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Seeking the Truth with Muhammad YunusDaniel Park, 13 December 2016
By Daniel Park, student of the HEC Paris' MSc in Sustainability and Social Innovation
Muhammad Yunus is hailed in many circles across the world as a hero, a man who has touched millions of lives through his work in microcredit. Since Yunus founded the Grameen Bank in 1983, the microcredit idea has surged in popularity, with thousands of microcredit organizations in existence today. Yunus himself has won several awards in recognition of his work, such as the Nobel Peace Prize in 2006, and the US Presidential Medal of Freedom in 2009. However, for all Yunus has undeniably achieved, many criticize both him and his ideas. He was even fired from his managing director post at the Grameen Bank in 2011 by the government of Bangladesh. Whatever “the truth” is in this conflict, I felt there could be a discrepancy between the perception and the reality behind Muhammad Yunus. When I was presented with the opportunity of interviewing him during his November 2016 visit to HEC Paris, I seized it with both hands.
Here is what I asked:
Question 1: Microcredit as a long-term solution for poverty?
In their 2010 book Just Give Money to the Poor: The Development Revolution from the Global South, Armando Barrientos and David Hulme, Directors of the Brooks World Poverty Institute at the University of Manchester, argue for direct transfer of cash to households in developing nation as an effective poverty reduction tactic. They cite growing evidence from many nations such as Bolivia and others across the Global South: it shows how the poor have frequently made good use of these money transfers, posting positive short run and long run benefits. While Barrientos and Hulme do not directly criticize Yunus, their idea certainly does not seem to support the Grameen Bank and the Microcredit movement. It is one of several criticisms levelled at Yunus – specifically that microcredit is not a long term solution, and in many cases saddles unnecessary debt onto the poor.
I decided to ask Professor Yunus about this and he was quick to respond: “If you have a better idea, go ahead and do it. What is stopping you? Since we didn’t have any better ideas, this is what we did.” Admittedly, microcredit has impacted the lives of millions around the world, whether critics like it or not. Yunus went on: “Instead of saying this is not big enough, this is not effective enough, this is not long term enough, the challenge is: Do it!” Yunus bemoaned the critics, saying they should be taking action, “not writing a book on how bad the other guy is”. Yet, it is important to note that throughout the answer, Yunus also emphasized that “I am not defending what I do… I am saying that’s all I know”, and that “if you have a better idea I’d love to learn from you.”
Question 2: Is Business the way to go?
I decided to broaden the scope of my curiosity, and posed a question based on a quote from Yunus while accepting the George Washington University’s President’s Medal on Oct. 26, 2016. During his remarks to the audience, Yunus stated that “every time I see a problem my mind works in the direction of creating a business to solve it.” There are many instances of businesses bringing effective solutions to society, such as Ashoka bringing social entrepreneurs together or AirBnb providing lodging options for through a two-sided market, but this is not always the case. For example, TOM’S Shoes, an international shoe company, has been criticized at times because its shoe donation policy may increase reliance on external aid more than having a positive impact.
Upon reading the quote from Professor Yunus, I resolved to ask him if there were any problems that he encountered for which business was not the solution. In response, Professor Yunus, stated that “if [business] is not the solution, I moved away from it…if you see a problem, if you can come up with a business idea, follow that business idea. If you can’t, move onto something else.” In his reply, Professor Yunus also acknowledged that some problems are better served by other organizations, “either a charity or by some other means of instruction, education, and so on.” He did not specify any problems in particular. The Nobel laureate freely admitted that he has had a number of failures throughout his career, but when considering a problem, one failure does not mean business is not a solution. Sometimes, the “very first approach was wrong.” He went on: “It was not that it couldn’t be done, it was simply that I didn’t have the right idea…that is how it works in the business world. Most of the work that I do is trial and error”.
Question 3: What fuels your fire in the face of statistics such as rising income inequality?
For my last question, I decided to go broader, tackling the rise in global income inequality. Absolute levels of poverty and incomes have risen over the past 30 years. But when one considers the data, average economic inequality rates in industrialized countries, as well as in South Asia, Eastern Europe and Central Asia, and even East Asia have all risen from 1988-2013. I wanted to know if these types of statistics ever discouraged Professor Yunus, and if so, how he finds the inner passion to push through hardship and criticism.
Intriguingly, Professor Yunus gave an answer that provided both an insight into the problem and left his inner motivation to be inferred. He stated that he does not focus on the idea of income inequality, but rather on wealth concentration which, for him, is the real issue. Wealth concentration focuses on all assets owned rather than the yearly income gained. In analogous terms, it is the entire value of a company versus the yearly additional revenue. He specified: “Wealth is the tree, income is the fruit… when you say income inequality and wealth concentration, these are two totally different aspects. Income is a minor aspect; wealth is what generates income.” Professor Yunus elaborated on the idea of income generation through wealth: “In the system we have, the more you have the more people will give you more money. So you get bigger and bigger”. However, if you do not have any money, no sources of funding “will come to you… It’s a strange financial system, that’s wrong, we have to redesign that”.
The brokenness Yunus spoke of is undeniably true, wealth concentration within the top 1% is staggering. According to 2015 report “An Economy for the 1%” published by Oxfam, the richest 1% of the world have more wealth than the other 99% combined. 62 individuals had the same wealth as the bottom 50% of the global population, a staggering 3.6 billion people – the number of individuals has steadily decreased from 388 in 2010.
So what is the solution to this problem? According to Professor Yunus, the answer lies in “bringing wealth redistribution”, part of which is brought about by encouraging people to become entrepreneurs. “Even the illiterate woman can be an entrepreneur… Microcredit, the Grameen Bank, created an instance.”
Nobody believed that lending money to the poor was possible, but the Grameen Bank numbers show otherwise, with a loan recovery rate of 99%. As entrepreneurs, people will work for themselves, not the 1%, as so many people do today. Yunus argued that we are “directly or indirectly like mercenaries, soldiers for hire”, because “everyone wants to work”, but the people who run the majority of companies are the 1%, meaning that working for them only contributes to their wealth.
As for his motivation, it seems to lie within his passion for eliminating wealth concentration – it’s unclear if he was discouraged, but it looks abundantly clear that, at 76 years of age, his energy level and passion have not subsided.
So Now What?
So there you have it, my best attempt at the clarification of Mohammad Yunus. Maybe you would have done it differently, but I believe my questions certainly contributed to my intellectual journey towards, in the words of Filipino social entrepreneur Tony Meloto, a more “competent compassion”. Okay, honestly, I left the interview with far more questions than solid answers, but that result wasn’t surprising in the least. What was surprising was the ambiguity and indirectness that I received in answer to the questions I posed.
When speaking on the application of microcredit as a solution, Professor Yunus provided an answer that merely sidestepped the concerns of critics, not taking the opportunity to address failures/misconceptions with the microcredit system. Moreover, I would have preferred to hear more specific examples of problems that Professor Yunus perceived as better tackled by non-business solutions, as opposed to the more general answer he provided. If possible, I would ask him more on his thoughts on general characteristics of a problem solvable through business vehicles – if there is any way to generalize such an idea. When I asked my last question regarding a driving internal fire in the face of discouragement, I was expecting more insight into to the personal commitment of the Nobel Peace Prize winner. Nevertheless, the exposé on wealth concentration and wealth redistribution was both interesting and allowed some inference into Yunus’ motivations.
However, my greatest takeaway was an overall sense of the attitude Professor Yunus carries throughout his life. The answers he gave might have been rather indirect and at times vague, but one crystal clear thread ran through every single one of them: a personal conviction that one simply does what one can. This mentality stuck with me more than any words he said. He emphasized that his solutions were not a panacea for poverty, but rather the result of him doing what he could given his situation and resources. He displayed a humility somewhat unexpected for a man of such high stature. This was accompanied by a clear commitment to taking action, especially apparent as Yunus spoke of the problem of wealth concentration – a preview of the fire I had been looking for, and a challenge to do the same.
Find more about Professor Myuhammad Yunus 48-hour visit at HEC in November with Daniel Brown's article. Daniel is HEC Paris Communications editor.
 Hulme and Barrientos, Just Give Money to the Poor: The Development Revolution from the Global South .
 Hickel, “The Microfinance Delusion.”
 “Muhammad Yunus Awarded George Washington University President’s Medal | GW Today | The George Washington University.”
 Taub, “Buying TOMS Shoes Is a Terrible Way to Help Poor People.”
 Roser and Ortiz-Ospina, “Income Inequality.”
 Hardoon, Fuentes-Nieva, and Ayele, “An Economy For the 1%.”
 Hicks, “How the Wealthiest of America’s Rich Make Their Money.”
- Hulme, David, and Armando Barrientos. Just Give Money to the Poor: The Development Revolution from the Global South . Kumarian Press, 2010. http://www.goodreads.com/book/show/7608423-just-give-money-to-the-poor.
- ii. Hickel, Jason. “The Microfinance Delusion: Who Really Wins?” The Guardian , June 10, 2015, sec. Global Development Professionals Network. https://www.theguardian.com/global-development-professionals-network/2015/jun/10/the-microfinance-delusion-who-really-wins.
- “Muhammad Yunus Awarded George Washington University President’s Medal | GW Today | The George Washington University,” October 31, 2016. https://gwtoday.gwu.edu/muhammad-yunus-awarded-george-washington-university-president’s-medal.
- Taub, Amanda. “Buying TOMS Shoes Is a Terrible Way to Help Poor People.” Vox , July 23, 2015.http://www.vox.com/2015/7/23/9025975/toms-shoes-poverty-giving.
- Roser, Max, and Esteban Ortiz-Ospina. “Income Inequality.” Our World In Data , 2016. https://ourworldindata.org/income-inequality/.
- Hardoon, Deborah, Ricardo Fuentes-Nieva, and Sophia Ayele. “An Economy For the 1%: How Privilege and Power in the Economy Drive Extreme Inequality and How This Can Be Stopped.” Policy & Practice , January 18, 2016. http://policy-practice.oxfam.org.uk/publications/an-economy-for-the-1-how-privilege-and-power-in-the-economy-drive-extreme-inequ-592643.
- Hicks, Alexander. “How the Wealthiest of America’s Rich Make Their Money.” Democracy Journal , June 5, 2013. http://democracyjournal.org/arguments/how-the-wealthiest-of-americas-rich-make-their-money/.
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