Sometimes you just get a feeling inside that things aren’t what they seem.  Such was the case with me when a friend invited me onto Kiva, the online microfinance website that promotes itself as bringing real connection between borrower and lender. It sounds so good, so easy - just loan $25 or more directly to a needy person of my choosing whose pictures are provided along with select personal data.  Kiva’s website tells you that it works with ‘organizations in the field’ to actually disburse my loan and that I will get all of my money back (without interest) when the loan is repaid by the new friend I have made -- who is ever-so-grateful that I have chosen him/her as the recipient of my loan.  

And in case you’re unfamiliar with microfinance, in a nutshell it’s a way of providing loans to poor people so they can lift themselves up out of poverty. Sometimes this means a loan to purchase goods to re-sell, sometimes a sewing machine to help increase a hand-sewer’s productivity, sometimes a couple of goats so a small farmer can sell goat milk in their community. It all sounds very simple -- the loans are usually repaid within a matter of months, all scheduled and carefully monitored by the non-profit lending institution in the field (meaning the partner institution located in the country where the loan is made).  

I need to back up a bit here and say that my interest in this issue became personal years ago when a friend fresh out of college set up a non-profit microfinance institution (MFI) and asked me to donate (please notice that my friend’s org depends on donations, not loans, which makes its operating model different from most of the other players).  Knowing this friend has a heart of gold, I didn’t hesitate and have followed the growth of my friend’s org from a one-person show involving repeated trips to one of the poorest spots on the planet to disburse donated funds to what is now a large, well-funded (donations, interest, and loan repayments) organization with celebrity supporters and fancy parties.  My friend’s involvement has dwindled to that of adviser after holding every position imaginable over the years, and financial ‘experts’ make up a board of directors who are set "to guide the organization to the forefront of microfinance." 

Uh... wait a minute.  Where’s the part on the website that tells me what sort of interest rate they are charging these people?   Additionally, they say there’s a “savings component” that requires each borrower to place funds in the care of this microfinance organization, ostensibly as collateral that will earn interest for these poor people.  But how much funds/savings are they required to deposit?  And how much interest do the borrowers earn on this savings account?  How much interest does the org earn while they’re keeping it safe for them?  I’m not seeing transparency here, and that makes me nervous.  

And then recently I got this invite to become a lender through Kiva, an MFI based in California with a novel means to attract capital via a website  ... I perused the website for answers to the same types of questions.  Nothing specific (to be fair, they do post the “average” interest rate used by their many partners in the field), but plenty of photos of poor people smiling with names and locations and types of businesses they want to promote.  Bingo. I have an emotional connection!  And the invite said that I wouldn’t even have to loan my OWN money because some anonymous donor wants to promote Kiva by giving money to people like me so I can learn about Kiva and become a lender in my own right.  Whew, how philanthropic of Anonymous!

My worst fears about microfinance were recently realized after reading Confessions of a Microfinance Heretic by Hugh Sinclair, a long-time veteran of the industry who became extremely unpopular for blowing the whistle on the dubious practices within the industry (the BIG industry).  His book has only just been published, and he sees it necessary to “lay low” for awhile given the fact that his life has already been threatened for exposing some very profitable players in the microfinance sector along with some creative and unethical practices.  I couldn’t begin to explain here all the schemes employed by those with fancy credentials who extort money from the poor, but here are a few highlights from Sinclair’s book:

1) In 2009 a Kiva website user discovered 2 photos of the same poor person on different pages of the Kiva website where they were given different names and profiles. One photo was cropped slightly different than the other, and they were time-stamped only one minute apart. 

2) Despite all sorts of evidence of fraud and direct notification of that fraud to investors, large pension funds (yours perhaps?) continue to invest in a Nigerian MFI known as LAPO that charges up to 150% interest (even more on occasion) on loans to the poor in that country.  Why would these large 1st world pension funds continue to support such blatant misuse of pensioners' dollars?  Because LAPO successfully repays the investor loans at a high interest rate.  And of course, it’s not really about the poor at all.  As you might guess, some of these MFIs collect debts by threatening their debtors.  One debtor sold her child into prostitution in order to pay up. And a rash of suicides by borrowers in India made headlines.

3) Due to a clause in microfinance regulations, the same fraudulent Nigerian fund recently employed an option called “transformation” that allowed it to (presto!) become a bank and disburse a percentage of their holdings to the CEO and shareholders.  This option is open and available to any MFI that wants to go there.

4) Kiva’s number one partner in the field is the very same Nigerian MFI mentioned above.  (Thus Sinclair reveals that those whose emotional buttons have been moved to lend may inadvertently be condoning fraud, intimidation, and absurdly high interest rates on loans made to the poorest of the poor.)

5) In 2010 Kiva held $42 million in idle cash (money waiting to be loaned or returned), none of which belongs to Kiva but from which Kiva earns a very tidy interest income for itself.  Much of that money comes from Wal-Mart ($1million), Microsoft ($65,729), Visa ($1million), Google ($58,303) (figures from 2007), and from people like me who gave $4,850,507 in 2010.

6) A good portion of loans to the poor are not made to lift people up out of poverty but are consumer loans, used to purchase such things as televisions.  Exact percentages are hard to come by since documentation is not usually a requirement for a loan.  (There are exceptions to this, and Sinclair is quick to note that not every MFI operates so carelessly.)

Despite all this, I just might hesitate to pass along this criticism of microfinance IF there was evidence that it actually helped people escape poverty.  But in fact, very little evidence exists at all to show that microlending has any effect -- though Sinclair points out that microfinance can and does work in the very small percentage of organizations that adhere to their actual mission statement. (He mentions Mongolia and Ecuador as places where he has witnessed ethical and honest lending.)  But as David Korten, one of my favorite thinkers, notes in the foreword: “...many microcredit programs are nothing more than predatory lending schemes rebranded as socially responsible investment opportunities.”

Though it’s still relatively unpopular to criticize microlending, the NY Times has done it, and more and more whistleblowers like Sinclair are stepping forward.  By reviewing Sinclair’s book (which is thoroughly documented in the bibliography, btw) I’m effectively adding my voice to the fray.  Next time I travel to a third world country, I will look for a real person who could perhaps use a hand up and offer her/him mine - up close and in person.

When I wrote the entry for 4/24/12 I mentioned that I would come back to Nicholas Carr's book The Shallows: What the Internet is Doing to our Brains.  This is that post.
    As previously mentioned, Carr wrote a second book entitled The Shallows: How the Internet is Changing How we Think, Read, and Remember.  Not just our brains, but the very fabric of our lives, from day-to-day relationships, casual communications as well as deepest and most heartfelt discussions, how we've been propelled into the age of surveillance, and finally, the focus of this post: economics.
     "How boring!" you say.
     Ah, but not!  Carr likens the Age of the Internet circa 2012 to the Age of Serfdom in which wealthy landowners rented out plots of land to peasant farmers ostensibly for the purpose of providing them a good living as well as food on their tables.  In truth, history documents the rise of the class system with the poor growing increasingly poor as the Lord of the Manor takes increasingly greedy shares of the crops while slowly upping the rents. 
      Fast forward to 2012, we're well into the Information Age with the internet being its catalyst, growing so rapidly that students who begin college to study internet technologies are faced with new curricula 2-3 times each semester.  Essentially, these students are ready for "continuing education" just a couple months after graduation.  One of the latest innovations is "cloud" technology wherein resides all you might ever need to know or software you ever need to use, or storage space for your songs and photos and literary creations -- all of it residing somewhere up there in the ether as opposed to on your own computer. This amounts to an "expert" always on hand to update your software, file your photos, or lend you the latest and greatest technologies and tools.  All you have to do is access the "cloud" when you, the consumer, need to retrieve one of your photos, listen to a song, design a graphic, or even write a letter.  The catch is this: like the Lord of the Manor, the internet entrepreneurs hold your tools in their hands (and in the case of photos, they hold your work!).  "Cloud" pricing can rise on a whim or upon the sale of a "cloud company" to another cloud company.  Moreover, cloud access is controlled by your ISP involving yet another fee, content is monitored and "surveilled" for offensive keywords (primarily by the Justice Department looking for the o so elusive enemy du jour), and content may or may NOT be yours after all. Twitter is currently involved in a court dispute with the Justice Department over who owns the words written by one of its users.  Read about it here.  Copyright issues are only beginning to be explored and challenged in court, but in the meantime, it's quite logical to believe that you may not be able to access your work for a period of time, and you may end up not owning it all.  Needless to say, the ownership issue is an additional economic consideration as the Information Age continues to evolve.
      So the cloud phenomenon is turning computer access into a utility company.  The user has plenty of liberties, but a blackout could occur at any time. 
      It's perhaps a bit too early to judge the accuracy of Carr's thesis when it comes to the economics of cloud technology, but suffice it to say, he's nailed it on his other observations about how the internet is changing us, The change in our methods and depth of our communications as well as our ability to retain what we read has been scientifically documented, and let's face it - is fairly obvious to anyone who's already done a fair bit of communicating offline in their lifetime.  Babies born today, however, may not ever learn the art of letter-writing by hand or figure out that their face-to-face communications are going to do more for their social skills than any social network could ever do.  And who knows?  Maybe their kids won't actually ever own their work but become part of a Gattaca in the making. This should give us all something to think about as we ponder the clouds.
       

I've been meaning to write about Green Polka Dot Box (GPDB) for awhile now.  Though it's a brand new organic food co-op, I tend to already take advantage of it.  As a gluten-free baker, I try my best to use organics whenever possible, and it's imperative for me to never ever knowingly use any geneticially-modified ingredients, so I especially appreciate The Green Polka Dot Box and their commitment to organic, non-GMO foods at discount prices. 

    Launched late in 2011, this company was the brainchild of a former Costco executive named Rod Smith who recognized the need for lower-priced organic foods, especially in rural areas where organics are often hard to come by.  Proudly referring to GPDB as a "buying collective," part of their mission is to help educate people about the connection between diet and disease.  Though located in Utah, they ship to every zip code in America, meaning that if you bale on civilization but still have a post office address, you're covered. 
     They don't carry every brand that I used to routinely buy, but thus far I've been pleasantly surprised to find organic versions of most my baking supplies, including Bob's Red Mill flours, organic sugars, olive oils, dried fruits, and vanilla  (which I go through like water!).  I've also discovered some organic chips that I didn't know existed that are quite good, and a new brand of gluten-free crackers that I will definitely be buying again.
     And here's the best part for those folks stuck in pesticide/herbicide zones across the country.   GPDB has already launched a fresh produce delivery service in the western U.S., partnering with local farmers who pick, pack, and ship produce within their region with a two-day delivery promise.   Other regions of the country will follow within the next couple of years, but they keep in touch with members regularly to update on the progress of making that happen.  They have also been pretty good to let members know when new brands are added (for instance, Newman's Own just added quite a few new products since the initial launch of the company). Since they are a new company, they are still in 'stock' mode, so new brands are appearing regularly.  Additionally, members can suggest products and brands to add, and they will follow up.  (Some brands have declined the opportunity, which I think is pretty lame, but others will no doubt fill the void.)

     Want to peruse the site just to see what they have?  You can do that here.  And if you decide to join, I have 3 free memberships to give away right now.  A membership is good for one year, and at that point you can choose whether or not you want to renew.  If not by gift invitation, memberships start at $50/yr., no minimum purchase, no regular purchase required, and purchases of $99 ship for free.  (I always take advantage of the free ship because shipping tends to be so expensive these days. ) There's also a reward membership plan for $125/yr that allows you to earn points for referrals.  (As a founding member, my free membership offer to you is different than this referral plan.) The link above will allow you to peruse the site, but if you decide you want one of my free memberships, please contact me via the contact link above, and I'll send you the link to the free membership.  First come, first served.
      It may not be for everyone, but quite honestly I absolutely love it.
    

     

I learned a new term this week: "Earthing" refers to the act of grounding yourself by walking barefoot on surfaces that conduct electrons from the earth to your body.  The best earth surface for conduction is a sandy beach, but early morning dew-covered grass is a close second according to the scientists who are studying this phenomenon.   (So that's why we humans immediately go barefoot when we hit a nice beach).
    Of course, this is a gross simplification of the term, but I had no idea that we humans thrive on these earth-born electrons.
   Dr. Joe Mercola did an article on this recently, but it was a guy named Clint Ober who actually spearheaded the research after a serious health crisis led him to alternative therapies.  Along with Martin Zucker and cardiologist Dr. Stephen Sinatra, he wrote the book Earthing: The Most Important Health Discovery Ever? (Basic Health Publications, 2010) which claims that earthing not only thins the blood and lowers blood pressure but reduces inflammation, stress, and fatigue.  Some readers claim that by sleeping with a ground, serious health conditions have improved dramatically.
   Dr. James Oschman (U Pittsburg) took it all a step further by scientifically documenting the effects of earthing on the body.  (See the link to Mercola's article above for details).  From the article:  "So really what is happening with grounding or earthing is that you're protecting your body from -- I call it, collateral damage," Dr. Oschman says. "Damage that was not intended to take place but does take place because we have disconnected ourselves from the Earth by putting rubber and plastic on the bottoms of our shoes."
    This makes so much sense to me -- we have lost the connection to our earth on so many levels it's hard to quantify.  Could a daily, habitual "earthing practice" help restore us physically, mentally, and spiritually?  It certainly can't hurt to try.
    Highly recommend reading this one.