My background: I am a graduate of Stanford University (class of '03) and am going to law school this Fall.


My question concerns children who end up as slaves/forced laborers to corrupt moneylenders.

Situation: A child falls ill, and the parents opt to treat the child and receive approximately a $20 medical bill. Being poor, they cannot pay. They go to a moneylender who gives them a loan. To pay back the loan, the child is given to the moneylender as a worker. He, however, being corrupt sets her salary so low that she never make a profit. She remains in bondage for her life, unable to pay the loan. (I first read about this specific issue in 'Not For Sale' by David Batstone).

Questions:

1) Is anyone familiar with this issue or know of organizations seeking to address this issue?

2) Does anyone know a model "out there" for addressing this specific situation? (To me, it seems the model would be creating a SAFE MONEYLENDING ENTITY).

I am familiar with a few microfinance companies as well as the model of the Grameen Bank (Professor Yunus mentions in his book 'Banker to the Poor' that a small percentage of loans from his bank go to these specific cases). However, I know at least in the Grameen Bank the majority of loans are for profit-generating business ideas/plans/start-ups rather than non-profit generating issues, such as medical bills.
3) Hence, must our "model" solution/company be changed in this case to best address this type of poverty?

Thank you for your time.
Sincerely,
Michelle

A very noble thought indeed.  I have always been fascinated by the essence of the movie 'Pay it Forward' in which you do good to a few and they in turn do good to a few others and the chain goes forward.  How about marrying this concept with microlending?  When you loan money to a certain individual, he/she in turn has to choose a 'noble cause' (such as the one you describe above) and fund them.

 

Do you think this merits a discussion?

 

Cheers,

 

Sri

thanks for the reply! i replied to some on-going discussions. is there anything else i can do?

Hello Michelle Forrest

 

I am sure the most distinguished way to support the poor is satisfying their immediate needs, I do also like the idea of supporting them.

 

Answering to your questions

 

Q1-   Yes, The world we live in has a wonderful belief system which implies the need that we are talking about. "Support the poor when they are in need". The religious belief system from Jewish to Islam, there is a system incorporate by acquiring donations from rich and supporting the poor. Most of the religious church's, temples and mosques or islamic governments is suppose to manage the systems by these beliefs.

 

If someone who needs to do it, it is that people who collects money in the name of poverty shall be doing it. It is there in their systems if you properly read their books.

 

The worst we say are Islamic systems. In the history of Islamic Founders there have been times they used power to bring out Zakath (religious donations from rich to poor) when the rich did not donate. 

"I suppose that is of a help for question 1 in identifying where to have a look"

 

Q2 -  Well i suppose what your idea is the perfect one. Safe money lending entity shall be created with the concern of the environmental status, where receivers cannot mis-use the donations. Which i am trying to say the entity and the borrower shall be responsible in using the money as intended.  Where  the entity should be able to monitor the usage. Specifically for this kind of a case of medical bill can be funded to the pharmacy who sells the drugs rather than to the person.

 

Q3- I think this is a major solution for todays communities, especially in 3rd World. Where politicians play their triumph card on poverty by buying votes.

 

Some parts of the world people fight in the name of religion, others in the name of freedom, which ever the way ball goes we see poor gets in real trouble.

 

Great idea....

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Hi Michelle,

I have started a website, http://opencapitalist.org, that is designed to foster socially responsible companies through contributions of individuals with the skill sets required by those companies.  I have a hypothetical project that would be listed that would serve your desire to directly help the people you are referring to:

 

I am sure you are aware of the cash advance/title loans/loan sharks we have in the US.  Their clients are some of the poorest our country has to offer.  They get charged an exceptionally high interest rate; it amounts to robbing from the poor.  In Oregon we have enacted laws limiting the interest they are allowed to charge, but it is still too high.  I initially thought they were partially justified due to a perceived high default rate, but after looking into it the default rate on these types of loans is very low, I don't remember how low but I remember thinking it was somewhere around the default rate for mortgages.

The Open Capitalist project would be a US based company that offers those same short duration loans at a more reasonable interest rate, say 10-15%, which is about half what Oregon law allows for.  This would be an obvious choice for a customer that needed a loan of this type as it would be far cheaper than the alternative companies. After operating expenses are taken care of, any profit left over gets sent to a fund that would serve to underwrite one of the microloan companies that would have the infrastructure set up to provide the loans that you were referring to.  This would help those microloan companies make these possibly more risky loans feasible.

 

The whole idea behind open capitalist is to provide advantages to individuals trying to start a company such as I described here.  For example, someone might have a vacant store front available that they could donate a year lease on, or otherwise provide favorable terms for.  This individual could possibly get a write-off on an otherwise non-profit generating piece of property.