Westerners typically save in the form of money or money-denominated assets such as stocks and bonds. But in poor communities, money is often an ineffective medium for savings; if you want to know how much net saving is going on, don't look at money. Banks may be a daylong bus ride away or may be plagued, as in Ghana, by fraud. A cash hoard kept at home can be lost, stolen, taken by the taxman, damaged by floods, or even eaten by rats. It creates other kinds of problems as well. Needy friends and relatives knock on the door and ask for aid. In small communities it is often very hard, even impossible, to say no, especially if you have the cash on hand....
Under these kinds of conditions, a cow (or a goat or pig) is a much better medium for saving. It is sturdier than paper money. Friends and relatives can't ask for small pieces of it. If you own a cow, it yields milk, it can plow the fields, it produces dung that can be used as fuel or fertilizer, and in a pinch it can be slaughtered and turned into saleable meat or simply eaten. With a small loan, people in rural areas can buy that cow and use cash that might otherwise be diverted to less useful purposes to pay back the microcredit institution.
Bullish on Cows
Writing in The Wilson Quarterly, Karol Boudreaux and Tyler Cowen take a nuanced look at what microcredit can and can't do to help poor people around the world. I won't try to summarize all their points, but I will quote my favorite part of the piece:
Comments to "Bullish on Cows":
Lamer | January 11, 2008, 4:59pm | #
THIS ISN'T ABOUT THE NEWSLETTERS. I CALL SHENANIGANS.. | January 11, 2008, 5:02pm | #
I swear to god I'll pistol whip the next guy that says shenanigans.Jesse Walker | January 11, 2008, 5:03pm | #
THIS ISN'T ABOUT THE NEWSLETTERS.Bombshell! Ron Paul Investment Newsletter, Feb. 1989: "Time to buy cows!"
Thomas Paine's Goiter | January 11, 2008, 5:06pm | #
Jesse, less about Kiva.org and Johnny Cash and more about newsletters please.dodsworth | January 11, 2008, 5:15pm | #
yes, jesse. you haven't yet had a chance to kick Paul when's he down. It's such fun and you'll feel so pure C'mom, pick up your club and and start pummeling.sv | January 11, 2008, 5:17pm | #
man, you guys... anyway the article is interesting, check it out, especially if you're REALLY sick of that -other- issue.Brandybuck | January 11, 2008, 5:20pm | #
I'm all for microloans, so long as the guv'ment isn't running or funding it.Let's assume, for a moment, that a cow or pig in some distant land is named "Ron Paul"....
So when is Ron Paul going to start calling for us to go back to the cow standard?
The really cool thing is that you can double you investment in 9 months.
ChuckWalla | January 11, 2008, 5:40pm | #
Will the Ron Paul cow standard include black angus cows?A friend of mine was telling me last night about a program he participates in, in which western donors put up money for goats in Africa. You don't get lease payments in the mail, but it's a damn sight more productive than sending them Bibles.
Jamie Kelly | January 11, 2008, 5:42pm | #
Anyone got change for a heifer?NoStar | January 11, 2008, 5:49pm | #
Don't eat ground meat made from rump roasts.You'll get ass-burgers disease.
drawnasunder | January 11, 2008, 5:58pm | #
http://www.kiva.org/Ron Paul newsletter | January 11, 2008, 6:01pm | #
The black Angus cow is a terrible waste. Not nearly 5% of them can make a decent football or baseball mitt.All they do is suck at the teat all day, lining up and stampeding off to the feed line.
Now, I know that this is mere hereford...err hearsay, but I have it on good authority that the Black Angus is a shill for Big Boca.
jimmy smith | January 11, 2008, 6:17pm | #
Borrow the money, buy a bull, sell the service to cow owners. All involved are happy, cows, bull, owners, etc. One does accumulate extra BS to save for any Ron Paul postings that may be forth coming. Win-win-win-win all the way to the b..garden.J sub D | January 11, 2008, 6:18pm | #
On topic,Thanks for the post and link, Jesse. The piece isn't going to drastically change my thinking on possible solutions to third world poverty, but will definitely affect it.
Francisco Torres | January 11, 2008, 6:27pm | #
http://www.kiva.org/Lenders do not get interest. I checked.
joe | January 11, 2008, 6:27pm | #
In my city, the Cabodians, and extremely poor community, have dozens of jewelry stores, and they're all in the higher-crime neighborhoods where they live. I couldn't figure it out, until my boss told me they use them as banks. A deposit means buying a bracelet or something and then leaving it the heavily-secured store, and a withdrawal means selling it back to the store for cash. Often, the bracelet never leaves the building.Oh, and if you've ever been robbed by a goat, you know how incredibly fleet of hoof they are.
P Brooks,
Really? Is there a website?
First Little Pig | January 11, 2008, 6:29pm | #
Relatedly, I have been donating animals to poor people in the names of friends, colleagues, family, etc for years:http://www.heifer.org/
Dang it. I know there is a mircolender (stateside maybe??) that charges a small interest rate but damned if I can remember who it is.
Joe, so it's just like Ron Paul Liberty dollars left in Von Nothaus' vault only the Feds don't raid jewelery stores.
Paul | January 11, 2008, 6:49pm | #
use cash that might otherwise be diverted to less useful purposes to pay back the microcredit institution.Yeah, like giving it to your useless Uncle Bob who'll spend it on drink and never pay you back.
Windtell | January 11, 2008, 8:43pm | #
For once, joe is right.I've seen this done in Turkey where I lived, people would use jewelry stores as banks because they didn't trust the banking system, let alone their own currency.
Funny memory, a friend's sister thought that her husband was cheating on her because there was an expensive ring on his credit card that he hadn't told her about. Turns out that he'd just used his credit card to "flip" the ring. People will use the credit card to buy jewelry then immediately "resell" it to the store to get cash.