"We help companies to grow by helping them to raise capital. Companies that grow create wealth. This, in turn, allows people to have jobs that create more growth and more wealth. It’s a virtuous cycle." To drive home his point, he makes a remarkably bold claim. "We have a social purpose."
Despite the article's swipes (why is this claim bold?) at the investment banking culture, I am convinced. These guys are singularly driven to make money and they succeed spectacularly. They are arrogant, brash, hyper-ambitious and probably not much fun at a tailgate party. But the rest of us are wealthier for their effort. It would be an impossible bar bet to settle but I would conjecture that Goldman Sachs has had as much of a positive impact on the lives of the poor worldwide as has Muhammad Yunus's Grameen Bank.
Comparing Goldman Sachs with Micro-lending and saying that the impact from both is the same and positive??? Nice conjecture but that is stretching things a lot too far unless there is direct evidence to prove. Isn't it like comparing two different things entirely? Also I wonder if Goldman Sachs will even look at someone who wants a tiny loans like $10!!!
ReplyDeleteUm, … did I not say this was a conjecture that is un-testable? Grameen’s $10 micro loans are off by at least 6-7 orders of magnitude from anything Goldman Sachs will touch. My point is that even though Goldman Sachs is at the opposite end of the lending spectrum, the loans they make are so big and generate so much wealth that even the Grameen’s customers benefit, and perhaps by as much. Even though Grameen and Goldman Sachs’s are so dissimilar, we could map out the theory as to how the spillovers from Goldman Sachs funded projects generate consumer surplus for rural peasants. Actually estimating the parameters would be hopeless.
ReplyDeleteFor example, Goldman Sachs may have funded advanced mobile telephone rollout in developed countries. Eventually this made the rollout in rural India viable. Peasants can now substitute waling into a regional hub with a phone call. Is this of comparable value to a $10 micro-loan?