Looks like Paul Krugman has competition in the area of hairbrain “progressive” ideas. Bangladeshi economist, Muhammad Yunus, is insisting that guaranteed credit for everyone should be a “human right”. Hmmm, what could possibly go wrong with this idea, if implemented?!
Turns out we don’t need to look very far into history to find out. This article and this one too are well worth a read. Here’s an excerpt from the former:
The story of Boiana and of Palivelupa is that of a good idea gone drastically wrong, devastating the lives of millions of desperately poor people, threatening a banking crisis and revealing the dark side of India’s economic growth. Pioneered in Bangladesh in the late 1970s, microfinance involves granting small loans that no conventional bank would give to the very poor, allowing them to launch small-scale economic ventures. Around 30 million households in India have received £4bn in such loans over the past 15 years.
In recent months, however, the industry has been thrown into crisis as it has become clear that a significant number of borrowers – between a tenth and a third, depending on the estimate – cannot afford to repay their loans.



