Can Wealth Concentration be Stopped?

Muhammad Yunus is a Bangladeshi social entrepreneur, banker, economist, and civil society leader who was awarded the Nobel Peace Prize for founding the Grameen Bank and pioneering the concepts of microcredit and microfinance. These loans are given to entrepreneurs too poor to qualify for traditional bank loans. On a visit to Sydney, Muhammad Yunis addressed an The Sydney Institute on Monday 3 April 2017. The paper which follows is an edited transcript of the speech as given.

CAN WEALTH CONCENTRATION BE STOPPED?

MUHAMMAD YUNUS

Thank you for inviting me to share with you the kind of things we do. Let me tell you that what I have been doing looks very peculiar, very unusual. Initially, people got a little nervous. My argument, however, is that if we follow the same road we reach the same destination. If you want to go to a different destination you need a different route or road.

While the new road looks a little awkward, unfamiliar, questionable, you can complain about it but we have the responsibility to find a new road to go to a new destination. So far, the destination on the old road that we have reached is not a very pleasant one. We have created lots of problems for ourselves; even if we’ve solved many problems along the way, we’ve also created many others. The problem of poverty remains with us, the problem of the environment has become acute, and we have all kinds of problems with waste. We don’t feel that we can continue this way. We have to undo that. We have to see where we went wrong and what makes it happen.

On the poverty side, this poverty is not created by the poor people themselves. It’s not something coming out of the people that poverty happens to. Poverty is imposed on them. Poverty is created by the system that we created. It’s not a self-created situation. And, once we agree on this, then we have to focus on the system itself.

How does it work? How does the system cause the poverty situation? Where do we have to change things to make it happen? That’s a big starting point. And then we have the huge problem of wealth concentration. Wealth is becoming more and more concentrated each day. This year was worse than last year. Generally, in 2016, one per cent of the global population held 99 per cent of the wealth of the world. A year later, it will be less than one per cent holding more than 99 per cent of the world’s wealth. This is now echoed in what we have been hearing during the US presidential election campaign. Bernie Sanders repeatedly mentioned, as his campaign statement, that one tenth of one per cent own more than 90 per cent of the wealth of the United States.

This is the US situation. Globally, just eight people have more wealth than the lowest half of the world’s population. And we know who these eight people are – Bill Gates, Warren Buffet, Carlos Slim, Mark Zuckerburg and so on. These are not unknown people – we know their assets and we have all the statistics on them. They own more wealth than the bottom 50 per cent of the world. But the worst part of it is that next year, when the same statistics are announced, it could be less than eight people owning more than the bottom half of the world’s population.

The direction the world is heading in is the most dangerous part. If that direction continues, we are in apocalyptic trouble. It is absurd to have a society like this, and a system which created that absurd situation cannot be continued. We need to address the issues which created it. We need to defy the track which led to this situation, and then undo that track so that it reverses the process.

The first job is to slow down the process so that it doesn’t get worse than what it already is. We need to bring the speed of concentration to zero so that it doesn’t worsen any further. And, if we are lucky, we can reverse it and come to a point where wealth is shared by everyone. What we are promising is the sharing of wealth rather than being subjected to squeezing the wealth to a few people in the world. In order to go to the other destination, to a distribution of everything in an equitable way, we need an egalitarian society. We need to find a new road towards the challenge that we all share. We have to do that.

I challenged the financial system, unknowingly. I was not an activist or fighting against the financial system. I was trying to find a financial service for poor people right next to the university where I was teaching. These people were the victims of loan sharks. So, I was trying to address that. I started lending to them myself out of my own savings. And that grew. Over time, I created a bank called the Grameen Bank or Village Bank. It was a system that became known as microcredit or microfinance. Today it’s a global phenomenon.

More than 300 million people around the globe are connected with microcredit right now. What is so important about it? It’s important because the financial system made us believe that it cannot be done. Yet, in my own experience, simple initiative made it happen. It works. It works in a very sustainable way. It goes directly to the people. It doesn’t need any help. It’s a strange kind of phenomenon. It’s based on trust. Things that we forgot. Something called trust does exist in our society. And we developed a whole system which doesn’t depend on papers.

The bank itself has over nine million borrowers now. Ninety-nine per cent of them are women. It lends out one and a half billion dollars a year. Our idea spread idea spread and we have now have a program in the USA, similar to what we do in Bangladesh. We have 19 branches all over the United States, eight branches in New York. We have branches in other cities like Los Angeles, Boston, San Francisco and another eleven cities.

Our bank’s repayment rate is 99.6 per cent. The average loan our bank supports in the United States is around $15,000. People take this money and start their own businesses. A financial service to reach out to the bottom people is the most important piece that is missing in the regular financial system. Not only credit should be available, but many other financial services which are available to better off people also should be available to them. That is something which we provide that changes their lives completely.

Bringing this financial support into the picture led to something else. Entrepreneurship. People were always arguing that loans and credit are useful when you have an entrepreneur to take it. But the poor were seen as not entrepreneurs. Especially women were seen as not entrepreneurs at all. If you were giving money to them you were wasting your money.

I had to respond to that and, by making a response, I started believing in it. Now I’ve started preaching about it. I now say, all human beings are entrepreneurs. This is our starting point. Human beings are born as entrepreneurs. If culture or education have pushed this spirit down, so that people forget that they were ever entrepreneurs in any phase of their history, forget about it. For me, human beings are not born to work for anybody. Human beings are entrepreneurs by themselves. That’s how we came to this planet; that’s how we survive on this planet. We survived by doing things that we had to do, overcoming the difficulties. We became hunters. We became gatherers. We became farmers. We became problem solvers. That’s what we were.

Only in recent history we were asked to become workers for somebody else. The word “job” came. Human beings are not produced for jobs. Currently, we are taking the wrong direction. That is also the reason why wealth concentration can take place. We are not doing things for ourselves.

As an entrepreneur, we would be catching the wealth rather than passing it on to somebody else. That’s what entrepreneurship is all about. We tell young unemployed people to believe that we are not job seekers but that we are job creators and that’s what we should be doing.

Theory told us businesses should be based on maximising their self-interests. Business has come to enhance the self-interest of any person which is a very limited explanation of human beings who are not essentially only driven by self-interest. Humans are also driven by the interests of others. Human beings are selfish at the same time as being selfless. But selflessness was never allowed to enter the business world. If you are selfless they say you will go and become a philanthropist. Don’t come near the business world. Business is business.

I said no. Business is not just business. Business is everything. Business has to be accommodating of everything. In order to simplify that, I created another kind of business. I said there is a business for selfishness so there must be a business, a counterpart business, for selflessness. And I created something called social business – a model of business to solve problems rather than making money for individuals.

Ours is a non-dividend company to solve human problems. We continue to promote that selflessness as a social business. And it has become a global phenomenon with many countries running our social businesses, solving their problem in a business-like way, and not doing it in a charity way. So often, we try to solve problems the charity way. Charity is a wonderful idea but it has a limits. Charity money goes out, does wonderful work, but the money doesn’t come back. So you have only a one-time use of your money. If you take the objective of charity and put a business engine behind it, and succeed in that objective, the money comes back. You can reuse the money, again and again, in the same pattern.

Our money has become very powerful. It can address many more problems than you can address through charity. Social business can address many other problems – problems in rich world countries and in poor countries, it doesn’t matter. Problems are everywhere. In rich countries, you have the problem of youth unemployment such as in Europe. You have the problem of old age. You have the problem of single mothers. You have the problem of welfare.

Humans are creative beings, energetic beings. There is no reason anybody should be at the mercy of the state, charity or whatever. They should be able to take care of themselves. The system failed so many. That failure is what we are trying to accommodate by providing an alternative route towards a livelihood. Human beings have creative faculties in a diverse way and should enjoy living on this planet.