My response to a comment by John Green on Reddit
I really really like your work and webcasts (example included below).
This seems to me to make it really difficult on people trying to use judgement. Calling people’s actions “extremely paternalistic” if they are not definitely so, I think impedes debate. And I think debate should be encouraged.
When making Kiva loans I do steer away from loans with rates above 40% (I also prefer loans that are geared toward a capital investment that will increase earning power going forward though this is hard – lots of loans are essentially for inventory that will be sold at a profit so a fine use of loans but not as powerful [in my opinion] and new capital investments – say a new tool, solar power that will be resold to users…).
Just like people anywhere, people taking Kiva loans are capable of getting themselves into trouble. Choosing to allocate my lender toward certain loans does not mean I am being paternalistic.
I am not being paternalistic if I chose not to invest in the stock of some company that vastly overpays executives and uses high leverage to do very well (in good times).
I do like the idea of direct cash to people in need. I give cash that way (and in fact did it a long time ago, 20 years, for several years – before any of this new hipster cachet :-). And I still do like it.
I also like to give to things that I think are good where I decide what the money will be spent to invest in (I like Global Giving). I have also been giving to Trickle Up for more than 20 years. They, to simplify, give micro grants (so not loans) to extremely poor to build businesses. I believe that there is great value in helping people gain long term economic success (even if that isn’t exactly the way they would use the funds if they had free reign). I don’t think that is paternalistic.
Declaring that if someone wants to borrow at an 80% interest rate that it is paternalistic to question that decision I think is unfair. To say the borrower knows best and if they think 80% is good that should be good enough is fine. I am not sure I agree (I think with rates that high it is possible wise, but the risks become greater and the borrower needs to be more aware of the risks), but I agree it is possible.
I like your later statement much more: “The reality of global poverty IS messy and complicated, and I do think there are times when kiva fails to acknowledge the complexity.” I think you understand the complexity and the reason why paying rates that seem very high may well be in the person’s best interest.
I think in this context “paternalistic” quickly gains connotations of racism (knowing better than those others…). It isn’t children we are talking about so being called paternalistic in relations to adults that are often of another ethnicity can easily push in that direction.
I also think it is sensible to object to payday loans in the USA. You could make the same argument that such an attitude is paternalistic (though I do see in your comments the explanation of the understanding of how limited the loan options are for many overseas – though that is how it can feel to many in the USA that use payday lenders).
Related: Researching the Effectiveness of Micro-credit – Kiva Loans Give Entrepreneurs a Chance to Succeed – More Kiva Entrepreneur Loans: Kenya, Honduras, Armenia… – More Kiva Entrepreneur Loans: Kenya, El Salvador…