A Trickle And A Trillion
Microfinance promised to alleviate global poverty. Megafinance created a trillionaire.
This Week In Blunders – June 7-13
“For every complex problem there is an answer that is clear, simple, and wrong.” – H.L. Mencken
The same week that the world made Elon Musk its first trillionaire, The Wall Street Journal published a devastating review of one of the most celebrated anti-poverty ideas of the past half-century.
The Davos class has been touting “microfinance” for decades as a sure-fire solution to alleviating global poverty. “Doing well by doing good,” they called it.
The economist who launched the concept won a Nobel Prize. Politicians and philanthropists swarmed. And then even Wall Street got involved, turning it into a more of a “do-well” than a “do-good” enterprise.
As it turns out, giving tiny loans to the world’s most despairing people too often leads to new loans to repay the old loans, and a cascading cycle of debt, according to a slew of academic studies.
It also leads to homelessness, child labor, suicides and shakedowns from aggressive loan officers, the Journal reports. Amid intense desperation, many borrowers end up spending the money on medical expenses and other necessities instead of small businesses. Go figure.
We can’t all be wealthy, but poverty activists tell us there is enough food, water, technology and productive capacity on this planet to meet the basic life needs of everybody. The failure is not so much scarcity. It is distribution, governance, war, corruption, political will, infrastructure and power.
But the super rich and the super poor just talk past each other. The super rich are obviously more intent on getting super richer. And the super poor just want to survive a life most of us would find unimaginable.
In 2021, World Food Programme chief David Beasley suggested that just a small percentage of the wealth of the world’s richest people could end world hunger.
This was back in the day when Elon Musk was a mere multibillionaire, and he must have taken umbrage.
He got on Twitter and made the unsolicited boast that if the WFP could explain how $6 billion of his wealth would end world hunger, he would sell enough of his Tesla stock to do it.
WFP came back with a detailed plan, but it was not actually a plan to “end world hunger.” It was to provide emergency assistance that could help about 42 million people facing famine conditions in 43 countries for about a year.
Nope. Not quite enough there. The conversation fizzled out like a microfinanced business plan.
So now Musk is a trillionaire thanks to the biggest initial public stock offering in history at SpaceX. And the world’s poorest people are still starving.
What about Sam’s hunger?
Forget about ending world hunger. What about poor Sam-Bankman-Fried?
One of the first complaints the convicted crypto-klepto had about prison life was the food. The vegetarian complained that he was surviving largely on beans and rice from the commissary because he found prison meals unsuitable.
Read More: Sam In The Slam (Business Blunders)
The FTX founder once had access to private chefs and billions of dollars in misappropriated customer funds. He must be starving.
This week, he lost his latest appeal of his fraud conviction, leaving him with fewer options than a federal prison food tray.
Still on the front end of a 25-year sentence for one of the largest financial frauds in American history, Bankman-Fried’s last remaining hope may be a pardon from President Donald Trump.
Despite all the loot he gave to Democrats when he was at the top of his game, he’s been sucking up to Trump for more than a year.
He must really be famished. Can someone please send him a care package? Or how about just a microloan for the commissary?
Stanford > Apple > Crypto > Prison
You’ve got to love today’s over-achievers.
Read More On Do Kwon:
Sorry Seems To Be The Hardest Word (Business Blunders)
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Because it just keeps happening
Business Blunders always tries to put the present in context with a pithy quote from the past.
It’s all been said before, but too few of us remember the past. That’s why the same blunders repeat and rhyme with history.
This week, I’ve published a grand curation of the greatest observations anyone has ever made business, leadership, management investing, economics, fraud, failure, corporate folly and more.
Read More: Timeless Wisdom Too Often Ignored (Business Blunders)
Have a read. Fill your soul with pithy wisdom. And if you have a favorite line that’s not in the collection, please add it to the comments.
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A microloan for the commissary 😂🤣 (being a vegan is difficult, take it from me).
I dunno about SBF having perpetrated the biggest scam in US history with FTX. We have someone currently spending taxpayer dollars for various 'vanity' projects that, to my knowledge, have not been budgeted as there exists no budget for even the Executive Branch for FY 2025-26...