Individualized Discourse in a Systemic Problem

     In her article "Regulating Credit" Deborah James discusses the cycle of debt experienced by South Africans. She details the effects and causes of the extremely high level of personal debt in South Africa as well as analyzing the debtors and lenders in relation to race. Of all the concepts in this article I will focus on the idea of the individual responsibility that is assumed in the cases of the debtors loans and repayment. 
     On page five James begins to detail the history of liberalization South Africa. This is the background to the view of individual being a matter of personal responsibility and not a group problem. The individual is seen to be the one taking on loans and therefore the responsibility of repayment is their responsibility as well. This trend continues into the relatively new practice of credit counseling where by an individual will pay a debt counselor to aid them in repaying their dent and the contractual agreements involved. 
     Another layer is added to the debt issue when the reader is able to see that the loans offered by most lenders were often unfair or even illegal in such large amounts that the borrower would almost certainly be unable to pay back with interest. Again, the problem is not seen as a systemic problem however with this argument of illegality not being successful in court. James records a debt counselor explaining this practice saying 

"The person must pay back, and must make an effort to do so. Don’t look at it as ‘They had no right to extend the loan’ – this is beside the point. Instead, I try to encourage people to pay back. Make an effort – it has to be a painful process. Otherwise they won’t learn the lesson. You need to make sacrifices. Forget about movies, eating out 3 times a week. The only way is to pay in as much as I can. This way I get a lot of acceptance from creditors (in court). I try to practice a system that makes sense" (James, 17).

This quote summarizes the problem of a systemic failure being placed on the shoulders of the victims. Reform is seen to be needed on the debtors behalf; they need to learn the lesson. How can financial literacy be learned by a person who is being penalized so harshly for past debts? The issue of debt and financials in general needs to be viewed as a systemic issue but in order to do so the discourse used to describe finances in a neo-liberal world needs to become caught up with the times. Instead of discussing debt as one would have two hundred years ago in an economy without modern "finance" the discussion of debt needs to look at individuals as part of a greater problem. A failure of financial education and awareness to all. Only then will the system be reformed. 

Regulating credit: tackling the redistributiveness of neoliberalism - DEBORAH JAMES

Runaway liberalization and belated regulation

"Ostensibly ‘to open up the market for small borrowers’, previously excluded from opportunities to start small enterprises because of their inability to borrow money from the big banks, existing legislation restricting the interest rate was removed in 1992. Removing the restriction would enable lenders – in theory equally small – to run viable businesses catering to the needs of such borrowers, thus creating opportunities for both." (James, 2013)


I think that the article, staring by its title, is a very good review and critique, through the South African case of how microfinance has become an extended neoliberal practice that intentionally targets the working class and the poor with the objective of bringing them into the financial market and creating channels for earning profit from them, even though it is with the rhetorical construction of providing them with tools for improving their lives.

With that said I think that James provides a very interesting and telling insight into the mechanics of these microfinance endeavours. First she describes the historical development of this institutions in a society deeply shaped by the Apartheid system and its racial and ethnic discriminatory organization and how sometimes the unexpected consequences of good-intentioned policies can be worst than the problem they are trying to fix. Second, the description and analysis of the both sides of the struggle when came to new regulation painted a very good picture of the scenario that in my opinion repeats itself everywhere when the public-private happens; and finally third, the author humanizes both those historical moments and the public debate through testimonies and quotes from people involved in the microfinance arena and by doing so she comes full circle in her analysis that began in the state sanctioned assassination of workers protesting predatory lending.

The Practice of Arbitrage

While most of the language in the article written by Hirokazu Miyazaki was difficult to understand, it was an intriguing article to follow since she looked at specific traders who lost their jobs due to the Japanese economic disaster in 1996, which was perpetrated by the government. This was a period called the "Big Bang" for the Japanese economy due to the formation of banks within the country. The selling of private Japanese trading firms and replacing them with American trading firms resulted in the loss of many jobs in Japan.

The leading term throughout the entire article was the word "arbitrage." While the article doesn't fully explain what the term actually means, it describes instances of taking advantage of the differences in prices in two or more markets. This concept was used by all of the traders throughout the article and some of the experience it more than others. One of the traders, Taka, explained that golf courses were extremely expensive and exclusive, meaning that it was mostly the rich that could enjoy the golf courses. He suggested that someone buy the golf courses, sell the membership to everyone, and turn it around and make a profit. This was a great example of using arbitrage because it helped me to understand the term a little better.

All in all, the article was hard to read for someone that has never taken an economics class. I found myself turning to Google to find out what words or phrases meant. But Miyazaki did help everyone to understand the collapse of the economy in Japan using these specific traders' lives to tell this story.