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By Sally Elena Lewis
There’s new hope on the horizon for people who would like to improve their financial condition, who are willing to do some work, and more importantly, for those who would like to work for themselves. It’s called “Micronomics” and it is a system that allows even the most poverty-stricken people a chance to improve their lives, anywhere in the world they may live, in any culture, without any preconditions, such as good credit, collateral or employment. What? This seems to go completely against the capitalistic system as we know it. So, just what is this amazing opportunity? Where is it coming from and who do I call to apply, you might ask?
All those questions will be answered, but first let me introduce you to the man who originally coined the word and the concept years ago: Mr. Michael Webster. Although Mr. Webster came up with this concept years ago, due to his many other business commitments, he was unable to fully launch Micronomics himself at that time. He did, however, hand off the idea to several people and those who tried and applied it did very, very well. Many people who would still be living on Starvation Lane are feeding, clothing, educating and improving their family’s lot beyond what they ever thought they could do. This has been accomplished completely through micronomics.
For a little background information, Mr. Webster’s business expertise runs the gamut from making and marketing Native American craft items (both Mr. Webster and his wife are part Native American) to Venture Capital, Asset Protection, Author, Journalist, Investigative Reporter, Worker’s Compensation Hearing Representative, Counter-Terrorist Specialist and Instructor, Emergency Management Specialist and Instructor, Emergency Medical Tech (EMT), Wildland Firefighter and Instructor, Adventurer, Explorer, Holistic Nutritionist and Amateur Anthropologist. He has been described as an entrepreneur extraordinaire and a business person’s business person since the tender age of 6 when he sold “Spud-Nuts” door-to-door in the city of his birthplace, El Paso, Texas. He is also the founder of the oldest online newspaper, www.lagunajournal.com His resume reads almost like a work of fiction, he’s done so many things in so many diverse arenas. (To check it out, go to www.MichaelWebster.net,)
I recently interviewed Mr. Webster (who did not object to my calling him Mike), and asked him about Micronomics. (My questions to him are in “bold”, his replies come after (so we can eliminate all those “I asked and he saids”…):
Mike, just what is micronomics?
“The dictionary defines “micro” as “small, abnormally small” and “economics” as the “science that deals with the production, distribution, and consumption of commodities relating to the necessities of life”. Hence, I coined the word “MICRONOMICS” in relation to this financing program. Micronomics opens up a whole new world of financing for the very poor. It enables them to participate in the economic system that they normally are locked out of. It allows anyone who wants to become a part of the system to turn the wheels of their own commerce, no matter how small. In fact, the smaller the better. It is an exciting new strategy to combat poverty.”
How does it work?
“Micronomics is the practice of extending equity loans to low-income people all over the world to help them obtain working capital to create their own “micro businesses. Its a wonderful and dramatic departure from traditional charity or welfare programs. Business capital is provided, not given. Repayment is required and a small equity position in the business is retained. In the world of economics where cash is king, the effect is amazing.”
How is it different from other programs?
“This departure from conventional economic development strategies differs in the way it extends the freedom to use the capital, while demanding the responsibility of paying it back. This helps to avoid the draining of dignity and confidence that is often a by-product of charity and welfare.
Small business or “microenterprise”, the result of micronomics, is becoming the best and only road to economic freedom and provides the only opportunity for most low-income people of the world, including many low-income Americans.
AEO, the National Association of Organizations, project by the year 2008 that over a million low-income people will achieve self-sufficiency through self-employment.
Micronomics focuses on personal asset accumulation and pride of ownership rather than on current welfare policy, income and consumption.
A microlender does not rely on collateral or credit on the first transaction, but invests capital in a person’s business or new business idea, which can be anything from making craft items to farming endeavors. In fact, they don’t even have to have a business idea; we’ll help them find something they like to do and can do. The main thing to remember is this is called “Micronomics, and we always start out with a very small amount. In this way, people do not get overwhelmed or too far ahead of themselves due to the fact they don’t know much about running a business. The microlender receives repayment of principle along with retaining an equity position in the business. Small groups are formed and they guarantee each other’s loans. The initial “microloan” amounts are small. They are often multiple and progressive.”
What about banks? What do they think of this approach?
“Banks and other lending institutions are simply unwilling or unable to meet these needs. Banks have been merging to compete in a global economy. As banks have grown larger, they have become increasingly dependent on larger loans, so the interest gained from a small loan isn’t enough to be profitable” Mike replied. “The world economies have serious weaknesses when it comes to the poor. Employers continue to downsize. Low wages mean growing numbers of working poor. The income gap between rich and poor is growing at an alarming rate.”
You know, I’ve been wondering how the economic system will keep going if people are too poor to buy much of anything, not even the basics. It seems like a bad economic strategy to me. Not to mention people with children. Is this something that would be good for women with kids?
“Microenterprise is an especially important option for women who often face the two-fold task of being a parent and earning a living. Three out of every four “microentrepreneurs”, are women,” Mike smiled. “The world is coming to realize how important micronomics is to women. Many choose self-employment as a way to earn income while caring for their children. Three- fourths of all “microloans” in America and around the world go to women. Research indicates that assisting the self-employed is a valuable and cost-effective strategy. In 1994, almost 50 percent of female-headed households in America lived in poverty, more than three times the poverty rate of married couples. During the period of 1994 to 1996, single mothers were eight times as likely as married couples to live in poverty. And it hasn’t gotten any better since then.”
That’s just a shame. The children that then grow up in poverty don’t really know how to get out of it either, and the cycle goes on. Do you think this plan is workable enough to break this pattern of poverty?
“Among the facts which have emerged about microenterprise are the results of a recent study conducted by the Aspen Institute. Of several hundred microentrepreneurs in seven programs across the United States, 25 percent climbed out of poverty in three years. Almost half had significant increases in their business and personal assets. In addition, the Institute estimates that the cost of creating jobs through microenterprise ranges from $2,000.00 to $9,000.00, considerably less than most other strategies.
Is that how it works? Do people get loans of from two to nine thousand dollars and then go into some kind of business?
“No, we start out with a very small amount. Actually, if you gave someone who’d never had their own business, didn’t have much experience in money management, maybe didn’t even have much of a track record as an employee, if we gave them that much money, they just wouldn’t be equipped to handle it. You’ve heard of lottery winners who’ve gone broke within five years of winning? Well, it’s kind of like that. People need to learn how to manage their business in what we might call ‘baby steps.’ We loan a person a small amount of money, get them started on oh, say, making a product, and we coach them every step of the way on the best way to maximize that loan.”
I see. Kind of like money management school with on-the-job training. What else is involved?
“We would coach them on the best and cheapest way to get supplies. Well, let me give you an example. Say we found somebody who wanted to get involved, maybe a Native American, and the product was dreamcatchers. We know the supplies that are needed: you need the rings, you need sinew, you need feathers and beads, you need leather. Now most people would want to run out to a retail store and buy these things, but then you’d have to spend too much money on supplies to make a profit. Say you found maybe some Navajo women who wanted to start their own microbusiness and they thought they’d like to make dreamcatchers. You live on the Navajo Reservation, don’t you?
Yes, I do.
“Don’t many of the Navajos keep sheep and chickens and such?”
They sure do.
“We would suggest to this budding businesswoman that she visit some of her family and friends who keep these animals if she didn’t have any of her own and make an arrangement that when an animal dies that the person keep the parts that she could use, like the skin for leather-type strips, the tendons to make sinew, and so on. Feathers are pretty easy to come by if you’ve got birds. Then, she buys these things from her family and/or friends, and everyone benefits. For the items she can’t get that way, we can help her find the best deal out there, like for beads and the rings. She can make her dreamcatchers, and repay her loan.”
That seems like a good idea. Does she have to go out and sell the dreamcatchers?
“Of course she can. She is not limited in any way in how or where they are marketed. In the case of Native American arts and crafts, it a very good possibility that my wife and I would buy them from her directly, as we have a store and a good online market we’ve established over the last thirty years or so.”
So, she makes them, maybe you buy them, then she repays her loan?
“You’ve got it. Say, just as a random number, we loaned her $5.00 to get started. Say she makes five dreamcatchers out of that $5.00 loan. She may sell them for $2.00 each, making $10 total. She then repays her $5 loan plus interest, say $5.50, and becomes eligible for the next loan, which may be for more money, say $l0. So, what’s happened?”
What’s happened? I guess she’s made some money and established some credit of sorts to get her next loan. Is that right?
“That’s right. And, if you add up the numbers, she’s not only made some money, she’s actually made a very good percentage on her investment. In fact, she’s made a better percentage than the big boys do. She will actually see a return somewhere in the 50% to 100% category, depending on how much she spends on supplies and what kind of dreamcatchers she makes. I think that’s impressive, even though it’s on a small scale, don’t you?”
Incredible! Can I sign up? (we laugh…) So what else do we need to know?
“One of my goals is a campaign to help provide technical assistance and funding throughout the United States and the world, working to ensure that millions of the world’s poorest families, especially women, Latino’s, African-Americans, Native Americans, other minorities and the worlds poorest receive credit for self-employment through micronomics.”
Now you say ‘especially women.’ What about men? Is there some reason women do better at this than men? Can men get involved if they want to?
“The reason women generally do better than men is because of their children. There aren’t many women out there who don’t want their children to have enough to eat, to go to school, to have clothes and toys and a chance to better themselves in the world. That’s why women do so much better at this than men. It’s not that men don’t care about their children, because they do, but they’re just not hardwired for it like women are. And, of course, men can take advantage of the program, too, if they’re so inclined. And remember, we’re not just talking about Native Americans, but anybody in a poverty-stricken situation can do this. All they need is a little desire and some assistance and they’re on their way. Of course, it’s also important to keep it going. We want people who want to significantly improve their financial circumstances.”
I believe you mentioned something earlier about forming small groups. What’s that all about?
“People in general do better when they have other people to help keep them on track, keep them motivated and interested, and kind of help each other along with whatever they’re doing. We’ve found that once one person gets going on this, often their friends and relatives will want to join in and create some success for themselves as well. We like to get groups of five people together. It can be made up of people who know each other and want to work together or we can arrange a group of people who don’t know each other. It just seems to work better that way.”
I can see where it would. It’s often hard to do things by yourself. What else do you want people to be aware of? “There are all kinds of statistics on poverty that could be included here and there is a big debate on how the poverty level is actually determined, since it was devised in the 1963 and hasn’t been significantly revised since then.” Some basic research revealed the following: The current method for measuring poverty in the United States was developed in 1963 by a young statistician for the Social Security Administration named Mollie Orshansky. Using data from a 1955 Department of Agriculture survey, Orshansky developed a set of thresholds that set a poverty line at three times the annual cost of feeding a family of three or more under Agriculture’s “low-cost budget.” She developed the thresholds purely for her own research and said at the time that her data’s limitations would yield a “conservative underestimate” of poverty. For one, food doesn’t account for one-third of a family’s budget today, making it an unrealistic cost-of-living measure. The model also fails to take into account housing, transportation or health care—which together can amount to more than triple the average cost of food. Add in regional variations, childcare costs and the growth of single-parent families, and it’s fair to say that the Census Bureau is systematically undercounting the number of poor Americans. Census data released this past August suggests that the number of Americans living in poverty grew slightly in 2004 (the most recent year for which data is available) to 12.7 percent from the 12.5 percent recorded the previous year, representing about 37 million Americans. Since 2000, the number of people living in official poverty has increased by 5.4 million. But according to experts, that number vastly underestimates the real total. So any statistical data has to take this into consideration. As critics have pointed out for decades, limitations of the Orshansky formula are manifold. Duke University sociology professor David Brady puts it this way: “Each August we Americans tell ourselves a lie. The entire episode is profoundly dishonest.” Brady says that based on his calculations the real number is closer to 18 percent—or 48 million Americans currently unable to afford the most basic necessities. Less conservative estimates have put the numbers of poor at 25 percent, or more than 70 million Americans. In the meantime, everyday Americans are spending more than they make. For the second straight year, personal savings have been in the red, a phenomenon that has only happened once before, at the height of the Great Depression. Research conducted by the Economic Policy Institute shows that the indebtedness of U.S. households has risen nearly 36 percent over the last four years. As a result, the gulf between the “haves” and “have nots” is reaching crisis proportions. The gap between the richest and poorest ten percent of the U.S. population is greater than that of all other industrialized countries. The combined wealth of the world’s 200 richest people hit $1 trillion in 1999; the combined incomes of the 582 million people living in the 43 least developed countries is $146 billion. A few hundred millionaires now own as much wealth as the world’s poorest 2.5 billion people. 51 percent of the world’s 100 hundred wealthiest bodies are corporations.
“Worldwide, we can see the situation gets even worse.”
According to UNICEF, 30,000 children die each day due to poverty, and they die quietly in some of the poorest villages on earth, far removed from the scrutiny and the conscience of the world. That is about 210,000 children each week, or just under 11 million children under five years of age, each year.
Half the world — nearly three billion people — live on less than two dollars a day. The GDP (Gross Domestic Product) of the poorest 48 nations (i.e. a quarter of the world’s countries) is less than the wealth of the world’s three richest people combined. Nearly a billion people entered the 21st century unable to read a book or sign their names. Less than one per cent of what the world spent every year on weapons was needed to put every child into school by the year 2000 and yet it didn't happen. Millions of children’s lives will be needlessly lost because world governments have failed to reduce poverty levels.
“So we can see that this problem is not being solved. Micronomics could be a significant part of the answer to this problem.”
You said this program is not limited to Americans?
“What needs to be impressed upon politicians, business and civic leaders, is the need to build a more inclusive local and world economy. Educate policy makers about the large contribution micronomics can make to a community’s economic vitality and how it can inspire democracy and allow those in the community to participate in and be a part of capitalism. Church members should be informed of microcredit’s contribution to the fight for economic and social justice. Women and minorities should be shown the special promise that microcredit and microenterprise hold for them.”
And if we teach the mothers, they teach the children. It’s been going on that way for eons. This really sounds like a way out for mothers who couldn’t afford child care if they could get a job and for all those people who just need a chance to make it on their own.
“Yes! We could teach young people all over the world about their own economy and society, and tell them of the many opportunities micronomics can provide for their future. Share fresh ideas with them of how they can participate and have a shot at success. Teach them how to nurture new sources of financial support for specific microcredit and microenterprise development that can benefit them.
Then we could encourage volunteers and community activists to help provide the support systems microentrepreneurs need to prosper. Micronomics’ greatest contribution may be beyond just the numbers! It may be in the way it can help create self-esteem, independence and a chance at a successful business and a successful life. It’s hard to feel good about yourself when you can’t ever get ahead.
That is the hope it can provide for them and for their future. I believe it’s an idea whose time has come, and there’s nothing stronger than that, except for the added bonus of being a win/win/win on every level. That’s the future that I’d like to help create.”
Mr. Webster, Mike, I can’t thank you enough for speaking with me today. In fact, I’m so inspired by this, I’d like to get involved in helping you to get this off the back burner and get it cookin’.
”Great! I could sure use your help. Why don’t you be my person on the Navajo Rez for starters?”
I’d love to! I certainly will!
So, for any of you out there who have stuck with us and read this article all the way through, you can contact: Michael Webster @ mvwsr@aol.com or call (49 494-7121 me at tomsally@tabletoptelephone.com . If you’re computer oriented, or call me at (928) 688-4460.
My name is Sally, and I’ll be looking forward to talking to you. Of course, I won’t limit it, either. Anybody with a desire to better their lot in life can come aboard this train! BOOKS/CD ROMS FREE DOWNLOADS
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