rate by six percentage points, to 24 percent, in the past several years as volume had brought down expenses.
The collapse of the industry could have severe consequences for borrowers, who may be forced to resort to money lenders once again. It is tough to find a household in this village in an impoverished district of Andhra Pradesh that is not deeply in debt to a for-profit microfinance company.
You know ...
It turns out that you just can't do it.
You can't expect for-profit companies to take on responsibilities for social welfare and have it all work out.
Let's look at contrasting examples here in the U.S.
Our for-profit health care and insurance system? The worst in the developed world.
Our government-operated, socialized insurance plan for the disabled and the elderly? In tip-top shape after 75 years in business.