[ExI] Micro-loan programs not as successful as hoped

[Dan]

Basically agreed. When people complain about a price being too high or too low 
(in an uncoerced setting*), they demonstrate a misunderstanding about how prices 
work. None of these claims hold up under scientific scrutiny.

Also, regarding transparency and all that, the way to arrive at this is not via 
regulation -- which, in a corrupt country, will merely mean established 
microlenders will capture the regulator and use regulations to knock out or keep 
out competitors. Instead, merely allow the market process to occur maximally -- 
so that borrowers have as much choice as possible in borrowing. In this way, 
borrowers will patronize those lenders who are the least deceptive. And the 
latter will try to broadcast their bona fides over shadey competitors. (The same 
thing happens in many market situations. For instance, most people quickly learn 
that if a firm is not forthcoming with information, that it's best not to deal 
with it at all. This makes the shadey firm either mend its ways or lose market 
share -- at the extreme, forcing it to go under.)

Regards,

Dan

* There's a difference when government sets the price -- directly via prices 
controls (or "floors" as in minium wage laws and "ceilings" as in rent control) 
or indirectly via antitrust policy -- because that then involves coercing 
outcomes. But even in that case, one cannot tell exactly what the uncoerced 
price would've been -- merely that the price mechanism has been interfered with.


From: Stefano Vaj <stefano.vaj at gmail.com>
To: ExI chat list <extropy-chat at lists.extropy.org>
Sent: Mon, November 22, 2010 12:00:44 PM
Subject: Re: [ExI] Micro-loan programs not as successful as hoped

2010/11/22 Mr Jones <mrjones2020 at gmail.com>
> From what I've been told,the 'high' interest rates are 'low' when compared to 
>typical rates paid in these corruption riddled areas. All the same, I think It's 
>wrong.

Let me say first that I am a fan of the views expounded in things such
as Money as Debt, and very little of bankers.

OTOH, if we accept the idea that loans for an interest are the right
way to deal with matter, interest rates cannot really be "right" or
"wrong", provided that no oligopoly exists, and depend on comparative
risk and profitability of alternative employments of the capitals
concerned.

--
Stefano Vaj


      
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