Regular posting will be delayed yet again as I will be in Taipei for the Global Initiatives Symposium at National Taiwan University. GIS is an Asian business student conference, modeled on the St. Gallen Symposium – I met one of the organizers when I went to SGS – except that its Asia focused and not Eurocentric like SGS is. It’s the first time Taida is putting this together, and I’m optimistic that it will be just as professionally organized. This will be my first visit to Taiwan, and a welcome break from my summer of Stata.

One of the best things about going to an ivy school is the chance to listen to world leaders that come to campus quite frequently. Recently, Muhammad Yunus came to talk about the Grameen Bank and his new book on ‘creating a world without poverty’, and I managed to get into the lecture theatre before it completely filled up. I got one of the last few available seats, and there were hundreds of people in line outside (including a Bangladeshi friend) that were quite upset about the seating capacity. Here are my notes from his speech:

He described the origins of the Grameen Bank from when he was teaching economics at university and saw the disparity between the affluent campus and the poverty just outside. He first noticed the activities of the loansharks in the villages, and studied them, collecting the names of 42 borrowers with $27 in loans. He decided to buy out their debt to free them from the loansharks, but he couldn’t do this for everyone on his own salary. He approached the bank on campus, which refused explaining that the poor were not creditworthy. He offered himself as a guarantor, and was told that he would end up bearing the defaulted debt. As it turns out, they repaid their loans and the rest is history.

The early days of Grameen: As he knew very little about how banks operated, he looked at what they did – and did the opposite instead. Instead of serving the wealthy in urban areas, GB served the rural poor. Instead of men, GB served women. Instead of requiring collateral, GB didn’t ask for any. GB stats: 7.5m borrowers, 97% of which are women, with 98-99% repayment rates. Then he made kind of a cheap shot at the conventional banks whose collateralized operations were nonetheless not creditworthy.

Special GB programs: After many years of GB emphasis that its clients should send their kids to school, it turned out that many client children were at the top of their classes, and went on from primary school to secondary school and then qualified for college but couldn’t pay tuition. GB started an education loan program, where “students can let Grameen Bank worry about the money”. The program has some 34k students in university. Now when seeing the clients and their families, there is this juxtaposition of illiterate clients and their highly educated children who are doctors and the like. He believes that the only difference between the parent and child are the opportunities that were available to them.

Thus he believes that everyone has unlimited potential and it is wrong to say that some are entrepreneurial (and thus benefit from microcredit) and that others are not. So GB started a new program only for beggars, those at the last stage of survival. GB provides a loan to a beggar to carry merchandise for sale as they beg from door to door, so that they offer households more options to donate or make a purchase or both/either. This loan charges no interest and has no maturity date, yet beggars still repay them to qualify for a bigger loan.

The program started small, with a maximum of 1 beggar client per loan officer, but as it proved incredibly popular among GB staff, all 28k loan officers had one. The maximum increased to 4, and there are now more than 100k beggars enrolled. 11k of them have since graduated from beggarhood to become salesmen, some are now personal shoppers for housewives. “The wife tells the husband to get something from the market, but as usual the husband forgets.” The remaining 90k are ‘part-time beggars’, and know which households are better for begging or selling. “They never attended business school but they understand market segmentation.”

GB America: He believes 98% of humanity is the same, so GB sent one of its Bangladesh staff to New York to start the US program in Jackson Heights, exactly the way it works in Bangladesh – no collateral or credit history required. “We are not interested in our clients’ past. We are interested in their future.” It now has 500+ women in the program, average loan size $2200 and a 99.3% repayment rate.

Social enterprises: He described a few GB joint ventures. One with Danone is a yogurt venture to address malnourishment. The product is a cheap fortified yogurt, which restores all necessary nutrients over 8-9 months of 2 per week consumption. The venture pays no dividends, investors can recoup their initial investment but no more than that. Another venture with Veolia addresses the arsenic contaminated water supply. The venture built a water treatment plant to sell cheap, safe drinking water, piped to clients and sold by the liter at the tap. No marketing, packaging, bottling, just the basics. Another venture produces nutrition supplements, another treated mosquito nets.

Social investment capital markets: He believes that government alone cannot solve all of society’s problems, and it is a slow machine, whereas individuals are much faster. Social ventures and businesses don’t need to be big to make an impact, there just needs to be a lot of them. Thus he wants to have a ‘social stock market’ to finance these ventures, and wants to see ventures in health insurance and consumer finance.

Q&A: Social joint ventures legal implications. Having joint ventures with public companies can be problematic because the firm managers have fiduciary duties to their shareholders, who might take issue with the firm making non-profitable investments. While Danone managers were enthusiastic about the venture, they couldn’t use company money for it. So at the AGM, while dividends were announced, they issued a notice to shareholders about the venture, and offered the shareholders the choice of whether to direct their dividend to finance it. 98% of shareholders said yes. Other firms can direct their CSR funds if available.

Q&A: Role of the government. Other than financing social ventures, regulatory bodies can accredit the socialness of ventures for special tax status. GB is able to lend over 1bn a year because it can leverage deposits like any other bank, and each branch of GB is self-reliant for funding, with local money going to local borrowers, and local profits returning to local shareholders. However, in many countries where MFIs are just NGOs without banking licenses, they can’t take deposits and are reliant on grants. This is the same in Jackson Heights where over 1m has been lent, but they can’t lent any more without deposits, and the banking license costs 30m.

Q&A: MF commercialization. “Microfinance was born for a purpose, to help people, not to become loansharks ourselves using the name of microfinance.” He explained the need of a guiding principle on interest rates, where the ‘green zone’ should be cost-of-funds plus 10%, the ‘yellow zone’ 10-15%, and anywhere more than that the ‘red zone’.

Yesterday I went to see the NYC premiere of Journey from the Fall with one of my surrogate-mothers on campus and other members of the Vietnamese Students Association, and after the film ended I knew that the long list of film festival awards was well justified. The film tells the story of one family’s journey from the fall of Saigon in 1975. When we were in the ImaginAsian cinema I was looking at the table of posters outside the theatre when I noticed several boxes of tissues available – It’s not possible to watch the film without crying a river. Perhaps seeing it was therapeutic for me since I’ve been holding back tears for a while now. Here are some thoughts on the film.

At first I was puzzled by the complex storytelling technique the filmmaker employed, but then it all made sense. Journey from the Fall has a non-linear narrative that jumps between from the protagonist’s suffering in the Communist “re-education” camps and the escape of his family to the “new economic zone” (i.e. America), yet also jumps forward and back chronologically. The narrative is united by the extended metaphor of the legend of Le Loi, reinterpreted in the film to parallel the protagonist’s sacrifice to allow his family to escape their past. The legend is told to the audience through a grandmother’s story and children’s drawings while the soft chords of a solo acoustic guitar express the sometimes overwhelming sorrow the film seeks to evoke.

The protagonist was an officer in the nationalist army that stayed behind after the fall of Saigon to resist the Communists, and was captured and taken to a “re-education” camp in the jungle, full of back-breaking construction and agriculture labor and land mines. I was amused to see the red banner above the entrance to the camp read “nothing is more precious than freedom” (of the ancients and the moderns, perhaps?), while a statue of the great leader stands silent while an absurd-looking party official delivers a sermon and the camp commissar smokes his bourgeois pipe. And then we segue to the incredible journey of his family with the boat people to Orange County, California, and the new life they find there.

After the film we had a little discussion about it outside the theatre. What struck me was how much their personal experiences verified the story. One of the VSA girls said that her older brother was actually born on the boat they escaped on, so they knew exactly when their family had fled the country. We compared the film with the previous Vietnamese film we saw (on campus), the Story of Pao, about a Hmong tribe girl’s search for her mother – none of them thought very much of that one. We wondered about reason for the difference, because both are ‘authentic’ yet one is far more real. Perhaps the answer is that the Vietnamese government supported the Story of Pao, while Journey from the Fall was (obviously) funded entirely privately from the Vietnamese diaspora community. Films like these speak so strongly against the enemies of freedom, far more eloquently and effectively than the pro-liberty documentaries of the Moving Picture Institute. I wonder if the libertarian movement really understands how to fight the culture war, when the best movies in the cause are not reactionary responses to the Michael Moore-style pseudo-documentaries of the radical left, but universal and timeless appeals to freedom and liberty. This had that universality and timelessness, yet was so much more powerful because it was closer to our world: events that take place only thirty years ago, with friends that still remember.

We were a relatively large group, and I suppose all Asian people look alike in the eyes of the locals. After dinner, an old white woman came up and pointedly asked us, “Are you all from the same country?” as if to imply something. I walked away though I wanted to say yes, we are. And that country is America.

Update: Vote for the film!

In retrospect I should’ve taken notes since I am writing this from memory.