Three Cheers for the 2006 Nobel Peace Prize

Past Nobel Peace Prizes have gone to elected (and unelected) officials, but this year the Nobel Committee gave the award to the entrepreneurial founder of the microloan bank Grameen.  It is long overdue recognition of the poverty-ending and peace-creating power of capitalism and voluntary trade. The New York Times reports:

Dr. Yunus founded the bank in his native Bangladesh to lend small amounts of cash — often as little as $20 — to local people, almost always women, who could use it to found or sustain a small business by, say, buying a cow to sell milk or a simple sewing machine to make clothing.

Traditional banks considered such people too risky to lend to, and the amounts they needed too small to bother with. Dr. Yunus’s simple but revolutionary idea was that the poor could be as creditworthy as the rich, if the rules of lending were tailored to their circumstances and were founded on principles of trust rather than financial capacity. He found that they could achieve lasting improvements to their living standards with a little bit of capital.

Since its creation in 1983, Grameen has made a total of $5.72 billion in such small loans, and has turned a profit in all but three years, including $15 million in 2005.

“Across cultures and civilizations, Yunus and Grameen Bank have shown that even the poorest of the poor can work to bring about their own development,” the Nobel citation said.