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Kiva combines web-obsession, gambling, feel-good philanthropy and self-referential facebook-style entertainment in a way that guarantees juggernaut expansion over the next decade. In fact, Kiva is currently among the 3000 most popular websites in America, and has distributed hundreds of millions of dollars.
So -- why complain? Kiva is no ponzi scheme -- most "investors" never expect to get their money back. The organization is transparent and effective, and the poorest people of the world have unencumbered access to western cash, while giving patrons a little harmless fun. Kiva appears to be a kind of perpetual motion machine, harnessing the Web to do endless good in the third world.
However -- as is made abundantly clear in Linda Polman's book The Crisis Caravan -- the law of unintended consequences has a way of corrupting the very people you are trying to help.
Subsistence economies are often delicately balanced. Poorly educated people rely upon traditional behaviors worked out painfully through trial and error -- knowledge that can be easily disrupted by sudden infusions of humanitarian aid.
In fact, there are early signs that it may be happening now with Microloans. The prime minister of Bangladesh has denounced microloans as "sucking the blood" out of the poor. Suicides have been reported from debtors unable to repay their loans. Instead of transforming the poor into capitalists, we may be instead exporting western-style financial irresponsibility. An impoverished peasant with self-respect is still better off than a peasant drowning in debt. If it is irresponsible to hand out credit cards to high-school students and hook them on a lifetime of deficit spending and interest payments, is it any better to ensnare the poorest people in the world?
Surely microloans have a role in helping poor people throughout the world. However, I am reminded of an anecdote I read in Tim Flannery's book Throwim Way Leg about his experiences living among the people of New Guinea.
The sharp edge of western debt may be even more dangerous.
My advice -- skip internet philanthropy and travel the third world yourself. Americans are the best ambassadors of Western Capitalism. Spend your money meeting the people you care about, eating their food and visiting their cities. And the next time you meet a cab-driver in Peru, if you like the ride, give him a $20 tip. He will know there are no strings attached, and you will get the best dividend of all -- a big grin.
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