I always appreciate the chutzpah of speaking truth to power, and I see that the last time I did this the Chutzpah of the Week award involved military power. It thus seems appropriate that this week's award acknowledge a similar act of speaking truth to financial power (without getting into any philosophical arguments over which is the greater power). What is particularly interesting is that, in this case, the truth is being spoken from a position of power: The speaker is Muhammad Yunus, whose Grameen Bank is one of the few financial institutions to weather the current economic crisis almost unscathed. Last October, when it seemed as if the entire financial sector had been turned into decapitated chickens, as if by a malevolent Circe with a sense of humor, I reported on an interview Yunus gave to SPIEGEL ONLINE in which he disclosed the secret of his success:
The fundamental difference is that our business is very connected to the real economy. When we provide a loan of $200, that money will go to buy a cow somewhere. If we lend $100, someone will maybe buy some chickens. In other words, the money goes to something with concrete value. Finance and the real economy have to be connected. In the US, the financial system has completely split off from the real economy. Castles were built in the sky, and suddenly people realized that these castles don't exist at all. That was the point at which the financial system collapsed.
It goes without saying that Yunus' wisdom had little impact on the efforts of either the Bush or Obama Administrations to bring recovery back to our national (let alone the global) economy. Thus, Yunus has decided to deliver the message again; and this time, as Tim Johnston has reported for the Financial Times, he is making it clear that the failed business models of the financial sector need to be replaced by a non-profit one. He has even proposed a name for his model: He calls it "social business." Here is how he describes it:
What I am suggesting is that you create businesses exclusively for changing a situation that exists, of poverty, or environment or so on.
This is an exclusive arrangement and you invest there not to make any profit out of it, personally or companywise, but to dedicate yourself to solve the problem, and you can bring your own technology, which you command, to make it happen.
My guess is that this is the sort of talk that can set the rich and mighty quaking in their boots, particularly when Yunus backs it up with a you-can't-argue-with-success logic:
It is particularly remarkable when big banks – lots of collateral, lots of lawyers around them – are collapsing, and microcredit, the programme we built, is working everywhere without any collateral; without any lawyers. Their repayment has remained as high as ever.
Reading this account, I found myself wondering whether or not the real secret of Yunus' success was one of attitude. I cannot imagine any one of us who has not felt that our dealings with a financial institution have been fundamentally adversarial, the underlying premise on the part of the institution being: "I have something you want; and, if you are to have it, you must be beholden to me." Yunus is more interested in being a problem solver than an adversary. At a time when it seems as if our very sense of humanity is in jeopardy, Yunus has focused on trying to recover it. As he puts it:
Poverty is not created by poor people – it is not their fault. They are as good human beings as anyone else, they are as creative as anyone else, they are as enterprising as anyone else. Simply, they never get a chance to discover their own talent.
Coming from anyone else, this might sound like granola-speak; but this man is a banker whose message is only as strong as the bank he runs.
Unfortunately, for all of his efforts to bring reality back into the financial sector, he will still have to confront that "classical battle between Lucy and Linus" that seems fated to reduce any effort to reform health care to bureaucratic rubble. The stakeholders in the adversarial approach to finance are legion, and they still have more than adequate resources to continue their adversarial ways. Nevertheless, Yunus deserves the Chutzpah of the Week award for his efforts to keep the discussion of current economic problems on message, in spite of the inevitable adversities that will confront him.