The Informationist

Credit Where Credit is Due

The Nobel Committee hit a home run last week when it awarded Muhammad Yunus and his Grameen Bank the Nobel Peace Prize last week.

Yunus pioneered the concept of microcredit--and made it work. In a nutshell, Yunus made modern credit financing available to the world’s poor. As far as I can tell, this idea has been the single most successful innovation in development economics within recent memory. Prior to microcredit, most poor people faced few options when they sought to take material action to improve their own lives. They typically had to choose between selling majority equity stakes in their proposed ventures, “collateralizing” usurious loans with their own bodies or those of family members, or taking handouts. Microcredit makes it possible for them to borrow small uncollateralized amounts. The lender--often a collection of community members--absorbs all risk. Almost all loans get repaid.

Yunus described his work much better than I could in a WSJ piece the day after the Nobel Committee announced his prize (non-WSJ subscribers may have a hard time following the link).

This award was particularly important after last year’s debacle. When the Nobel Committee awarded its 2005 Peace Prize to Mohammed el-Baradei and the IAEA, I found myself a lone voice of incredulity among the respondents at TPMCafe. In response to an article headed “Nobel Committee got it Right with the IAEA,” I could only ask “Is this Parody?” Apparently not, for I alone seemed to get the joke. Perhaps now that the nuclear programs in North Korea and Iran have had successful years others can begin to chuckle, but I doubt it.

The Nobel Committee continues in its schizophrenic state, seemingly alternating its awards between people and organizations whose words or charters espouse wonderful ideas, but whose actions are detrimental to peace and stability, and those who actually do something to make the world a better place. This year’s award went to one of the good guys.

Watching the parade of Peace Prize winners often draws me back to one of my favorite used-book finds. I am in proud possession of a book called “Peace Year Book 1933,” a League of Nations publication detailing work towards world peace in 1932. The book makes much of Germany’s return to “normal” status following the rather odious terms that the Treaty of Versailles had imposed. It made little or no mention of the political crisis then facing Germany. In the autumn of 1932, however, Germany underwent a difficult parliamentary election from which no clear winner emerged. As 1932 ended, negotiations to form a government were still underway. On January 30, 1933, Adolf Hitler was sworn in as Chancellor. Shortly thereafter, his Nazi Party incinerated the Reichstag, swept new elections, and the rest, as they say, is history. At least the Nobel Committee had the good sense not to award a 1932 Peace Prize.

Sometimes hope and denial can blind the world to brewing threats. Last year’s award was willful blindness in its finest glory. This year’s choice shows a much clearer glimpse of reality. Give credit where credit is due.

Posted by Bruce Abramson from on 10/16 at 02:43 PM in Foreign Affairs and the World beyond Our Borders