Muhammad Yunus, a Nobel Peace Prize winner and founder of microcredit, spoke at Innis Town Hall on February 3 about how economic systems affect social issues, including inequality, unemployment, and environmental degradation.
He also spoke about his recent book, A World of Three Zeros: The New Economics of Zero Poverty, Zero Unemployment, and Zero Net Carbon Emissions.
The event was hosted by U of T’s School of Public Policy and Governance (SPPG) and featured a lecture by Yunus followed by a discussion with SPPG Director Peter Loewen and a Q&A period with the audience.
Yunus is known for founding Grameen Bank in his native Bangladesh and pioneering the concept of microcredit in an attempt to alleviate poverty. Microcredit is a financial service aimed at people on the lowest rungs of the economic ladder who are normally unable to secure a bank loan through regular channels, as they often require collateral or a credit history. Microcredit involves giving out smaller loans to help people improve their local communities and build small businesses.
Yunus began the talk by trying to answer what he considered a common question from people: why are people poor, and why do they remain that way?
“Poverty is not caused by or created by poor people,” said Yunus. “Poverty is created by the system that we have created.” He compared the current system to a bonsai tree, explaining that the seed of the plant, taken from a giant tree, will stop growing after a while. Yunus argued that, like a bonsai tree, society doesn’t give people space or an environment to grow like everything else.
Yunus contended that the financial system is so intricate that it leaves the bottom half of the world’s population out of the structure, cutting them off from the “economic oxygen” they need for basic survival and leading to a cycle of poverty. In his opinion, the problem lies with the current world order, not on the people themselves.
A major problem in the financial system, Yunus concluded, is the existence of loan sharks. “As long as there are pay lenders in your country, you know your financial system is not working,” he said. Seeing their presence in small villages is what led him to create microcredit, unlike traditional banks, which he claimed were only trying to maximize profit instead of helping people.
“Once I learn what they do, I do the opposite,” said Yunus, referring to conventional financial institutions. Instead of concentrating in large urban areas, Grameen Bank would focus on small, rural villages. After 35 years, the bank has more than 2,600 branches and more than nine million borrowers. In the last year alone, Grameen lent out $2.5 billion USD.
Yunus later turned to economic theory, having been an economics professor himself. He argued that the notion of humans being driven solely by self-interest was false, and that selflessness is and should be a factor in economics. He ended his talk by telling the audience that the entire economic system must be redesigned so that wealth can be shared by everyone.