Thursday, November 23, 2006

Caring for the Poor (15) - More on Poor Loans

Loans give an incentive for the person to get back onto their feet. Most people do not want to be in debt. They will usually work hard to pay back the loan.

The worst effect of government social welfare is the effect that it has on the incentive to work and succeed. People no longer have to work to supply their needs, because the government will provide for them. Those who do work are taxed heavily, to pay the cost of social welfare. They soon get the feeling that it does not pay to work hard and the whole economy is weakened. Poor loans strengthen the economy.

Poor loans are an excellent method for helping people in third world countries. The greatest problem is lack of capital. Local lenders often charge exorbitant interest rates that enslave people for life. Providing people with an interest free loan to start a business if often the best way to help them. They will often be able to repay the loan quite quickly. An effective business will provide financial support for the entire life time. Those who are successful will be able to help families. Interest free loans are often the best way to help the poor.

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