Jim Hilton discusses the principals of trickle-down economics and the business model of micro loans and their impact on the forest industry. (File Photo)

COLUMNS: Pros and cons of trickle down economics and micro-lending

Him Hilton discusses practical economic ways to help the little guy this week

Forest economics like most other industries is impacted by the global economy and the associated government policies intended to stimulate healthy communities.

Trickle-down economics, or “trickle-down theory,” states that tax breaks and benefits for corporations and the wealthy will trickle down to everyone else.

It argues for income and capital gains tax breaks or other financial benefits to large businesses, investors and entrepreneurs to stimulate economic growth.

While there is lots of information on “trickle down” there does not seem to be as much on helping those on the lower end of the scale. Some notable aid organizations are Foster Parents Plan, World Vision and the Salvation Army to name a few.

Some equally important but perhaps less well known are some banking organizations like Grameen Bank, Triodos Bank, Rabobank , Kiva and other micro-lending institutions.

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In his book, Banker to the Poor, Mohammed Yunis describes how the founding of “Grameen Bank” really started in 1976 with a loan of $27 out of his own pocket to 42 stool makers living in a tiny village.

The success of this first loan lead him to the simple principle “loan poor people money on terms that are suitable to them, teach a few sound financial principles , and they will help themselves.” The theory worked as Grameen bank has provided 3.8 billion dollars to 2.4 million families in rural Bangladesh in addition there are more than 250 institutions in nearly 100 countries that operate micro-credit programs. Even though the clients are very poor they have an excellent record of loan repayments.

Triodos Bank based in the Netherlands with branches in Belgium, Germany, United Kingdom and Spain claims to be a pioneer in ethical banking.

It finances companies which it thinks add cultural value and benefit both people and the environment. That includes companies in the fields of solar energy, organic farming or culture.

Rabobank another Dutch multinational banking and financial services company headquartered in Utrecht, Netherlands is a global leader in food and agriculture financing and sustainability-oriented banking.

Over its 40-odd-year history, the fund has grown from being a small charity to a professional development organization.

Kiva is an international nonprofit, founded in 2005 in San Francisco, with a mission to expand financial access to help underserved communities thrive. Students can pay for tuition, women can start businesses, farmers are able to invest in equipment and families can afford needed emergency care.

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Closer to home, a program in Ontario supports low-income women who are seeking to start their own business by providing financial literacy training, entrepreneurial mentoring and skills development and life skills support.

These skills will ensure women’s success in starting and growing their businesses.

Women who become business ready within these programs will be eligible to receive small loans (microloans) to start their businesses.

Through the Microlending over 800 low-income women will receive business readiness supports and financial skills training to help them on a successful path as entrepreneurs.

I think we all have the responsibility to research which approach has had the greatest impact on the majority of people on this planet.

This knowledge will help us in our investments as well as how we vote.

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Jim Hilton is a professional agrologist and forester who has lived and worked in the Cariboo Chilcotin for the past 40 years. Now retired, Hilton still volunteers his skills with local community forests organizations.

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