‘Thug’ is already a word from India. It comes from the Hindi verb ‘thug’.

w.r.t. the use of Force, I’d bucket the world into 3 (simplified) categories

• Involuntary transaction + Preemptive threat of force = government (e.g. “you’d better pay your taxes, or the cops throw you in the slammer; I don’t care if you disagree with how the tax $$$ are being spent” )

• Voluntary transaction + After the fact use of force as the last option if reciprocal obligation isn’t met = capitalism (e.g. if you sign for a loan and don’t pay, the court / your contract can allow the Repo man to come get your car; more likely, however, the “after the fact sanction” is refusal to do biz with you in the future, impact your credit score, etc.)

• Voluntary transaction + no reciprocal obligation = charity (e.g. “hey bro, here’s some $$$…”)

Thank you, this is much more clear to me, and now I understand how I have been misinterpreting your point.

I am saying that the same charge that you hurled at Vinod is applicable to you.
Your explanation articulates your frustration much better.

How should such sanctions be structured in order to disincentivize corruption?

Very interesting question. One that I have grappled with for many years. Can sanctions be enforced in a feudal society. And how does one define corruption – is it shukhrana / nazrana / mehatana or jabrana ? Items 1-2 are common nay even the norm in the developed world, it is dominance of 3/4 in under developed world that is the trouble. Folks go around saying that the govt must do this / police must do that. But the govt and police are from the same stock.

I’ll put it in the affirmative — you strike me as a relatively honest guy. It’s just that you have cited the SAME microcredit = charity argument over the past two years, with little deviation or additional analysis:

sigh… if that’s your take away, then I’ve failed to make my point. My argument is quite different (if you want to reduce it to a few bullet points)

• microcredit is NOT charity
• microcredit is a FORM OF capitalism
• what’s unique is that it is being used to DISPLACE more traditional methods of charity

When Yunus et. al. rail against Compartamos, what they SPECIFICALLY dislike is how uncharitable (e.g. capitalistic) it is. And that’s where I disagree w/ Yunus – a figure who likely represents the consensus opinion within the Microfinance community.

The “additional analysis” in this post is Tyler Cowen (eloquently / succinctly) pointing out the central role of the “thug function” in microcredit. Contract enforcement is a central aspect of capitalism (b/c of the expectation of reciprocal action) but it is NOT a natural part of most charity.

Vinod, I apologize if my comment was quick — it wasn’t meant as a backhanded compliment, nor was it intended to be preachy/condescending. I’ll put it in the affirmative — you strike me as a relatively honest guy. It’s just that you have cited the SAME microcredit = charity argument over the past two years, with little deviation or additional analysis:

I’d argue that instead of reenginering capitalism to help the poor, microloans are far more profoundly reengineering charity to help the poor help themselves. Why point out this seemingly semantic difference? It’s about identifying the long term goal and the moral high ground.[October 2006]

“To its backers, on the other hand, the success of Compartamos, despite the recent lacklustre performance of its shares, symbolises how the profit motive can help lift many more people out of poverty than charity alone could ever do.” [quoted in May 2008]

Perhaps the perceived “condescension” is merely a manifestation of my frustration, as articulated in forum-level commentary There are much more logical economic models and explanations for what’s happening than a simple “microcredit == charity.” In trying to draw a distinction between microfinance/lending and microcredit, I think presenting one as capitalistic and the other as charitable fundamentally misrepresents both. Hence frustration.

Re: force, I’d like to tease this out further, if you don’t mind. Clearly Tyler Cowen and I are on the same page re: “thuggishness, or perhaps “gunda-ness” (although I, with my bleeding heart, would probably give it some postmodern term instead). You mentioned, as a libertarian, valuing sanctions for a state based on the mis-use of force. What would be an example of this? How should such sanctions be structured in order to disincentivize corruption? I think it is fair to say, that in the same modern states that hold absolute force via cops + courts, corruption still exists — albeit with slightly different terms than we assign to the same kind of activity in developing countries — throughout all levels of government.

Also, are you arguing that enforcement is intrinsically at odds with a not-for-profit, or not explicitly profit-maximizing (what you term “charitable” and “capitalistic”) systems? Doesn’t one, in theory, nest within the other? Does that imply there is no violence or force within non-profit-maximizing arrangements?

oh boy – case of the pot calling the kettle black.

Does pawnbroking fall under micro-credit ? I guess it is true around the world that pawnbrokers (corporates or individuals) abound in poorer areas. In Madras a pawnbroker is called a ‘setu kada’ – meaning shop of the ‘seth’ – normally a marwari. Setus give you a loan for anything including school notebooks.