has posted a serious defense of Milford Bateman's Why Doesn't Microfinance Work? on Governance across Borders...a defense, that is, against my negative review and some others. Mader writes:
To me, the intense reactions to Bateman’s book are a gauge for measuring just how worried many in the development industry have become about their poster child. I get the impression that a systematic critique of microfinance touches highly sensitive nerves with many researchers and industry insiders, whose reaction is to challenge the person rather than the argument.
Parts of his post theorize generally about the reaction to Bateman's book, as in the title: "Why can’t the microfinance community handle criticism?" I'm not sure if these parts apply to me. I don't think of myself as part of the microfinance community, for example, as I have never worked for a microfinance organization, have smashed a few of its minor icons, and will soon head to other subjects. So I'll stick to the parts that clearly connect with me.Mader:
The most biting review of Bateman’s book came from David Roodman, which in my opinion was a departure from his habitual sharp analysis and reasoned argument. He claims to be annoyed by Bateman’s “sloppy thinking” and levies three main critiques against the book: first, it makes “dramatic conspiracy claims”; second it is “careless in [its] use of evidence”; and third, it has bad style. He also accuses Bateman of “extremism”.
Well, I claimed to be annoyed by sloppy thinking as I perceive it, which is a correct statement: I was annoyed. Later, Mader elaborates on the conspiracy issue, so I'll come back to that. I stand by the accusation of careless use of evidence; I grabbed a handful examples for the review and stopped when I thought I'd made my point. Here are more:
| Bateman | Me |
| Acceding to neoliberal donor pressure to become self-sufficient, in 2001 the Grameen Bank deployed "a number of devices" to "quietly hike up" its interest rate. Example: borrowers had to deposit 2.5% of any loan received into a Grameen savings account for at least three years. "This was an important break with the original Grameen model." (p. 18) | Actually, the mandatory savings was 5% and had been since Grameen's earliest days. The real innovations gave clients quicker access to their savings and shifted from group to individual savings accounts. (Source.) Arguably those are neoliberal shifts, but ones that many poor, female borrowers actually went on strike for. |
| Bateman refers to "one of Muhammad Yunus's own flagship poverty-reduction programmes," GrameenPhone. He shows how the the marginal benefits of financing more "phone ladies"---who took microcredit to buy phones and rent them out by the minute---crashed to zero as phone ladies multiplied and competed in limited markets. He criticizes microfinance promoters for fixating on the early successes and ignoring the larger picture. (pp. 68--70) | This is indeed a good example of "displacement effects." But Bateman's focus is itself arguably narrow. Those telephone ladies were the vanguard of mobile phones for the poor in Bangladesh, and thus pretty much for the entire developing world, the majority of humanity. See this post about Iqbal Quadir, the man who actually drove GrameenPhone, and about the profound benefits of mobile phones for the poor. |
| Bateman describes consumption smoothing as a minor poverty gain. (p. 99) | I can do no better than quote Rich Rosenberg: "When households operate near the edge in terms of basic consumption needs, the value of income-smoothing can get very high, more than justifying the use of high interest finance to avoid it. I once asked a woman who’d been with an Indian MFI [Microfinance Institution] for 3 years whether she thought her family had more to eat over the course of the year as a result. She guessed no. I asked her why she was still bothering with the MFI. She looked at me like I had a hole in my head, and said, 'Now we eat every day.'" |
Sorry, I'll stop.As for my comment on "bad style." I complained that the book is "heavy in its use of passive voice and weighty abstractions such as 'neoliberalism,' which obscure for the reader (and perhaps the writer) who is accused of doing what." That is about style just as Orwell's Politics and the English Language is about style:
Now, it is clear that the decline of a language must ultimately have political and economic causes: it is not due simply to the bad influence of this or that individual writer. But an effect can become a cause, reinforcing the original cause and producing the same effect in an intensified form, and so on indefinitely. A man may take to drink because he feels himself to be a failure, and then fail all the more completely because he drinks. It is rather the same thing that is happening to the English language. It becomes ugly and inaccurate because our thoughts are foolish, but the slovenliness of our language makes it easier for us to have foolish thoughts.
Orwell warns against passive voice (and weighty abstractions). I am persuaded by this great book, that passive voice is often used well, which is why I was explicit about how it is used by Bateman. If Bateman more often articulated who exactly he sees as imposing neoliberalism on the developing world he might have to confront the diversity of actors he implicitly condemns---the Danes, the Americans, the Japanese, the 750,000+ Kiva users.Maybe I am overly sensitive about this, but it truly angers me when people issue such sweeping condemnations of the integrity and judgment of large classes of human beings. I believe it is dangerous, a kind of verbal violence. And it should be named. How is it possible, I wonder, to think so little of so many, except by dehumanizing them in one's mind? And has not such rhetoric repeatedly paved the way to real violence? My point is not to associate Bateman with atrocities but to explain why this kind of language angers me so.And about those weighty abstractions. I just read Just Give Money to the Poor, and I recommend it if you want to learn more about the growing phenomenon of cash transfer programs in developing countries. Here's why I bring it up: while Bateman denigrates small loans to the poor as neoliberal, this book celebrates small grants to the poor as anti-neoliberal. Go figure. Well, what I figure is that these sorts of labels are easily overused.
As a reviewer, Roodman makes no further mention of his ‘conspiracy theory’ charge, nor does he really explain his stylistic criticism; instead, he seeks to correct Bateman on minor hand-picked technical points of evidence.
Most individual facts are arguably minor. But let us revisit my "hand-picked technical points." In my review and in the debate in the comments, I showed that Bateman:
- caricatures the hero role a microfinance leader assigns himself in his own story;
- equates hype from within the microfinance world with dominance of foreign aid priorities globally;
- caricatures one of the most thoughtful observers of microfinance as an "advocate" who "admits" it has problems;
- dismisses, by labeling, a deservedly leading center of thought on financial services for poor, the one that so powerfully documented how subsidized credit often went awry;
- exaggerates the negativity of the conclusions of an impact study I coauthored;
- neglects some of the most important studies yet on whether microfinance works;
- caricatures the position of another leading center of analysis on microfinance on the Compartamos IPO;
- maligns "almost all impact evaluators" as assuming that microfinance works even before they evaluate it;
- and caricatures me as "lack[ing] of understanding of real world economics and [devoted] to theoretical mathematically modeled market processes confined to textbook worlds" because I asked why profit-seeking banks would abandon a profitable line of business.
Note what I am not saying: I am not saying that Yunus never self-aggrandized, not saying that evaluators always see 20/20, not saying that my own motives are pristine. (All public writing involves self-promotion.)But I would argue that most of these are not minor details. And they follow a pattern: dismissing anyone who has anything positive to say about microfinance as narrow-minded, ideologically blinded, hyperactively upbeat. I wrote that no one holds a monopoly on the truth. I think that is wisdom. If so, then those who analyze complex issues have a responsibility to try to learn from those with whom they disagree, rather than dismissing them as beneath consideration. I see myself as striving to do this in my book, for instance in organizing chapters 6--8 around three conceptions of development (see hotlinked outline at right). It is my observation that those who reflexively accuse others of ideological narrow-mindedness are projecting more than they realize.
For instance, he questions whether Jonathan Morduch may be called a microfinance “advocate” or not (does being the Managing Director of the Financial Access Initiative count?).
I think we shouldn't equate financial access advocacy with microfinance advocacy. In fact, Bateman regrets how one way of providing financial access---microfinance---has come at the expense of other ways.
What Roodman regrettably fails to do is engage with Bateman’s overall argument that microfinance has few and questionable economic impacts, but is nevertheless promoted because of its political usefulness.
I agree I did not fully engage with Bateman's arguments. As I explained, I found the use of evidence and style of reasoning to be frequently offensive, incorrect, and unconvincing. I do not doubt that Bateman has something to teach us all. But I tired of separating the wheat from the chaff. And a book must win trust to convince.Mader closes with a couple of sections, which I commend to you, on the distinction between conspiracies and "epistemic communities." His point: ideas have power, ideologies come and go, and they influence how all of us behave. Bateman is not necessarily claiming a conspiracy when he points out how the tide of ideas in recent decades has favored microfinance and disfavored other approaches.I think this is a fair point, and it forces me to confront my use of the word "conspiracy." To my mind, a conspiracy has several aspects. It is:
- Coordinated (i.e., it involves several actors working toward a conscious goal)
- Malign
- Secret
I think there's little doubt that Bateman accuses the microfinance movement of the first two. As I wrote before, he compares microcredit to the Morgenthau Plan to deindustrialize Germany after World War II. He refers repeatedly to the "international donor community" as if it were a coherent monolith, and does so implicitly many times more through passive voice. He says microfinance advocacy NGOs are co-opting "senior academics and researchers as board members, the better to ensure that favourable research outputs are forthcoming and potentially critical voices can be silenced" (p. 35). And so on.I would even say that Bateman casts the movement as underhanded. For example, see the previous quote; his insinuation that the Ohio School "very conveniently provided a stream of arguments" (my emphasis); and his theory that I attacked his book "with a view to solidifying [my] street cred and career advancement prospects within the microfinance industry, rather more than it was meant to illuminate and advance the important debate surrounding microfinance as development policy"...as usual, I could go on.But no, I think Phil Mader is right that Bateman is not claiming that the coordinated, malign, underhanded microfinance movement is secretly organized. To that extent, I should not have used the word "conspiracy," and I apologize.
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